TOPICS > Economy

Cubans Grapple With Challenges, Promises of Economic Change

December 20, 2010 at 12:00 AM EDT
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Ray Suarez and the NewsHour Global Health Unit kick off a three-part series from Cuba with a report from Havana on how the country's economy is adapting to the gradual economic reforms of President Raul Castro -- while maintaining a tradition of socialism.
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GWEN IFILL: Now to Cuba and its changing economy.

This weekend, President Raul Castro told Parliament that carrying out his reform agenda is essential, both for economic growth and to preserve socialism.

In the first of three reports for our Global Health Unit, Ray Suarez, just back from Cuba, reports on how that’s working.

RAY SUAREZ: Is Cuba ready for big economic change? Like everything about this country, it depends on who you ask and where you ask.

In Havana, Rafael Hernandez is a political scientist and writer.

RAFAEL HERNANDEZ, political scientist: The leadership is realizing that this is a key strategic moment. We cannot postpone these changes. And I think that the government is very clear and knowledgeable about that.

RAY SUAREZ: In Miami, Cuban-born Carlos Saladrigas is co-chair of the Cuba Study Group.

CARLOS SALADRIGAS, co-chair, Cuba Study Group: I think the Cuban economy is in a freefall. And unless the reforms that are made are significant enough, deep enough, structural enough, they’re not going to work. We have seen them in the — we saw them in the Soviet Union. We saw them in many other places. When you try to tinker, tinkering doesn’t work.

RAY SUAREZ: Whatever numbers you use, there’s wide agreement, all the way from Cuban President Raul Castro to a tiny locksmith shop in Old Havana, that times are tough, and with eight out of 10 people working for the government, change is needed.

But is change coming? Cubans have heard it before. And, in previous decades, the government opened the door a crack to the development of a small business sector, only to pull back the reforms by refusing to issue more new licenses.

A tiny private sector remains from the ’90s. Now there’s a national debate about making that sector bigger. A rare Communist Party Congress is set for the spring to discuss change. Self-employment looms large in Cuba’s future. The government has already announced the coming firings of half-a-million workers. To start the transition, over 100 different occupations will be opened for self-employment.

Jose Lagar works for himself, but complains the rent he pays for his tiny shop is too high, about $45 U.S. a month, while he charges less than a $1 for a haircut. He’d like to buy the space outright, but fears the government would set the price too high.

JOSE LAGAR, barber (through translator): Yes, I’m really hoping that, during the Congress, they will talk about changing this policy, because it’s really abusive. If they keep on raising the rent, I will have to go home. There is no way I can hold on, paying this much money.

RAY SUAREZ: I asked if he’d say the same if Raul Castro were in his chair. Lagar said he would, and he would charge the president more for the haircut to cover the rising rent.

At 52, Andres Alfredo Sans is as old as the revolution. He pays a little over $8 a month to the Cuban government for the 40 or so square feet where he spends most of his day. The self-employed locksmith says people are still getting used to the idea of shrinking government employment, but they will adjust and be better off.

ANDRES ALFREDO SANS, locksmith (through translator): It’s just something has to happen. It will take time for society to get used to it, but I think that in a few years we will win in terms of quality, offering Cubans better work and better services from self-employed people.

RAY SUAREZ: Thomas Sinclair used to be a brigade leader at a sugar factory. Now he sells books from a stall in the historic district.

THOMAS SINCLAIR, bookseller (through translator): Being self-employed doesn’t guarantee a steady amount of money, but, yes, I make more money here than when I worked for the government.

RAY SUAREZ: After the Soviet Union collapsed and heavy subsidies to the sugar industry disappeared, tourism climbed the charts to become a leading source of income for Cuba. It’s easy to see why. The country is chockful of historic plazas, is world-famous for its music, and offers the visitor gorgeous scenery and a unique cuisine.

The tourist economy runs on hard currency. Workers in the hospitality industry have hard or convertible pesos to spend. So do Cubans with relatives in the U.S. and Europe who send remittances. Other Cubans have to make due in the much more restricted world of the national peso. Costs are low, but so are wages. A ticket to a baseball game costs the equivalent of a nickel, but people only make 20 or so dollars a month in Cuban pesos.

So, is Cuba impoverished? The U.S. government statistics put Cuba somewhere in the middle of the deck in annual income per person, at $4,900, a little behind Colombia and slightly ahead of the nearby Dominican Republic. Food and other commodities are rationed. Staples like cooking oil, rice and meat are in short supply at controlled prices and unaffordable in the hard currency stores.

