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State Resistance to
Globalisation in Cuba
Antonio Carmona Bez

Pluto

Press

LONDON STERLING, VIRGINIA

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First published 2004 by


Pluto Press
345 Archway Road, London N6 5AA
and 22883 Quicksilver Drive, Sterling, VA 201662012, USA
www.plutobooks.com
Copyright Antonio Carmona Bez 2004
The right of Antonio Carmona Bez to be identified as the
author of this work has been asserted by him in accordance
with the Copyright, Designs and Patents Act 1988.
British Library Cataloguing in Publication Data
A catalogue record for this book is available from the British Library
ISBN
ISBN

0 7453 2146 1 hardback


0 7453 2145 3 paperback

Library of Congress Cataloging in Publication Data applied for


Carmona Bez, Antonio, 1972
State resistance to globalisation in Cuba / Antonio Carmona Bez.
p. cm.
Includes bibliographical references (p. ).
ISBN 0745321461 (hbk) ISBN 0745321453 (pbk)
1. SocialismCuba. 2. CubaEconomic policy. 3. CubaForeign
relations1959 4. CubaPolitics and government1959 5. Cuba
Economic conditions19591990. 6. CubaEconomic conditions1990
7. Anti-globalization movementCuba. 8. Globalization.
I. Title.
HX158.5.C313 2004
337.7291dc22
2003025964

10

Designed and produced for Pluto Press by


Chase Publishing Services, Fortescue, Sidmouth, EX10 9QG, England
Typeset from disk by Stanford DTP Services, Northampton, England
Printed and bound in the European Union by
Antony Rowe Ltd, Chippenham and Eastbourne, England

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Contents
Preface
1. Introduction
Cuba as an Exception
Neo-liberal Globalisation, Socialism and Anti-Imperialist
State Resistance
Implications for the State
Social Consequences of the Global Trends
Socialism in a Sea of Capitalism
Marxist Socialism
State Capitalism
Implications for Studying Cuba
The Party/State Apparatus
2. Conceptualising Cuban Socialism: The Pillars of the
Revolution
The Causes of a Tardy Independence
Roots of Nation-state Formation
US Intervention and Neo-colonialism
The First Labour Movement
A Workers Revolutionary Attempt
An Alternative to the Workers Movement
Cuba Socialista
Economic Integration into the Soviet Bloc
Unity, Continuity, State Supremacy and Popular
Participation
3. The Causes and Impact of Cubas Crisis in the 1990s
The Background to the Crisis
The Effects of Integration
The Campaign to Rectify Errors and Negative Tendencies
The Demise of the CMEA
Cuba and the Fall of the Soviet Union
The US Economic Embargo
The States Response and the Impact upon Cubas
Political System
Foreign Direct Investment
Signs of Slow Recovery

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1
2
5
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14
16
17
21
24
34
41
42
43
48
50
52
60
69
79
81
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90
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109
117
133
139

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State Resistance to Globalisation in Cuba

4. Structural Adjustments and Social Forces in Cuba:


How Cubas Economic Model was Shaped by
Global Trends
Demonstrated Economic Growth
Causes for Economic Growth
Social Growth
World Bank Development Reports and Other
International Sources
Cubas Most Radical Change Sistema de Perfeccionamiento
Empresarial
Cuentapropismo: The New Self-employment in Cuba
New Structures
New Structures and Social Bloc Formations
Structural Changes and the Revolutions Identity

164
184
195
206
216

5. Conclusions and Considerations


Shaky Pillars?
Possible Future Scenarios
A Disintegration of the Party/State Apparatus?
Maintaining Cuban Socialism

223
226
231
233
235

Bibliography
Index

240
257

152
153
155
158
162

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Preface
This book examines Cubas unique position in the current global
political economy, the alternatives that this country stands for against
the backdrop of capitalism and the possibilities and limitations of
state resistance to neo-liberal globalisation. It is essentially the product
of my critical academic preparation in international relations during
the first decade of the post-Cold War era, when the world appeared
to be moving into a singular neo-liberal trajectory. My encounters
with scholars in the field of international political economy, both in
Europe and Cuba as well as back home in Puerto Rico, heightened
my curiosity in exceptions and counter-norm tendencies at the nationstate level. Those who most inspired me to investigate the case of
Cuba during the process of political and economic restructuring in
the 1990s, were the friends I met on the island while conducting
postgraduate research. Mostly workers and artists, but also students
and scholars of the social sciences, their post-Cold War experience
shaped my thinking about the search for alternative strategies in
resistance to global changes. Although these compaeros were busy
surviving the hardships that the so-called Special Period (199198)
brought into their daily lives, they somehow found the time to share
with me their Weltanschauung.
More recently, during the past couple of years, a number of events
have brought international attention to the Republic of Cuba. First
was the appearance of President Fidel Castro at the United Nations
First World Conference Against Racism in Durban, South Africa. In
the midst of diplomats and representatives from non-governmental
organisations, Fidel Castro was one of the few state leaders who
bothered attending. He made a strong intervention in support of the
initiative to bring all nations together in the effort of recognising the
need for a declaration against racism and all forms of discrimination
rooted in slavery and colonialism. At the same time, he identified
the process of neo-liberal globalisation as the perpetuator of modernday poverty and inequality. Second, on 11 September 2001, when
two hijacked planes crashed into the World Trade Center and one
into the Pentagon, Cuba offered humanitarian aid and medical
expertise to the victims of New York. Despite this kind gesture,
President George Bush, in launching his new war against terrorism,
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placed Cuba on the list of states that possibly harbour terrorists. Last,
in October 2001, Hurricane Michelle passed through Havana with
floods that resulted in major damage to crops and the wreckage of
many homes. After the tropical storms had passed, the United States
offered humanitarian aid to their enemy state on the condition that
none of the aid would be used or dispersed by the Cuban government.
The Cuban Parliament responded to the US Congress, stating that
the country did not need the aid or medical assistance. Instead, Cuba
demanded the right to purchase medicines and food products that
are sold by US monopolies and an end to the 42-year-old economic
embargo. On Friday 14 November 2001, a ship containing US$30
million in corn and frozen chicken left Louisiana for the ports of
Havana, Cuba for purchase. This was the first direct shipment of US
merchandise to the island in over 40 years.
The Cuban governments responses to all four of these international events reveal some of its most essential characteristics: its
opposition to neo-liberal globalisation and therefore its steadfast
belief in alternatives, national independence and a sense of dignity
in the face of isolation. It is often the case that the Cuban government
stands alone in opposition to current global structures and
uncontested financial, political and economic policies.
Throughout the world today, millions of individuals and thousands
of groups also concerned with bringing down neo-liberal globalisation have been mobilised to challenge the same structures, the Empire
that burdens the people of Cuba. This global justice movement is
growing, as a new generation of activists wearing Che Guevara
T-shirts is taking to the streets from Seattle to Genoa, from Jakarta
to Porto Alegre. But the question is: What options do revolutionaries and anti-capitalists have when they are in government? The
following chapters do not pretend to use Cuba as a model for a postneo-liberal order. Rather, this book intends to discover the possibilities
and limitations of state resistance to neo-liberal globalisation and
emphasise the continuing need for alternatives.

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1
Introduction
Throughout the past decade, the idea of establishing or maintaining
what was understood as revolutionary or state socialism has been
somewhat lost to historical discourse. The collapse of the socialist
bloc in Eastern Europe, the demise of its international trading system
(the Council of Mutual Economic Assistance) and the disintegration
of the central state socialist stronghold (the USSR), all played an
essential role in reducing communist and socialist movements to
ghostly levels of existence. The economic, political and ideological
breakdown that occurred towards the end of the 1980s and the start
of the 1990s affected not only those living in Eastern Europe during
the popular uprisings against state leadership. The fall of political
and economic structures dominated by communist parties also created
a crisis of theory; left-wing radicals and broader movements searching
for alternatives to Western capitalism became paralysed throughout
the entire globe. Guerrilla movements, communist and socialist
parties of the West and non-industrialised, post-colonial countries
of the Southern Hemisphere all formerly aligned on a real, international alternative force in the face of capitalist expansion were
thrown into disarray. In Western Europe, political parties of the social
democratic tradition abandoned their allegiance to the interests of
the working class and clearly began a process of recanting their
demands for increasing social spending. Meanwhile, those forces
historically antagonistic towards socialism and national liberation
movements and in favour of free-market capitalism, stepped up their
efforts to consolidate a global system based on free trade favourable
only to a small minority of transnational entrepreneurs and political
leaders that protected their expansionist interests. Out of this
condition arose what would become known as the process of neoliberal globalisation.
In this era, governments in most countries experience a shift of
power in their traditional spheres of influence. The essential result
is a move from public, national dominance of the means of production
and social activity towards the hegemony of multinational
corporations supported by an elite community of technologically
1

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advanced countries and global financial institutions that adhere to


the principles set out by the aforementioned conservative forces.
Among the most important of these principles have been the
privatisation of national enterprises and a reduction by the state in
social spending. Although in recent years there has been demonstrated
grassroots resistance to the post-Cold War new world order, few
state leaders have actually contested the status quo and in many cases
they have found themselves forced to accept a world without
alternatives. Alongside this reality there is the idea that develops into
a rule: that those resistant to the current state of affairs and longing
for socialism or any other alternative, will fail, dissolve or pass into
history. But for every rule there is an exception.
CUBA AS AN EXCEPTION
When it comes to conforming to the status quo, employing
fashionable trends in neo-liberal globalisation, structural adjustment
programmes, market orthodoxy, transitional or post-Socialist
regimes, Cuba and its state leaders are often considered to be the
exception to the rule. Despite the countless efforts of extra-national
forces to destabilise the 43-year-old regime headed by Fidel Castro
and the Communist Party of Cuba (PCC), the Cuban leadership
remains firm in adhering to the principles that distinguish it from
those that have accepted the structures currently dominating the
global political economy. More surprisingly, while actually contradicting neo-liberal theories and practices, Cuban state enterprises
have been able to experience economic growth and acquire new
technologies that are used to generate capital. At the same time, the
institution of the Communist Party, as the motor of so-called socialist
society in Cuba, has ensured that even during the worst years of
economic turmoil, investment in social welfare continued to grow.
Recognising that the process of neo-liberal globalisation replaces
the influence of domestic political and economic structures with
trends and ideas fostered by transnational corporations, financial
institutions and the will of economically advanced countries, Cuban
government propaganda often focuses on the imperialist character
of the new world order. In this light, in Castros lengthy speeches and
in PCC documents, Cuban socialism is depicted as being more than
just an option of political and economic structure within one country.
Today, the Revolution as the state is often referred to in Cuba is
also, and essentially, a counter-imperialist structure that defends the

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Introduction

sovereignty and independence of the Cuban government and


maintains public ownership of most of the means of production and
socialeconomic activity. Along with this anti-imperialist character,
Cuban political discourse is often centred on making a critical analysis
of the leading role played by the US government in the era of neoliberal globalisation. This can be explained firstly by pointing out
that since the socialist bloc ceased to exist, the United States has gone
unchallenged as the worlds military, economic and political statehegemonic power; and secondly, because the United States only 90
miles away from Cuban shores and possessing a military base on
Cuban national territory continues to impose a very unpopular
economic trade embargo against the Republic of Cuba. After the Soviet
Union ceased to exist, this embargo was only enhanced in 1992 and
1996 to punish other countries and non-American companies for
conducting trade with Cuban state corporations.
For a period of five years, between 1990 and 1995, many scholars
who specialised in Cuban studies dedicated the bulk of their work to
contemplating a post-socialist Cuban society based on the deconstruction of revolutionary politics or the imminent death of the
commander-in-chief of the Revolution, Fidel Castro. Evidently these
writers based their predictions on the idea that socialist Cuba was
dependent on the socialist bloc in Europe and particularly on Russias
geopolitical interests. Dependent, in this context, meant economically,
militarily and ideologically. To their surprise and that of other
observers, Fidel Castro was not overthrown, nor was the hegemony
of the PCC over Cuban society ever seriously challenged. To the
dismay of counter-revolutionaries, although Fidel Castro must
inevitably die sooner or later, opinion studies and political analysis
indicate that he will most probably pass away as a popular historical
hero for the people of his country and much of the world (August,
1999; Kapcia, 2000).
Other studies that considered the eventual death of socialism in
Cuba concentrated on the economic hardships that the Cuban people
have had to endure after the country lost over 70 per cent of its
purchasing power due to the fall of the subsidised trading system
within the Council for Mutual Economic Assistance (CMEA). Since
this breakdown did not result in the expected total economic collapse,
other analysts, between 1995 and 2000, focused upon the new
measures that were implemented by Cuban state leaders to help
the economy recuperate and to adjust to the new global economic
conditions. It was thought that just as the so-called socialist states

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State Resistance to Globalisation in Cuba

in Eastern Europe had implemented economic reforms that led to a


disintegration of productive forces within each national case study,
Cuba too would experience a similar process of deterioration in state
control of economic and production relations. These tendencies to
link the experience of two distinct cases (one being the Soviet Union
and Eastern Europe, the other being Cuba) into a uniform, historical
trajectory were based on economic theories developed by Eastern
European economists and North American scholars. Those that held
these theories were convinced that Fidel Castro and the PCC were
on their way out, forced by the natural economic processes that
take place after socialist systems begin to adjust their economies to
new global market structures (Oppenheimer, 1992).
All social formations change dialectically. A prolonged disintegration of the social, economic and political forces that currently lead
the Cuban Revolution may very well happen. But for now, neither
political revolt nor economic disintegration has caused a change in
the anti-imperialist and socialist Cuban leadership. Nevertheless, the
leaderships success in surviving global pressures to privatise state
corporations did not happen without real structural changes in Cuban
society and the production system. Although Fidel Castro and the
PCC leadership contend that the structural changes experienced in
Cubas political economy during the last decade have nothing to do
with neo-liberalism, scant attention has been given to the striking
similarities between the outcome of market-like reforms on the island
and the typical trends and modes of production found elsewhere.
The central question that this book aims to address is two-fold:
Firstly, why, after such a radical change in the global political economy
and the triumph of the process of neo-liberal globalisation among states,
does the Cuban Communist Party/state apparatus continue to exist?
Secondly, to what extent is the process of social, political and productive
restructuring in Cuba shaped by global trends and pressures?
In order to accomplish the tasks that the central question entails,
it is necessary to outline some basic thoughts generated by research.
At the top of the priority list, there is the need to lay out the structures
and ideas dominating the current global political economy. This
entails delineating the parameters and implications that define the
process of neo-liberal globalisation and the most important characteristics or trends in national economies. Secondly, there is the need
to define the project of creating or maintaining the revolutionary
dream of what has been called by some Marxists state socialism and
evaluate its existence in a world that is hostile to it. The uncontested

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Communist Party dominance of the state in Cuba, the discourse that


is often deemed as Marxist and the combination of nationalist or
anti-imperialist tendencies is what motivates analysts to marvel at
the peculiarity of Cuban socialism today.
NEO-LIBERAL GLOBALISATION, SOCIALISM
AND ANTI-IMPERIALIST STATE RESISTANCE
No estamos en contra de la globalizacin, no se puede estar, es una
ley de historia; estamos contra la globalizacin neoliberal, la quieren
imponer al mundo y que ser insostenible, se derrumbar, y hay
que ayudar a derrumbarla, y para ayudar hace falta conciencia que
se ha llevado a cabo de la Revolucin. (Fidel Castro, 20 July 1998)
There appears to be a number of truths or ideas that dominate
contemporary political and economic thinking. One of them is that
socialism is dead. This is often sustained by the experience of the
demise of the Soviet bloc in Eastern Europe and the collapse of other
so-called socialist states during the early 1990s. The other truth is
that neo-liberalism, the tendency of states to reduce their intervention
in economic, financial and social planning, is the uncontested and
most widely accepted and practised economic ideology for bringing
the world towards economic prosperity. Finally, a synthesis of the
last two, that because Western capitalism rose triumphant over state
socialism, there are no alternatives to the process of neo-liberal globalisation, and thus it is inevitable. While these truths or ideas have
been widely challenged by a variety of global social movements
stemming from grassroots organisations in civil society and nonmainstream political activists, few states or state leaders have
contested the hegemony of neo-liberal ideology in the current phase
of globalisation.1 Here Cuba is at the crux of the matter.
1. Throughout the 1990s, grassroots movements have evolved into greater
struggles for democratic rights of indigenous peoples, economic equality
through fair trade, peace, the elimination of poverty, concern for the
environment and alternatives to capitalist development. Though pluralistic
in the issues they tackle, year by year, these tendencies have drawn closer
together and appear to be forming one global movement for socio-economic
justice, or, in short, the global justice movement. Some scholaractivists
have dedicated the bulk of their work to analysing and supporting these
movements, among them Susan George, Alex Callinicos, Mike Gonzalez,
Ronnie Hall and Barry Coates. In a publication entitled Anti-Capitalism:

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Neo-liberalism as a hegemonic ideology


According to the political economist Arthur MacEwan: The essence
of the neo-liberal position on international commerce is the
proposition that economic growth will be most rapid when the
movement of goods, services and capital is unimpeded by government
regulations (MacEwan, 1999:31). Its name comes from the experience
of nineteenth-century liberalism, which was thought to have brought
wealth and power to English and other northern European societies,
and the suffix neo, meaning new or revised by contemporary
condition. To elaborate, neo-liberalism is a political and economic
ideology that represents the interests of market leaders (i.e., big
business and finance) in their tendency to expand globally.
Governmental rules and practices that prevent or hinder expanding
markets are thought to be the enemy.
The term neo-liberalism can be misleading in that the suffix neo
is often interpreted as meaning something new. However, the only
thing new about this ideology and political, economic practice is the
dominance it seems to have had throughout the last decade. Some
point to the ReaganThatcher era (early 1980s) as the beginning of
neo-liberalism and the fall of the Berlin Wall (1989) as the start of
its global consolidation among states and international financial
institutions. The truth is that, in the words of Susan George: The
victory of neo-liberalism is the result of 50 years of intellectual work,
now widely reflected in the media, politics, and the programmes of
international organisations (George, 1997). George points to the
A Guide to the Movement (2001), these writers together with other analysts
argue for an alternative to neo-liberal globalisation. They also highlight
those areas where the global movements have demonstrated their
willingness to form common agendas. References are often made to Seattle,
Washington 1999 where 70,000 demonstrators took to the streets to protest
against the World Trade Organisation (WTO) and Genoa, Italy in July
2001, when 300,000 people demonstrated against the G8 Summit. In
recent times, the media have erroneously tended to classify the struggles
of those that challenge the present world order as belonging to the antiglobalist movement. Contrarily, analysts like those mentioned above have
emphasised that those who manifest their disenchantment with current
global structures are not against globalisation. Rather, they are against
neo-liberal or corporate-led globalisation and are attempting to construct
a globalisation of justice from below. Interestingly enough, Fidel Castro
has been the only state leader worldwide to openly support this movement
of socio-economic justice and express his solidarity with those that struggle
for an alternative form of globalisation (Castro, 1999a).

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Introduction

establishment of think-tanks in the United States and the United


Kingdom during the 1940s, when liberalism was a marginal ideology
in politics. Through the institutions, wealthy conservatives poured
millions of dollars into research and materials for the development
of anti-New Deal plans geared towards political leaders of the right.
In turn, these politicians and capitalists formed an alliance to
dismantle the transformation that Polanyi wrote about (Polanyi,
1944). The intellectual roots of neo-liberal economics can be found
during the same period with individuals like Richard Weaver and
Friedrich von Hayek, who both studied economy and business at the
University of Chicago and started a trend of producing literature that
discredited the transformation from free-market capitalism to statecontrolled economy (George, 1997). The production of literature and
ideology that fortified conservative forces eventually laid the basis
for the conservative revolution against Keynesian economics. Today,
neo-liberal ideology, as a doctrine, is reflected in the practices and
formulas that are often promoted by international financial
institutions when dealing with the question of development in the
countries of the South (George and Sabelli, 1994). The eventual global
acceptance of this ideology by state leaders and international organisations is what makes neo-liberalism a hegemonic ideology in the
process of globalisation.
Hegemony, coming from the Greek word hegemon meaning leader,
is a concept that was developed early last century by the Italian
Marxist Antonio Gramsci. While most Marxists during the 1920s
explained global as well as state-centred phenomena by using a strictly
economic interpretation of history, Gramsci added an intellectual/
cultural element, which concluded that social classes could establish
domination over others through promoting their ideology and culture
at social and political levels (Gramsci, 1971). If there is any truth in
this, the experience of the conservative revolution, which relied
upon the production of liberal, economic literature, makes it evident.
Susan George goes so far as to say that because the progressive forces
did not promote intellectual production, were complacent and did
not mobilise a front based on substantial professional thinking, the
conservative forces were able to step in and make their project
hegemonic. But most social scientists, including George, would agree
that ideological hegemony does not amount to permanency, far less
does it mean there are no alternatives.
Even though most countries, both in the technologically advanced
North and the developing South, and global structures fall under the

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umbrella of neo-liberal ideology today, there are always political


moments when social forces gather enough strength to resist and
counter the dominating mind frame. Robert Cox calls this counterhegemony (Cox, 1987). In short, counter-hegemony can be thought
of as a successful movement of resistance against the dominating
structures of reality. Throughout the twentieth century, resistance
can be found in states or alliances but also in grassroots movements
that are currently taking shape.
What is important to emphasise here is that the framework of this
study is dependent on the notion that the Cuban government and
people are now at a political moment where they are found to have
been developing on a domestic scale counter-hegemonic tendencies
that contradict the neo-liberal practice. Cuban discourse, as will be
demonstrated in the chapters to come, is often centred on criticising
the globalisation of neo-liberal ideas and placing the market and
profits before the interests of people. Fidel Castro and the PCC promote
an alternative form of globalisation, one that is based on the cooperation of states in material development and fair trade among
the nations instead of competition (Castro, 1999a). Whether or not
they are successful is a question to be dealt with later.
Neo-liberal practice
But what exactly does neo-liberalism consist of in practice? As its
ideology dictates, neo-liberal practice is comprised of the implementation of a number of tactics or policies that result in diminishing
the authority of the state or public sector in society, especially in the
market, and placing large, private corporations at the top of organised
society. This implies, firstly, that corporate leaders make a pact with
certain political figures and/or organisations in governmental and
international bodies, in order to lay the legal basis for this movement
or transition. Therefore neo-liberalism can only be applied to societies
in which legal frameworks allow room for private corporations to
take on a leadership role in public affairs. Secondly, the practice must
be undemocratic in that public dominance over a productive or
service sector is usually rendered to those who have the capital to
develop markets from this sphere of influence, instead of those functionaries of public institutions who serve elected officials or
governmental offices.
The most effective way to render power to corporations is to
privatise publicly owned enterprises and services. A service like transportation, for instance, will go from being a public and local patrimony

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Introduction

funded by taxes to being a private business that will profit from the
consumers of the provided service. In a democratic setting, a political
party, usually funded by leading entrepreneurs, would encourage
voters and legislative bodies to support the project of privatisation
in return for a number of advantages. Often these have included the
reduction of income tax for common workers. Other neo-liberal
politicians might argue that a service or public industry would become
more efficient if it were free from governmental bureaucracy. These
myths have been widely contested by people who have actually
experienced the privatisation of industry or services, as efficiency
issues after privatisation are often neglected. But the essential problem
with privatisation is that, in most cases, decisions to privatise
companies are not made democratically; in most cases they are made
from above without a public-based consensus. In this sense, the
opponents of neo-liberalism argue, privatisation equals thievery from
the wealth of society in order to subsidise private capitalists in their
mission to expand (Petras and Veltmeyer, 2001). This is not to say
that all public ownership of production and services is necessarily
democratic. However, the privatisation of publicly owned enterprises
does exclude the chance of democratic governance.
Privatisation might be attractive to politicians who are in the
position of solving state indebtedness or government bankruptcy.
By selling off national industries or public services, governmental
bodies are believed to be relieved from debt and responsibility over
social concerns. Those politicians interested in making governmental
bodies smaller will use privatisation as a means of doing so in addition
to fundraising for the government. The problem comes to the fore
when non-governmental groups lobby for state monitoring over the
transition to privatisation, either in defence of the environment, in
the interests of workers or to deter corruption. Furthermore,
fundraising arguments fall by the wayside when one realises that
privatisation is not a sustainable means of government income;
companies can only be privatised once. The practice of privatisation
becomes even more anti-democratic and much more controversial
when international governing bodies and institutions pressurise
poorer countries to privatise production domestically.
From the business point of view, neo-liberal practice entails freeing
the market from rules that hinder economic growth and profit. For
instance, politicians that represent the interests of private capital
might campaign against a hike in the minimum wage for workers,
in order to keep profits rising. Another example can be found when

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private companies are given the right to ignore the demands of labour
unions, hire and fire as they want, and move from one region where
legal wages are high to places that offer a surplus of workers willing
to produce for a lower and less secure income. But privatisation is
but one of the many practices. Neo-liberalists might also pressure
local or national governments to relax environmental laws in order
to allow private companies to produce more cheaply rather than
under eco-friendly frameworks, which often require businesses to
employ costly production methods that crunch profits. Like-minded
politicians argue that unemployment rates will automatically drop
when these policies are adopted, because the private company, after
profit rates increase and wages decrease, will be able to employ more
workers. The result of these ideas when they are put into practice is
that more workers are employed either on a part-time or temporary
basis, and with less job security. When it comes to environmental
quality, the risks of air and water pollution become more pronounced.
The examples mentioned above are best demonstrated in real
national case studies. However, neo-liberalism, an international
project, goes beyond state structures and specific instances and is
applied globally. That is, not only are neo-liberal practices
implemented by domestic politicians but also by international
financial institutions that often pretend to aid countries in need of
development. After the demise of the so-called socialist regimes in
Eastern Europe and the fall of authoritarian political structures in
Latin America during the late 1980s, neo-liberal policies were followed
by new governments in reaction to years of state dominance in the
economy. Critical political economists have noted that international
financial institutions, in the hands of neo-liberal thinkers, actually
forced many of the state-dominated economies to be dismantled
(Bello et al., 1994). This was done by denying international bank
loans and credits to countries that refused to privatise or to cut state
subsidies in domestic agricultural, industrial or service sectors.
Evidently, the purpose was to allow large transnational corporations
(TNCs) to compete successfully against or buy up small domestic
businesses whether private or public. The result has been the selling
out or disintegration of national economies and, in their place,
allowing the TNCs to dominate almost every aspect of life. This is
seen more clearly when state companies and public services from
telecommunications to water and energy sectors in small underdeveloped countries are sold to large corporations, usually based in the
technologically advanced North. The international institutions that

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are most known to promote these policies of privatisation are the


International Monetary Fund (IMF), the World Bank and the World
Trade Organisation (WTO).
For some time now, the World Bank has been the architect of the
liberalisation of developing economies by overseeing privatisation
programmes and implementing what are called Structural Adjustment
Programmes (SAPs). SAPs are packages that are offered to heavily
indebted countries that either have experienced a sharp transition
from state-dominated to private corporate-led economies, or to those
very poor nation-states that were or are in the condition of economic
and political bankruptcy. In offering these troubled countries loans,
the World Bank demands that recipient countries meet certain
conditions. The conditions for receiving loans for infrastructure or
any other kind of development are set by Structural Adjustment
Programmes. Looking at the political aspect, once again, the
government then responds to foreign lenders and investors and not
to its citizens. This pushes the neo-liberal project to its global extreme.
In 1999 and 2000, member states of the WTO held a number of
negotiation summits that laid the basis for implementing agreements
on trade in services; this was called the General Agreement on Trade
in Services, or, GATS2000. The negotiations are focused on liberalising
trade that affects all service sectors, from investment banking to the
energy sectors, and reducing domestic subsidies for national services.
Once again, the political if not the moral issue comes to the fore
when looking at the anti-democratic practices that are employed in
these negotiations and agreements. Rich and powerful TNCs are
known to lobby successfully during the negotiation rounds, whereas
groups from civil society, like labour organisations, are not invited
to give their input and represent their interests (Wesselius, 2001).
What happens in this process of neo-liberal globalisation is the
forming of alliances between top government officials and big
businesses, and the alienation of public interests in the organisation
of present day society. Neo-liberal politicians and political organisations, which promise their constituents in poorer countries more
development by employing free-trade policies and SAPs, are concerned
with making their country attractive to foreign investors and
technology. They argue that privatisation, the relaxation of environmental and labour laws and the reduction in state subsidies to domestic
producers and service sectors are all necessary for efficiency, in the
interest of the common good and the advancement of their societies.

