HomeFT SelectRaúl Castro’s reform drive grinds to a halt

Raúl Castro’s reform drive grinds to a halt

Cuban president Raúl Castro is preparing to step down next year, Venezuela has cut millions of dollars in aid and Donald Trump’s election has cast a shadow over the nascent US-Cuba detente. Unnerved by the changes, Havana’s domestic reform drive has ground to a halt as the Communist party battens down the hatches.

Marino Murillo, the senior official leading Cuba’s reforms, has not been heard in public for almost a year. His absence has mystified Cubans and dented the high expectations Mr Castro’s liberalising drive once fomented, both at home and abroad.

“There are three reasons for the pause in the reforms — and I say pause, because inevitably reforms will continue at some point,” says Richard Feinberg, a Cuba scholar at the Brookings Institution in Washington. “Senior leadership is focused on managing austerity and preparing the succession as Raúl steps down . . . They are also managing a backlash over emerging inequality, low state wages and inflation.”

Mr Castro made reform the hallmark of his presidency when he formally took over from his elder brother Fidel Castro in 2008. He sought to decentralise the economy and boost productivity by allowing self-employment, slashing state bureaucracy, welcoming foreign investment and unifying Cuba’s dual currency system.

Mr Murillo, who became known as Cuba’s “economic reform tsar” when he was appointed minister of planning and the economy in 2009, was the technocrat in charge of implementing the changes. In some ways, he and Mr Castro made up a tag team that repeatedly cajoled Cuba’s stolid bureaucracy to reform.

While Mr Castro’s revolutionary stature provided moral cover, Mr Murillo gave lengthy PowerPoint presentations to party and government members that explained the changes. His talks, usually an hour long, were later broadcast on state television, sometimes more than once.

By contrast, Mr Murillo has not uttered a word in public since last July. At the same time, price controls have been slapped on burgeoning private sector businesses in agriculture and transport.

Marino Murillo , chairman of Cuba’s economic policy commission © AFP

The reversal comes as Mr Castro, 85, prepares to carry out his pledge to step down as president on February 24 next year. If he does so, 2018 will be the first time in six decades that Cuba has not been ruled by a Castro — although he is expected to remain head of the Communist party and armed forces. Fidel Castro died last November.

“In a way, the reforms have not gone far enough but at the same time too far,” says Bert Hoffman, a Cuba expert at the German Institute of Global and Area Studies. “Not far enough to . . . lift up growth [but] too far in that social inequalities are widening, the cost of living is rising and the Communist party fears the discontent this produces.”

These tensions became clear at a party congress in April 2016, which admitted that reforms had failed to meet popular expectations in terms of economic growth, supplies of goods and higher wages. At the same time, a debate on state television showed party delegates fuming over a private onion farmer who had earned enough money to buy a car and fix his house.

In many ways, Cuba has been here before. Reformist officials have often had their wings clipped after liberalising drives were stifled by hardliners who feared loss of control. One famous case is that of Carlos Lage, Fidel Castro’s “economic fixer” in the 1990s, who was unceremoniously dismissed in 2009 and now works as a paediatrician.

One difference today is that Mr Murillo still seems to enjoy official blessing. He was promoted to the powerful politburo in 2011 and remains chairman of the government’s economic policy commission.

“All this has been a severe blow to Murillo, although the main problem is the deterioration of the Venezuelan economy,” he says.

Caracas has long supplied Havana with 100,000 barrels per day of subsidised oil, but Venezuela’s economic and political crises have forced it to cut shipments by as much as 40 per cent. Largely as a result, Cuba’s economy shrank by almost 1 per cent in 2016, entering its first recession since the collapse of the Soviet Union.

In another setback for reformists, Mr Trump has promised to re-examine the detente begun under his predecessor Barack Obama — although the US president has taken no concrete steps since his election last November. His state department has yet to appoint an official in charge of Latin American affairs.

Some US businesses have scaled back their initial euphoria about opportunities in Cuba. Although 615,000 Cuban-Americans and US tourists visited the country last year — of a total 4m foreign visitors — Frontier Airlines and Silver Airways cancelled scheduled US flights on March 13, citing lack of demand and market saturation. American Airlines and JetBlue have also reduced their schedules.

“They [the Cubans] have managed quite well to dampen reform expectations,” says a senior European diplomat, referring to Mr Murillo’s muting.

However, the corollary of prioritising political stability over economic reforms, at least for now, is that complaints about government inertia, low wages, high prices, shortages and deteriorating services have become routine.

One clear sign of that came in a rare private survey carried out in Cuba late last year by the independent NORC research group at the University of Chicago, in which 46 per cent described the country’s economy as “poor or very poor”. A similar number said they expected it to stay the same while only three in 10 expected it to improve. Remarkably, half of polled Cubans said they wanted to leave the country.

Via FT

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