John Parke Wright says, it doesn’t have to be that way.

JOHN PARKE WRIGHT, rancher: We had three of the best ranches in the world here in Cuba in the eastern part of the island.

RAY SUAREZ: Wright’s family owned some of the biggest ranches in Cuba for more than a century. He travels from Florida to Cuba under special agricultural licenses. He’s shipped 1,000 head of cattle here and wishes he could send a lot more, he says, to benefit both countries.

JOHN PARKE WRIGHT: We’d want to come right back in business and raise cattle here. So, we would take an investment, professional cattlemen from Florida and Texas, and just kind of getting back on the range here.

And there’s no beef in the country to speak of. So, we’re talking about putting meat on the table. And, plus, they have some of the best cattlemen in the country. Cowboys here are good people.

RAY SUAREZ: Wright laments the decline of the Cuban cattle and dairy industries, but says trade and American expertise can make the island more self-sufficient and better fed.

For Wright, step one is ending the trade sanctions, what Americans call the embargo and Cubans know as the blockade. Saladrigas says Cuban-American support for the embargo has fallen as it’s gotten easier to visit family on the island.

He came to the U.S. as a 12-year-old refugee, right after the revolution. He’s afraid that, if the promised reforms do move ahead, sanctions meant to hurt the government could end up hurting the Cuban people even more.

CARLOS SALADRIGAS: There are two provisions in the U.S. embargo that could be deadly to a transition in Cuban-economy. One is the prohibition on credits, and the other one is the prohibition on participating in international monetary organizations, like the IMF and the World Bank and the Inter-American Development Bank and so forth.

So, it’s going to be very difficult for a Cuban economy to implement market reforms if they are not permitted to participate in these international financial organizations.

RAY SUAREZ: Oscar Espinosa Chepe was imprisoned by the communist regime. He was only freed when his health declined. He’s experienced the heights and depths of revolutionary Cuba. In a tiny apartment, he shows me his soap allowance for the month, his ration card. As a representative of the Cuban government in Eastern Europe, he watched communism collapse in other countries and lost faith in the system’s future.

OSCAR ESPINOSA CHEPE, economist (through translator): It’s a process. You think. You analyze what’s going on in your country. And then you see the mistakes or the wrongdoings. For example, right now, we live in a moment of complete frustration, and most of the Cuban people are feeling that way. The revolution is going backwards. It’s now taken the country back to a point that is worse than it was before 1959. Our dreams have become a nightmare.

RAY SUAREZ: Rafael Hernandez is much more optimistic. We took a quick tour of Havana’s historic core, powered by a former accountant who now makes more money, as much as $8 to $10 a day, peddling Cubans around. Hernandez says his country is moving away from state control, but not toward capitalism.

RAFAEL HERNANDEZ: We are investing in cooperatives, more than in a state or jobs private sector. The state has to be downsized. The state is too large, too heavy. And the private sector has to be expanded. But what is interesting is what is in the middle, which is the cooperative sector. And that is a socialist idea.

RAY SUAREZ: But here’s the risky part. Cubans are proud of their accomplishments in education and health care, yet well aware of the material comfort enjoyed by common people in other countries.

Katrin Hansing is a college professor currently researching and writing about Cuban social issues. She says Cubans are caught between hope and fear about what is coming next.

KATRIN HANSING, City University of New York: Remember, this is a country that has basically given its citizens a cradle-to-grave security blanket, right? Whether it’s, you know, been good or bad is a different story.

But people have had the basics from, you know, education, to work, to health care, to the bare minimum of food, a roof over their head, taken care of. And, yes, the quality of all of this has been going down severely in last 20 years, since the economic crisis. But now, you know, with all of these new announcements of potential unemployment, and that you have to kind of fend for yourself, and, you know, that is scary to people, because, psychologically, this is something completely new.

RAY SUAREZ: Cuba is an island in more ways than one. It’s tried to remain isolated from the jaw-dropping changes in the rest of the world during the last 50 years. While the Cuban government has made a virtue out of sticking with its old ideas, 11 million Cubans are wondering how to change, how to let the world come in without risking everything.

GWEN IFILL: Tomorrow, Ray looks at the crucial role preventive medicine plays in the Cuban health care system.