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Consequently, local or domestic governments in developing countries


render up most of their power to foreign private corporations.
From the discussion above and the reading of works on the topic
of neo-liberal globalisation, neo-liberal practice worldwide can be
summarised by highlighting what the global trends are among states
today:
1. Privatisation of state corporations to eliminate inefficiency and
government expenditure. But privatisation is also known as a
fundraiser for the state during the process of restructuring and
repayment of debts.
2. Fiscal reform for reducing budget deficits. This reduces the chance
that the state will intervene with subsidiaries to supply industries
and social programmes. It is also geared towards creating
independent national banks. The purpose is to reduce
governmental costs and increase government income.
3. Flexible labour markets, providing more autonomy for employers
in deciding wages and benefits, with trade unions stripped of their
powers to negotiate. This is flexibility with the purpose of reducing
social security contributions that employers have to make. The
lower wage earners are subject to more elusive hiring and firing
policies.
4. Trade reform, making the private sector of the national economies
more competitive internationally and more orientated towards
the export market, with updated technologies in production.
Certainly this has reduced tariffs on imports; but it encourages
that production be geared to foreign markets.
5. The opening of financial markets, reducing government
intervention and aiming for the operation of free markets, in
which national enterprises and the economies as a whole become
heavily influenced by international or foreign financial
institutions. The advantage of this is an increase in the flow of
capital and the modernisation of industries.
These five global trends will be considered, especially in Chapter
4, when the influence that neo-liberal globalisation has had upon the
Cuban model will be assessed. From the Cuban experience, there
emanates an alternative in development and economic practice,
especially on the topic of privatisation. Cuba, which is not a recipient
of IMF/World Bank loans, is seemingly exempt from the pressures to
privatise. In this light, neo-liberal globalisation is not seen as an

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inevitable process. Rather, neo-liberal globalisation can be understood


as the implementation of global trends. However, and in parallel to
this, it will be demonstrated that though the Cuban leadership has
made an enormous and unprecedented effort in challenging global
trends that are widely accepted by most states, especially in the area
of privatisation, some policies that have recently been implemented
in Cuba do resemble the outcomes of neo-liberalism in practice. For
instance, in Chapter 4, the Cuban party/state apparatus is found to
employ some policies that appear to make labour more flexible. This
should indicate that the process of neo-liberal globalisation really does
have an affect on countries, even when the intention is to resist it.
IMPLICATIONS FOR THE STATE
One of the major contemporary debates in global political economy
concerns the power of leaders in developing countries to choose neoliberal ideology and practice or reject it (Palan et al., 2000). Does the
state still have the sovereignty to decide whether or not neo-liberal
development should be practised? Or is neo-liberal practice imposed
upon weak states? Many (social) scientists will agree that neo-liberal
policies are not implemented uniformly across the globe (Gwynne
and Kay, 2000). Therefore the issue is not so much one of choosing
neo-liberalism or deciding to reject it. The question is: To what degree
are neo-liberal practices implemented? Whatever the case, it suffices
to say that countries that are dependent on foreign aid and the
workings of international financial institutions have little choice in
the matter. But what do the experiences of neo-liberal globalisation
imply about the pressures that global structures and fashionable
measures exert upon states?
What implications does the process of neo-liberal globalisation
have upon the state? Some speak of the retreat of the state, the collapse
of states; some even go so far as to claim that the state is no longer
relevant. Though many will argue that the role of the state has
changed, few would argue that the state in the era of neo-liberal
globalisation has ceased to exist. Susan Strange points out that there
are fundamental changes:
The shift away from states and towards markets is probably the
biggest change in the international political economy to take place
in the last half of the twentieth century. It is most marked in matters
of production, trade, investment and finance in what I would

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call the production and financial structures. These are the ones
which have most impact on peoples daily lives. I argue that
one of the major shifts resulting from structural change has been
the increased power and influence of the multinationals more
properly called Transnational Corporations (TNCs) and the
networks they set up and operate. (Strange, 1996:40)
Strange makes the argument not that the state is disappearing, rather,
that due to the integration of the global economy through international production the balance of power has shifted away from
states and towards the market. Additionally, this shift is seen as causing
a transfer of power from territorial states to non-territorial TNCs and
the creation of gaps of power where authority of any kind is seemingly
absent, i.e., the informal economy and underground markets like
drugs, prostitution and the Mafia. TNCs are seen as political actors,
having political relations in civil society, determining the role of
employers, and the employed, they are producers as well as sellers,
and they are also consumers of goods and services. The technical
innovations and where research funding is allocated are often
determined by the TNCs. Strange comes to the conclusion that power
was handed over to the TNCs on a plate, and that it was not
accidental. This coincides with the idea that, as Susan George has
revealed, conservative forces were preparing for this change some
time ago.
SOCIAL CONSEQUENCES OF THE GLOBAL TRENDS
For the past decade, many critical social scientists have dedicated a
large portion of their work to analysing the social implications of the
current global trends. While some have been apologetic to certain
aspects of neo-liberal globalisation and the opening of markets, most
have concluded that neo-liberal practice is destructive and not
sustainable. The same can be said of the neo-liberal experience in
Latin America:
Companies which find it difficult to compete in the new and
vulnerable international market, have started laying off workers
more easily and there has been little resistance on behalf of the
weakened labour movements; the term, introduced from the
US corporate world, is downsizing. Additionally, the
government, in trying to reduce spending, has also done a

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considerable amount of downsizing of its army of civil servants.


A more recent trend is to keep a reserve of civil servants and
private sector workers temporarily employed by creating shortterm contracts through temporary employment agencies.
Workers and civil servants are now hired to produce or serve
on production or planning projects, rather than as permanent
functionaries in the service of the public.
Real wages have decreased. While the top two deciles of income
earners experience a substantial increase in their salaries, most
income earners have experienced a decreased or stagnant rate.
Additionally, there has occurred an increase in what is known
as the informal sectors; i.e. an increase in the number of urban
workers dedicating their workday to unwritten contracts, illegal
activity (such as the sale of drugs, prostitution and theft), and
other unregulated trade creating low levels of income.
Nevertheless, with the state reduction in funding social services
and investment in public infrastructure, it is the poor that suffer
the most. Latin Americas 3050 per cent poor suffer from poor
health and high infant morality rates. There seems to exist,
generally in the minds of intellectuals, artists, and the
overwhelming majority of members of civil society, including
the Church, a core concern with the poor in the region. While
public foreign debt has been paid, the public debt to the working
poor has not. The result has been outbreaks of epidemics and
an increase in violent crimes. Even international financial
institutions are recognising this, as did the Inter-American
Development Bank in 1996. Hence, social inequality has become
a serious problem, creating contradictions between the neoliberal idea and reality. (Gwynne and Kay, 2000)
Resistance
Historically, especially in Latin America, the popularisation of neoliberal ideology was accompanied by the transition of dictatorial
regimes in the region, like Pinochets Chile, towards multi-party
democracies. During the dictatorships, the tradition of movements
resisting certain economic practices had been lost, as was the faith
in the existence of real alternatives. The weakened political movements
of the left were pushed further away from the path of resistance,
when it became clear that the countries under the former socialist
bloc were also moving in the same direction. The political leaders of
the traditional left in Latin America seemingly rested satisfied with

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the new democratic laws that were given to the general population
and saw their historical mission as being completed after the dictatorships were abolished. The exceptions to this would be left-wing
factions of the Workers Party (PT) in Brazil and the Zapatista liberation
movement in southern Mexico. These movements, linked to other
progressive forces, like those concerned with human rights and the
environment, started to challenge many of the myths surrounding
the new global trends. The resistance to neo-liberalism was primarily
based on the unfavourable social consequences that resulted from
its practice.
During the second half of the 1990s it became more and more
evident that these neo-liberal policies were not wholly acceptable.
In Venezuela, popular resistance and disenchantment with corruption
and a deteriorating infrastructure led to a political slide to the left to
control or reduce neo-liberal policies; this resulted in the election of
nationalist leader Hugo Chavez in 1999, who vowed to reduce liberalisation and resist external pressures to privatise. Throughout Latin
America as a whole, between 2000 and 2001, there have been at least
ten demonstrations or general strikes with more than 10,000
participants. These actions were centred on challenging the trends
of neo-liberal globalisation, especially privatisation, but also unfair
trade and currency devaluation (Charlton and Bircham, 2001:341).
More and more intellectuals and social activists have been arguing
for alternative forms of globalisation. Inspired by the works of
historical authors like Polanyi, social scientists of the left reject marketcentred or corporate-led globalisation and instead consider the
globalisation of participatory democracy, human rights and fair trade
(George, 1997; MacEwan, 1999; Coates, 2001). Again, these ideas
have often been generated by new social movements or intellectuals, but not by state leaders. As exceptions, Fidel Castro and the PCC
have been arguing for alternative forms of globalisation ever since
the term took off in popular discourse during the early 1990s (Castro,
1999a; 1999b). But what does resistance to neo-liberal globalisation
in the state form entail?
SOCIALISM IN A SEA OF CAPITALISM
The existence of socialist states in a world of capitalism continues
to pose a dilemma of interpretation for the study of the global political
economy as well as for the many contributors to the broad and rich
Marxist tradition. By the end of the Cold War, the theme of revolu-

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tionary socialism was seemingly abandoned, neglected or ignored;


then, it was often considered a failed project, especially after the
demise of the so-called socialist bloc in Eastern Europe and the dismemberment of the Union of Soviet Socialist Republics. An exception
might be considered in the work of James Petras and Henry Veltmeyer
in their book Globalisation Unmasked: Imperialism in the Twenty-First
Century (2001), where they argue for the possibility of socialism as
an overthrow project against modern-day structures, more specifically
against neo-liberal globalisation. Nevertheless, the socialist project
was never clearly defined and to this day scholars as well as politicians
continue to disagree over a number of questions concerning the
possibility of socialism.
MARXIST SOCIALISM
Traditionally, political Marxism views socialism as a real transition
from capitalist society to communism. This is a society of material
abundance, in which the needs of the population are met through
consensual, self-rule planning and where the production of goods
and services is based on need and not profit. It is a system of worker
and popular councils, the original meaning of the word soviet under
the later defeated Bolshevik Revolution of 1917 (Mandel, 1978). This
most revolutionary yet often abandoned idea is based on
MarxistLeninist principles whereby a vanguard of disciplined revolutionaries would lead the working class into acquiring state power
and creating this society of abundance. In socialism, centralised
workers councils make decisions about the allocation of resources,
money incomes and pricing policies, the quantity of production, the
priorities of production, etc. Self-managed production units would
scientifically calculate the technical average according to the highest
prevailing level of technology. Less efficient units of production would
be dismantled as new and innovative, indeed more efficient, ways
of producing for the needs of workers would be provided. Alternative
employment for those displaced workers would be found and, of
course, the workload of each individual would be lessened.
Conferences from representatives elected directly from the consumers
(workers) would signal the type of improvements needed in products
and services, indicating how much more of what and when. Public
services for the population, like transportation, the media and
education would be run in a similar fashion and be accessible to all.
Self-rule of workers, autonomy or emancipation of workers, would

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actually be the transitional stage to the highest attainable level for


human emancipation, not much different from what Marx
envisioned, only technically detailed. Small businesses would be
based on voluntary consensus or co-operatives; whereas no one would
be forced to join private enterprise because all the needs of the
population would be satisfied due to guaranteed consumption. Labour
would certainly be free and the term free contract would have a
new meaning. Indeed, socialism was meant to entail a new mode of
production (Mandel, 1977; 1978).
Since the first Marxists, including Marx himself, understood that
capitalism was an ever-expanding world system, the original concept
of socialist revolution was also to be implemented internationally.
Hence the purpose was to move from one mode of production that
was growing internationally to another form, from one stage of
human development to another. Global capitalism enlisted all ethnic,
linguistic, cultural, racial, and national groups, to the war of class
struggle on a transnational scale. The achievement of a new order is
completely dependent on the invariable that socialism, taking off
from capitalism, must be international.
In his (Lenins) eyes the Russian Revolution was a mere preliminary
to a greater revolution which would establish international socialism
Lenin did not invent the iron curtain. On the contrary, it was
invented against him by the anti-revolutionary Powers of Europe.
Then it was called the cordon sanitaire Trotsky said on 8 November
1917: Either the Russian Revolution will create a revolutionary
movement in Europe, or the European powers will crush the Russian
Revolution. Neither happened. Lenin, like all other Bolsheviks,
including at that time Stalin, believed that socialism was impossible
in a single country. (Taylor, 1964)
This is sustained by Marx himself when, in the preface to the 1882
Russian edition of The Communist Manifesto, he said that a revolution
in Russia could serve only as a signal or complement to a proletarian
revolution in Germany or England. Luke gives a brief description of
the backwardness of Russian agriculturalfeudal society and the
minuteness of industry inherited from Tsarist rule, in which he
recognises that only 2 per cent of the population could be considered
urban proletarians (Luke 1985:16275). This group often had contradicting interests with the majority of peasants and hence led the
entire country to a civil war that lasted from 1917 until 1921. The

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Bolshevik party sought to create hegemony within the state; in other


words, they attempted to seize control of production and all power.
It promoted the ideas of international socialism while at the same
time it defended their experiment against belligerent capitalist states
that surrounded Russia. But, the Bolshevik Revolution did not spread
and therefore the priorities of the new government were altered.
Lenins New Economic Policy allowed capitalist measures to be
taken up in order to permit the growth of capital accumulation and
thus to restore and even further Russias industrial capacity. The need
for industrialisation was spurred on by the fact that the Soviet state
was increasingly isolated from the world system. Among the many
characteristics of the New Economic Policy was the opening to foreign
investment by Western capitalists in the form of joint ventures
(Mommen, 1993). After Stalin took over in the late 1920s, the
leadership sought to industrialise the country even further in the
name of raising the workers standard of living. Through five-year
plans, the objective of industrialising the country and improving the
life of urbanites was successful, but at a very high human cost. Millions
of peasants were starved through the process of primitive
accumulation, whereby the state exploited the rural agricultural
workers in order to sell domestically and abroad for profit; this also
ended up in the programmes of forced collectivisation of farms.
During this time, Stalin pursued his own interests in obtaining
hegemony over the Communist Party in the Soviet Union and the
workers movement around the world. This resulted in systematic
purges of the Party and the execution of the original Bolsheviks who
criticised many of the policies that Stalin put forth.
However, the Stalinist model of economic development was not
autarkic, or detached from the rest of the world. The Soviet Union
depended on foreign technology and the developments of Western
sciences. After the Second World War, when the Soviet Union had
allied itself with the United States in order to crush Nazi Germany,
Russia acquired industrial plants from parts of Germany and also
Manchuria, which had been captured from the Japanese (Luke,
1985:3403). Additionally, after the war, the Red Army took over
much of Eastern Europe, which supplied Russia with more natural
and industrial resources. This outcome created a scenario for the
Soviet Union, whereby it became a leading superpower dominating
by military force a considerable amount of the worlds resources.
Politically, this meant that while the United States was fostering so-

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called democratic models in West Germany, Italy and Japan, Stalin


set up Communist Party-led regimes in Eastern Europe that were
heavily dependent on Moscow. It is at this point that Marxists differ
on their view of the Soviet Union and the collective of Communist
Party-dominated states. They were thought of as either a real
alternative world system with a different mode of production than
that of the United States and the West, or as just another military
superpower (alliance) participating in the inter-state game of economic
competition, i.e. still part of the singular capitalist world system (Gill
and Law, 1988:30231).
This discussion is relevant to the Cuban case for two reasons. First,
it has set the framework for understanding socialism in one country
as the Cuban leadership continues to view itself, its characteristics
and how they differ from the original idea of Marxist socialism.
Second, because throughout this book, especially in Chapter 3, the
Cuban economic model(s) is seen as one previously pertaining to an
alternative market system, i.e., the Soviet-inspired COMECON or
CMEA. This belonging shaped Cubas economic, social and political
development for two decades of the Revolutions existence as well
as partially explaining Cubas economic crisis during the 1990s.
Some scholars and social scientists have dedicated a large part of
their research to understanding the concept of socialism in one
country. I agree with many of the specialists, who concur on two
fundamental points. Firstly, the Stalinist mode of production cannot
be considered socialist and secondly, Soviet capital accumulation is
essentially the same as those in (other capitalist) societies. The term
given to describe modes of production during the 1930s and thereafter
is state capitalism. The study of state capitalism became increasingly
important when social scientists from around the world recognised
that the production, distribution and financial power in the most
industrialised countries experienced a real transformation from
competitive private capitalism to monopoly or state organised
capitalism (Horkheimer, 1940:95117). Each country developed its
own model but all had many characteristics in common. The theory
of state capitalism became just as important for those states that
demonstrated an interest in industrialising their economies or
catching up with economically advanced countries, especially after
the Second World War, when a large number of colonised regions in
the South sought independence.

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STATE CAPITALISM
State capitalism is a concept that for many years was conceived as
the highest form of capitalist development. The term is not new and
has been used and discussed in various schools of thought, both
academic and political, in relation to the state management of the
market. State capitalism theory has been used both by the writers of
the Frankfurt Institute of Social Research (Frankfurt School), as well
as by revolutionary socialists who opposed the Soviet model during
its existence; among these, the Trotskyites and the International
Socialist Tendency founded by Tony Cliff (Cliff, 1948; Arato and
Gebhart, 1997).
Friedrich Pollock declared that: terms like state organised privateproperty, monopoly capitalism, managerial society, administrative capitalism, bureaucratic collectivism, totalitarian state
economy, status capitalism, neo-mercantilism, economy of
force, and state socialism are a very incomplete set of labels used
to identify the same phenomenon (1941:71). He concluded that
state capitalism is the successor of private and then monopoly
capitalism and that it was a mode of production in which profit
interests still played an important role. In state capitalism there is
no longer self-managing or the private control of production and
distribution. The system would have become controlled by planning
and direct, conscientious command by the state, whatever the nature
or origins of the state; where enterprise and labour as two separate
entities are fused under governmental control, where there is a partial
negation of free economic laws. Full employment of all resources,
including labour, is claimed to be the main achievement or goal in
the economic field, where pseudo-markets can be created in order to
expand production and increase profits.
State capitalism in the Frankfurt School was conceived as a result
of the decline of the market system, which had become inadequate
for using all available resources. The decline of free-market private
capitalism could be attributed to a crisis in the liberal era where private
monopoly succeeded competitive capitalism and where government
had to interfere in the economic crisis due to monopolistic structures
and the destructive consequences and disruptive conflicts which
emanated from them. This was especially true for the most developed
countries of Western Europe and then the United States. The
symptoms of declining market economies, says Pollock, was what
became characteristic of all industrial countries after the First World

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War, as exemplified in the New Deal, and continued after the Second
World War (Pollock, 1941:72). There was concentration of businesses
into gigantic enterprises, which thereby created a system of rigid
prices, self-financing and concentration, government control of the
banking systems, the monopolistic character of trade unions, largescale unemployment and enormous governmental spending on the
poor. State capitalism gives direction for production, consumption,
savings and reinvestment. As a planned economy, what is produced,
how and how much is not left to the crazy, indeed anarchical and
wasteful, dictates of the economy; rather, is controlled directly and
intentionally by the government. This was the transformation that
Polanyi described.
Not much was changed, says Pollock:
Prices and goods are paid for in money, single prices may rise and
fall. But the relation between supply and demand on one side and
prices and the cost of production on the other becomes somewhat
disconnected in those where they tend to interfere with general
societal planning. (Pollock, 1941)
The market becomes a closely controlled tool in material development
and the state is considered to be the repository of the means of
production. However, Pollock envisioned only two forms of state
capitalism: authoritarian and democratic. According to this train of
thought, he observed state capitalist history in the most important
historical examples: Nazi Germany and Stalins Russia.
In totalitarian state capitalism or monopoly state capitalism the
state under the control of an alliance among the most powerful
vested interest groups in industry and technology, the higher
classes of society including ruling elites and especially the military,
the party bureaucracy and everyone who is not included in this
group is then dominated by the prior. Under democratic state
capitalism, the state has the same function but is thence controlled
by the masses. It is based on institutions which prevent
bureaucracy from transforming administration into a mere
instrument of power whereby leaving room for trans-shaping
democracy into totalitarianism. (Pollock, 1941: 84)
Pollock saw democratic state capitalism, therefore, not as a form
of socialism but as a transition period whereby workers, or the majority

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of the people, could participate directly in governing the state that


controls the means of production.
Bureaucratic state capitalism
But Tony Cliff (1948: 162), and before him Lenin and Bukharin,
explained state capitalism as a form different to that of the workers
state or what is generally identified as socialism, the dictatorship of
the proletariat. Thinkers from the Frankfurt School, especially Pollock,
described state capitalism as an emerging form and inevitable
descendant of private or monopoly capitalism. Cliff saw Nazi Germany
and Stalins Russia as forms of state capitalism, but defined them
differently; respectively, one was monopoly state capitalism in a
wartime economy and the other was considered to be bureaucratic
state capitalism where the leaders of the bureaucracies are conceived
to be those who run or own the means of production. Both definitions
of state capitalism agree that it is not socialism, but that it is a move
towards it. Both schools of thought think of socialism or workers
control as an international phenomenon that is the ultimate
expression of human emancipation and democracy. State capitalism
and how it is distinguished from socialism can be understood from
Marxs law of value, which explained the relations of production in
capitalism. More specifically, it was the process of appropriation of
surplus value from one group to another.
In Stalinist Russia, the appropriation of surplus value meant the
extraction of profits from the workers by bureaucracy. Wage labour
continued its antagonism to capital, surplus value continued to be
produced, and continued to be reconverted into capital. Cliff saw
the Soviet bureaucracy as rising above the workers and playing the
role of the private capitalist. Taking a so-called socialist economy in
a vacuum, appropriation of surplus value is thought of as suppressed
since most production is held under state control. But the picture is
entirely different when the socialist state is viewed as a competitor
with other countries and capitalist enterprises that act internationally. It is precisely this illumination that led radicals like Cliff to
defend Lenins and Marxs requisite that socialism needs to be a global
system. Even Marxist economists recognise that in a world system
where every state is dependent on international trade and is itself a
competing and capital accumulating entity, the law of value is not
abolished but only partially suppressed (Dumont, 1974).
Outside of the state capitalist theory, other social scientists place
emphasis on the fact that in a so-called socialist society, private

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property is abolished and that market mechanisms are controlled by


state planning. In this sense, they might understand production
relations to be distinct from capitalist economies. Nevertheless,
economic planning can be found in large private corporations since
a certain amount of products must be available to supply markets
within a certain time-frame. Furthermore, even though private
property is abolished, workers still cannot control what is produced,
for whom and how much. Whether state or private, centralised or
not, state-capitalist production relations do not differ that much from
that which is found in capitalist societies. In this sense, Polanyis
great transformation was not so great after all.
Cliff based his theory of state capitalism on the real experience of
Stalins Russia, i.e. the defeat of the original Bolshevik project to make
socialism international. According to Cliff, the Stalinist bureaucracy
that evolved out of the New Economic Policy fulfilled the task of the
capitalist class, and by doing so the bureaucracy transformed itself
into a class. Although different from the capitalist class, it is at the
same time the nearest to its historical essence. Stalinist bureaucracy,
in Cliffs view, was an alternative to the traditional capitalist class;
at the same time it was the truest personification of the historical
mission of this class (Cliff 1948: 162). Accordingly, to call it a
bureaucratic/state class, known as the Party, and stop at that is to
circumvent the cardinal issue, which is the appropriation of surplus
value from one class by another. Hence, to say that Stalinist political
economy was state capitalist is correct, but not sufficient for Cliff; it
was also necessary to point out the differences in the juridical relations
between the ruling class under Stalinism and that in a state capitalism
that evolved gradually from monopoly capitalism. From here, Cliff
created a formula for describing Stalins Russia and calls it bureaucratic
state capitalism. This can be justified by looking at appropriation of
capital and accumulation by top-ranking leaders in the Communist
Party. So-called socialist countries can be seen, thus, as one big factory
or business that competes with other international corporations. But
what does this tell us about socialist Cuba?
IMPLICATIONS FOR STUDYING CUBA
The followers of the International Socialist Tendency continue to
use Cliffs theory of bureaucratic state capitalism as a means of understanding all states that claim(ed) to be socialist, including Cuba. I
would argue that though Cliffs and the Frankfurt Schools discussion

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of state capitalism offers insight into the importance of the law of


value and production relations as the determining difference between
socialism and state capitalism, their historical analysis does not hold
when taking the Cuban experience into consideration. For Cliff and
also for the Frankfurt School writers, (bureaucratic) state capitalism
was essentially an economic model that was centralised by
government authority. Few Marxists anticipated the decentralisation
of national industries under still state-controlled economies. The
experience that will be delivered in the following chapters, especially
Chapter 3 concerning Cubas new enterprise system, totally negates
the notion that the economy is centralised under the auspices of a
central bureaucracy. There is a new development that emanated from
the economic crisis that Cuba experienced during the early 1990s.
Going even further than that, I will demonstrate that state-run
economies are capable of surviving global pressures to return or
transit to private competitive capitalism by adjusting their own lines
of production in order for them to resemble those of private
companies, thereby making themselves more competitive. This
includes making labour slightly more flexible and linking wages and
incentives with productivity in the global market. Finally, Cuban
leaders continue to apply anti-capitalist and anti-imperialist language
in their discourse with firm credence in searching for alternatives.
Though they often shy away from critiquing their own production
relations, most Party documents and initiatives are dedicated to
understanding the international division of labour and the condition
of the capitalist world system.
To find a suitable name for the Cuban economic model, as Cliff
did for Stalinist Russia, is in my opinion difficult. If one insists that
every countrys political economy should be categorised under a
certain economic form, then I would accept Cliffs argument that
since production relations are essentially the same and the law of
value continues to exist, Cubas mode of production in many aspects
resembles bureaucratic state capitalism; possibly it is a decentralised
bureaucratic state capitalism. Still, this imagined category does not
sufficiently describe what is going on in Cuba; but names never do.
For more than two decades Cuba has had changing state policies
determining the permitted level of foreign investments from laws
on joint ventures dating back to 1982 (Economic Intelligence Unit
(hereafter EIU), 1990:19) to the legalisation of foreign direct
investment in 1995. Foreign investment, especially in the tourist
industry, now plays an important role in the Cuban economy by

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building infrastructure, providing jobs, inserting new technology


and pumping foreign spending into the country. To say that the
Cuban state bureaucracy replaces the private capitalist class found
in other countries, and to leave it at that, is to ignore the importance
of foreign capitalists and their dealings with public (state) institutions.
Sornarajanah, an economist, wrote extensively on the opening up
to foreign investment in state-led economies and called it the middle
path; whereas both extreme nationalism and protectionism, and a
free market with an indiscriminate welcome to foreign enterprises,
were tendencies that were neglected by developing and newly industrialised countries during the second half of the last century
(Sornarajanah, 1994). Likewise, other legislative acts that were passed
during Cubas economic crisis after the fall of the Soviet bloc in
Eastern Europe allowed for other market activity to take place. For
instance, social relations among Cuban citizens have changed as
income disparity increased after the legalisation of the possession of
hard currency. Another example is the opening up to self-employment
services as a legitimate means for certain individuals to generate
income. Finally, Cubas economy has increasingly been geared towards
the tourist service sector as opposed to manufacture and the export
of raw materials. This will all be analysed in Chapter 3.
What is important to understand from what has been reviewed so
far is that production relations and modes of production should not
be thought of as very different in countries that claim to be socialist
or capitalist. For this reason, I would follow the framework that was
developed by Immanuel Wallerstein in his world system theory
(Wallerstein, 1974). There were never two separate worlds or systems.
Due to the external relations with non-socialist economies and also
to its own capitalist mode of production, the Soviet bloc was just
another hegemonic realm that took part in the global, competitive
capitalist market. The differences must be discovered outside the
realm of mode of production.
National development and imperialism
There are other aspects of socialism in one country that should be
considered. Among them, and more pertinent to this study, are the
causes for states to adopt a certain ideology in their discourse; another
is the construction of national political economies.
Continuing with Wallerstein, dependency or world system theory,
both national development and the choices for economic models,
have been essentially shaped by the history of the world system

