Cuban Economists Outline a Pathway to Overcome the Economic Crisis

On Monday, five prominent independent Cuban economists released "Cuba Transformation," a comprehensive 120-page blueprint aimed at dismantling the island's current economic system and replacing it with a market-oriented social economy grounded in a democratic rule of law.

This detailed document, seen as a roadmap to navigate Cuba out of its most severe economic turmoil in recent times, argues that the primary barrier to recovery is not the U.S. embargo but rather the exhaustion of the economic system established by the regime.

Unveiled in its entirety, the initiative was first announced on June 22 and crafted by Mauricio de Miranda Parrondo, Pedro Monreal González, Omar Everleny Pérez Villanueva, Ricardo Torres Pérez, and Pavel Vidal Alejandro. It was backed by the Cuba Study Group and the Observatory on the Cuban Economy.

Assessing the Economic Decline

According to the authors, Cuba's economy is in a state of regression. The report highlights that by 2025, the real Gross Domestic Product (GDP) remained lower than in 2014 and was over 15% below the level of 2018. Investment accounted for merely 7% of GDP, starkly lagging behind the Latin American average of approximately 19%, while external debt soared to around $29.3 billion, exceeding 130% of GDP.

The document criticizes the Cuban economic model for losing its capacity to foster growth years ago and points out that successive governments have opted for external alliances over necessary internal reforms.

"Foreign policy acted as a substitute for economic policy," the document asserts, alluding to the dependency on the Soviet Union first, and later, Venezuela.

Rejecting Chinese and Vietnamese Models

The proposal explicitly rejects following the paths of China or Vietnam. Instead, it advocates for a transition to a social market economy where economic reforms are accompanied by political and institutional changes ensuring a rule of law.

The authors argue that without these transformations, reforms remain susceptible to setbacks.

Phases of the Plan

The plan is structured in three phases. The initial phase, expected to last about three years, focuses on stabilizing the economy through urgent measures addressing the energy crisis, food production, inflation, the foreign exchange market, and the expansion of the private sector. Subsequent phases envision productive recovery, institutional reform, and the consolidation of a new development model.

Restructuring GAESA and CUPET

Among the significant proposals is the restructuring of the military conglomerate GAESA. The document suggests transferring its companies to civilian institutions, integrating its revenues into the state budget, and transferring the international reserves managed by the group to the Central Bank.

It also calls for dismantling the monopoly of CUPET in the energy sector, establishing an agricultural land market with usufruct contracts up to 50 years and a 402-hectare limit per producer, and seeking Cuba's re-entry into the International Monetary Fund (IMF), World Bank, and Inter-American Development Bank (IDB).

Addressing Confiscated Properties

Another sensitive issue tackled by the economists is the properties confiscated after 1959. They propose creating a National Claims Commission to compensate former owners through bonds or other mechanisms, without evicting those who legally acquired the properties later.

Corruption Concerns

Economist Pedro Monreal highlighted on the social media platform X that the proposal includes six specific measures to prevent corruption, contrasting with the 176 actions recently approved by the regime's National Assembly, which merely reference "control and inspection" in general terms.

Monreal cautioned that a rapid privatization of state assets, without solid institutions or legal guarantees, might enable those close to power to seize these resources.

The authors clarify that "Cuba Transformation" is not intended as a government program nor directed at Miguel Díaz-Canel's administration. It is presented as a basis for dialogue on how to rebuild Cuba's economy after decades of stagnation.

"This proposal does not claim to be an infallible plan or offer magical solutions. Instead, it presents a coherent, realistic, and flexible analytical framework," the document concludes.

However, it acknowledges the main challenges for its implementation: the lack of necessary political conditions, the need for international financing from the outset, and the potential for those currently in power to obstruct any fundamental transformation.