Castro set to step aside as Cuban president, his reforms incomplete

[April 17, 2018]  By Sarah Marsh

HAVANA (Reuters) - Most of Camilo Condis' family emigrated from Communist-run Cuba to the United States seeking a better life, but the 32-year-old decided to stay after Raul Castro became president a decade ago and promised change.

Seeking to make socialism sustainable, Castro introduced some market reforms to the state-run economy and secured a historic detente with the United States. He made it easier for Cubans to travel, allowed them to own property, cellphones and computers, and expanded internet access.

Condis, who graduated university in 2011, the year Castro announced most of the reforms, now makes a decent living in the capital, Havana, working for a restaurant in Cuba's fledgling private sector, and renting out a flat. He surfs the web daily and has traveled outside the Caribbean island.

But even Condis, who has benefited more than most from the changes, is worried about the future as Castro prepares to step down as president this week and hand off power to a younger generation of Communist leaders.

"I decided I could bet on a good future here," Condis said on a street buzzing with private cafes and shops, fruit of the changes. "But there is a lot of uncertainty."

Like most Cubans, his biggest concern is the creaking economy, which remains one-third smaller than in 1985 when it was receiving subsidies from its ally the Soviet Union, according to former Cuban central bank economist Pavel Vidal.

Castro introduced some new social freedoms when he officially took power from his ailing older brother Fidel Castro in 2008, albeit maintaining the one-party system that has a monopoly on the media and little tolerance for public dissent.

On the economy, his government has implemented only a fraction of its planned market reforms, which aimed to deepen an opening Fidel Castro had started following the collapse of the Soviet Union in 1991. It has even backtracked on some.

(Economic changes in Cuba under Raul Castro: https://tmsnrt.rs/2JNSWCK)

Those who welcomed the proposed changes blamed this on resistance to change from the party and entrenched bureaucracy as social inequality rose and the state's control diminished.

"He created the main lines, the institutions, but what he wasn't able to do is end the old mentality," said Carlos Alzugaray, a retired Cuban diplomat.

More than two-thirds of Cubans work in the inefficient state sector, earning on average $30 per month, although free education and healthcare and some subsidized food and housing offset low wages to some extent.

In interviews across the country, Cubans told Reuters they are struggling to get by. Travel and use of the internet at $1 per hour were luxuries many could ill afford.

The benefits of the economic opening have been concentrated on the private services sector in cities, especially Havana where better relations with the United States boosted tourism.

But even there, opportunities were curtailed last year when U.S. President Donald Trump partially reversed the detente, and they look set to be curbed further by tighter regulations.

The economy has grown on average 2.4 percent per year over the last decade, according to official statistics. The government said in 2014 that annual growth of at least 7 percent was necessary to develop the country. And exports have stagnated.

Some analysts say Castro may have missed a historic opportunity to enact change given his authority as a leader of the 1959 revolution. Others say his legacy hangs in the balance.

Much will depend on the path taken by his successor - likely to be 57-year-old Miguel Diaz-Canel - and on how much Castro maintains a hand in policy as he remains head of the ruling Communist Party until 2021.

A NEW CUBA?

While critics saw just another Castro when Raul Castro took over from his more charismatic brother, who died in retirement in 2016, his ascent was seen by some as a ray of hope for reform.

Once considered an implacable Stalinist, Raul Castro is said to have become more pragmatic after the Soviet collapse pushed Cuba to the brink of economic chaos.

He was defense minister at the time and the military became the first Cuban institution since the revolution to introduce capitalist business practices, going on to manage large swaths of the economy.

Tourists take selfies in front of the Capitol in Havana, Cuba, April 9, 2018. REUTERS/Alexandre Meneghini

As president, Castro has trimmed the bloated state payroll, leased out fallow land and expanded the private sector.

The number of self-employed Cubans has more than tripled to around 580,000, out of a total population of more than 11 million. Some of those have started earning - and spending - conspicuously more than everyone else.

Castro also oversaw the creation of a Chinese-style industrial park and a new law offering foreign investors tax cuts. To advance Cuba's re-integration into global markets, he renegotiated its external debt, getting the Paris Club to forgive 76 percent of its $11.1 billion in official obligations.

The detente with long-time foe the United States, reached with former U.S. President Barack Obama and announced in 2014 sparked global investor interest in Cuba.

A surge in tourism boosted the private sector and remittances served as start-up capital for many Cubans forming small businesses, but that meant many of the emerging opportunities were for people in the right place, or with relatives abroad.

RURAL CHANGE AT AN OX-PACE

In rural areas, though, farmers remain dependent on the state to allocate scarce equipment like tractors. Agricultural output stagnated over the past decade, according to the Brookings Institution think tank, and Cuba still imports 60 to 70 percent of the food it consumes.

"What we need here is a decent irrigation system," said farmer Mario Cruzata, 45, who uses ox-drawn plows to work his fields of yucca, eggplant and lettuce in southeastern Santiago de Cuba province.

And while the reforms have had more success at stimulating the services sector, there are still lids on private business such as the lack of a wholesale market and the right to import or export.

"I wish they would let people grow," said Yusbely Andino, 40, who makes a living fixing computers in the eastern province of Holguin. He has to buy old PCs for spare parts.

Moreover Cuba has authorized self-employment only in certain, highly specific categories, and it stopped issuing new licenses last year for certain popular activities like running restaurants and bed and breakfasts.

In fact, a draft of new regulations seen by Reuters proposes curtailing the private sector. One measure would limit licenses to one business activity per person, hurting entrepreneurs like Condis.

The economy overall remains distorted by a byzantine dual currency system with multiple exchange rates that Castro had promised to unify.

Some analysts say his focus on generational change and attempt to foster more critical debate within the Communist Party may yield longer-term dividends. He has proposed age and term limits for leaders and deployed a more collective leadership style, after decades of dominance by a single figure, Fidel Castro.

If Raul Castro's successor continues on his reform path, he could still be remembered as Cuba’s version of Deng Xiaoping, who transformed China from failed central planning to market socialism, said William Leogrande, a professor of government at American University.

"But if the updating fails, Raul will be remembered as just one more reform communist who couldn’t force the system to change despite his best efforts."

(Reporting by Sarah Marsh and Nelson Acosta; Editing by Frances Kerry)

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