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during the twentieth century. In After Liberalism, Wallerstein wrote


an Elegy and Requiem to the Concept of National Development, covering
the theme from a global perspective in the time-frame 191789. Of
course coming from his own world-system theory, the theme of
national development starts off from European thinkers like Lenin
and Woodrow Wilson (not European but indeed Western) though
he claims that it was since the sixteenth century that European
thinkers have been discussing how to augment the wealth of the
realm Adam Smith wrote The Wealth of Nations in 1776; in this
Bible for liberals, Wallerstein points out, he [Adam Smith] ... preached
the notion that maximising the ability of individual entrepreneurs
to act as they deemed wisest in the world market would in fact result
in an optimal enhancement of the wealth of nations (Wallerstein et
al., 1996:108). But the central theme of this historical work was that
every state could reach the maximum in development and wealth
by adopting certain policies. By the turn of the nineteenth century
it became clear that a group of countries had indeed become wealthy,
or at least developed, through liberal capitalism. However, the boat
that left for the sea never picked up any more passengers and
development through liberal capitalism ceased to exist.
Wallerstein points to 1917 as a turning point in history, when the
foundations of capitalism at the core of the world economy were
shaken. The world economic leaders turned to war and led their
nations into battle in order to preserve their interests and to maintain
stability in the world system that was continually developing. But
Wallerstein does not stop there. He argues that the ideas brought to
the international stage, like Lenins call to world revolution by the
proletariat and Wilsons bourgeois world safe for democracy in his
famous 14 Points, were not the underlying themes of the First World
War and the resulting push for decolonisation. Rather, it was an effort
to integrate what Wallerstein calls the periphery referring to the
underdeveloped parts of the globe into the world system in order
to create new stable markets. Now, whether or not we agree that
Lenins intention was to include the poorer regions of the Earth on
the development bandwagon, it remains clear that Lenin did envision
an international socialism. And whether or not we agree that Stalin
was Lenins rightful successor, it also remains clear that the USSR did
depend on other countries for its own development in the form of
import/export and industrialisation. That is, industrialisation in the
former Soviet Union would have been slower without some
connection to the world market. Both great powers (the United States

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and the USSR) naturally sought the expansion of their economic


power and enhancement of development by integrating what is now
called the Third World, countries of the South or the periphery, into
the world system.
Wilson sought to spread the good news of liberal ideology, that
the natural expression of each individual was rational self-interest.
In this light, reformist policies and rational, peaceful and legal means
to accomplish development and human progress were called to order.
Lenin had his own idea of self-determination and started from the
premise of the rise of proletarian internationalism and the end of
imposing certain national structures upon other groups of people
anti-imperialism in order to move the whole of humanity into a
singular working class (Lenin, 1939). In accordance with Marxian
principles, the concept of nations and peoples would be a temporary
passing in the history of humanity; but in the meantime the struggle
for national liberation became an essential part of the struggle for
world revolution. This was manifested in the early part of forming
the Soviet Union and the voluntary federation of Soviet Republics
in the end the Union of Soviet Socialist Republics. The idea in Lenins
mind was that the revolution would spread to the West. He expected
German workers to revolt against their masters and eventually join
in on this newly founded order. The expected worldwide workers
revolution did not come to pass, socialism country by country (one
by one) was established; so then the central theme was changed.
Writes Wallerstein:
Marxism-Leninism in effect was moving from its origins as a theory
of proletariat insurrection against the bourgeoisie to a new role as
a theory of anti-imperialism. This shift of emphasis would only
grow with time. In the decades to come, it is probable that more
people read Lenins Imperialism: The Last Stage of Capitalism than
the Manifesto. (Wallerstein et al., 1996:110)
But the link between the two doctrines of self-determination/antiimperialism and national development has not yet been sufficiently
analysed. Wallerstein points out the similarities between the two
doctrines, from the list of countries and peoples that urgently needed
to be decolonised to the manner in which the nations should establish
independence, to who should be the leaders of these countries. He
warns that the differences should not be exaggerated. Under the
Wilsonian paradigm, the natural leaders of the newly independent

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nation should be the educated bourgeoisie, who conveniently had


links to their core-based counterparts; whereas the Leninists looked
for leadership in a singular movement modelled after the Bolshevik
Party later the Communist Party of the Soviet Union (CPSU) even
if the communists or self-proclaimed socialists were not the majority
in those countries, or even if the leaders of the party were not
necessarily working class. In most cases, the party leaders had their
origins in the petit-bourgeoisie/intellectual class, more commonly
the children of the bourgeoisie and petit-bourgeoisie. This theme will
be developed in Chapter 2, concerning the history of the revolutionary forces in Cuba. But Wallerstein goes so far as to say that these
leaders were the same people under two different camps, at least
relatives or cousins. In the case of the countries that opted for violent
insurrection against colonial masters, combining the singular
Communist Party with the state and creating the party/state political
structure, the policies did not always emanate identically to that of
the Soviet Union. Rather, the primary concern was the incorporation of these newly founded states into the world system of capitalist
production.
After the Second World War, the scramble for allies and markets
became fiercer. The globe was divided into a bipolar system, as the
newly independent states in Eastern and Central Europe leaned
politically towards either the USSR or the United States. This was
seen as the essence of the Cold War. Of course there were exceptions,
such as the Non-Aligned Movement. But when push came to shove,
both camps prompted propaganda in order to gain more ground,
especially in the United Nations General Assembly. In the end, most
of these newly founded states were not much different from one
another. They were, almost always, one-party states or military dictatorships. Even when a multi-party system was implemented it was
always one party that dominated domestic politics. Additionally, the
economic policies did not differ much. Economic development was
led, again almost always, by state enterprises. Foreign investment of
course was a must, and many theories concerning this flourished
throughout the century. But economic development in the case of
foreign investment was not conducted solely by private corporations.
Rather, it was through joint ventures between foreign private
companies and the state. When foreign investment through joint
ventures was not enough, newly independent states sought aid in
the form of grants or loans. This is true for both pro-Western
developing countries as well as some newly founded socialist

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countries, or countries that participated in the worldwide Soviet-led


progressive movement. Aid from the OECD countries and especially
the Northern countries was used to fortify military dictatorships and
foster national economic development: that is, building up infrastructure in the cities, constructing highways, buying and
implementing technology from the core countries; in one word,
catching up, or acquiring the major achievements that advanced
capitalism has bought humanity in the core. Wallerstein emphasises
that an illusion in the minds of the leaders was born, that development
was possible given that the right economic policies were implemented.
The options for developmental politics were various, and so
institutions were built and theoretical schools formed around the
globe. Regionalism sprouted up and the United Nations sponsored
institutional projects like the Economic Council on Latin America
(ECLA). Development theories like dependency theory and modernisation theory and a bunch of other theories in between flourished
throughout academia for the purpose of persuading governments to
follow up with state plans. What all programmes had in common,
however, was the objective of creating wealth for the community:
development. Wallerstein restates the obvious point that it was
common to believe that any kind of development was more easily
done by further integration into the world market system; countries
that were excluded or isolated from the world market struggled hard
to regain entrance into the community of wealth-seeking nations.
This was the essence of the push for self-determination under the
Wilsonian/Leninist paradigm.
The USSR was where this idea of development was first tested
outside the core. Wallerstein explains:
When Lenin launched the slogan Communism equals the Soviets
plus electricity, he was putting forward national (economic)
development as the prime objective of state policy. And when
Khrushchev, decades later, said that the Soviet Union would bury
the United States by the year 2000, he was venting supreme
optimism about catching up. (Wallerstein et al., 1996:115)
It was after the Second World War, following the rapid reconstruction of Japan and Western Europe, that ideas on the possibility of
development were emphasised. Third World countries and even
underdeveloped regions of the core like southern Italy, Spain and
southern parts of the United States went on rampages searching for

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the best model of development. At the top of the agenda of all


politicians and political programmes had been, and to a certain extent
remains today in the minds of many, economic development.
What Wallersteins study leaves us with is a sense of how
contemporary national liberation movements came to order and how
economic development has been a major theme, for both the
promoters of self-determination and the receivers of the same
(Wallerstein, 1984). Furthermore, detailing the road that many
countries took for development from the time of independence brings
us to realise that beyond socialism or liberalism, beyond the proletariat
or the citizen, a party/state paradigm of state-controlled enterprises
is what most peripheral countries had in common. This was even
true of the newly industrialised countries of East Asia after the Second
World War. Sornarajanah states:
Developing countries generally view the success of the newly industrialized states of Hong Kong, Singapore and South Korea as models
to follow. Though the Classical economists may believe that these
achieved success by following free market economics and permitting
full-scope for non-indigenous capital and technology, this does
not present an accurate picture. There was considerable state
regulation and intervention which accompanies the process of
industrialisation of these states. (Sornarajanah, 1994:56)
Cuban state-led economy
The theoretical illusion of further economic or national development
by opening up to the uncertain forces of the world market with little
or no state intervention seemed to phase out after a number of studies
were conducted on the newly industrialised countries (Broad and
Cavanagh, 1998). In its place came state-led industrialisation and
actual state corporations. The idea of setting up state enterprises for
the purpose of generating capital to develop the underdeveloped
country is better understood through the idea of state capitalism in
its different forms and the project of Keynsian economics. In this
sense, Cuba, as having a one-party/state apparatus, a socialist name
in its discourse and a state-led economic model, was not all that
unique among countries of the developing world. In many regards,
the Cuban government can be conceived of as having been typical
of all states in the periphery of the world system that searched for
development. What makes this case different is that since the Cuban
Revolutions existence, state leaders in Cuba never recognised classical

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liberal policies as those that result in national development; this has


remained true even during the time that neo-liberalism has returned
to fashion. If anything, Fidel Castro and the Cuban Communist Party
reject (neo-)liberal economic policies to this very day. It was, as I will
expose in Chapter 4, precisely the call to anti-imperialism and the
opposition to interventionism by foreign entities and global financial
institutions that was thought of as and is still believed to be the
key to national development in Cuba. If there is a slight clue as to
what Cuban socialism entails, it would certainly and possibly solely
be found in the leaderships active resistance to state reductionism
in order to maintain national or democratic sovereignty.
I have found that Wallersteins or the world-system approach
is good but not sufficient when trying to understand the character
of Cubas state-led economic model. The first clue to flaws or weak
points was found in the logic that followed in the section concerning
the issue of using anti-imperialism as the driving force to state-led
economic development. Wallerstein traces the concept of antiimperialism to Lenins call to worldwide revolution and Wilsons 14
Points when, in fact, Cuban government discourse against imperialism
and foreign intervention does not base itself on either of these sources.
In Cuba, the call for cleansing the island of external impinging forces
has its origins prior to the Cuban, Spanish and American War of 1898.
By that time, many Cuban intellectuals had read the Communist
Manifesto, but Lenins Imperialism: The Last Stage of Capitalism did
not exist. Rather, Cuban discourse depended on the countrys own
intellectuals, most notably Jos Mart, to shape the ideology which
produced both anti-foreign intervention and a state-led economic
model (August, 1999). It was neither the Soviet-controlled PSP (Cubas
Communist Party prior to the 1959 Revolution) nor the CIA that
inspired or even contributed to the Cuban Revolution. On the
contrary, the movement of social change and the disposal of the
Batista dictatorship was essentially an autochthonous struggle that
was hindered by Stalinist politics. Therefore, world system theory
has a problem of interpretation when regarding national liberation
movements.
Wallersteins contribution can be accused of carrying with it two
particular faults. First is that of being Eurocentric. This should come
as no surprise as Wallerstein chose to develop his study of the modern
world system by basing it on studies of agricultural capitalism in
fifteenth-century Europe, and how that structure spread through
colonialism and the practice of mercantilism and primitive

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accumulation within European empires. An alternative approach


would rely not so much on the need for capital to expand outside of
Europe but on the weaknesses of peripheral societies that allowed
European colonial powers to penetrate all the regions of the Earth.
Though this theory has yet to be developed in all the social sciences,
the history, possibilities and limitations of world capitalism are not
as yet fully explored. The consequence of Eurocentric models is the
overlooking of important developments within the periphery. Petras
and Veltmeyer have noted: the initiation and success of all 20th
century revolutions had less to do with the presence of the Soviet
bloc and more to do with the development of class and anti-imperialist
struggle and international solidarity within the country (Petras and
Veltmeyer, 2001:1601). But this can be found even before the
twentieth century; the prime example was provided above when
considering the link between national development and antiimperialism in Cuba prior to the ascent of the Soviet Union.
Another flaw in the world system theory is that which reflects its
general vision of the inter-state system. Though Wallerstein finally
agrees that within the core there are peripheral areas, and vice versa,
his point of departure in explaining national liberation movements
is the state, the state that was given liberty to practise self-determination. Though I agree with the conclusion that newly independent
states in the twentieth century actually served the interests of rising
or potential hegemonies and their economies by providing new
markets, I disagree or am dissatisfied with the way the state on the
periphery is portrayed. In some sense, Wallersteins views on the
peripheral state and its behaviour resemble what is called the realist
perspective in international relations. Though world system theory,
through its origin in Latin American dependency theories, tries to
define the global political economy as one whole structure that
employs capitalism (an economic system that penetrates beyond
national boundaries), it still does not get away from the idea that the
leaders of states are independently looking for economic models that
promote development. I would argue that when it comes to the
treatment of the state, world system theory is not dependentista
enough; it does not look to the structures that are global and penetrate
or shape national movements. National liberation movements are
not led by socialists or liberals because their leaders randomly chose
one ideology over another. These movements and eventual
independent states evolved from a long history and struggle of social
and intellectual forces that can be found internal to the state as well

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as globally. These forces, which in each country developed differently,


cannot be considered independently of each other but as related and
interacting. The same can be said of state strategies and policies in
the choice of whether to comply with global trends of neo-liberal
ideology or to reject them.
THE PARTY/STATE APPARATUS
Both global (external) historical forces and domestic (internal)
historical forces create state strategies. On another note, one can
conclude that external factors set the limits to the options available
to a country but in the words of Susan Eva Eckstein Third World
Governments, if skilful, can mediate the impact of global political
and economic forces (Eckstein, 1994:6). In other words, not only do
world market and political forces impinge certain structures upon
the state but domestic actors, when forming alliances inside the state,
can create new structures impinging upon outcomes as well. This
negates the position taken up by many political scientists that fall
into either the realist or superstructuralist categories that ignore
historical and structural conditioning in the first instance and
domestic alliances or social forces in the latter.
I agree with Nico Poulantzas who, in 1978, made the argument
that policies are moulded by interests within a domestic entity and
also by the struggles among the interests. So the unit of analysis is
shifted from the hardly defined animal called the state to the
strategies taken up by the social construction which I identify in
Cuba as the party/state apparatus in response to the global
environment. In this discussion the state is not ignored but it is
conceived in a relational manner, related to the domestic forces and
historical basis upon which it was built (see also Cerny, 1989). The
state, according to this line of thinking, can no longer be viewed as
a concrete entity; it must be viewed as a social relationship. For this
reason I prefer to use the term party/state apparatus when referring
to Cuba, because the one-party, anti-imperialist state-led economy
that exists in Cuba is better served by describing it according to the
most important actors in that entity the Cuban Communist Party
(PCC), the collective of institutions and productive sources are all
embodied in an apparatus which constitutes national power.
Furthermore, this view also deters social scientists from thinking of
a state as socialist, capitalist or neo-liberal. This makes it difficult
to categorise the countries according to the ideologies and forces the

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social scientist, as s/he should be doing, to look for state strategies


that imply the (im-)mobility of social forces that influence policymaking. In other words, and once again, there are no socialist states,
there are only state-led economies run by socialists that might opt
for certain market measures, depending on which way the domestic
social forces are mobilised and how they are manipulated by global
restrictions. Some of these market measures might entail dismantling
the entire party/state apparatus, as experienced in Eastern Europe.
Though this last experience was seemingly the most popular option
during the late 1980s, it was, as demonstrated in other cases, such as
Cuba, not the only one.
What happened in Eastern Europe is a perfect example of the
internal struggle of interests that was implied by Poulantzas work.
The culmination of conflicting interests was, nonetheless, inspired
by an economic crisis that slowed Soviet production and technological innovation during the 1970s, but it was not until the 1980s that
Eastern European economists were allowed to open publicly the
debates on the causes of economic stagnation. Some, like Aganbegyan
(1988), pointed mostly to the general structural problems that a
centrally planned economy entailed. Others, like the Hungarian Janus
Kornai, made specific claims about the causes of the decline of Soviet
bloc economies. His main theses were: (a) that a shift in world market
price proportions changed the terms of trade to the disadvantage of
Eastern Europe; (b) that a recession in Western capitalist countries
coupled with new protectionist measures made export more difficult
for these countries; finally, (c) that during the decades when economic
growth seemed constant, infrastructure was ignored by following
investment-intensive as opposed to extensive programmes (Kornai,
1980). The countries of the CMEA in Eastern Europe were integrating
their economies further into the West and because of their dependency
became vulnerable to shocks in prices and products (Lawniczak,
1992:99106).
Some pointed out that the series of reforms that Gorbachev
introduced in his perestroika and glasnost just accelerated the process
of integration of Eastern European markets with the countries of the
West (Kornai, 1992). The conclusions were that once the process of
so-called democratisation and market liberalisation began rolling,
popular forces antagonistic towards state leaders would gain
momentum and eventually bring down the bureaucracy that appeared
to impede progress. But the movement towards resistance was not
new, nor had it developed in the late 1980s. Since hardline Stalinist

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models of socialist states had been imposed upon the countries of


Eastern Europe after the Second World War, the popular base of
legitimacy was never present in those countries. This caused a large
political vacuum between elites in the Communist Parties leadership
and the ordinary Eastern European citizen. Additionally, due to the
market openings to international financial institutions other than
those provided by the Soviet Union, infiltration of antagonistic forces
towards Stalinist models of development started to rise within Party
bureaucratic circles. These anti-statists and agents of Western
capitalism formed interest groups that came into conflict with the
so-called hardliners, while at the same time filling the political gap
that had been exposed between the leaderships and the people.
This was not the case in Cuba for a number of reasons. One of the
underlying tenets of the Cuban Revolution what I call pillars is
that of popular participation (see Chapter 2). This at first might seem
as an apology for Communist Party propaganda. But what it entails
is a connection between Cubas party/state apparatus and the popular
masses. Whether the vehicles of expression can be considered
democratic or not, or whether the relation with the leadership is
imposed or simply justified, is another question. Nevertheless, there
is a revealed, strong link between leaders in government and businesses
and the popular masses that was somehow absent in Eastern Europe
and the USSR. There was never a gap between popular forces, like
the Federation of Cuban Women and the united Cuban Trade Union,
and the members of the PCC. In Cuba, bureaucratic despotism was
rarely an important factor in the political life of its citizens.
Furthermore, since Fidel Castros ascension to power, at no time did
any country including the Soviet Union impose its military might
against the popularly supported regime. Cuba was never a Soviet
satellite in the Americas. As historical reference will demonstrate,
Cuban and Soviet foreign policies often clashed. There are other
factors that should be considered when asking why the Soviet bloc
disappeared; however, since this is not a comparative study, there is
no room for them here.
Concentrating on the Cuban case, it is necessary to look more
deeply into the theoretical foundations that allow for what I identify
as the party/state apparatus to adopt certain positions, strategies and
measures that may be consistent with the global political economy
or, possibly, quite the opposite of what most state leaders employ. At
this point it is necessary to move beyond the state and look at the
general environment in which the Cuban party/state apparatus has

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existed and exists today. Analysing Cubas domestic political economy


entails taking into consideration the domestic and global forces and
changes that impinge upon it.
Chapter 2 of this book will provide a historical framework for
understanding the party/state apparatus in Cuba, i.e., what is known
as the Revolution. Though the events that led up to the 1959
Revolution and the social consequences that followed have been
written about time and time again, few analysts look at the social
forces that evolved in Cuban history and shaped or consolidated the
project of national liberation and emancipation of the countrys
working class. It is my contention that without careful consideration
of Cubas political and economic history, the present day leadership
of the party/state apparatus cannot be understood. This is partly
because some of the current key leaders are products of the struggle
for national liberation during the Batista dictatorship; namely Fidel
Castro and his brother Raul. Additionally, it was the fusion of various
revolutionary tendencies prior to 1959 that made the PCC what it is
today. In this historical review, I suggest that the Cuban Revolution
rests upon certain pillars and foundations that have allowed the
party/state apparatus to persevere through this recent era of neoliberal globalisation. A brief look at how the values of unity, continuity,
state supremacy and popular participation were transmitted to the minds
of the Cuban people will conclude this part.
Chapter 3 is dedicated to understanding the recent global changes
that forced Cuban society to restructure many of the economic,
political and social policies that were thought of as traditional or
even essential to the Revolution. It reflects upon the causes and
consequences of the economic crisis that the Cuban people and
party/state apparatus endured between 1991 and 1996. As Chapter
3 will show, the Revolution was transformed from a social system
that concentrated on reproducing itself to a mutated social, political
and economic project that is struggling to survive. The economic
crisis, caused not by a sudden disappearance of a sponsoring
superpower but by the slow disintegration of a real working parallel
market system based on moderately fair trade (CMEA), should never
be underestimated. The paralysis of over 70 per cent of Cubas
purchasing power and the consequences that this caused for
production and capital accumulation on the island led the countrys
leaders to embark upon new formulas for maintaining state control.
In this experience, often referred to as the Special Period, new ideas
emerged that would have been unimaginable only a couple of years

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prior to 1991. Among these ideas and policies are: the legalisation of
citizens use of hard currency for the purchase of import products;
the building of a tourism industry as the countrys main source of
income; the opening up to foreign direct investment and up to 100
per cent foreign ownership in new fields of economic exploitation,
and the formalisation of a self-employment system (cuentapropismo)
that in many ways relieved the states responsibility for a percentage
of Cuban workers. Nevertheless, all of these measures were taken in
the name of safeguarding what is often referred to as the triumphs
of the Revolution. As will be demonstrated, the reforms were not
inspired by global financial institutions like the World Bank or the
International Monetary Fund. Rather, the economic restructuring
that took place in Cuba during the 1990s proved to be the collective
work of Cuban political economists and the implementation of ideas
that are autochthonous to the island. However, none of the changes
happened in an international vacuum. The Cuban leadership foresaw
the global opportunities that were open to the party/state apparatus.
Foreign investors were willing to contribute to Cubas alternative
model and create partnerships with state enterprises in ventures such
as petroleum explorations. Other countries and corporations avoided
the twice-enhanced economic embargo. All of these factors will be
given brief consideration.
Chapter 4 will deal with the period 19962000, when social and
economic indicators revealed that Cuba was on its way to a slow,
stable economic recovery. The aim of this chapter is not only to
emphasise the Revolutions success in resisting global pressures to
fall to neo-liberal practices and the will of counter-revolutionaries in
the United States. Rather, the purpose is to discover how global
pressures, together with domestic policies, shaped Cubas current
political economy. At this point the similarities between new policies
in production and capital accumulation and some of the trends most
typical of neo-liberal globalisation will be revealed. Attention will be
given to the self-employed sector (cuentapropismo), the number of
participants, which has steadily decreased throughout the last five
years, and the restructuring process of state enterprises called el
sistema de perfeccionamiento empresarial endorsed by documents
produced in the fifth PCC Congress (1997). Lastly, the implications
of these recent changes for Cuban society will be highlighted, whereby
internal economic structures and shifts in productive power will be
clearly explained. Throughout Chapter 4 I will argue that specific
social forces have been repositioned in order to accommodate Cuba

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Introduction

39

into the global political economy, while preserving the foundations


and pillars of the Revolution.
The fifth and final chapter of this study will reassess the central
questions and restate their relevance to the subject of global political
economy and alternatives to neo-liberal globalisation. It will outline
theoretical as well as practical consequences for considering the
Cuban Revolution and the historical relevance of revolutionary
resistance to the new world order. Brief consideration will be given
to the possible future scenarios that the Cuban party/state apparatus
might encounter.
Besides secondary sources and findings, much of the work in this
book is based on my five trips to Cuba between 1996 and 2000.
Interviews were held with Communist Party members, leaders of
socialist civil society groups like the Federacin de Mujeres Cubanas
(FMC), the national trade federation (CTC), students, political
economists, anonymous opponents of the Revolution, participants
in the black market and the self-employed.
In February 1998, I interviewed 179 self-employed/informal
workers, using a questionnaire found in the dissertation version of
this document; I also interviewed state inspectors, tax collectors, and
individuals participating in illicit activities like prostitution. The
purpose was to find evidence of an emerging social or economic class
viewed differently from state workers among the self-employed,
and to identify the ideas carried by this group of people. This project
was not intended to be a scientific survey that pulls out numbers for
the mere purpose of categorising those interviewed. Rather, it is a
sampling to provide some insight into dividing lines that are being
developed or possibly revealed during this time of social restructuring in Cuba. The topics of self-employment and the informal sector
were chosen because of their recent development in Cuban society
and their implication for labour relations in the country. Additionally,
very little research has been dedicated to this field. The services and
small products that are sold by the cuentapropistas supplement the
daily needs of the majority of the population. Cuentapropismo was a
potential force that was in the hands of the population and was
unleashed by government leaders during the economic crisis of the
1990s. The government uses the term cuentapropistas to describe those
self-employed individuals who pay their monthly taxes and adhere
to the terms set in Decree-Law No. 141. Decree-Law No. 141 does
not consider workers in the black market or those conducting illegal
activities.

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Thanks to Cubas excellent health-care system and the countrys


general care for the elderly, I was fortunate enough to interview many
senior citizens during the advent of the Revolutions 40th anniversary
(199799); these individuals were able to offer a comprehensive and
long-term testimony concerning the social trajectory of the
Revolution. In 1999 and 2000, over 100 Cuban workers in the tourism
industry and the health and education sectors were interviewed
randomly on their views about recent economic and political
developments on the island. These interviews and testimonies are
documented in my Ph.D. dissertation.

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2
Conceptualising Cuban
Socialism: The Pillars of the
Revolution
Socialist Cubas present-day existence rests upon a combination of
elements that I have chosen to call pillars. In this sense, party/state
governance can be seen more as a consolidation of social and economic
conditioning that reflects the combination of global trends and local
forces. Among them: a popular rebellion, in the name of social justice,
against a dictatorship that was defunct as a legitimate regime; and a
social revolution that was framed by the Cold War, which pushed
the leadership to opt for Cubas anti-imperialist stance against US
hegemony in the region and her move into the socialist bloc. Later
in this book the mass organisations and electoral system linked to
the PCC will be depicted as those that ensured that Cuban society
was highly politicised and that the PCC maintains legitimacy.
Towards the end of this chapter and throughout the remainder of
this book, I will defend my argument that the party/state apparatus
at hand rests upon four main pillars, which define the character of
Cuban socialism. These pillars are: continuity, in the tradition of revolutionary leadership against colonialism and later imperialism for
the purpose of perfecting society; unity in a singular political party
of the masses, which would seize state power and conduct change;
state supremacy over all social forces including the market mechanisms;
finally, popular participation or the convergence of domestic social
forces that respond in electoral and informal processes to global
trends and pressures. The pillars of the Revolution can be defined as
the tendencies upon which the 1959 Revolution came to the fore
and the ideas that are promoted by the vanguard and currently
demanded by the general population. This is the formation of a
nationally unified, counter-hegemonic bloc upon which the state
was built, often contradicting the interests of US hegemony and
global trends.
In order to depict the pillars, by which we can identify the present
regime in Cuba, it is necessary to discover first the historical
41

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foundations of revolution that led to the social transformations in


1959. Cubas revolutionary state can be understood from two aspects
that are not separate but intertwined. They will be identified as
foundations to the states existence. On the one hand there is the
struggle against imperialism, i.e., the coming to the fore of social
movements that oppose foreign and especially US interventionism
in domestic affairs. These movements have their roots in the struggle
for independence from Spanish colonialism in the nineteenth century;
leaders like Jos Mart and Antonio Maceo built political discourse
based on ideas regarding sovereignty from both Spain and the US.
These leaders were conscientiously opposed to Monroe Doctrine
policies (Smith, 1987) and inspired those early twentieth-century
revolutionaries who opposed the Platt Amendment in the Republics
original constitution (see below).
Together with the struggle for independence there developed an
idea of social justice and the building of a society based on the concept
of equality. Jos Mart was not only interested in fighting for an
independent Cuba, as did the politically sovereign republics of Latin
America. Mart was also interested in building a new society based
on equality for all its citizens, a united nation that would form a oneparty state apparatus in the interests of the masses (Morales, 1975:27).
This brings us to a second aspect.
The other foundation by which we can understand Cubas revolutionary character is that its very existence with the present leadership
is a conscientious front and challenge to the capitalist world system
and all its social contradictions. This was true in a more radical manner
during the 1960s, but has remained so throughout the duration of
the Cold War in the form of a legitimate institutionalised state aligned
with the socialist bloc, and even until today in opposition to the
process of neo-liberal globalisation, which has not solved the issues
of poverty and inequality among nation-states this is at least so in
the leaderships discourse. Both anti-imperialism and social justice are
aspects that must be studied critically, for these foundations of Cubas
revolutionary existence did not develop in a vacuum, but within the
limits of a historical context.
THE CAUSES OF A TARDY INDEPENDENCE
Cuba was late in achieving its independence. What made Cubas
struggle for national liberation unique among her neighbouring Latin
American countries was the lack of coherent middle-class interests

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43

that would normally lead towards political sovereignty. Where the


middle class in other countries was unified in its interests to end
colonialism, Cubas aristocracy or slave-holding classes were divided
and thus never acted upon the desire to emancipate themselves from
the Spanish crown.
The white Creole elite in Cuba delayed their urge for independence
because they were class dependent on the colonial structure, which
protected their very livelihood: the production of sugar by the
exploitation of black slaves. During the late 1700s, tens of thousands
of acres of land were dedicated to sugar production. When Haiti won
its independence from France and the colonial masters, Cuba became
the world centre for sugar production. As the island became richer,
more slaves were needed, not only to work the fields, but to build
city infrastructure and to work as domestic servants for the rising
middle class of the cities as well. According to one reading of
demographics, by 1872 slaves made up 40 per cent of the population
(Thomas, 1971:268). One cubanologo adds: In no other Spanish colony
was the local economy so totally dependent on slavery; in no other
Spanish colony did the total population of colour constitute a
majority (Pino Santos, 1964:13). Because there were many free people
of colour as well, the white Creole class were a very small minority.
Their economy depended on slavery and the suppression of other
races. In no way were the Creoles ready to fight for independence,
especially if it meant a detriment to the economic order. Throughout
the 1800s the slave-dependent economy in Cuba was cursed with a
susceptibility to break down, as this particular century produced
conditions for the creation of an abolitionist or resistance movement.
This seed of resistance gave birth to a tradition of struggle, which
would not die but would flourish throughout the future wars of
independence (August, 1999: 47).
ROOTS OF NATION-STATE FORMATION
In 1868, a movement for armed struggle against Spanish domination
was organised in all the provinces of the island. The leaders of this
movement were various, mostly from the frustrated Creole elite but
also the children of African slaves, such as Antonio Maceo, general
of the Eastern Liberation Army. The movement itself consisted of a
melting pot of cultures, an array of people struggling for the idea of
a new society. A constitution was created under which all people
were recognised as equals and a representative form of democracy

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was to be established (articles 7, 24, 26 of the Guaimiro Constitution


of the Republic of Cuba: see August, 1999).
After ten years of bloody battles, this initial spark of revolution
failed and ended up in the hands of compromising figures. In 1878,
some of the Creole elite living in the centre of the island signed the
Pact of Zanjn. The Pact was a peace treaty recognising Spanish
colonial power but putting an end to slavery and providing some
rights to the inhabitants of Cuba, including the rights of African
peoples and Chinese contract workers. Here the Spanish colonial
powers recognised that the fight for independence was linked to the
social liberation of slaves and people of colour. But not everyone was
satisfied. Antonio Maceo, the well-educated Black General of the East,
did not recognise the Pact and so skirmishes and battles haunted
Spanish military control in the provinces of Oriente right up until
the very day the colonial power was defeated in 1898.
Developing the emancipation idea
But the historical value of the First War of Independence (186878)
was the creation of a nation ready to seize state power by the implementation of political structures like the first constitution; a nation
defined therein as consisting of people of various backgrounds, mostly
non-aristocratic. The desire to create some sort of political structure
had risen from the desire to accomplish the emancipation of a people.
August puts it nicely:
as the Cuban nation developed its struggle for national and
social emancipation and for its own state, the attribute of being
part of the Cuban nationality in general, proudly took, and still
takes, precedence over national origin ...
The consolidation of nationality, the political struggle of the
notion of an indigenous Constitution as part of the construction
of a new state, all these elements together compose cubana. The
centerpiece of cubana is the holding of political power by the
majority at the head of the Cuban nation. (August, 1999:83)
Since the failure of the First War of Independence, the ideas of the
majority of the people had changed; individuals became self-conscious
about their position in society and political discussions about
emancipation were abundant on the city streets as well as in the
countryside. Meanwhile, the Creole elite splintered again and lost
unity. Among the many groups that formed were the annexationists

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(those who preferred to join the United States) and the Spanish loyalists.
Their ideological state of confusion left the independence movement
in the hands of grassroots and modest leaders such as Jos Mart.
Jos Mart
Just as today, when history is written focusing upon one man in the
leadership of the Cuban revolution that man being Fidel Castro
the history of Cubas anti-colonial movement during the late
nineteenth century was written by highlighting the importance of
Jos Mart. Though I discard many psychological approaches that
interpret movements by the charisma of their leadership, it is necessary
to point out the significance of a leader like Jos Mart, who was
capable of expressing a clear idea of the type of society he envisioned.
Because of Marts writing abilities, he was able to capture the attention
of his generation and also that of many which followed up to the
present day (Mart, 1931). However, it is appropriate to place more
emphasis upon the material conditions of his time than on his view
of society, which did not rest upon mythical ideas of a fatherland.
Jos Mart was the son of modest Spanish immigrants who settled
in Havana. As a journalist and a man who spent all his money on
travelling, he was capable of taking a world view on the situation
that had flared up in Cuba. Mart envisioned a new war of
independence, waged by the vast majority of the people against the
colonial masters and against the exploiting Creole elite who were
labelled as traitors to the Cuban movement. The only way Cuba could
be free, according to Mart, was through an organised collective
rebellion against the social, political and economic structures
governing the island. Mart spent a number of years in exile in the
United States (Thomas, 1971:292309). Initially, he was impressed
by the workings of democracy in that country. However, the situation
he was living in moved Mart to consider the faultiness of AngloSaxon democracy, i.e., the division of society into classes consisting
of capitalists and the vast majority of the people, with political parties
representing the same reality. During his expatriate residency, he
came to know other exiled Cubans, many of whom were involved
in struggles of their own, while looking for the betterment of material
living. He also came to know Puerto Ricans in exile in New York who
like him were interested in initiating a united front against Spanish
colonialism. During this time, Mart became clear in his vision of a
future society. Democracy, in his view should not have resembled
the bipartisan system found in the United States, where both parties

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were slaves to their capitalist owners (Mart, 1931). Mart understood


that the struggles of all human history hitherto had been the struggle
between oppressors and oppressed (August, 1999:948). He was by
no means a Marxist. But many of the ideas Mart was famous for were
congruent with an economic interpretation of history. Those
surrounding Mart in his independence movement were certainly
influenced by Marxists.
Cubas first revolutionary movement: working-class
movements and the PRC first links
In 1890, Jos Mart founded a popular and unconventional revolutionary movement called La Liga de Instruccin. In reality, it was a
training school for revolutionaries in New York, the majority of whom
were Cuban and Puerto Rican workers (mostly mulattos and blacks).
Out of this school developed the clear idea that no other option than
outright independence was viable for Cuba (Morales, 1975:27). The
movement grew, as did Marts popularity, to the point where branches
of La Liga were established around the East Coast of the United States.
Among them was the section of tobacco workers in Tampa, Florida,
where a union of mostly socialists (both Marxists and anarchists) was
formed. Some accounts of these young movements and socialist
groupings note that a theoretical 10 per cent of workers wages was
spent on organising the independence movement (Balio, 1964).
Finally, in 1892, Mart founded the Cuban Revolutionary Party
(PRC), which had the goal of independence for both Cuba and Puerto
Rico and the establishment of a new social order. Viewing the Cuban
people as a whole, the PRC was to become the vanguard party of the
immense majority of the people. For Mart, it was important to
distinguish the PRC from all other parties on the island, never allying
itself with the loyalist conservatives or the Creole liberals because
these parties did not have the interests of the masses at the forefront
of their agenda. On various occasions, Mart noted that these parties
were estranged from the Cuban people and had nothing to do with
them (Mart, 1889:18). Additionally, Mart started placing emphasis
on the need to maintain the agenda of Cubas independence as not
only separate from but also in conflict with the United States
expansionist tendencies (Mart, 1931:2713).
The second War of Independence
On 24 February 1895 the Second War of Independence was launched
from Oriente (the eastern provinces). It was called El Grito de Baires,

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Baires being a town where the rebellion began; a call to armed struggle
for independence and democracy. For the first time in modern history,
an entire nation, consisting mostly of working-class people from all
kinds of ethnic backgrounds, enjoyed unity in a single political party
that belonged to them and whose purpose was the establishment of
a new social order, with total emancipation as the prime objective.
Jos Mart died in battle shortly after the outbreak of the second War.
But in September 1895, a Constituent Assembly gathered in the
central province of Camaguey in order to create a new constitution.
The constitution in this case would be in stark contrast to the first,
composed by common people who only had the interests of the
masses in mind (August, 1999:70).
What needs to be emphasised though, and still remains clear in
Cuban history, is that the struggle for independence from colonialism
and later imperialism was organically linked to the formation of
national identity, or what is called cubana. The leaders and writers
of the Cuban wars for independence were genuinely interested in
building a new society. This view reappeared in the ideas Mart had
on the concept of a single political party representing the most
progressive ideas for the masses and presented by the experience of
the masses. Certainly, one should not romanticise the idea of
interracial unity. Jos Mart, like many other whites of his time,
possibly including Marx, saw anti-racism not as a moral idea but as
a political necessity. But this material need, to remain unified in order
to attain progress, affected the populations conscientiousness and
defined the broad limits present in social change in Cuba.
The consequences of a late independence
During the time of the Cuban, Spanish and American War (1898),
Cuba was already integrated into the ever-expanding world market
system, which was dominated by England and the United States.
Prior to this, the British Empire was already declining and as the US
economy grew, so did the expansionist tendencies induced by market
need. It was the Cuban, Spanish and American War that consolidated
US hegemony over the Americas. Simply put, the United States saved
Cuba from Spanish domination. But the struggle for independence
started long before the United States intervened and the ideas of anticolonialism blossomed into the ideas of anti-imperialism and the cry
for social justice. However, as stated before, the United States, as a
political structure of vested interests in trade and commerce, always
had its eye on the jewels of the Caribbean, especially Cuba. If Cuba

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were not to be integrated into the political structure of the United


States, then certainly Cuba both economically and politically
should at least have been subordinated to the interests of US capitalists.
Jos Mart and other revolutionaries of his time recognised North
American expansionist interests as a threat to sovereignty (Mart,
1889:2713). Hence was born the Cuban revolt against a hegemonic
order and a new movement that was later labelled anti-imperialism.
US INTERVENTION AND NEO-COLONIALISM
The Cuban, Spanish and American War ended with the Treaty of
Paris in December 1898 whereby Spain sold all her overseas provinces
in the Pacific and the Caribbean, including Cuba and Puerto Rico,
to the United States. To the delight of the annexationists, US military
occupation ensued. US martial law took control of the island with
total disregard for the Cuban movement of independence. In fact,
US intervention immediately quelled the already burning fire of
revolution. Tomas Estrada Palma, president of the PRC since Marts
death, liquidated the singular party and recognised US supremacy.
A military proconsul (General John Rutter Brooke) appointed by the
US president presided over the island and Cuba became a neo-colony
of the United States (Thomas, 1971:436). From the very beginning,
the Cuba that emerged during the half-century of struggle by the
masses came into conflict with the government that would be put
in place by the United States. The view of the US ruling elite circles
was that the Cubans were incapable of governing their island. The
attitude was essentially racist and additionally frustrated the project
that Jos Mart had in mind when he founded the PRC (August,
1999:101).
A liberal, neo-colonial constitution
In 1901 the US government invited members of the Creole elite to
participate in drafting a constitution, the first of the independentto-be Republic of Cuba. But the very structure and conditions upon
which the constitution was fabricated indicates the level of
independence the Republic actually had. The United States, now a
neo-colonial power, had to figure out what kind of government they
wanted to install. Foreshadowing problems to come and in fear that
the spirit of revolution might resurrect the Cuban struggle for complete
independence and rule by the masses, Secretary of State John Hay
recommended that some clauses be included in the Constitution

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of the Republic of Cuba which would allow the US government


(represented by the military) to intervene in the case of foreign
aggression or domestic disorder. This was called the Platt Amendment,
named after Senator Oliver Platt. It met much opposition, even from
within the new ruling elite of property owners. But the United States
did not budge from their position; on the contrary, independence
would not be granted and a constitution would not be approved if
the amendment were not included. The compromising nature of the
elite led the future leaders of the Republic to vote in favour of the
US-fabricated constitution. It was enacted in 1902 and the Republic
of Cuba was inaugurated that same year. For this reason, in Cuban
history books today, the period between 1898 and 1959 is referred
to as the neo-colonial period (Ibarra Cuesta, 1995a).
Sugar dependency
During the neo-colonial period, the entire economy was structured
around sugar, as it had been under Spain. The difference now was
that slavery had been abolished and a newly born working class with
a tradition of struggle was on the rise. While US companies started
buying up most of the arable land for sugar production, new mills
and ports sprouted up all over the island. New technological advances,
such as the steam power mills and increased usage of railroads, allowed
for a greater concentration of working-class people, in the cities as
well as in the countryside. Three forces antagonistic towards each
other summed up the conflict of social classes. First, the US capitalists,
who practically governed the island and curtailed self-determination. Second, the domestic bourgeoisie, who had their time tied up
between governing island politics in servitude of the US capitalists,
on the one hand; and on the other, aspiring Cuban capitalists who
usually became the middle men between smaller sugar-cane fields,
tobacco and rum factories and the larger US corporations. Their
primary preoccupation was the guarding of advantageous sugar trade
deals in quotas and price arrangements. On few occasions were the
elite happy with the USCuban sugar deals. Third, was the Cuban
working class, who made up the majority of the Cuban people,
standing in direct opposition to all other ruling classes and still
carrying the tradition of resistance learnt during the struggle for
independence. It is ultimately this third and last social force that
requires particular attention, since the purpose of this chapter is to
delineate the background or pillars of socialist Cuba.

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THE FIRST LABOUR MOVEMENT


As mentioned before, the working-class movement was strongly
linked to the leaders of Cubas war against Spain and US intervention.
Even prior to the Cuban, Spanish and American War, the first socialist
groups started to take form. These included: the Club of Socialist
Propaganda, founded by Carlos Balio; the Karl Marx Club, founded
by Augstn Martn Veloz; and the Workers League of Oriente, founded
by Rafael Guiterras (Soler Martnez, 2000). The founders of these
groups were the intellectuals linked to the PRC. Carlos Balio, a friend
of Jos Mart and member of the PRC, was originally an anarchist
who eventually shifted in his political thinking towards organised
working-class action. He later adopted Marxist ideology and founded
a socialist party in 1905 and two decades later a communist party.
The working class in the periphery
In contrast to industrial Europe and the United States, where the
working-class movement focused strictly on class struggle, their
peripheral counterparts those similar movements in the agricultural
economies additionally had the task of fighting imperialism. In
Cuba this meant that the working class, which already had a tradition
of political organisation against colonial Spain, had to form an alliance
with other parties (including the nationalist middle-class elite) in
order to fend off Yankee neo-colonialism. As a result, socialist organisations were led, not by the common worker, but by leaders from
among the few who were literate (usually university-educated
descendants of the Creole class), who did not always understand the
interests of the class they so pretentiously represented. This produced
a pattern of splintering and division of the revolutionary movement
that was once unified under the PRC.
Anarchist roots and the move towards socialism
Due to the influence of Spanish immigrants, the revolutionary
tendencies among the working-class movement of the time happened
to be chiefly anarcho-syndicalist. In groups, workers of the anarchist
movement read Spanish political literature, exchanged Spanish ideas
and followed the tendency to form workers movements with Spanishstyle organisation. For instance, in 1905, Carlos Balio founded the
Partido Obrero Socialista, modelled after the Partido Socialista del
Obrero Espaol (PSOE) in Spain; but its members were primarily

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anarchists (Thomas, 1971:575). This socialist party grew as more


immigrants with revolutionary tendencies flooded the Cuban labour
market. The move from the anarchist organisations to the socialist
and communist parties can be attributed to two reasons: the triumph
of the Bolshevik Revolution in 1917 and the disillusion of many
workers with the collaborationists (those anarchist and socialist leaders
who compromised with state figures and policies).
A fragmented beginning
The socialist groupings also splintered into varying tendencies and
currents as a series of debates concerning what is to be done
dominated the left from its inception, especially after the revolution
in Russia. This occurred not only in Spain, but also all over the world
and in Russia itself. Most socialists took the path of collaboration,
meaning that the revolution was not immediately possible. So it was
necessary to ally the workers movement with other movements or
political parties represented in the state apparatus in order to achieve
economic benefits and to bring national interests closer to the masses,
i.e., to build socialism by reform rather than revolution. The
development of different Marxist theories caused further often
violent divisions among the revolutionary forces. Stalinists
persecuted Trotskyists and Trotskyists criticised reformists. Cuba was
no exception. Additionally, there were those members of the Creole
elite (of leftist leaning) who were frustrated with the neo-colonial
experience and returned to martiano (meaning from Mart) national
ideology. So while one tendency was geared towards making
advancements in the workers movement through compromise with
the powerful, the other concentrated on restoring national sovereignty
and dealing with immediate contradictions in society. The former
were the communists who eventually collaborated with the dictator
Batista; the other tendency derived from student organisations that
depended on orthodox Cuban ideas, based on the writings of Jos
Mart, which tended to be essentially relevant to the Cuban experience.
This second group was non-international, and carried with it a sense
of social justice and equality for all citizens. But they were not at all
Marxists. From this second group came the heroes of Fidel Castros
26 July movement; this will be dealt with later. Nevertheless, due to
the level of political involvement, Stalins worldwide communist
movement remained dominant against imperialism in Cuba, and it
did so with a strange bourgeois accent.

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The first Communist Party and Machados terror


On 17 August 1925 the Communist Party of Cuba called the Union
Revolucionaria Comunista (URC) was organised in Havana under
the leadership of Carlos Balio. This first communist party centred
around the interests of the working class and worked within the
various unions of their time; its members participated heavily in
other social groupings and popular organisations: youth groups,
womens organisations, groups unifying blacks, and peasant unions.
This first Cuban communist party was established during a very
confusing time in history. It was established under the tyranny of
the US-installed military dictator Gerardo Machado, who ruled
between 1924 and 1933. He was put in place to control the masses
and quell all strikes against the ruling classes. Machado himself was
a member of the ruling class; he was the former director of the USowned company General Electric in Cuba (Beals, 1933:101). Gerardo
Machado was known to run affairs with repression and terror, but
mostly he was famous for his anti-labour-movement tendencies. He
came to power, or rather was installed, because he promised New
York businessmen not to let any strike last longer than 24 hours. He
was responsible for the arrests, murders and deportations of union
organisers and labour movement leaders. Talk of labour organising
was to be squashed at its inception (Binns and Gonzalez, 1981:57).
Most of its leaders were put in prison or sent to exile in Mexico or
Spain. Since most of the original leaders were persecuted or even
murdered, the remaining members of the party and the syndicalist
groupings of those who adhered to the ideas of Marxism had to meet
in the most repressive, occult conditions. Despite Machados reign
of terror, the worker movement continued to grow in the
underground. The spirit of resistance, struggle and revolution had
not been lost and the tradition of fighting against the ruling classes
had become much more acute.
A WORKERS REVOLUTIONARY ATTEMPT
At the beginning of 1933, sugar-cane workers had stepped up their
striking patterns. Cane fields were set on fire, while some 20,000 mill
workers struck for higher wages at 25 sugar factories (Marconi Braga,
1997). However, the government retained enough power to repress
workers and force them to complete the harvest. In August, the recently
united National Confederation of Cuban Workers, which was still

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illegal, sponsored a general strike initiated by Havana bus drivers and


other urban workers. The entire economy came to a halt. What began
as a strike of bus drivers in Havana escalated rapidly into a general
national strike of workers and students against the government.
Workers demanded higher wages and shorter workdays, improvement
in living conditions, job security and recognition of labour unions
by management. Management refused to meet these demands and
depended on Machados leadership to squash the general strike. But
the workers threatened the lives of managers; they helped themselves
to food and supplies from company stores and warehouses. The URC
initially played no role in the rising, but quickly moved to take control
when a sort of anarchy ruled. They declared the establishment of
soviets or workers councils and often came into direct confrontation with US Marines who were in place to protect US property.
Meanwhile nationalist and left-wing student organisations on the
university campuses organised demonstrations against the dictator
and against US intervention in domestic affairs. Among them: Ala
Izquierda, Directorio Revolucionario Estudiantil and Joven Cuba.
These groups were allied with the Partido Revolucionario Cubano
Autentico, calling themselves the authentic representatives of Marts
mission (Thomas, 1971:706). The URC, in their control of the workers
movement, together with the Autenticos and revolutionary student
organisations, led the revolt against the US-installed dictator.
Nationalist tendencies and the lack of a united front
The strike forced President Machado to flee the country, and an interim
government under Carlos Manuel Cespedes was formed. But Cespedes
had no strategy to pacify the radicalised workers and his government
lasted barely three weeks before it was toppled by a military rebellion
led by Sergeant Fulgencio Batista (Thomas, 1971:63449). Batista
collaborated with the students and eventually gave in to their elected
leader Dr Grau San Martn. Belonging to the generation of radicalised
students and revolutionaries who recognised US intervention as a
threat to democracy, Grau intended to create a Platt Amendmentfree Cuba. Grau San Martn promised nationalisation of Cuban
industries and improvement in living conditions for the masses. The
workers remained in control of the mills throughout most of
September 1933, forcing a change in legislation governing practically
every aspect of sugar-cane production (Marconi Braga, 1997).
For a very brief period there was an alliance between the
communists and the nationalists, as Lenin had said there should be.

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The URC policy was that of backing the new president and creating
a coalition government with the nationalists. But Grau San Martns
cabinet lasted only a few months, as the United States would not
tolerate a nationalised sugar industry in Cuba. Batista was summoned
by the US Ambassador and told that Roosevelt would never recognise
Graus presence (Philips, 1935:95). So when Batista toppled Grau San
Martns government, the new generation of revolutionaries splintered
and the workers movement fell apart. If there ever was a presence
of a revolutionary vanguard in neo-colonial Cuba, it certainly was
absent during this period of history.
Batista and the communist movement
The world usually remembers Fulgencio Batista as the cruel dictator
who capitulated to Fidel and Ches revolutionary movement in 1959.
He was known as an irresponsible despot, a corrupt delegate of US
interests on the island, and the violator of the 1940 constitution. But
few remember or want to remember Batista as the first democratically elected Cuban president, who actually installed the first
democratic constitution. It was the same Batista who was endorsed
by the Communist Party URC, the friend of labour and the president
who, as a friend of President Roosevelt, sparked the New Deal era in
Latin America.
As throughout most of Latin America, Cubas Communist Party
followed the line of compromise with the liberal order; it was
malleable, it was gullible, it was corrupt and it was bourgeois. The
orders came from the Soviet Union and posed no real alternative for
the Cuban working class. Under Secretary General Blas Roca, the
Communist Party never sought to rule Cuba, it only supported the
liberal regime in its move towards progressive social conditioning.
During the Second World War, the Communist Party in following
Stalinist policy of alliance with liberal democracies against fascism
maintained a stance of unconditional support for the United States,
the United Kingdom and the Soviet Union. This meant communist
unconditional support for Batistas government, especially when the
US President declared war on the Axis powers. Joining the allied forces
and actually participating in the war fortified Batistas popularity; it
consolidated and legitimised communist participation under the
Batista regime.
In pursuance of creating a new legitimate government, Batista
invited the few remaining Communist Party members (who had all
initially opposed the pursuance of national strikes) to join his cabinet

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and together draft the constitution of 1940. Batista in many ways


was a nationalist and he was not always trusted by the United States;
his interests lay in bringing stability and order to the Cuban economy,
even if that meant a partial nationalisation of the Cuban sugar
industry. He declared that his intended policy was that of giving the
domestic capitalist class a larger share of the sugar industry. Batista
sought to enlarge the state machine by incorporating various trade
unions into it. In 1940, he recognised the Cuban Workers Central
(CTC) and the communist leadership supported this move.2 Thus,
the URC became a party whose principal interests were no longer
working-class power and revolution. Rather, it stood for nationalist
populism based solely on the idea that reforms through legislation
would help implement a political programme that would move the
government towards some sort of social democracy.
The communists moved quickly and with the same velocity
changed their political line. After the X Plenum of the Party, representatives went to Batista to share their support for a new
constitutional assembly. In return, the Party would be legalised. This
led Batista to recognise the Communist Party as a democratic
institution whose guidelines fitted within the political workings of
a future social-democratic constitution and the framework of the
capitalist system. In September 1938, the Communist Party was
inscribed into the electoral polls. The Cominterns journal, World
News and Views, commented: Batista no longer represents the
centre of reaction the people who are working for the overthrow
of Batista are no longer acting in the interests of the Cuban people
(World News and Views, 1938, No. 60).
At no other time in Cuban history did the Communist Party attain
as much power in the countrys political system as it did under Batista.
The united front was finally dissolved and its members were
incorporated into the Communist Party. A new national labour confederation was established and run by communists; this was the CTC
(Central de Trabajadores Cubanos), with Lazaro Pea as its secretary
general (Alexander, 1957:287). Batista seemed quite comfortable in
power since his natural enemy the labour movement had turned
into a partner. Batistas populism was also nourished by his alliance
2. The CTC was founded in 1939 as a follow up to the attempted, united
National Confederation of Cuban Workers. Since its official recognition
by the Batista government in 1940, the CTC has been the only national
organisation representing the labour movement in Cuba.

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with other popular leaders of Latin America, for instance with


President Cardenas of Mexico. Only Grau and those revolutionaries
who advocated a more independent Cuba represented a real
oppositional threat to Batista. But there was no hope of tempting the
communists into forming an alliance with Grau in his Autentico
Party, as the URC was quickly co-opted into the neo-colonial structure.
The 1940 constitution and the perverted alliance
The constitution was social democratic in character; it imitated a
post-New Deal system, which recognised the responsibility of the
state to control unemployment, to exploit Cubas subsoil and to
create a maximum holding of lands and property. Two years later,
the CTC was given official status as the national labour organisation,
and Juan Marinello a communist was appointed to Batistas cabinet
as a minister without portfolio. Batista even allowed members of his
cabinet to participate in international labour conferences (Thomas,
1971:715).
The alliance between Batista and the communists only grew
stronger. Though running independently in the elections, his backing
was essentially communist. The only candidate that the URC endorsed
was Batista. This is not to say that Batista did not enjoy backing from
other sectors; as a candidate who stood for economic stability and
support for the national sugar industry, members of many classes
upheld him. The strengthening of the ties can also be attributed to
wartime politics. The more drastically the Second World War affected
the American continent (e.g. by the presence of Nazi submarines in
the Caribbean), the more the nation pulled together in order to
combat the common enemy. Both Stalin and the US Communist
Party endorsed this call to unity.
Batista used this, his most glorious moment, to consolidate power
and also to take advantage of world sugar prices which as in the
First World War were advantageous to Cuba. Russia, as an ally in
the war, set up its embassy in Havana, and Batista greeted the
ambassador personally. Consequently, favourable sugar price
arrangements were made between the two countries. It may be inconceivable to think that the United States had no problem with this,
but the fact remains that, in 1944, Batista made the best sugar deal
with the US corporations since 1924, with a fixed quota of 4.25
million tons at $330 million. Notably, sugar workers wages increased
by 10 per cent (Thomas, 1971:735).

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By 1944 the communists had changed their organisations name


from the Union Revolucionaria Comunista to the Partido Socialista
Popular (PSP), still remaining under Secretary General Blas Roca.
Their programme was progressive but not in the least radical. They
called for racial equality, rights for women and nationalisation of
large-scale industries, but not even for land reform. It would no
longer be a revolutionary movement, rather a democratic party that
upheld the values and laws of the 1940 progressive constitution,
while supporting the rights of the labour movement. But while the
communists conducted themselves within the confines of a fairly
progressive social and political framework, the workers movement
from the base (and not the communists at the top) started to rearrange
their alliances with other revolutionary forces; namely, those whose
political platform centred around anti-imperialism and a fairer
distribution of the nations wealth in a post-war economy.
Additionally, opposition to the Communist Party grew among the
university student body, which criticised the Moscow-mandated
policy of compromise with the United States and corrupt, authoritarian regimes. The voting population shifted to the nationalist side.
The authentic and the orthodox
Although Batista was a popular leader, his personal politics alienated
most of the intellectual circles. His priorities were to create political
stability and promote economic progress. At the time, this was only
possible by creating a coalition between capital (including international capital) and labour (which was controlled by the Communist
Party); Batistas politics were certainly opportunistic. Since the intellectuals and the revolutionary middle classes were not interested in
forming an alliance with the working-class movement because of
the compromising tendencies of the communists these in turn
missed out on a chance to lead the country during economically
prosperous times. Additionally, the intellectuals alienated themselves
as they ignored or underestimated wartime politics. Throughout
Batistas presidency, the Autenticos maintained their independent
line. They were never concerned with the anti-fascist and imperialist
wars among other countries; nor were they ever keen on pleasing the
United States or fearing the Platt Amendment. This was at least so in
their discourse; their governmental experience told a different story.
The workings of democracy in Cuba seemed quite real, as the
Autenticos replaced Batista in the 1944 elections. Grau won on his
party platform of furthering progress in Cuba and promoting more

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nationalisation. Though they backed Batista to the bitter end, in no


time the PSP cuddled up to the new president; again, pretending to
have always supported the interests of the working class. Under Grau,
no communist ever became a cabinet member, yet their
compromising manner did constitute an understanding with the
new president. In the underground, some of Graus cabinet members
were involved in dealing with Trotskyite groups and independent
militias, which had no link to the popular classes. Corruption,
gangsterism and assassinations plagued Graus government. The
Autenticos eventually lost all their legitimacy; it was time for a new
kind of politics.
Eduardo Chibs, the wealthy student leader and radical antiimperialist, led the left-leaning student organisations and workers
movement to realign them with President Grau when he returned
to power in 1944. However, corruption within the Autentico party,
along with police violence and dirty politics, later forced Chibs to
break with Grau. Additionally, Grau was never successful in nationalising industry as he had promised. Chibs formed his own group
called the Partido del Pueblo Cubano Ortodoxo. The name suggested
that they were the real repositories of the revolutionary tradition
ignited by Mart. Often found in bloody street fights and as the victims
of anonymous bombings, the Ortodoxos suffered a stunted growth,
limited to a small group of intellectuals. Their slogan was: Cuba, free
from the economic imperialism of Wall Street, and from the political
imperialism of Rome, Berlin and Moscow (Thomas, 1971:752). The
Ortodoxos were certainly nationalistic, but also socially progressive.
Eddy Chibs was known to have hated the communists because of
their inconsistencies and their corrupt alliance with the neo-colonial
state. He was famous for quoting Marx and Lenin, as well as Mart,
in his arguments against the communists. Unfortunately, his
degenerating mental health led him to commit suicide (Conte Aguero,
1955:439). His organisation still lived on but never got far in a Cuba
whose political system had rotted to death. Nonetheless, out of this
small current was born the radical tendencies of Fidel Castros 26 July
Movement.
The end of liberal democracy
Towards the end of his presidency, Grau turned his back on all his
former comrades in the hope of maintaining stability and avoiding
a US invasion or another coup led by Batista. He employed repressive
tactics to control any let-loose radicals who might have caused a

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threat to the establishment. In violation of constitutional law, he


curtailed political rights and shut down any newspaper that criticised
him (Alexander, 1957:287). Furthermore his secret police was known
to have attempted to cleanse the CTC of Communist Party leaders
such as Lazaro Pea (Fundamentos, April 1947). The Party did grow
in numbers, but by 1947 the government took control of the CTC
and banned the PSP because it posed a threat to stability. The new
union leaders were gangsters, similar to the ones found at the time
in the United States.
Grau was voted out during the following election. He was followed
by Carlos Pro, a president who once again fooled the masses into
believing that they could vote out US hegemony and vote in clean
government. But this man, like those before him, proved to be made
of empty promises. Due to the political violence that had spread
throughout the country and pressure from the United States to clean
out the communists, Pros ruling was just as autocratic as Graus
before him. His inability to form any coherent alliance among the
popular classes widened the gap between government and real political
and economic power. The 1948 presidential race was the last multiparty election Cuba has ever seen. The corruption and violence that
accompanied Pro stand as a reminder to post-revolutionary Cuba
that the uselessness of electoral politics in a neo-colonial setting
presents itself as an impasse for progress and independence.
Batista returns
Fulgencio Batista returned to Cuba in 1952 and ruled until 1959; he
did so more viciously than ever before. All his energy was spent on
eliminating the last vestiges of the constitutional democracy he
himself had installed back in 1940. The culture of revolutionary or
even reform politics hid underground. Some of the trade unions
limited membership was relatively privileged economically, but any
political opposition was violently crushed. The rural workers, on the
other hand, remained poorly organised because they were unemployed
for 5 or 6 months every year. During this period, Cuba became nothing
more than a sugar plantation for her neo-colonial masters. The country
was a playground for gangsters, gamblers and the seediest North
American tourists.
By the 1950s, 80 per cent of all Cuban imports came from the
United States; $1 billion of US capital was invested in Cuba. The US
had a virtual monopoly of foreign trade via the 1934 Reciprocal Trade
Agreement. Agriculture, with 41.5 per cent of the labour force,

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dominated the economy and sugar dominated agriculture. Eightythree percent of available land was under sugar and it made up at
least 80 per cent of exports, another 10 per cent being tobacco. Sugar
constituted 36 per cent of the GNP. The rest of the economy was little
developed and utilities remained in foreign hands. Hansen states that
services, including a large sector of the economy devoted to catering
for US tourism, [...] employed 20.1% of the entire workforce. A vast
state machine, riddled by graft and gangsterism, took an estimated
25% of the GNP (Draper, 1962:510).
AN ALTERNATIVE TO THE WORKERS MOVEMENT
So long as the entire economy remained dependent on the United
States, the less powerful sectors of the urban middle class could not
develop. Not only was there no talk of social mobility but their
children were also forced into the working class (Ibarra Cuesta,
1995b:197). They, together with middle farmers, small peasants and
university students, formed the backbone of the opposition to Batistas
dictatorship. With the support of the most radical remains of the
organised working class, only the wealthy and well-educated militant
students formed a viable alternative. The surviving members of the
Partido Ortodoxo, in the tradition of Eddy Chibs, brought together
various dissidents in 1953 to organise a violent attack against Batistas
military police. Their leader was a young lawyer named Fidel Castro.
Their ideology was focused around independent national
development, the betterment of living conditions for the poor and
fair politics. The leaders were also influenced by the ideas of Mart,
who had preached against dependency on colonial or imperialist
powers. Their demands: the re-instalment of the 1940 constitution,
the return of political freedom, nationalisation of the countrys largest
industries and a radical redistribution of land to the peasantry (Castro,
1961b). It was the members of this movement who realised that the
Cuban government was too heavily influenced by US economic
interests and those of the domestic capitalist class who served their
imperial masters. Compromise was not a possibility. Because of the
sad history of the workers movement in Cuba, socialism was almost
entirely discredited. The potential mass base for revolutionary
organisation the working class was effectively insulated from
political action, because their leaders had been killed off. The only
way to bring Batista down, it was thought, was through the same

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means that were employed in 1933 against Machado, i.e., a long


series of strikes directed by a conscientious and revolutionary
intellectual leadership. The new revolutionaries, however, established
a precedence in the history of neo-colonialism; that is, the tactic of
guerrilla warfare.
Fidel and the 26 July Movement
It is often the case that when the history of the 1959 Revolution is
written, the attack on Moncada becomes identified as the starting
point. Firstly, because it was the initiation of the armed struggle
against the previous regime of Fulgencio Batista. Secondly, because
the world famous speech in his own defence was presented at the
ensuing trial of the young lawyer Fidel Castro.
Fidel Castro was the son of a wealthy sugar-cane grower; his family
belonged to the middle class. After law school, Fidel joined the nonMarxist Ortodoxo Party and was a congressional candidate in an
election that was annulled by Batista in 1952. As mentioned before,
the Ortodoxo Party was called orthodox because it followed the line
that government in Cuba should be geared towards national
independence, democracy, and the welfare of the people; it was
orthodox in Marts teachings.
After Batistas coup dtat in 1952, Fidel petitioned Cubas Supreme
Court to declare that Batistas government was unconstitutional,
undemocratic and should be dismantled. But the petition was denied
and Cubas national legislative body took no action. Frustrated with
the absence of any kind of democracy, neither popular nor electoral,
Fidel Castro and a number of Ortodoxo Party members organised an
armed movement against the regime. Students, journalists, religious
figures and the few poor who had the opportunity to hear Fidels
arguments supported this movement. On 26 July 1953, Castro led
approximately 200 armed citizens to attack the Moncada military
barracks in Santiago de Cuba. Castro stated that his inspiration was
Jos Mart, the year 1953 marking the centenary of Marts birth. If
the attack on Moncada is seen simply as an attempt to seize state
power, then it could be considered a failure. Most of the 200 rebels
were captured and tortured, half were killed and the rest were
imprisoned. Castro did not find support from the political parties;
even the Moscow-linked PSP repudiated the act. Once again, the
workers movement had failed. But if the 26 July attack on Moncada
is portrayed as the spark of the national interest in overthrowing

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Batista and as a call to the nation for revolution, then it can be seen
as the birth of a movement that years later would seize state power
and become the biggest thorn in the side of US hegemony.
History will absolve me: a platform
Fidel Castro, at the age of 28, was brought to trial. Proud of being a
well-read man, he was capable of conducting his own defence. He
produced a five-hour-long speech, which is popularly called History
Will Absolve Me. In this speech Fidel articulates the most popular
demands against the Batista dictatorship. The occasion provided the
platform for the Revolution, legally, politically and socially. The
primary concern was that the dictatorship had violated by its own
existence the constitution of the Republic. Castro demanded that
the constitution be reinstated and that the democratic rights won
under former presidents be safeguarded. The constitution itself gave
the Cuban people the right to rebel against any government that
violated democracy, even if this was the government that had created
the document. As leader of the 26 July Movement, Fidel stated that
it was his duty to act upon constitutional order in the name of the
people of Cuba. In addition to supporting the constitution, Fidel
Castro outlined Cubas principal problems. In a nutshell, Cubas main
problems were described as: the distribution of land and the condition
of the peasantry; the lack of industrial capital; education; rural as
well as urban unemployment; and health. A serious problem that
existed at the time was the large number of people who were seasonally
employed and spent half the year languishing in rural or urban hell.
Finally, there was the petit-bourgeoisie, small business owners who
found themselves unable to grow economically. The speech was
essentially in the interests of the nation as a whole. It expressed the
thirst for development, which was common among the countries of
the periphery and semi-periphery (Wallerstein et al., 1996).
Fidel Castros eloquent words did not suffice to keep him out of
prison. He was, however, released two years later on a pardon arranged
by relatives and friends. Fidels popularity had grown during those
two years and his name had become known all over the cities and
throughout the countryside. Fidels intentions were to build a
movement that was even stronger and incorporate a broader support
base. Most of all, he wanted to drive the armed struggle movement
towards rural Cuba, where the most desperate of Cubas workers were
to be found. But upon his release, Fidel Castro took to exile in Mexico,

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where he met other aspiring young leaders and revolutionaries, such


as the Argentine Ernesto Che Guevara.3
The Rebel Army
Castro, Guevara and a number of other rebels prepared themselves
in Mexico, the France of the Americas, where revolutionary exiles
often took refuge. In Mexico, Castro sought economic and political
support from wealthy sympathisers (Thomas, 1971:87786). In 1956,
the rebels sailed on a boat the Granma back to Cuba to take on a
second attempt at overthrowing Batista. On its arrival at the eastern
part of the island, Batistas army attacked the boat and killed off most
of those who arrived with Castro. Only a few guerrilleros escaped.
Among the survivors were Raul Castro (Fidels brother) and Che
Guevara, who established the eastern base of operations. The group
hid in the Sierra Maestra mountain range.
While Fidel Castro and the rebels were preparing themselves in
Mexico, the movement was being built in Cuba. A Rebel Army was
established, centred on conscientious peasants, the disenfranchised
young professionals, workers, and the hopes of a returning Fidel
Castro. Thousands of men and women awaited the leader to initiate
the seizure of state power. The motivation was less ideologically clear
at the time and more based on the hopes of improving material
conditions for the bulk of the population. Those actual members of
the Rebel Army were not, however, the vast majority of the people.
Nevertheless, most rural workers and peasants supported the three3. Che Guevara was a young man trained in medicine. Upon graduating from
the School of Medicine in Buenos Aires, he set out to explore Latin America
on his motorcycle. Through his journeys, Che became familiar with the
social and economic conditions of the region, recognising the need for
change (Bayo, 1960: 667). His humanistic views developed into a spirit
of repugnance against the United States a country that has played an
enormous role in dictating the economic policies of Latin American
governments. It was the United States that often intervened, militarily,
when liberal democratic elections were not going the way US businessmen
desired. At the same time, Che read a lot of Marxist literature and became
very critical about social movements that countered actual existing economic
and political structures (Dalmau, in Granma, 29 October 1967). Upon
witnessing a coup dtat in Guatemala in 1954 after a communist party
government was installed through liberal democratic elections, Guevara
favoured the idea of an armed movement of workers and peasants against
the state. Guevara, through the Argentine embassy, escaped the Guatemala
massacre and ended up in Mexico where he met up with Fidel Castro.

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year struggle. The urban workers movement also joined in supporting


Fidel Castro and the Rebel Army. Activities in city centres, demonstrations, and student strikes all aided in gaining support for a
revolution. Castro also benefited from the fact that large sections of
Batistas military had defected and joined in armed struggle against
the very unpopular dictator. The political parties that placed their
faith in a restored liberal democracy, on the other hand, did not
applaud the Rebel Armys efforts until perhaps a couple of months
before the Revolution triumphed in 1959.
Castros leadership in military planning was keen. Not only did
Fidel use historical symbolic measures in mustering strength, but his
military tactics were very similar to those used by Antonio Maceo
and other leaders of armed resistance during the fight for
independence from Spain a century beforehand. He used columns,
starting from Oriente, the east, and moving towards Havana, the
capital, sweeping the island and cornering Batistas power base. Finally,
after nearly three years of struggle against the tyrant, Fidel Castro
and the Rebel Army marched triumphantly into the city of Santiago
de Cuba on New Years Day, 1959. The 500-mile Central Highway
became one of the largest rebel-parades known to man, welcoming
Fidel Castros rise to power. The population of disenfranchised peasants
and workers participated in squashing the illegitimate structures
reminiscent of a falling dictatorship that did not even enjoy support
from the US embassy. As many Cuban senior citizens can recall to
this day, Che Guevara was sent ahead of Fidel to La Habana where
the armed, revolutionary movement congregated days later to declare
the triumph of the Revolution.
A united front and material conditions
The triumph of the 26 July Movement cannot be attributed to guerrilla
warfare alone. There were other material conditions that were also
responsible for the possibility of revolution in Cuba. These essential
elements cannot be underestimated. The desire for a revolution
received major support from those segments of society that were
victims of seasonal unemployment. Without any kind of social security
to back them up, the landless peasants who worked on the fields only
during the winter months were subject to hunger and disease. The
high rate of unemployment on a seasonal basis is directly attributable
to monoculture dependency. Rural workers and their families organised
themselves into squatter movements that took over lands that were
primarily owned by absent landlords. Additionally, on their side were

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the university graduates who could not find employment. Few professionals were practising. Lawyers had no courts, physicians had no
hospitals, and journalists had no newspapers. Some of these conditions
could be found in other countries of Latin America and the Caribbean,
but what made Cuba the land of revolution was the movements
willingness to confront the country with these problems. In turn,
this eagerness stemmed from student solidarity with the peasantry,
the tradition of popular rebellion, which was fresh in the minds of
the revolutionary leaders, and the arrogant presence of large foreign
corporations. Furthermore, and possibly a cornerstone to popular
rebellion, there was Cubas proximity to the United States, both geographically and technologically. During the 1950s, Cuba enjoyed one
of the highest levels of income and standard of living in Latin America.
In terms of consumer goods, Cuba ranked first in Latin America in
the number of televisions, radios, telephones, and automobiles per
capita. The figures surpassed even those of Spain and most of southern
Europe (Thomas, 1971:1093107). These advances were due to
consumer habits originating from the United States. The desire to
revolt was only exasperated by the inequalities between those who
had access to the consumer goods and those who had not.
The shaping of the Revolution
The Revolution did not happen within one day. The social forces and
organisations that would come to the fore during the first years of
Castros rule were already formed while the rebels hid in the Sierra
Maestra. Among them were the Institute of Agrarian Reform (INRA),
which later became the ANAP (National Small Peasants Association),
and the Workers Front for National Unity (FONU), which organised
the strikes and demonstrations against Batista. Many communists
who abandoned party politics took part in these organisations.
Meanwhile, some of the leaders of the PSP, the Autenticos and the
Ortodoxos were rejected when attempting to partake in the
realignment of the social forces. This was primarily due to the mistrust
between the leaders of the 26 July Movement and the aforementioned groups. Additionally, on the university campuses there was
the Directorio Universitario, which adhered to the 26 July Movement
from the time that the Granma landed.
Radical transformations
After Fidels appearance in Havana, the Revolution started to permeate
all sectors of society. Batistas police authorities were brought to public

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trial and the homes of the bourgeoisie were looted. Moralistic revolutionaries closed down gambling halls, and brothels were converted
into trade union halls. Certain freedoms were immediately enacted.
Hoy, the communist newspaper, was permitted publishing rights once
again. Although rule by decree put a bar on all political party activity,
revolutionary movements were allowed to associate freely. Within a
number of days, the Rebel Army installed an acting president and a
prime minister as a mask for international observers. Their duty was
to support all the actions of the revolutionary forces. Additionally,
they were to oversee the replacement of high-ranking officials by
those who were loyal to the revolutionary movement. All personnel
during Batistas rule were welcomed in reorganising the military. But
these gentlemen only lasted a month before the 26 July Movement
named Fidel Castro prime minister without a president and Raul
(Fidels brother) commander of the armed forces. One of Fidels first
decree-statements was: The Platt Amendment is finished (Castro,
in Revolucion, 10 January 1959). Later, Fidel continued to encourage
labour strikes and the occupation of factories. The contradictions
between the US and its private corporations on the one hand and
the interests of the masses on the other were manifested immediately.
The idea of reinstalling the 1940 constitution had been lost, as a
period of state transformation was in the making.
Seizing the state
Immediately following the overthrow of Batista, Fidel and his cronies
had to come to terms with Cubas unique position in the world market
under US regional hegemony. The country, principally dependent
on sugar as the main source of income, now had to use this typical
monoculture in order to survive. In other words, in order for the
Revolution to be successful and in order to carry out proposed projects,
it had to seize the culture of sugar and utilise the available economic
apparatus in order to benefit the Revolution. Originally, Fidel set out
to accomplish this. But the dream to industrialise never coalesced.
Taking over the government in 1959, neither Castro nor the 26
July Movement had a blueprint for economic development. However,
the social forces on the island took on an autonomous, dynamic
strategy influenced by pre-revolutionary, domestic and international
political and economic structures. Castros primary concern was to
diversify the islands sugar-dependent economy. He promoted import
substitution, a fashionable experiment throughout Latin America,
as the leadership recognised that underdevelopment was due to the

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dependency on sugar, which in turn was subject to price fluctuations


on the world market. Where Castro differed from other import
substitution attempts was his emphasis on the peasant, the common
worker, and their emancipation.
The social groups that supported Castro in taking power were many.
Among them were the peasants, blacks, women, the poor, the revolutionary student front (Directorio Universitario), the CTC and a
number of clandestine trade unions. In addition, and in contrast to
attempted revolutions seen elsewhere during that time, the popular
revolution depended heavily on moral and a religious (Christian) cry
for justice for the marginal sectors of society (Betto, 1985). But the
movement was essentially that belonging to a generation of disenfranchised youth that admired Fidels heroism. In order to organise
these social forces, the rebels had to depend on some of the prerevolutionary movements. Among these was the PSP, whose
membership was then 17,000 (Thomas, 1971:745). Fidel used this
cadre army to disseminate information and revolutionary ideas in
the workplace and in intellectual circles. The most well-known
academics were communists, and so were the poets and artists.
Socialism: a tailor-made ideology
To this day, the question of whether Castro had always intended to
adopt Marxist state ideology, or whether he was framed by Cold War
circumstances, remains to be answered. Proving himself to be a keen
statesman, Castro did not limit himself initially to the two options
of the bipolar system, i.e. US capitalism and the neo-colonial context
(which did not work) and the socialist bloc led by the Soviet Union.
Instead he kept himself open to all options that would help sponsor
the revolutionary state of affairs within the context of national
liberation. Fidel Castro declared:
Our Revolution is neither capitalist nor communist!!! Capitalism
sacrifices the human being, communism with its totalitarian
conceptions sacrifices human rights. We agree neither with one
nor the other Our revolution is not red, but olive green. It bears
the color of the rebel army from the Sierra Maestra. (Castro, 1959b)
Nevertheless, the 26 July Movement set out to search for an
ideology, not to mention an economically viable system, which
would fit the character of the Revolution. Liberal democracy under
US hegemony was not an option: the United States would not

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recognise the attempts of nationalisation. So the only counterhegemonic bloc that was available to the Cuban condition was that
which the Soviet Union represented. In their attempt to build the
state, the young leaders also sought trade deals that were beneficial
to the Cuban economy. Some of the revolutionary leadership visited
Peking and Moscow; they were warmly welcomed and returned with
outstanding trade deals. In 1961, China bought 1 million tons of
sugar at 4 cents per pound and granted $60 million in credit for
equipment and technical aid. For the same price during the same
year, Russia purchased 2.7 million tons of sugar, but additionally
offered military assistance and arms to prevent a counter-revolutionary
attack (New China News Agency, 18 November 1960). It was the
latter to which Castro cuddled up, as Soviet internationalists like
Khrushchev were convinced that a communist Cuba would serve as
a military leverage against the United States. But Castro, Che and
the economic planners of the Revolution did not restrict themselves
to the East only. Canada not a member of the Organisation of
American States, which had already condemned the Revolution
refused to impose any kind of embargo. In turn, the leadership decided
to compensate Canadian banks after the process of nationalisation
had occurred. It opened trade deals with Egypt (rice for sugar) and
also Japan (Thomas, 1971:1317). Cuba dropped out of the World
Bank but remained a member of the International Sugar Council
and, of course, the United Nations.
Eventually, the United States began to disapprove of the economic
measures that were being taken in order to meet the requirements of
the Revolution. What Eisenhower and Kennedy did not understand
was that the Revolution was taking a shape of its own. Meanwhile,
during 1961, more mass organisations, especially the trade union
organisation which re-adopted its original name (CTC) started to
call themselves socialists or communists. The youth movement of the
26 July Movement merged with the Communist Youth (UJC). Without
declaring the Revolution to be a communist regime, Castro instigated
or approved this social consolidation. Hughes astutely pointed out
that Castros intentions, at first sight, were to use the communists in
order to control labour, as did Batista during his presidency (Thomas,
1971:148394). But Castro was not merely interested in bringing in
labour to the revolutionary process. He was also keen on creating a
scenario in which the Revolution would be permanent and considered
the ultimate stage of Cubas historical class struggle. In propaganda,
Castros Revolution was to be the final fulfilment of Cubas pursuit

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of freedom. In presenting the Revolution as such, Fidel Castro set up


Schools of Revolutionary Instruction, as did the national hero Jos
Mart during his own time in the United States. There, communists
would train cadres for a united, revolutionary party. The canons for
this school were the selected writings of Jos Mart, the Communist
Manifesto and, most surprisingly, Blas Rocas Fundamentos del Socialismo
en Cuba (Cuba Socialista, February 1963).
CUBA SOCIALISTA
It was not until 1961 that Castro announced to the world that he
was a Marxist (Bohemia, 10 December 1961). This fact caused an
almost immediate mass migration of small and large business owners
to the United States. The exodus created the first layer of Castros
enemies, the group of people known today as the gusanos the worms.
These were those who left immediately, seeking refuge in the US
military and counter-revolutionary attempts. The neo-colonial forces
together with the domestic capitalist class, which at the time ended
up in Miami, tried to subvert the Revolution. The biggest incident
was the invasion of national territory through the Bay of Pigs, where
Washington-financed, counter-revolutionary forces mistakenly
thought that their efforts would be supported by the majority of the
Cuban people. The contrary was true. Castros army received almost
unanimous backing from el pueblo. This invasion brought Cuba closer
to the Soviet Union.
It became clear that the character of the Revolution was essentially
socialist in terms of social organisation, and nationalist with regard
to the economy. In Castros own words, the Cuban communists were:
The only party that has always clearly proclaimed the necessity of
a radical change in the structure of social relationships. It is true
that at first the Communists distrusted me and us rebels. It was a
justified distrust, an absolutely correct position ... because we of
the Sierra were still full of petit bourgeois prejudices and defects,
despite Marxist reading Then we came together, we understood
each other and began to collaborate. (LUnita, 1 February 1961)
Whether this was an apology or a defence for conversion to
MarxismLeninism, Fidels political alliance set the tone for the rest
of Cuban revolutionary history. This position somehow ignores the
communist leaderships political irresponsibility during the Batista

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era. Hence, it is not clear to which party Fidel was referring. His words
reflected his future vision of a new political party; a party composed
of the most progressive Cuban forces; whether their tendencies derived
from nationalism, Stalinism or Trotskyist tendencies seemed to be
irrelevant. The emphasis was on MarxianMartiano principles that
led to unity.
As a self-proclaimed Marxist, Fidel Castro saw communism as the
highest stage of human development, following feudalism, capitalism
and socialism. In his mind, Cuba, being born of fifteenth-century
European colonial expansion, had passed through all these stages.
Drawing on Leninist principles, Castro declared that a Marxist political
party should be the sole vanguard of the people, which would facilitate
the transition from struggling socialism to communism. A unified
party formula also fitted within the programme Mart put forth during
the Second War of Independence and the anti-imperialist movement.
Moving leftwards, the revolutionary forces under Fidels direction
consolidated into what became the United Party of Socialist
Revolution (PURS).
Radical and utopian ideas
After 1965, the PURS changed its name to the Cuban Communist
Party (PCC). The visionary transition set forth by the party included
state ownership of the means of production and nationalisation of
all industries, agriculture, and retail trade in addition to a radical
change of societal relations.
The egalitarian emphasis was accented by Ernesto Che Guevaras
vision of the New Man (Guevara, 1968). Workers were to labour for
the new society instead of individual material gain. Over time, work
was geared towards collective benefit. Competition was transformed
into a push for non-material reward. The government extended free
social services and programmes in education, health care and social
security, day care for children, and housing. Today these are considered
to be the triumphs of the Revolution. In his speeches, Castro drew
on Marx as well as Mart to break down the barriers between manual
and non-manual labour, and urban workers were exhorted to
volunteer for occasional agricultural activity. These initiatives resulted
in making Cuba the most egalitarian society in Latin America. This
is what is known as the Revolutionary Offensive, which was
accompanied by literacy campaigns, the building of schools, the
organisation of neighbourhood watch committees and the consolidation of the labour movement into a united CTC.

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The state proceeded to create new institutions in order to push


forth revolutionary planning. This was true even in the remaining
private sectors. For example, the Vanguard Peasant and Worker
Movement was organised by private landowners who conformed to
state rules and projects. However, such institutions fell apart as
worker and peasant interests differed. Urban workers demanded
more land expropriation, whereas peasants demanded only the
repartition of giant land masses under the control of foreign
enterprises and wealthy owners. The effects on the province of
Matanzas can be used as an example. There, peasantworker strife
resulted in the destruction of property, sabotage of agricultural capital
and riots. Eventually, the government sided with the workers and
violence stagnated the Revolution for a short period of time
(Huberman and Sweezy, 1969: 113).
Meanwhile, workermanagement relations changed radically.
Grassroots level workers were allowed to elect their own union
leadership. By 1966 they re-elected 26 per cent of the incumbent and
selected leaders who were party and non-party members (Domnguez,
1978a). However, Castro and the top leadership of the PCC appointed
top union officials who would represent the workers in government.
Eckstein notes that in due time the labour movement became little
more than a transmission belt between the revolutionary leadership
and rank and file workers (Eckstein, 1994:40). The unions transformed
into labour councils, which conformed to government-set norms
and regulations. The councils eventually consolidated themselves
under the auspices of the state and reformulated the party-dominated
CTC which just as it had been under Batistas rule became the
only recognised institution that represented labour interests within
the state. From this point on, the Revolution became synonymous
with the state and all revolutionary intentions were executed from
the top down.
Consequences of the radical years
The push for communism had varying effects. The radical transformation embraced the idea that private property was the essential ill
of the capitalist system. Private property in production and private
land were to be eliminated. The official line was that the law of value
had to be diminished and market forces suppressed (Gonzles
Gutierrez, 1994:10). Nationalisation meant state ownership of the
means of production, whether the companies happened to be formally
in the hands of foreign enterprises or were small local businesses. In

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1963 a land reform placed more than three-quarters of all land into
the hands of the state; this offered material as well as ideological
incentives. Those peasants who received their parcels of land became
very comfortable in producing what was lucrative for the independent
producer, a profitable domestic-oriented agricultural sale as opposed
to a less profitable sale to the state for export. There existed the danger
of the peasantry, now small landowners, becoming a class independent
of the government and the rest of Cuban society. More importantly,
maximising state monopoly over agricultural production benefited
the state, which then was in dire need of accumulating for its own
reproduction in order for it to carry out the social projects it set out
to accomplish. The two interests clashed, but state supremacy became
the triumphant priority.
The push to communism was also particularly against the petitbourgeoisie. The small shop owners in the cities, and those with their
offices in Havana, charged very high prices for their services and
output. The idea was to dismantle this parasitical class. By closing
down excess shops and nationalising the service of food distribution,
the government indirectly made these once-distanced city dwellers
available for sugar/agricultural production on government plots.
Eckstein notes that approximately one-fourth of the persons in
Havana province, whose businesses were appropriated in conjunction
with the Revolutionary Offensive, went into agriculture (Eckstein,
1994:37).
Sugar production rose indeed, from 1963 when 4 million metric
tons were produced until 1970 when 8.5 million tons made the alltime high. By this time, 4057 per cent of the labour force worked
part-time cutting sugar cane (Silverman, 1973:21). This resulted in
an increasing export contribution to the national product, from 16
per cent in 1963 to 25 per cent in 1970 (Roca, 1976). However, the
policies set forth by Castro and the PCC were meant to reach the
goal of 10 million tons of sugar. The rest of the agricultural sector
suffered. In 1970, national productivity dropped to the level of 1965.
In the end, the country benefited socially from this stage of
development but economically Fidels predictions and expectations
were never completed. Additionally, the hopes of becoming
independent from the monoculture economy were never realised.
A step back from radical revolution
During the 1960s the Soviet Union purchased only 56 per cent of
Cubas sugar (Leo Grande, in Estudios cubanos, July, 1979:128). Cuba

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had to search for other markets that would supplement its export
capacity. In 1968, the world market price for sugar fell drastically to
fewer than 2 cents per pound. Because the Revolution raised and
guaranteed workers salaries, the cost of production superseded the
world price. Once again, Cuba became the victim of its own
dependency on its primary export product. However, this time the
Cuban government was responsible for the welfare of the population
it represented.
Shortages in goods and supplies in connection with a tightening
ration system discouraged large segments of the population. Workers
responded to the economic crisis by foot-dragging and absenteeism
at the factories and sugar mills. The rate for absenteeism got as high
as 52 per cent in some regions of the country (Domnguez, 1982:
272). The result was a major slowdown in production. Foot-dragging
became a popular form of resistance to government policies (Eckstein,
1994:10). Additionally, black-market activity began, as a means to
meet the material needs of the population, usually in food. This hurt
government profits and prevented any plan for redistribution from
being completed. Legitimacy started to be questioned.
Eckstein notes that in his annual speech commemorating the 26
July attack on Moncada, in 1970, Fidel recognised the failures of the
push to communism (Eckstein, 1994: 41). He stated that since the
Revolution belonged to the people, it was the people who failed
but he more than anyone else. He offered to resign but the crowds
yelled No! Fidel and the PCC decided that the biggest mistake had
been the irresponsible push for communism without ever having
passed through socialism. What this meant in the minds of the
leadership remains unclear. But in policy action, it meant the decentralisation of state-owned enterprises, a search for more access to
Western markets and a closer move into the Soviet economic sphere.
It was in 1975 that the first PCC Congress took place on a
national/official scale. At this congress, the System of Economic
Management and Planning (SDPE) was outlined; it was implemented
by 1976. This system closely followed the economic framework of
Soviet reforms of 1965. Local authorities of this innovative system
allowed for the usage of small plots of land for private agricultural
development; it also encouraged collective subsistence farming and
rendered the right of management to hire and fire labour. Hence
began a process of decentralisation. The government continued its
responsibility to the poorer sectors of society by maintaining a rationbook system (la libreta) that guaranteed basic household needs and

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staple food products. But the most interesting aspect of this period
was the implementation of incentives for workers. Jeffries (1993:181)
explains that this sovietised SDPE acknowledged the importance of
real economic levers like interest rates and prices, and management
powers on manpower and investment; that profitability became more
important as an indicator; and that portions of surplus could be put
to personal bonuses, investments and social projects. According to
Zimbalist and Brundenius (1989:77), prior to the SDPE material reward
did not exist. Later however, the implementation of bonuses and
material incentives caused problems that will be discussed in Chapter
3, in the section concerning the Campaign to Rectify Errors and
Negative Tendencies.
Labour steps up
In terms of the organisation of labour and participation, some
concessions needed to be made in order to appease the masses. Local
CTC elections were reinstated in 1970 by the Ministry of Labour.
Seventy-three per cent of the worker representatives were replaced
in the elections (Domnguez, 1982:126). The people demanded more
consistency in the democratic procedures of the country. As a result,
local elections and workers assemblies were to be conducted on a
regular basis. But the reforms did not stop here.
In 1973, the CTC came out with a new programme that was thought
to improve workers material conditions. If salaries immediately after
the Revolution were based on utopian models of equal pay for all
citizens (a system that had failed), the answer was to collectively link
worker salary to national productivity, although still on an equal
basis. Additionally, there were individual material rewards for those
who worked overtime. At work centres, household appliances, such
as televisions and refrigerators, were distributed, linked to the
economic contributions that work units produced (Zimbalist and
Brundenius, 1989:219). Cane-cutters who were replaced by the
combine were sent off as mini-brigades to build housing. These
volunteers in turn were rewarded with property rights over flats in
the newly built districts. This labour model could be thought of as
Soviet-inspired, but all these changes originated in the ideas of the
workers that were expressed in the workplace assemblies. The result
was that government expenditure would increase according to the
level of productivity the workers achieved.
However, offering welfare goodies to workers and their families
was not enough to solve the problems of state economic management

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in the face of a revolutionised people. The leadership sought new


ways of organising the national economy and pleasing the population
by implementing more democratic rights at the workplace. A onetime reform could not be sufficient if the revolutionary government
was to be permanent. A new Central Board of Economic Planning
(JUCEPLAN) was created in order to oversee state-run projects. These,
in turn, were supported by the Organs of Popular Power (OPP), which
worked on municipal, provincial and national levels. In the municipalities, the OPP would choose economic projects that the workers
thought would be achievable and in turn benefit their community.
The constitution and political normalisation
The largest evidence of the Revolutions institutionalisation came
with the drive to normalise all state institutions and the Cuban
democratic model. In 1976 the Cuban government codified the
principles and laws of the Revolution in what is now the Constitution
of the Republic of Cuba. This became the base law of the land that
provided for a formal parliament, declared the republic to be a sovereign
workers state with the PCC as the ideological motor of the Revolution,
institutionalised the military, contained clear explanations of revolutionary intentions and expressed the emancipation project as it
pertained to and was understood by the leaders of the PCC. This
included the elimination of institutional racism, the protection of
the rights of women and children, the family code and the intention
of destroying class structure. These egalitarian measures increased the
number of workers gaining equal pay, and provided incentives for
women to become more active in production. Central planning was
de-bureaucratised by the new constitution with the creation of the
Organs of Popular Power (OPP), which were made up of provincial
administrative committees. Delegates were chosen by the population
at large in multi-candidate but non-party elections. The state, then,
was based on the configuration of revolutionary forces which were
represented in the OPP, among them: the PCC, the Federation of
Cuban Women (FMC), the Revolutionary Armed Forces (FAR), the
Union of Young Communists (UJC), the National Workers Central
(CTC) and the Committees for Defence of the Revolution (CDR). These
recognised organisations created a link between the state leaderships
official ideology and the general population. All citizens residing in
Cuba became members of at least one of these organisations.
The constitution was written by the law experts of the Communist
Party and put to popular referendum a year prior to its implementa-

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tions. Ninety-eight per cent of the voting-age population participated


in the referendum; of these, over 97 per cent voted in favour of the
national document and 1 per cent against. The rest were spoiled or
blank ballots (August, 1999:220). The constitution outlined the
framework of the new socialist society in Cuba. It defined the terms
of property and provided a legal base (or explanation) for the nationalisation of all or most of the means of production. In stating that
the state/revolution was the maximum expression of el pueblo cubano,
the constitution at the same time emphasised national unity under
one political party and state supremacy over all economic and social
activity. The mass organisations of popular participation were also
mentioned. It was most certainly a Soviet-inspired constitution.
The Communist Party of Cuba and the mass organisations
According to the Constitution of the Republic of Cuba (1976), the
Cuban Communist Party (PCC) is the ideological motor of the state
and of Cuban society as a whole; it is a party of disciples of Mart
and MarxistLeninist orthodoxy. Indeed the party permeates all facets
of government and socialist civil society. PCC members are found in
every workplace: schools, factories, hospitals, hotels, coffee houses,
government agencies, stores, etc. The official role of the PCC is to
lead Cuban society to communism after socialism and safeguard the
triumphs of the Revolution. But in reality, PCC militants are more
than just political moralists; they are mostly white-collar workers,
managers, and appointed elite directing the political economy of the
nation. They are responsible for making company policy in line with
the national project. They are also the transmission belt for the ideas
of the Central Committee of the party to reach the workplace. In
order to be a party member one must be elected by co-workers and
have high moral character (generally free of vices), be well disciplined
and read in the classics of Marxism, be loyal to Fidel Castro as defender
of the Revolution and the triumphs of the Revolution, and have an
ability to hold leadership in the workplace. The PCC is topped by a
Political Bureau and Secretariat which really set the tone for Marxist
interpretation in Cubas institutional political ideology. The Central
Committee is comprised of a large group of industrial managers,
economists, the directors of research centres, scientists and people
who hold important positions in the military.
Upon consolidating power after 1959, the leaders of the Revolution
incorporated some of the popular organisations that were involved
in the struggle for democracy, workers rights and anti-imperialism

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into the new party/state apparatus and created new mass organisations that group and represent the specific interests of the population.
This was done to complement progressive forces in Cubas civil society
that already existed prior to the Revolution. These forces in civil
society include workers interests, peasant interests, womens interests,
nationalist tendencies and intellectual forces. Membership in these
civil society groups, in contrast to the PCC, is not selective, with the
exception of the Union of Young Communists (UJC). Every Cuban
citizen belongs to one or more of these organisations, even though
membership overlaps. The purpose of these mass organisations is to
extend a participatory outlet for the entire population, where the
interests and concerns of the masses can be expressed and outlined.
Leadership in the mass organisations was previously elected by the
PCC and sometimes appointed directly by Fidel Castro. This ensured
that the mass organisations and the population as a whole would
adhere to the precepts of PCC ideology. Today, many leaders are still
PCC members, but they are elected directly by the organisations
members. The revolutionary leadership was interested in forming a
new type of democracy that allowed for popular participation while
maintaining national unity.
The Committees for Defence of the Revolution (CDR) was instituted
initially to suppress counter-revolutionary activities in local areas,
including the 1961 Bay of Pigs invasion. Those who criticised the
Revolution portrayed this grouping as a spy organisation, because
on the local level the community elected leaders who would be
responsible for reporting any anti-state activity, including theft, the
dissemination of counter-revolutionary propaganda, and anti-social
behaviour. Most Cuban citizens residing on the island are members
of this mass organisation. Today, the CDR is responsible for
community safety, enrolling children into schools, immunisation
and vaccination, the deliverance of municipal information, organising
community events, recycling refuse, insect fumigation and keeping
track of housing and utility maintenance. Almost every city block
and every couple of adjacent streets in towns and villages have regular
meetings where elections are held for representation on the municipal,
provincial and national levels. These meetings are held in the streets
and parks of neighbourhoods. In 1961, there were only 798,703 CDR
members; by 1972, membership reached over 4,236,000, or approximately 70 per cent of the adult population.
The Federation of Cuban Women (FMC) was initially established
to provide women with the opportunity to participate in the trans-

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formation of Cuban society during the early years of the Revolution.


It was responsible for creating centres for learning work and organisational skills, eliminating old ideas of sexist oppression, and
encouraging women to participate in voluntary community projects
or to work full time. The FMC addresses womens concerns in Cuba.
The Association of Small Peasants (ANAP) was organised among
those proprietors of small land holdings that never became
nationalised. This organisation groups together the interests of small
farm peasants and addresses the concern of the individual families.
The Central de Trabajadores Cubanos (CTC) is the national labour
federation that existed prior to the Revolution but was later
transformed into a pro-government union whose leadership was
directly linked to state leaders. It groups together all industrial-based
and product service sector workers. Their responsibility is to hold
regular and irregular forums that provide a space for workers to express
their concerns, complaints and opinions, in addition to providing a
medium between workers and managers. Managers cannot be
members of this organisation. The elected leaders of the CTC are
those who encourage discipline at the workplace as well as political
participation and discussion.
The Federation of University Students (FEU) was a progressive
organisation that was created early in the twentieth century. It was
an active part of instituting the Revolution, but later became a union
of university students, which set up forums for students to express
their concerns and complaints; also to propose projects for the
government and reform in academia.
The Union of Young Communists (UJC) was another mass
organisation created for young people. Today UJC are the model
youth of Cuban society; they are the best prepared academically or
the best disciplined at the place of work. They are considered to be
the future leaders of the Revolution and Cuban society as a whole.
Here membership is selective and based on merits at school or work.
They also represent the largest pool of future PCC members.
There are other mass organisations, which have very little
influence over Cubas political structure but encourage democratic
participation, including elementary and secondary school organisations and sport unions. Their functions are more organisational
than political. The mass organisations as a whole can be considered
the democratic representation of civil society in Cuba, a civil society
that is politically charged and linked to the Revolution (i.e., the

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state). It is through these means that a sense of popular participation is reproduced in Cuba.
ECONOMIC INTEGRATION INTO THE SOVIET BLOC
In 1972 the Cuban leadership inserted itself into the Council for
Mutual Economic Assistance, the COMECON or the CMEA. The
CMEA was a Soviet-inspired, parallel international market providing
a fair deal to the countries of the socialist bloc in Europe, Cuba and
later Vietnam. Set up as a political response to the 1947 Marshall
Plan in the West, the CMEA, created in 1949, was also an economic
counterpart to the Organisation for European Economic Co-operation
(today known as the OECD). The aim of the CMEA was to develop
economic collaboration among the Socialist countries and to coordinate their economic progress on the basis of equality of rights of
all member states (Jeffries, 1993:27). The CMEA system worked on
five-year plans.
The Soviets would purchase Cuban sugar at fixed prices superior
to those found on the world market. In turn Cuba would receive
credits in petroleum and in industrial, medical and agricultural goods,
not to mention construction materials for infrastructure. Additionally,
the Soviet Union would provide more aid to fortify the Cuban military
as it was always under the pressure of possible US invasion. For the
following two decades, Cuba based more than half of its trade on
this alternative market. With excess Soviet petroleum, Cuba would
re-export refined oil to other countries in order to gain hard currency.
This last item became Cubas primary hard currency income. This
economic integration into the Soviet bloc would not have been
possible if Cuban economic structures had not been compatible with
those of other socialist economies in Europe. This explains the
similarity between Cubas model of production and redistribution
and that of the Soviet Union.
In short, throughout a period of 19 years (between 1972 and 1991)
the CMEA raised the standard of living in Cuba to that of Eastern
Europe, and permitted the Cuban population to purchase goods and
services found in industrialised countries. Due to the access to
advanced materials in medicine and academia, social indicators such
as life expectancy, literacy and popular levels of education were
equivalent to that of most Western European countries (Stubbs,
1989:28).

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Socialist integration and the standard of living


Some studies have already been conducted on Cubas use of Soviet
aid and the distribution of purchases available from CMEA agreements.
Qualitative as well as quantitative documentation has demonstrated
that the revolutionary leadership pumped back a large proportion of
the aid Cuba received not only into the domestic economy, but also
into the populations welfare (Garca Reyes and Lpez de Llerga,
1997). Additionally, the hike in the standard of living, including life
expectancy and a drop in infant mortality rate, can be attributed to
the economic and material benefits of joining the CMEA. Within a
decade, the Cuban standard of living no longer reflected that of a
typical developing country. Social indicators reveal that Cuba, in
comparison to her Latin American neighbours, was often far ahead
in terms of the possession of material goods per capita (automobiles,
televisions, etc.), but improvements in non-capital social qualities
couldnt be ignored. For instance, according to World Bank
Development Reports the population per physician in 1960 was 1,038;
by 1980 this had dropped to 219 and by 1989, 136 (World Bank,
1979; 1983; 1990). In little time, Cuba ranked among the worlds
highest in literacy rates, medical doctors were sent on international
missions, and infant mortality rates dropped dramatically. By the
late 1970s Cuba started producing its own vaccines for children.
Economically dependent politically independent
Despite the close economic ties between the Soviet Union and the
revolutionary leadership, Cuba always held its own. One would think
that due to the aid received from the Eastern bloc, Moscow would
most likely have dictated all of Cubas foreign policies. But nothing
could be further from the truth. Ignoring hints from Moscow that
Soviet military equipment sent to Cuba should not be used in arming
other national liberation movements, Cuba acted independently by
aiding guerrilla efforts in Ethiopia and El Salvador and the government
in Angola. The Cuban government also played a significant role in
the Sandinista Revolution (Nicaragua) of 1979 (Ratliff, 1990:80).
Thereafter, against Soviet will, the Cuban military aided in the Central
American countrys defence against US-backed counter-revolutionary
attempts.
Cuba was never an appendage of Soviet interests in the Americas.
Rather, Cuba became its own Third World superpower. Being a
showcase for developing countries, the leadership often lent its support

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to international solidarity efforts. This included sending some of its


most well-trained staff abroad, as well as welcoming students from
Africa and Latin America to attend its prestigious Schools of Medicine.
Additionally, Fidel Castro became popular among other developing
countries, both socialist and non-socialist; he served as the NonAligned Movements chairperson between 1979 and 1983. This
brought Cuba closer to countries like India and Egypt. It is true that
Cuba stepped up international solidarity efforts and collaboration
with left-wing movements under the auspices of the Soviet Union
after the country entered the CMEA. But during this time Cuba was
also experiencing good economic years in relation to the West,
especially in its sugar trade deals. In view of all this, therefore, there
can be no definite correlation between Cubas presence internationally and Soviet foreign policy.
UNITY, CONTINUITY, STATE SUPREMACY
AND POPULAR PARTICIPATION
The 1959 Revolution was not a fulfilment of Cubas history of class
struggle. Rather, it was a return to a necessary united party/state
condition such as Jos Mart had advocated in order to achieve
its pursuit of national independence and some sort of social progress
within the confines of a capitalist world system. This happened almost
more naturally than if it had been a conscientious fulfilment of human
emancipation led by one party or movement. The existence of a revolutionary tradition, at the workplace and in academic circles, gave
the impetus for social change at various periods throughout the neocolonial period. More specifically, the tradition of resistance against
Spanish colonialism became naturally the spirit of anti-imperialism.
The merging of working-class interests with those of intellectual
circles that upheld the nationalist values of Cuban independence was
done out of political necessity in order to overthrow a dictatorship
and a senseless, vicious cycle of corrupt, electoral games in a neocolonial setting. Certainly this was done under the charisma of Fidel
Castro, but it was his implemented ideas that actually mattered.
The implemented ideas, in turn, were supported by the masses.
This was possible through the alliance of Cubas most revolutionary
forces, which permeated all sectors of society. Among them: the disenfranchised working class, which no longer had a vanguard party
or friend in the state leadership as they had done during Batistas
first regime; the peasantry, which was landless and forced to work

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on fields belonging to foreigners; lastly, the intellectual class, which


by the mid-1950s was entirely revolutionary and opposed to US
hegemony. The Soviet Union had nothing to do with this, the
Communist Party had nothing to do with this, and there was no
compromising on Fidels behalf. This was genuinely a national consolidation of social forces, independent of both the Soviet Union and
the United States.
After China, Cuba was the first Third World country to liberate
itself from modern-day imperialism. It was the first anti-imperialist
state in the Americas and it became so by forming a domestic national
unity. This was possible by eliminating the power of transnational
classes on national territory and by placing an emphasis on domestic
social justice, linked to international solidarity with the rest of the
Third World. External pressures during the bipolar, Cold War era
pushed the leadership of the Revolution to cuddle up to the Soviets.
But it was the revolutionary tradition that provided the basis for
the leading social forces to adopt Marxist ideology and so-called
scientific socialism.
Immediately after the triumph of the Revolution, certain basic
initiatives demanded by the masses were made. Never before did the
people of Cuba feel so much power as they did when they participated
in the trials against the dictators officers. Furthermore, reforms
regarding the distribution of land, the reduction of housing costs,
free education and medicine were instituted instantly. The euphoria
pushed hundreds of thousands of volunteers to cut sugar cane to
sponsor economically the idea of a New Man, even though this
New Man carried with him a baggage of old fashioned and puritanical
values. Nevertheless, the instant changes were not enough to hold
a decade of popular revolution. Institutions guaranteeing the rights
of citizens were necessary, economic programmes were necessary, a
legal framework for civil society to express itself was necessary and
most of all a reliable parallel market alternative to the world market
was necessary.
In terms of economic practices, the leadership seemed quite flexible
in organising the inflow and outflow of capital in order to best serve
state interests. Joining the CMEA in the 1970s secured Cubas sugar
revenues and industrial imports at guaranteed prices. But Cuba did
not rely upon this structure only. Investments and trade deals were
conducted with the participation of some countries in the West,
including Canada and Japan. Nevertheless, constitutional law institutionalised state supremacy over the domestic economy. These laws

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rendered control over economic forces to the state, but also created
a sense of empowerment to producers and consumers in Cuban
society. In Cuba, the market is a force to be manipulated by the
elected, unified, and revolutionary leadership in order for it to benefit
the progress of social and material development among the masses.
Therefore, Cuba is understandably alienated from most international
financial institutions such as the World Bank and the IMF.
The pillars
In the end, the Cuban Revolution can only be understood through
the historical context under which it was born. Likewise, Cuba as an
anti-imperialist state in search of social justice can only be understood
by the historical social forces that moulded its very existence. In order
for the social forces to realise their maximum potential in a world
capitalist system, the movements which came to the fore converged
to create and later preserve the required pillars upon which the state
was built. In order to clarify this idea, a summary of each pillar is
provided below.
Continuity
The theme of continuity is based upon the tradition of revolution
against the existing world order that began in Cuba towards the end
of the nineteenth century. Most political parties and groupings claimed
to be the proper heirs of Marts ideas. But only a few individuals
remained faithful to his tenets. During the neo-colonial experience,
the ideas of a united party, absolute sovereignty and social equality
were lost, even in political discourse. The success of the 26 July
Movement meant the preservation of Marts revolutionary ideas.
They were well read, well thought out and applicable to Cubas peculiar
condition. Overall, the line of a non-compromising independence
in the face of hegemonic structures was not only an idea that was
bought by the masses, but a characteristic that revolutionaries had
to come to grips with. History taught the communists to be consistent
and not to put their faith in neo-colonial structures. Fidel and the
other young revolutionaries maintained that current. Even to this
day, Fidel invokes the words of Mart to muster ideological strength
in this post-Soviet era.
Unity
Unity in Cuban ideology stands for a united social front of as many
sectors of society possible under one umbrella, the Revolution or

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Communist Party/state. Though Mart was by no means a


MarxistLeninist, he would have been happy to see that a single party
of the masses exists at least in name. Additionally, the state and the
Revolution are one. Ideologically, this makes no separation between
the state class and civil society. The entire population is politically
charged, as almost all of its members are linked through the organisations that are controlled by the vanguard party. The choice of a
single-party democracy as opposed to multi-party or liberal
democracies is what keeps the Cuban government intact. All
differences are resolved within Cuba, by Cuban communists for the
Cuban state. Whether or not the decisions made at the top reflect
the interests and opinions of those at the bottom is another question.
But government propaganda makes it very clear that there will be
no alternative movement with regard to the political directorship.
State supremacy
In Cuba, the state rules supreme above all other social forces. This
includes the market and the way it behaves on domestic terrain. The
market is seen as a natural resource that needs to be controlled by
conscientious leadership. Shortly after the revolution triumphed, the
idea was to abolish the market system in a push towards a Utopia.
The retreat from Utopia meant bringing Cuba back to economic
(material) reality. The New Man could not develop if the material
conditions of the country were to remain stagnant.
The state leadership implemented certain market mechanisms and
took advantage of the bipolar situation. While acting during the
height of Cold War politics, it had to take advantage of that scenario.
Hence, Cuba joined the CMEA and integrated itself into the Soviet
bloc. In the next chapter, evidence will demonstrate how Cuba
expanded state capacity over the market even in the post-Soviet era.
Though many institutions and national companies were decentralised,
they remained publicly owned.
Popular participation
Democracy is in the hands of the beholder; the definitions vary from
country to country. But in line with national unity and the interests
of the masses at hand, the leaders of the Revolution saw to it that
the voices of the masses are heard in public and in the vanguard
party meetings. Therefore, most sectors of society have a forum in
which people can freely speak their minds. Some might say that they
are afraid of persecution by party members, the police or the CDR.

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But these institutions could not be strong and last as long as they
have if they were not seen as legitimate forms of expressions in the
eyes of the vast majority of citizens. In every election, over 90 per
cent of the population take part (August, 1999). This is another
important key to maintaining Fidels popularity. The mass organisations have a character of their own, even if high-ranking communist
officials participate in them. The CTC, the UJC and the FMC have
leaders who are elected by the masses they represent. Their founders
have a historical revolutionary link and the institutions themselves
are bedded in revolutionary history. In the next chapter, I will
demonstrate how the idea of popular participation was used in order
to test the legitimacy of the revolutionary leadership.
Finally, these four pillars of the Cuban Revolution are what together
keep Cuba socialist. It surpassed the test of counter-revolutionary
attack in 1962 and it has surpassed the turmoil of the post-Soviet era.
The country suffered throughout much of the 1990s, but these four
pillars remain in principle the same. If they were needed during the
Cold War to maintain stability, much more are they needed now. In
the next two chapters, I will demonstrate how these pillars have
adapted to the new international context.

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3
The Causes and Impact of
Cubas Crisis in the 1990s
Throughout the first three decades of post-revolutionary society,
Cubas orientation in domestic policies as well as external relations
seemed to be clearly defined and structured around bipolar, Cold
War conditions. Within that context, the Cuban party/state apparatus
proved to be an exceptional model in post-colonial development and
Cuba achieved the status of being a Third World superpower in the
anti-imperialist movement (Zimbalist, 1987; Stubbs, 1989). The basis
upon which these assumptions are made can be found in the
continuous rising standard of living and material progress documented
between 1960 and 1989; the achievements in education, medicine
and scientific research; and the countrys intervention in other postcolonial affairs. For example, Cubas repeated election as head of the
Non-Aligned Movement, her military intervention in Angola and
southern Africa, and the humanitarian and technical aid offered to
countries like Jamaica, Nicaragua, Ethiopia and Grenada (Domnguez
and Hernndez, 1989c). Regardless of the undeniable contradictions
and problems that Cuban society encountered during that period, it
is commonly agreed that the country was consolidated under a
politically unified communist party that implemented programmes
of stable economic growth and relatively egalitarian social growth.
These same characteristics, developed under a state-led economy, can
be considered as the basis of party/state legitimacy in the eyes of the
countrys vast majority.
However, the state leadership and the countrys general population
entered the 1990s under harsh circumstances, where all the previously
mentioned developments, including and especially party/state
legitimacy, were put to the test of political, military and economic
isolation. The crisis that Cuba faced can never be exaggerated. Due
to the break-up of the socialist bloc and the consequential fall of the
Soviet Union, Cuba lost between 80 and 85 per cent of its external
trade and more than 50 per cent of its purchasing power (Domnguez,
1995:23; Mesa-Lago, 1992:4). Within one year, 198990, imports
from Eastern Europe, a third of which originated in the Soviet Union,
86

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were reduced by approximately 50 per cent (Prez Lpez, 1995:1). In


total, Cubas foreign purchasing power shrank from $8.1 billion in
1989 to no more than $3 billion in 1992. After 31 consecutive years
of economic growth, Cubas GDP contracted in 1990. At first,
economic conditions resembled that of a recession, but later
accelerated into a depression between 1991 and 1993. The drop in
GDP was 34.8 per cent over this period. Exports fell 67 per cent and
imports fell 72 per cent, resulting in a 30 per cent fall in domestic
consumption (Gonzlez Nez, 1995:3). Additionally, the excess of
national currency in relation to supply of goods became a serious
macroeconomic problem. Food consumption plummeted and
petroleum was removed from both the black market and the legal
market. Due to the reinforced US economic embargo, Cuba could no
longer purchase essential products, such as fuel and medicine, from
its neighbouring countries; transportation and electricity use was
drastically cut back and health services suffered. For the first time in
the history of the Revolution, the population came to know
malnutrition through the augmented rationing system. The Cuban
masses were restless. During the PCCs fourth Congress in 1991, the
situation was blanketed by the phrase El Periodo Especial en El Tiempo
de Paz (the Special Period in the Time of Peace, here referring to the
end of the Cold War).
The crisis that characterised the bulk of the 1990s in Cuba can be
attributed to a variety of factors that can be classified into four broad
categories, none of which is independent of the others; rather, they
are all interrelated and often took effect simultaneously. These
categories are: the internal economic dynamics and logistics of Cuban
revolutionary social development; the evolutionary demise of the
CMEA parallel market system; the complete dissolution of the Soviet
Union as a global superpower and political structure; and lastly, the
hardening of the US economic embargo against the islands economy.
The purpose of this chapter is to delineate these factors, describe their
consequences and highlight their impact upon Cuban society and
the structure of the state-led political economy. This study will explain
how and why the one-party/state apparatus continues to exist.
One mistake that is often made with regard to the Cuban crisis of
the 1990s (and all other domestic crises of economic origin) is that
of concentrating strictly upon external factors. Superstructuralists,
found in Cuba as well as throughout academia worldwide, tend to
blame all the problems of developing countries on the worlds political
economy (Panitch, 1994:1). While superstructuralists may be right

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in the idea that we live in one world economic system and that points
of comparison are only possible through a global perspective, it is
nevertheless important to look at the internal dynamics of Cubas
economy just prior to the fall of the Berlin Wall (the early to mid1980s) and possibly even further back than that (the 1970s) for
historical references. It is equally important to understand what the
situation was that Cuba was in and how the government and people
reacted to the crisis. After all, what makes one country different from
another is the manner in which autochthonous reaction to the world
system takes place. The economic problems that Cuba encountered
during the 1990s were not strictly due to the fall of the Berlin Wall
and the demise of the Soviet empire.
In Cuba, the analysis of change or adjustment is publicly promoted
through the declarations of the PCC congresses, which had been held
every five years ever since 1975, when the institutionalisation of the
Revolution (meaning the creation of normative structures) and the
edification of its political system took place. At each of these congresses
the national agenda for economic development was discussed at all
levels of society, where certain current global trends like neo-liberal
capitalism and antagonistic factors like the US embargo are criticised.
At the same time, problem solving geared towards making domestic
productivity more efficient has played an important role in dealing
with the economic crisis. Terms like efficiency, rectification and
reforms are not new to Cuba. There has always been the need, not
only to adjust to global trends, but also to perfect socialism from
within and raise the level of productivity.
The documents produced by the PCC have been useful in the search
for factors that help explain the economic crisis and the adjustments
made throughout the 1990s. They tend to offer a critical view of the
global political economy and also point out where efficiency in
production and distribution need fixing. However, because economic
research is controlled by the state apparatus and the documents must
by law represent the intentions of the state leadership, many
internal factors that have contributed to the crisis have been
overlooked. Rarely does the PCC point to the drastic social
consequences of the economic policies it puts forth. In this manner,
it becomes difficult for the research centres in Cuba to reflect upon
the domestic conditions the country faced during or prior to the time
of global structural changes. So it is imperative to relate internal as
well as external factors to the economic crisis; if not internal factors,

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then at least the internal conditions that were present at the time of
mounting economic crisis.
THE BACKGROUND TO THE CRISIS
Though the seizure of state power by the revolutionary leadership
was fulfilled in 1959, the state institutions that defined Cubas socialist
character and command economy were only established during the
1970s (Domnguez, 1978a). It was this decade which set the parameters
of state-led development and the interaction between the domestic
and international socio-economic forces. Additionally, this can be
considered as the time when the Revolution was institutionalised;
whereby Cubas government took form and created a strong party/state
apparatus. As mentioned in Chapter 2, the congealing of political
structures and mass organisations under the constitution is what has
ensured PCC legitimacy, in the eyes of both the state and the people,
over the last two decades. But in order to participate in the global
economy, the Cuban leadership had to shape the political economy
according to the options that were available during the time of institutionalising the Revolution.
Eckstein calls this era (the 1970s) the retreat to socialism, after
the mistaken attempt of jumping into radical communism during
the 1960s (Eckstein, 1994). She points out that this retreat was not
so much an ideologically inspired move, but rather a dawning of the
realisation that the country needed to insert itself into the global
economy. Bringing Cuba into economic reality included the need
for Cuba to open up to the West for trade and commerce, as was
common with all CMEA countries. For instance, in 1974 Cuba took
advantage of the sugar price which was at the time US$0.68 (68 cents)
per pound in the West (Eckstein, 1994:50). In this sense, trade with
non-socialist countries was dependent on what terms of trade were
most favourable to Cubas national project. In total, the Western bloc
accounted for 41 per cent of the islands trade by 1980 (Eckstein,
1994:2638). This signifies that Cuba was never completely dependent
on Soviet subsidies. It also means that the Cuban drive for normalising
economic relations with the West is not recent. Even US-based
corporations increased their trade with Cuba as the embargo was
being softened in Washington under the Carter administration. In
1982, the Cuban legislature passed a law/decree regarding the Foreign
Investment Code, which made formal the state leaderships intentions
to attract foreign hard currency into the country. The 1982 reform

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permitted investors up to 49 per cent of private ownership and profit.


Sectors such as tourism, construction, and pharmaceutical production
came out of this change and invitation.
Relations with the world market economy were used in an attempt
at developing the national economy to its highest potential. By turning
to export-oriented growth and the formal reception of Western
investors, the late 1970s and early 1980s showed indisputable signs
of economic and social growth. As a result, the average yearly growth
rate between 1981 and 1984 was 7 per cent GDP (FRI, 1997). It is
interesting to note here that economic growth continued in Cuba
while it did not throughout most of Latin America. While neighbouring
countries experienced little or no growth due to the debt crisis of the
early 1980s, Cuba started to reap the benefits of preferential
agreements, not only with its socialist allies, but also by playing the
game on both sides of the fence in opening up to foreign investment.
THE EFFECTS OF INTEGRATION
Turning to the world market took a toll on the states fiscal affairs.
Despite the economic growth that Cuba experienced during the 1970s
and the early part of the 1980s, other problems emerged at the
forefront of the leaderships concern. This was mainly a question of
foreign debt and access to credits in hard currencies. During the mid1980s, the governments ability to finance hard-currency imports
began to fail. The blame can be put on the fall of world market prices
for Cubas principal hard-currency-earning exports. During the early
1980s, Russia allowed Cuba to refine and re-export its oil to other
countries; for some time, this was Cubas number one source of hard
currency. Garca Reyes and Lpez de Llerga (1997:192) note that
between 1984 and 1987, Cuba imported 99 per cent of its required
oil from the USSR; this is including the oil that it imported for refining
and re-exporting, for which the country made an average of US$1.5
billion annually. But just as Cuba reached its oil-exporting peak in
1985, the following year was met by a reduction of approximately
50 per cent (Granma Weekly Review, 16 September 1990:3; Marconi
Braga, 1997:1620). For reasons that will be explained in the following
sections, Soviet oil deliveries to Cuba were reduced on an annual
basis by accords or by renegotiations of the original trade deals with
the island.
Additionally, the world market price for sugar had fallen abysmally.
In 1980, sugar fetched US$0.27 per pound, in 1985 this price dropped

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to 7 cents per pound. This was the lowest price for sugar in real terms
since the 1930s. Hard-currency earnings from sugar dropped by nearly
80 per cent between 1981 and 1985 (Granma Weekly Review, 16
September 1990:3). Cuba had come to confront the reality that its
primary and historical product (sugar) was replaced indefinitely at an
industrial level. Nickel, or the use thereof, during the late 1970s and
early 1980s, was widely replaced by the production of plastic substitutions (Alonso, 1992:41). In the absence of the much-needed hard
currency, Cubas import consumption from the West dropped. Even
more importantly, the countrys trade debt to non-socialist countries
mounted from 3.6 billion pesos in 1985 to nearly 6 billion pesos the
following year. At the time the peso was roughly equivalent to the US
dollar (Eckstein: 1994:72). With the exception of one debt rescheduling
in the Paris Club in 1986, the country was unable to achieve success
in obtaining more credits from the West. To exacerbate the problem
even further, the value of the US dollar fell on a global scale; since
Cuba had to contract many of its loans in other Western currencies
thanks to the US embargo repayment became difficult. These
factors pushed Cuba to depend more heavily on the socialist bloc.
Finally, and in connection with the economic and social growth
experienced in the 1970s and first half of the 1980s, the children of
the Revolution (born in the 1960s) were inducted into the labour
market in the 1980s with high levels of education and training. These
young workers held high expectations and looked forward to working
in offices, research centres, city hospitals or abroad in the diplomatic
corps. Few were willing to go back to the small towns and the
countryside to participate in agricultural production and manual
labour. As a result, there was a fall in the productivity of physical
labour. This fall rolled on until 1989, when productivity reached
only half of what was planned and expected by national planners
(Dilla, 1993).
At the third PCC Congress in 1986, Fidel Castro addressed the
problems of delays in Soviet oil deliveries, the lack of hard currency
to finance trade with the West and the upcoming effects upon the
national economy. Hints of austerity and seeking alternatives
decorated his speeches (Prez Lpez, 1991). In addition to recognising
the pressures of the global market upon the island, the state leadership
pointed to domestic social and economic problems; among them,
inefficiency, corruption and the straying away from revolutionary
principles. Public resources and plots of land were used for domestic
demands for goods, rather than for government export for the

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accumulation of hard currency. Managers at factories and other


productive plants were seen as a developing parasitical class that
should be put to more labour. Farmers, who were then allowed to
sell on the legal free market, used their profits to buy luxury items
on the black market. Corruption increased and state economic
efficiency declined. In Cuba, a managerial class had formed and Fidel
Castro identified it as the new domestic enemy of the Revolution.
THE CAMPAIGN TO RECTIFY ERRORS
AND NEGATIVE TENDENCIES
In 1986, the government launched what came to be known as the
Campaign to Rectify Errors and Negative Tendencies. The purpose
of this was to correct the injustices imposed by those who sought
their own interests instead of the collectives. It was a moral campaign
to re-emphasise the ideas and necessary commitments expressed in
the words of Che Guevarra and the national hero Jos Mart. This
period of reforms was characterised by a sort of dichotomy embedded
in moral attitudes about socialism and the hike in market-oriented
practices. In the same manner, it highlighted the inevitable contradictions prevalent in a society that tries to accomplish domestic
egalitarianism while competing on the world market. While the
campaign centred on curtailing certain market features, it reemphasised the collective forms of labour organisation. Additionally,
this period was marked by some serious cleansing of the state
bureaucracy at national and local levels (EIU, 1988:9).
Cuba analyst Mesa-Lago concluded that the period of rectification was a reaction to the Soviet Unions perestroika, which will be
discussed in the section concerning the impact of the fall of the Soviet
Union (Mesa-Lago, 1992:8). The period of rectification was really a
political, ideological and moral affirmation of continuing the real
socialist project. But this period did not resemble one of transition,
change or perfection in the economic aspect of the socialist project.
While the Soviets were reforming their economy to the tune of neoliberal policies, Cuba reaffirmed its commitment to revolutionary
ideals and one party/state leadership. The rationing system was
reinstituted as a means to meet needs; bonuses were removed from
individual pay and implemented only collectively. During this period,
university students were asked to spend more voluntary time on the
sugar and tobacco fields. At the same time, the government pursued
more Western economic ventures. Foreign investment through joint

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venture arrangements was made in electronics, mechanical


engineering, petrochemicals, pharmaceuticals, textiles and tourism.
Sociedades Anonimas (SAs), or semi-autonomous state corporations,
were created for the purpose of facilitating joint ventures. For example,
Cubanacan is the best-known SA, which specialised in the tourism
industry; later on, however, it began to diversify from services to
actual exportable products. During the 1980s, Cubanacan negotiated
a US$80 million contract in exporting the meningitis B vaccine (Cuba
Business, April 1990:15; Eckstein, 1994:70).
The moral antithetical aspect of the campaign was manifested
when government officials encouraged the general population to
return to MarxistLeninist principles and the communist ideals
proposed by Che Guevara. At the same time the government sought
more ties with the world market system. Eckstein notes that:
Several policies associated with the RP (Rectification Process) that
were antithetical to socialist morals and principles and the new
ruling ideological emphasis reflected state efforts to address the
mounting hard currency crisis. For one, the SAs that encouraged
the entrepreneurial spirit and foreign investment were designed
to generate hard currency. Second, austerity policies were partly
designed to increase the supply of goods available for hard currency
export. The government, for example, increased the amount of
textiles earmarked for export while decreasing textile rations, and
it slashed sugar and motor vehicle gas allocations to increase the
amount of each item available for export. The government also
raised the electricity tariff to encourage more rational electricity
use, so as to free petroleum for sale abroad. Third, tourism was
tolerated during rectification because it generated hard currency.
(Eckstein, 1994:73)
Towards 1989, the contradictions in the Campaign to Rectify Errors
and Negative Tendencies were becoming obvious to the public. Certain
welfare programmes were cut back by the government. Free and
subsidised lunches at work were eliminated or reduced and university
matriculation in 1989 fell to the level of the early 1980s (CEE,
1989:321). The corruption that was supposed to be eliminated never
was, and the black market flourished throughout the economy. Where
prices were mandated to be reduced, store managers kept violating
the newly imposed price regulations (EIU, 1989:12). The queues at
bakeries and other neighbourhood stock stores got longer, while

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scafflers would cut through selling the same products for slightly
higher prices to people waiting in the long queues. In the Cubalse
SA stores, reserved for diplomats and those allowed to purchase in
hard currency (US dollars), employees with access to the dollars would
illegally purchase products not available to the rest of the population.
Despite the contradictions between morality and the pressing need
for more market strategies, the rectification campaign brought about
some economical benefits to the Cuban state retail sector. Since many
of the private farms in this period fell into the hands of state cooperatives, the state was capable of conducting wholesale directly.
Nevertheless, while personal expenditure of consumers (goods and
services acquired directly by the people at official stores) increased
by 6 per cent between 1985 and 1989, the recorded social expenditure
of the state (in goods and services consumed collectively by the
people) fell by 5 per cent (CEE, 1989:2401). Internationally, this
time was marked by the countrys need to adjust to global trends in
world prices. Loyalty to the CMEA agreements became a stumbling
block to the type of structural adjustments necessary to operate with
the global changes. As prices in the West dropped for Cubas main
export products, the island became much more dependent on the
socialist bloc, especially the CMEA market system and more specifically
the Soviet Union. Under these conditions, Cuba embarked upon her
stormy voyage towards the 1990s.
THE DEMISE OF THE CMEA
As briefly stated in Chapter 2, the CMEA was an alternative market
system which was thought to be based on fair, basically equal, trading
terms among so-called socialist economies. The terms were concretely
made through five-year plans and guaranteed the sale and purchase
of Cuban products at prearranged prices. Between 1972 and 1991,
Cuba had based more than half of its international trade on this
alternative market system. During this period, Cuba linked its
economy to the five-year plans implemented by the member states
and became progressively more dependent on the socialist bloc
especially after a global fall in prices of Cubas main hard-currencyearning export products. In this relationship, Cubas income was
dependent on the commercialisation of its sugar, tobacco and nickel.
From Eastern Europe (including the USSR), Cuba imported 40 per
cent of the medicine consumed on the island, 16 per cent of
agricultural fertilisers and 90 per cent of its public buses (BIC, 1997:21).

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In terms of marketable import products, the CMEA provided 63 per


cent of Cubas imported food, 86 per cent of imported primary goods
and 75 per cent of manufactured goods. In turn, 63 per cent of Cubas
sugar exports, 72 per cent of its nickel exports, 95 per cent of its citrus
and tropical fruit exports and 100 per cent of its small industrial and
machinery parts and other manufactured goods exports were geared
towards the countries of the CMEA. These figures represent the fixed
trade between 1985 and 1989 (Rodrguez Beruff, 1995:6). The bulk
of this trade was conducted with the Soviet Union. But Garca Reyes
and Lpez de Llerga concluded or estimated that excluding the Soviet
Union, only 15 per cent of Cubas commercial exchange was
conducted with the remaining member states of the CMEA system
(Garca Reyes and Lpez de Llerga, 1997:201). Trade with the USSR
together with the CMEA amounted to 85 per cent of Cubas imports.
Here we can see that Cuba, though benefiting more from CMEA trade
than from trade with the West, was primarily dependent on no other
country than the USSR. Jeffries (1993:190) estimated that by the end
of the 1980s, the USSR provided up to 70 per cent of Cubas imports.
More recent estimates give a figure of around 80 per cent by 1989
(Prez Lpez, 1995: 2).
In the move towards integration into the world capitalist market,
the relationships among the now ex-socialist countries began to
corrode. The countries of Eastern Europe began to demand the
repayment of debts Cuba had accumulated during the period of its
participation in the CMEA. Additionally, the Eastern European
countries started to raise their prices for mechanical and industrial
goods. In 1988, Czechoslovakia and Bulgaria decided against renewing
their preferential agreements with Cuba. Prices for products and
manufactured goods coming from these countries were raised by
approximately 20 per cent. Already in 1989, the official communist
daily newspaper Granma started publishing the hiked prices for goods
such as buses for public transport from Hungary (Granma, 1 October
1989:6). Due to the rise in prices, Cubas trade deficit was increased
by 41 per cent in one year (Domnguez Reyes, 1991:2130). Prices
continued to rise rapidly during the following years.
In January 1990, the heads of the member states of the CMEA met
in Sophia, Bulgaria to decide the fate of the organisation. How would
this parallel market of socialist economies some of which were then
in transition to neo-liberal models continue to exist? Would it be
restructured or completely dissolved? This meeting was of the utmost
importance to the relationship between developing countries of the

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socialist bloc and the most industrialised countries like East Germany
and Czechoslovakia. Since the chances seemed quite bleak for the
continuing existence of the CMEA, Cuba had to rescue all the possible
bi- and multilateral trade agreements made between the island and
the industrialised part of the socialist bloc. At the same time, these
same countries, with the exception of Cuba, were experiencing a
social, economic and political transition to neo-liberal models. Garca
Reyes and Lpez de Llerga found that Ernesto Melndez, president
of the CECE (State Committee of Economic Collaboration) advocated
a restructuring of the organisation. Because of the debilitating effects
of the reforms in Eastern Europe on socialist states, the creation of a
new multilateral post-CMEA trade organisation was deemed necessary
by the Cuban leadership. At this same meeting, at which the vice
president of the Council of Ministers Carlos Rafael Rodrguez
participated, Cuba led the movement to maintain preferential trade
agreements between the most industrialised socialist countries and
those less developed countries like Mongolia and Vietnam (Garca
Reyes and Lpez de Llerga, 1997:202).
The end result was that, due to Eastern Europes political crisis in
1990, there was no five-year plan for 199095. After Russia, one of
Cubas biggest trade partners was the Democratic Republic of Germany.
This entity ceased to exist when East and West Germany were unified
on 1 July 1990. From this point on, the new Germany suspended all
sugar trade deals with Cuba. It is also worth noting here that prior
to the unification process between West and East Germany, Cuba
had approximately 10,000 workers in the Democratic Republic, which
produced for the island an extra income of US$3 million per annum.
This additional income came to an end (Garca Reyes and Lpez de
Llerga, 1997:25).
With the disintegration of the Soviet Union in 1991, the CMEA
was dissolved on 28 June of that same year. Yeltsins ascension to
power in Russia resulted in economic changes regarding former CMEA
relationships, including Cuba. Yeltsin made sure that all contracts
signed between Russia and Cuba were invalidated, certainly under
pressure from the United States (Garca Reyes and Lpez de Llerga,
1997:198). In the end, Cuba lost approximately 50 per cent of its
purchasing power. China had become Cubas only powerful friend.
Still all trading had to be made in hard currency, nothing of which
resembles the preferential agreements made under the relationship
with Eastern Europe. The demise of the CMEA together with the fall
of the entire Soviet Union forced Cuba to look for alternatives and

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indeed to restructure its economy. The CMEA was a cushion between


the socialist intentions of the Cuban leadership and the US-dominated
world market. This cushion disintegrated and Cuba was left naked,
the existing internal economic order apparently defenceless.
CUBA AND THE FALL OF THE SOVIET UNION
La desaparicin de la Unin Sovitica y el derrumbe del campo
socialista europeo no nos tom totalmente de sorpresa. Incluso
advertimos mucho antes a nuestro pueblo de esa posibilidad. Con
los errores estpidos que estaban cometiendo y las concesiones
vergonzosas que continuamente hacan al adversario histrico,
veamos venir los acontecimientos. (Fidel Castro in Federico Mayor,
Cuba no negocia ni vende su Revolucion que ha costado la sangre y
sacrificio de muchos de sus hijos, interview with Fidel Castro, in
Granma Internacional, 22 June 2000)
While in December of 1987, when the Reagan family and the
Gorbachevs were dancing in the White House to celebrate the end
of the Cold War in Europe, at that very same moment, thousands
of Cuban troops crossed the Atlantic Ocean to combat South African
forces in the Angolan city of Cuito Cuanavale. (Domnguez, 1995:23)
Without doubt, the most important factor contributing to Cubas
crisis during the 1990s and the evolutionary process of change was
the disintegration of the Soviet Union and the severance of political,
economic and military ties. The USSR was Cubas principal ally in
the international sphere in addition to being its main economic
patron and trading partner. On various occasions, Fidel Castro alluded
to the future possibility of a Cuba without an ideological and economic
superpower ally to back it up. The fact that the country was preparing
for a radical break-up in the international system testifies to the
alertness and consciousness of the Cuban leadership. However, no
preparation in any amount of time could have sufficed to prevent
the economic catastrophe that occurred during the first half of the
1990s. The deterioration of economic and political ties between the
Soviet Union and Cuba must be looked at critically. The problems
did not occur simultaneously with the fall of the Soviet Union; rather,
Cubas crisis in the 1990s was due in part to a gradual rise of contradictions between state tendencies based on ideological grounds and
those based, more importantly, on Soviet economic interests. This

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short but critical review is essential in that it helps to answer the


question to be dealt with in the remainder of this book; namely, why
does socialist Cuba continue to exist?
A gradual break in relations
CubanSoviet relations started to show signs of deterioration in 1981
when Brezhnev, then secretary general of the CPSU, announced
during the 26th Congress that the USSR was interested in lowering
the level of tension between itself and the West, but without lowering
its commitment to the developing countries of the South. This new
attitude was announced around the same time that Ronald Reagan
took the presidency of the United States on the foreign policy platform
of burying the Soviets economically and militarily, and making the
Americas safe for democracy. Though Brezhnev seemed clear in
explaining Soviet intentions on maintaining the superpowers
commitment to allies in developing countries, no statement made
clear what kind of support would be given to revolutionary establishments like the PCC in Cuba and the Sandinistas in Nicaragua.
Evidently, ideological commitment took a subordinate position to
the attempt not to disturb the United States geo-political interests.
Garca Reyes and Lpez de Llerga (1997:1359) have provided some
interesting accounts of the development of changing attitudes within
the CPSU at the start of the 1980s. They note that certain individuals
within the Soviet Central Committee, like Karen Brutents of the
Central Committees International Department and Brezhnevs
eventual successor as head of the Party, Yuri Andropov, were given
the freedom, within academic papers and political statements, to
criticise Soviet expenditure on the international communist
movement. It was especially Andropovs position after Brezhnevs
death that started the ball rolling in defining the Soviet Unions new
list of economic interests. This individual drew the Soviet Unions
attention to the need for modernising the Soviet economy and
industrial sectors. In order to do this, Andropov deemed it necessary
to reduce the countrys costs in helping allies in the South; this would
include reducing certain subsidies and preferential prices in trade
between Cuba and the Soviet Union (Domnguez, 1989:1037). The
causes here are essentially economic. But this economic move became
more of a political problem as Cold War conflicts in Central America
(Nicaragua and El Salvador) started involving increased Cuban
intervention and solidarity aid. In 1982 Andropov and the CPSU
made it clear to the United States that the USSR would be interested

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in setting up talks for peace in Central America rather than continuing


the bloody battles from which the Soviet Union never benefited. On
more than one occasion, the Soviet Union denounced Cubas military
support for the Sandinistas in Nicaragua and the FMLN in El Salvador
(Ratliff, 1990:80). Castro and the Cuban leadership, on the contrary,
continued to request more military aid from the USSR in the light
of US aggression throughout the region. Cuba stood firm in its
commitment to the anti-imperialist movement in Latin America,
while the Soviets sought out more ways of appeasing and improving
relations with the United States. The commitment that Cuba
displayed, in my view, was an affirmation of political independence
and a discerning measure of PCC coherency in its foreign policy.
Prior to this, the USSR started to reduce its contribution to the
Cuban military apparatus. During the mid-1980s the Cuban
government, nevertheless, doubled its military support and
humanitarian aid in Nicaragua (Domnguez, 1995:247). Additionally
Castro called back his troops from Ethiopia, which were at the time
supporting Soviet interests in combating Eritrean rebels (Domnguez,
1995:28). The conflicts of external state interests began here,
representing also ideological differences between the USSR and
steadfast Cuba.
The end of the Cold War
The situation only got worse when Gorbachev came to power in
1985. By this time, the idea of reforming the Soviet political economy,
with the government implementing outright market policies and
privatisation programmes, had become consolidated, as was the
leaderships intention of lowering tensions between the two
superpowers and bringing an end to the Cold War. The new way of
thinking and reconciliation foreign policy were the fashionable
formulas that determined not only the fate of the Soviet Union, but
also the relationship between the Soviet Union and Cuba. Somehow,
the diplomatic relations between the two countries did improve with
Gorbachev, who sent a friendship delegation in early 1986 in
preparation for the third PCC Congress. This Congress, which was
supposed to convene in February, was delayed until later that year.
The reason for this delay, as was announced in public by the Cuban
government, was to take time to study the possibilities of reforms
necessary to perfect the socialist project in Cuba (Granma Weekly
Review, 15 June 1986:1). As mentioned earlier, in the section
concerning the Campaign to Rectify Errors and Negative Tendencies,

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Fidel Castro was occupied with making speeches attacking the


inefficient practices in Cubas domestic political economy. In response,
the Soviets paid close attention to the economic developments in
hopes of the islands joining the superpowers move towards a
transition economy.
Nevertheless, and to the dismay of the Soviet leadership, the third
PCC Congress, which finally took place in November 1986, produced
documents and created a policy determining the Cuban governments
intentions of reaffirming its commitment to political independence
and socialist values. In his speech to the Party Congress, Fidel Castro
stated that, in his opinion, the liberalisation of Cubas economy
would eventually lead to political instability and hence the death of
the socialist project; he concluded that the Soviet Union would
eventually fall apart (Castro, 1987). Needless to say, Castro was correct.
The end of Soviet solidarity
Meanwhile, the reform movement in the USSR, which included the
proposals of those economists who favoured reducing economic ties
with Cuba, took advantage of this differentiating moment. Between
1987 and 1989 the Soviet press (Pravda) started publishing reports
on the misuse of Soviet aid to Cuba and emphasising the need for
Cuba to change its economy in order to pay its external debt to the
more developed member states of the CMEA. In 1989, the economist
Nikolai Shmeliov pointed out that the USSR spent between US$6 and
8 billion annually on aid to Cuba and that the PCC did not use the
economic aid efficiently; additionally, that two Soviet republics like
Tajikistan and Kirghizia received together three times less economic
aid and resources than Cuba (Bordreaux, 1992). These revelations
caused some resentment and pushed the Soviet reform movement
further away from solidarity with Cuba. Politically, this war of words
was accompanied by an anti-Castro campaign in Poland, Hungary
and Czechoslovakia. The press in these countries went on further to
question Castros real reason for approving the application of the
death penalty to General Arnaldo Ochoa and other military heroes
of the war in Angola in 1988 (Garca Reyes and Lpez de Llerga, 1997).
In Cuba, the cleansing of the military was seen as necessary due to
corruption and the trafficking in narcotic drugs, which embarrassed
government leadership and the Communist Partys reputation. The
now ex-socialist countries of Eastern Europe, contrarily, insinuated
that the executions were political, as Ochoa and company posed a
threat to Fidel and Raul Castros popularity. The propaganda offered

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by the triumphant neo-liberalists in Eastern Europe influenced Soviet


leadership in their attitude towards Cuba.
Economically, the Soviets were already failing in their crude oil
deliveries to other socialist countries, including Cuba. By 1987, the
Soviet deficit on oil deliveries to Cuba was approximately 1.5 million
tons, when comparing the trade accords to actual deliveries. MesaLago points out that, as a result of this, austerity measures on
combustibles in Cuba had already started to take place by 1988 (MesaLago, 1992:26). Whether or not this reduction in oil deliveries could
be directly linked to the inter-state disputes, what does remain clear
is the gradual change in the Soviet attitude regarding the significance
of keeping up good trade relations based on ideological preferences.
Post-Cold War diplomacy between Cuba and the USSR
In the diplomatic sphere, however, Gorbachev attempted to maintain
respectful ties with Cuba; this was true at least in words. Gorbachev
would love to have seen Cuba join in on the freedom bandwagon,
but assured the world that the USSR would always respect the
inalienable right of self-determination in all socialist countries
(Exclsior, 8 June 1991:5). In 1989, Gorbachev visited the island for
reasons which are to this day not clear. Gorbachev spent most of
the time talking with Fidel Castro behind closed doors, but some
dialogue with sectors of society outside the PCC, especially the
military, was kept open. Additionally, during this time, thousands of
Soviet citizens were residing on the island. The speeches that
Gorbachev made in their presence and in the presence of the rest of
the islands population never specified disappointment in Cubas
negation of perestroika. Garca Reyes and Lpez de Llerga (1997:211)
allude to the notion that this was possibly because the majority of
Soviet citizens on the island represented the most conservative or
orthodox brand of communists who were interested in maintaining
co-operation between the countries.
Towards the end of his visit, Gorbachev did sign a Friendship Treaty
of Co-operation, which was to be effective for 25 years (Granma Weekly
Review, 15 June 1986). The purpose of this treaty was to recognise
the need to mobilise funds, which were freed through Soviet
disarmament, towards the furthering of social and economic
development of both nations. Unfortunately for Cuba, the Soviet
Union did not last 25 years in order to keep up its commitment.
Despite the somewhat friendlier diplomatic ties between the two
countries, none of the commitments in words were reflected in real

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economic terms. Possibly to the disappointment of Gorbachev and


others who stated their interests in maintaining close relations with
Cuba, the economic leaders in the Soviet Union continued their
policies of reducing non-profitable trade with their Caribbean
comrades. Already by October 1990, Soviet oil deliveries were reduced
by nearly 10 per cent (Garca Reyes and Lpez de Llerga, 1997: 211).
This naturally affected Cubas small industrial production and some
of the populations consumption habits. Austerity measures in all
sectors were put in place by the government; hence began the initial
stages of the Special Period.
Cuba and the end of the Soviet bloc
As the supposed Cold War of contradicting ideologies, military confrontation and economic models came to an end, so did the alliance
between the Soviet Union and erstwhile comrade countries of the
South. This was all due to the level of priority Gorbachev placed on
building new relations between the USSR and the United States. In
this process, it became evident that reconciliation between the two
great powers once arch-enemies was contingent upon the severance
of relations between Russia and its allies in the South. No longer was
the Soviet Union to sponsor political and military activities among
the revolutionary and progressive, anti-imperialist movements in the
regions of Asia, Africa and Latin America. This aloof attitude
demonstrated towards Soviet allies in the developing countries of
the South sealed the decline of the USSR as a superpower and permitted
the United States to take on a hegemonic role in the new world order.
In this sense, Cuba lost its practical and strategic relevance to the
Soviets. Simultaneously, the ideological and economic debates in the
Soviet parliament and within the CPSU, between conservatives and
reformers, or between hardline communists and neo-liberal procapitalists, were mirrored in debates on international trade between
those wanting to maintain close relations with Cuba (the Cuban
lobby in Moscow) and those who opted to reduce the links between
the two entities. Needless to say, the latter group won their case in
both debates.
In contrast to other SovietThird World relationships, which came
to a halt almost without a second thought from the CPSU leaders,
SovietCuban relations experienced a slow and painful death. This
was due to the will and common interests of those leaders who wanted
to maintain friendly relations between the entities up until December
1991, when the USSR was finally dissolved. For the Soviet Union, the

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Cuban case was significantly different from those of all other countries
of the South. Cubas political apparatus and policy decision-making
sources were never dependent on nor centrally managed by Moscow.
Cuba was more of an economically dependent ally than a political
subordinate, as were perhaps the nations of Eastern Europe, especially
the Democratic Republic of Germany, Hungary, Romania, Bulgaria,
and Czechoslovakia. Soviet armed forces did not arrive upon the
island by force and confrontation. Rather, they were invited to stay,
as the Cuban leadership never had any intentions of surrendering
Cubas close ties with the United States, especially considering the
islands close proximity to the latter. In this sense, it was more difficult
for the Soviet Union to leave a country that had invited its armed
forces and technical help, rather than being expelled by the
governments and peoples of states who rejected its presence, as was
the case in Eastern Europe.
Soviet collapse
With very little resistance, the Soviet Union collapsed in 1991, as did
the Communist Party that ruled it. Only on one occasion did the
military, which included many loyalists to the CPSU, and the top
ministers of the Soviet Council of State, attempt a coup for the purpose
of maintaining Soviet political structures and reversing some
perestroika policies. With a quick call to post-Soviet solidarity and
in the name of democracy, the military bowed to the will of the disillusioned masses. Soviet communism came to an end when the failed
coup resulted in the new states renunciation of communist ideology.
On the following 12 September, US Secretary of State James Baker
arrived in Moscow to discuss security measures in the post-Soviet era.
One of the most impressive moments of the meeting was when
Gorbachev announced that 12,000 Soviet soldiers would retreat from
Cuban territory (Garca Reyes and Lpez de Llerga, 1997:130) The
Cuban leadership protested, as this decision was made unilaterally
without taking Cubas security into consideration. The most pressing
issue for Cubas state security interests was the fact that the United
States had no intentions of retreating from Guantanamo Bay.
The dismantling of the Soviet Union did not only mean a break
of relations between Cuba and Russia. Rather, it meant that Cuba
had to deal with the new political set-up that would provide a
framework for possible future economic relations with Eurasia. The
15 republics comprising the former USSR were set free to create their
new alliances. Not much had changed. Most of the new state leaders

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in those countries were members of the former CPSU or held high


bureaucratic positions. Nevertheless, decentralisation did take place
and, at least in written law, they were granted sovereignty.
Due to the process of political decentralisation, which culminated
during the structuring of the Commonwealth of Independent States
(CIS), the ex-Soviet republics had achieved a certain political autonomy
in relation to Moscow. By early 1992, Cuba was obliged to sign accords
with each CIS country, individually (Granma Internacional, 10 January
1992:3). No longer did Moscow-centred political ideology direct
economic solidarity between Eurasia and Cuba. Instead, the ex-Soviet
republics became concerned with their own integration into the
global market. The Russian Federation and the other former Soviet
republics followed quickly with neo-liberal reforms. This shock therapy
to the economy exposed almost all sectors of the Russian economy,
with the exceptions of education, transportation and some parts of
the medical system, to the free market and privatisation. The
triumphant neo-liberal project in Russia meant a policy of reduced
government spending; this went for internal domestic spending and
most importantly for Cuba, internationally. As far as the Russian
Federation was concerned, no more preferential subsidies were to be
offered to Cuba or any other developing or (ex-)socialist country
(Exclsior, 28 January 1992).
Russias new deal with Cuba was based strictly on world market
prices. In June 1992, the Russian Federation signed a trade accord
with Cuba, whereby Russia would give 1.8 million tons of crude oil
for every 1 million tons of sugar. (This was based on the then current
prices of US$220 for a ton of sugar to $120 for a ton of oil.) This
differs greatly from the trade accords between the two countries set
up for 1989. Additionally, a sort of propaganda machine against
communist Cuba was created. This was possible with the help of a
number of Cuban dissidents residing in Russia during the time of the
Soviet demise. Newspapers, journal reports and television programmes,
which monitored and somewhat encouraged the transition to neoliberal democracy in Russia, portrayed Cuba as a country of people
suffering the tyranny of the ancin regime (Garca Reyes and Lpez
de Llerga, 1997:1723).
Option zero
Ultimately, the story is about a political crisis and a push for neoliberal reforms in one superpower, which affected its economic
dependant. But what needs to be pointed out is that, though the

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demise of SovietCuban relations was gradual, the disregard for legally


binding contracts and terms of trade was not. Due to the political
crisis that the USSR endured during 1991, Cuba received less than
50 per cent of the products it was promised (except for petroleum)
according to bilateral trade agreements. As for petroleum, Cuba
received only 71 per cent of the 10 million tons of oil it was promised
for the exchange of its sugar. While Cuba succeeded in complying
with the original trade agreements, the Soviet Union did not because
that entity ceased to exist. In an article in the London Financial Times,
Stephen Fidler pointed out how in 1991 the USSR delivered:
only 45 per cent of the 1.5 million tons of grain that were
promised to Cuba;
only 16 per cent of the 1.1 million tons of fertilisers;
absolutely none of the 200,000 tons of sulphur;
only 38 per cent of the 100,000 tons of ammonia;
none of the 90,000 tons of rice;
none of the 10,000 tons of wood;
only 5 per cent of the 5,000 tons of soap;
only 26 per cent of the promised 30,000 tons of copper and
aluminium. (Lobe, 2001:3)
The purpose of pointing out these facts is not to blame Cubas
crisis during the 1990s on the irresponsibility of Soviet or post-Soviet
leadership. Rather, my interest in citing the empirical evidence is to
demonstrate how dramatically the chaotic fall of the USSR affected
Cubas production and service processes. Under normal circumstances,
Cubas economic crisis should have begun during the early 1980s
when the world market prices for sugar and nickel fell dramatically.
The countrys productive capacity was reduced by internal social contradictions, and efficiency became the theme that had no end in Fidel
Castros speeches. But due to the strong ties between Cuba and the
Soviet Union, together with the price arrangements with the CMEA,
Cuba was barely hurt by the global scenario. It is with this knowledge
that I assert that the economic crisis which caused state cutbacks,
the harsh rationing of resources, the minimisation of production and
most importantly the restructuring of the political economy began
in 1990, when the Cuban leadership came to realise that Soviet oil
deliveries were to be paid in hard convertible currency based on world
market prices starting the following year. This realisation was evident
in the documents that were produced and published by the fourth

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PCC Congress. The Congress, which will be discussed in detail later


on, publicly documented the severity of the hard times to come. The
factors that caused the crisis were presented as the following: unequal
trade between Cuba and the West, which tended to reduce the
countrys income; the need to trade totally in US dollars; new high
interest rates on Cubas foreign debt; a fall in the world market price
for sugar; the fall of traditional trading partners for exports; the US
economic and trade embargo; finally, the lack of access to financial
and trade credits from institutions like the World Bank and the
International Monetary Fund (Granma, 17 October 1991:2).
But this was only the beginning of the Special Period During the
Time of Peace. During the start of the crisis, the Cuban government
continued to emphasise the need for efficiency in production.
Additionally, new sectors were to be prioritised in the national
economy; namely, biotechnology, tourism and scientific research. As
far as the population was concerned, the government prepared the
masses and indicated on numerous occasions that the country was
to enter a wartime-like economy. This is what government chancellor
Roberto Robaina called opcin cero (option zero); that is, zero energy,
zero electricity, and zero transportation (Exclsior, 2 January 1992).
From this point on, the government developed state-of-emergency
plans to save energy. Among these schemes were the planned
electricity blackouts all over the country and especially in the nations
capital. Because community information and newspapers in Cuba
are efficient in spreading the word, the blackouts took no one by
surprise and were always conducted in an orderly fashion. Everyone
knew that there was to be no electricity for lighting throughout most
of the day time and for approximately three to four hours per night,
much less for housing and building appliances (Granma Internacional,
19 February 1992; interviews, 1999). Nickel mining and processing
industries had to be shut down, due to the lack of energy resources.
This, in turn, became a serious problem for two reasons. First, nickel
was considered to be one of the most important exports bringing in
hard currency. Second, since the regime is dedicated to avoiding
unemployment, the workers at the mines and factories were sent to
the countryside. No one was brought to the countryside to cultivate
and reap agricultural production by gunpoint, but there were
absolutely no options. Hundreds of thousands of factory and office
workers were sent to the barracks of food farms in order to replace
the machines that were lacking fuel (Alonso, 1992:40). This immediate
remedy to save the countrys agricultural production for domestic

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consumption did save many workers from being on the streets, but
it certainly was not enough for the government to conceal one of
the PCCs best-kept secrets; that is, unemployment.
For the first time in post-revolutionary history, the Cuban
government announced publicly in May 1992 that unemployment
in Cuba actually existed (Hockstader, 1992). This is understandable
in a regime where one of the most basic human rights articulated in
the constitution was that of every citizen to contribute to society by
working where he or she is capable and willing. Full employment
was the motto of the PCC between the 1960s and 1980s. Official
figures estimated that the islands unemployed represented only 6
per cent of the work force (Garca Reyes and Lpez de Llerga, 1997:76).
In terms of sugar production, Cuba never had a worse time. Because
of the lack of fuel to drive large-scale production, the country did
not even produce 6 million tons of sugar in 1992. This is a considerable
drop in comparison to the 8 million tons produced in 1990 (Journal
of Commerce, 16 April 1992). The lack of fuel pushed sugar production
back nearly 40 years, as horses, cows and humans replaced tractors
and ground turners This situation escalated to the point where by
1992, 10,000 tractors stood still due to the lack of gas and oil; these
tractors, a third of the nations total, were replaced by undernourished oxen (Garca Reyes and Lpez de Llerga, 1997:121). Petrol for
private cars, which was already rationed by 50 per cent in 1991, was
taken off both the official and black markets (Analco, 1992:28). The
city avenues and the Central Highway were silent. Over a hundred
bus routes were discontinued and 700 taxis in Havana were to be
without fuel. At this point Fidel Castro ordered 700,000 bicycles from
China (Granma Weekly Review, 2 January 1992:2); this was to be the
new and dominant mode of transportation for the citizens in this
economy, which was similar to that of wartime.
Food consumption fell harshly as well. Due to the lack of fuel for
transportation, and the materials to reap agriculture and handle
livestock, the Cuban governments ability to deliver the guaranteed
food rationing for each Cuban citizen began to crumble. In 1991 and
1992, the government guaranteed each citizen the right to a monthly
ration of only 2.3 kg of rice, 0.23 kg of cooking oil, 1.84 kg of sugar,
0.46 kg of fish, and only 0.46 kg of meat, chicken or soya substitute
per month. Milk rations were restricted to children under the age
of seven (interviews, 1999). The rest of the populations food
consumption depended on the black market or later on what was
available for those possessing US dollars. By 1993, construction had

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dropped to less than 20 per cent of what it had been in 1989, the
bulk of it in public housing (CEE, 1994:5).
According to the Cuban government, the difference between official
state expenditure and inflows produced a budget deficit in 1992 of
over 5 billion pesos. These numbers alone are alarming in comparison
to the state budget deficit in 1989, which was less than 2 billion pesos
(IF, 1993:4). Additionally, this crisis involved serious inflationary
problems, which are often measured by monetary liquidity. By 1994,
liquidity among the general population reached 11.9 billion pesos,
most of which was in savings accounts. Although real salaries
decreased by 5 per cent between 1989 and 1993, the purchase of
goods and services fell by 40 per cent (CEE, 1994).
Who is to blame?
The analysis of the severance of SovietCuban economic ties confirms
the theory that the so-called socialist economies are not and were
never unlinked from the global market. This study has shown that
Cubas economic crisis during the 1990s was in part due to a certain
dependency on the state-led economies of Eastern Europe and in
particular Russia and the USSR. As the countries of Eastern Europe
gradually exposed their national products to the rise and fall of world
prices, and neo-liberal tendencies started creeping into the party/state
apparatus of the Soviet Union, Cuba started to become more isolated
in the global political economy. With hindsight, dependency on the
only state-led alternative to development in the global market, the
CMEA, can be thought of as a big mistake. Of course, the PCC is the
first to admit that we, the people, made errors in building our
country, that all is a dialectical process and that we can learn from
our mistakes, and that we can overcome our problems and continue
to (re-)build socialism. But the problems that cause crises, the inherent
contradictions of the political economy, are yet to be unmasked by
the revolutionary leadership. The PCC has yet to admit that as long
as the Cuban party/state apparatus continues to operate in a capitalist
world system, the country will always be exposed to the causes of
economic crisis inherent in capitalist production. Instead, the PCC
continues to blame the problems of dependency on the will of traitors
to the so-called socialist project.
In the following sections of this chapter, this study will take a look
at the biggest external problem that the PCC put forth in the analysis
of Cubas economic crisis during the 1990s. It is the most frequently
mentioned cause of many problems in Cuba, the one problem which

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captures media attention in the United States today and the problem
that unites all progressive, left-wing movements in solidarity with
the people of Cuba. It is the one problem that is usually labelled an
external factor, a problem created from the outside the US economic
embargo. Later on, after reviewing this final factor in Cubas economic
crisis, I will delve into explaining how this crisis resulted in the restructuring of the countrys political economy and, just as importantly,
what effects the reforms have had on the general population. All
together, this will answer the question of why and how the
Communist Party/state apparatus continues to exist in a neo-liberal
world.
THE US ECONOMIC EMBARGO
The US economic embargo, which has existed since 1962, has had a
tremendous effect upon the islands revolutionary development. The
embargo, which eliminated Cubas sugar trade with the United States,
can be seen as a reaction to the nationalisation of US companies that
took place almost immediately after the Revolution. Moreover, it was
a direct reaction to Fidel Castros announcement that he was a
MarxistLeninist and that Cuba would align itself with the socialist
bloc (Thomas, 1971:201). Under the embargo, US companies were
banned from exporting to Cuba directly. Additionally, the influence
that the US had over the whole of Latin America politically was so
immense that the entire continent, except for Mexico and Canada
(and for a short period Jamaica and Grenada), joined in on severing
economic and diplomatic ties with Havana. Andrs Escobar estimates
that during the first 26 years (that is, between 1962 and 1988), the
economic embargo cost the Cuban economy US$450 million annually.
That would be a total of approximately $15 billion for the time period
(Escobar, 7 July 1991; CEE, 1991:27). Vice-President of the Council
of State Carlos Lage estimates that from 1962 until 1996 the embargo
cost Cuba more than US$41 billion. He stated that without the
embargo, with the same level of production and prices, the country
would have averaged 40 per cent more in hard-currency earnings
(Granma, 12 November 1996). Though these estimates are always
questionable, the numbers seem quite reasonable when taking into
consideration US trade capacity.
Fortunately for Cuba, aid coming from the USSR and favourable
trade agreements during the existence of the CMEA compensated for
the lack of trading with the geographically natural and historical

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trading partner, the United States. Thus, for 28 years, Cuba was able
to survive the trade embargo and actually grow economically and
socially. However, when the towers of communism in Eastern Europe
came tumbling down, Cuba became exposed to the fierce intentions
of anti-Castro forces residing in the United States.
The reinforced embargo
Both wealthy, conservative anti-Castro Cubans and those US politicians
who throughout the Cold War pursued the imperialist intention of
toppling Cubas party/state apparatus automatically assumed that
because of the fall of communism in Europe, Fidel Castro and the
PCC had no chance of lasting more than a couple of years
(Oppenheimer, 1992). Some pressed for a military invasion, others
for a hardening of the US embargo. Yet others, the bulk of academia
and many economists, took it as a given that the Cuban government
would not be able to handle the economic crisis caused by the severance
of economic ties with the former Soviet Union. This last group of
thinkers concluded that, just as the transition economy in Eastern
Europe produced a political change within government circles as well
as a dissatisfied attitude among the popular opposition movements,
thereby resulting in the decomposition of the social and ideological
base of the state, Cuba too was doomed to yield to the same reforms
and experience a radical breakdown of the socialist project.
In Washington, DC, research centres dedicated to the study of the
Cuban economy sponsored various projects and eventually documents
emphasising the discourse of a post-Castro Cuba; one of these is the
Association for the Study of the Cuban Economy, which sponsored
the semi-annual Cuba in Transition volumes. This collection of
essays, reports and talks given at Florida International University was
set up in contemplation of the eventual demise of Cuban socialism.
The titles of the articles alone give away the mindset of the mostly
US-based researchers: Reconstructing Cuba: From Marxism to
Democracy, 199?200?; Elements of Political Restructuring in PostCastro Transition (Rivera, 1991; 1992); The End is Near: Why Cuban
Socialism Failed (Roca, 1993). In an academic fashion, Sergio Roca
wrote this last-mentioned article with a theoretical framework based
on Janos Kornais work, which was dedicated to explaining the causes
of the fall of Soviet communism. All these mistaken assumptions will
be tackled in Chapter 4. I mention them briefly now in order to
provide a background on the attitudes and intentions of the antiCastro movement and the push for a hardening of the US embargo.

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Excited by the widely discussed and almost obvious possibilities


of the fall of the Cuban party/state apparatus, the CubanAmerican
Foundation (CANF) lobby group mounted pressure on the US Congress
to take action upon the Cuban case. In 1992 US Congressman Robert
Torricelli sponsored the bill that would mark another decade of
USCuban conflict. The Cuban Democracy Act (the Torricelli Act),
which would reinforce the 30-year-old embargo, was aimed at
destroying the Fidel Castro-led regime and punishing other countries
for trading with the island. The law was implemented immediately.
This was made possible through CANFs contribution to the 1992 US
presidential campaign, when the CANF donated US$120,000 to Bill
Clintons contingent (Eckstein, 1994:94). The written object of the
law was to punish any businesses that were investing in Cuba, in
addition to prohibiting the IMF and the World Bank from facilitating
business transactions on the island. Cuba was excluded from these
Bretton Woods institutions since the US can enforce their voting
power here. Voting in the World Bank and the IMF is weighted by
monetary contribution; the US contributes the most. This act can be
understood as a reinforcement of the embargo that characterised
USCuban relations, in that prior to the Torricelli Bill, US subsidiary
companies in Mexico and Canada were allowed to export to the island
and participate in joint ventures. According to Trueba Gonzlez, US
subsidiary companies in 1991 exported products and services worth
$300 million to Cuba (EIU, 1992). Total transactions with Cuba
amounted to $718.7 million in that same year. The biggest companies
involved were Mobile Oil, Esso-Exxon, and IBM.
Migration policies
However, the hype died out between the end of 1992 and 1996. US
economic aggression against Cuba began to simmer down after US
corporations saw the benefits of investing in Cuba, even if trade was
conducted via third countries. Esso-Exxon, ITT, and IBM all unsuccessfully lobbied against the Torricelli Act, but received broad attention
from the US media (Granma Internacional, 30 June 1993:4).
Additionally, this bouquet final, which exacerbated Cubas already
difficult position, was not producing the desired outcome. Cuba
remained socialist, or at least a one-party/state apparatus. Although
no official change was made on the embargo policy, the Office of US
Interests in Havana set up negotiation talks with Cuban government
officials (Granma Internacional, 30 June 1993:45). In August 1993,
recent Cuban migrs, who were distressed by the economic condition

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of the island rather then being true political refugees, pushed


businessmen, lawyers, doctors and other professionals to form a
moderate counterpart to the CANF; it was called the Cuban Committee
for Democracy. This group sought negotiations between the Cuban
community throughout the US and the Cuban government; they
succeeded in getting medical supplies and other materials to families
and friends on the island. But though the CCD intended to override
the powerful influence that the old guard of anti-Castro forces had
over the US government, the CANFs economic power and strong
networking within the US Congress prevailed. Once again, this was
due to the leverage that large enterprises run by Miami-based Cubans
had upon US Congress.
Relations between Cuba and the United States improved for a spell
when in 1994 a massive migratory crisis hit the shores of Miami. It
was in this year that the Cuban government allowed 30,000 Cubans
to flee the island. This massive exodus produced a fear in the United
States, recalling the days of the Mariel exodus in 1980, when thousands
of Cubans were able to leave the country and arrived unexpectedly
on Florida beaches. Conservative and anti-immigrant forces in Florida
quickly called US federal attention to the legal and illegal influx of
Cubans, many of whom were former convicted criminals in their
homeland. And so the leaders of the two countries compromised on
a new migratory-visa regime. But the United States maintained the
wet foot/dry foot policy, which encouraged certain brave resisters,
especially among the young, to attempt to leave the island by unsafe
means in the hope of reaching US shores. The law stated that if a
Cuban national were to arrive upon US dry land territory, the
individual would be considered as a political exile. If the individual
were to be caught by the US National Coast Guard or the Immigration
and Naturalization Service crossing territorial waters, then the US
government would reserve the right to deport the Cuban national
back to his or her homeland. In the United States, this wet foot/dry
foot policy created some resentment among other ethnic and migrant
communities because of its discriminatory character (Hoefte,
1995:8390). The Cuban exile community in Florida backed this
measure as it coincided with US foreign policy to support those
oppressed by non-democratic regimes.
The Helms-Burton Law
In 1995, the Cuban parliament passed the New Law on Foreign
Investment, which invited foreign companies and individuals to

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invest directly and up to 100 per cent in ventures; the character


of this law was non-discriminatory. In other words, even
CubanAmericans and former exiles were invited to invest. This law
will be discussed later in greater detail. But it is important to mention
it here in order to describe how open (desperate, perhaps) the Cuban
government was in re-establishing contacts with Miami capital
holders. Despite the New Law on Foreign Investments friendly gesture
to Cuban exiles in the United States, the CANF and other Miamibased forces set out to discredit the changes made in Cubas economic
and political system. One week after 24 February 1996, when the
Cuban Armed Forces shot down a pirate jet violating Cubas territorial
space, the Republican Party-dominated US Congress passed the HelmsBurton Law. The Helms-Burton Law was, according to President Bill
Clinton, a powerful message to Fidel Castro, that the United States
will support anyone who fights for freedom and democracy in Cuba.
The Helms-Burton Law allows any Cuban exile in the United States
the right to sue any individual or company that purchases any
property confiscated by the revolutionary government. One writer
in the Economist described the law as a scarecrow to deter enterprises
from investing in Cuba (Economist, 10 March 1996:30). The pirate
jet had been sent and flown by the Miami-based group Hermanos al
Rescate (Brothers to the Rescue); this group allegedly receives funds
from the CANF, the CIA and CubanAmerican enterprises (Granma
Internacional, 1 March 1996). Because of the proximity of the two
events and the press commentaries on Cuban military defence, one
might as well assume that the latter was a direct result of the former.
In his book concerning the role that the world-famous rumproducing giant Bacardi Rum played in formulating the Torricelli
Act and the Helms-Burton Law, Calvo Ospina describes the politics
of the US economic embargo against Cuba as an occult war between
Cuban state corporations and Miami millionaires. The study was
well defended and provides the reader with surprising facts concerning
corporate influence in US laws concerning Cuba. However, while
studies like these are significant in understanding the adverse
relationship between the two countries, they tend to disguise the
essence of the economic embargo; that is, the intentions of the US
state leadership to undermine the social revolutionary and antiimperialist processes that characterise the Cuban Revolution. The
bottom line is that the embargo continues to be in place today
because of US imperialist intentions. CubanAmerican corporations

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and their lobby groups only support the embargo with capital and
intellectual back up.
The embargos illegality
For the United Nations General Assembly, the embargo is illegal
according to international law in that it coercively violates Cubas
right to self-determination. Additionally and especially in its latest
phase, i.e. the Helms-Burton Law, the embargo was viewed as an
impediment to the self-determination of all nations; this attitude is
manifested in the progressive loss of support the US has received in
upholding the embargo. In 1992, only 59 countries voted in favour
of ending the US embargo against Cuba, with 70 countries voting
against; this was shortly after the passing of the Torricelli Bill. Every
year thereafter, the number of countries opposed to the embargo
against Cuba has increased. In 1993 the resolution calling for the
embargos end passed 88 to 57, with four abstentions. In 1994 the
score was 101 to 48, with two abstentions; in 1995 it was 117 to 38,
with three abstentions; in 1996, 139 countries voted in favour of
ending the embargo against 25, with three abstentions; and in 1997,
143 countries called upon the United States to end the embargo and
scrap the Helms-Burton Law. In a word, there is currently no international backing for the embargo; the world sees it as unjustified.
Looking at the embargo critically
There are fundamentally two problems when looking at the embargo.
The first is the way the embargo is used in Cuba as an excuse for all
the shortcomings of the present system. In 1996, one Cuban worker
told me: Cuba is nice, you just have to understand it; if anything
goes wrong, all you have to do is blame the US blockade (interviews,
1998). In all my research I have not found a single document
pertaining to the Cuban political economy, or even a single issue of
the Granma newspaper, that does not contain some assessment on
the effects of the embargo. There has not been a single speech by
Fidel Castro that does not, even if it is only briefly, rebuke the US for
its sanctions. All the food shortages, lack of equipment, materials,
schoolbooks and medicine, diseases, malnutrition in the countryside,
even the weather; all the blame goes to the US embargo. Secondly
and ironically, when one arrives at any of Cubas recently remodelled
airports, one cannot help but notice the stacks of Coca-Cola cans
standing as proudly as the native Varadero Rum on the bars. But this

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sight is not complete without the accompaniment of Winston,


Marlboro and Camel cigarette cartons. In the tourist area shops, US
toothpastes and PalmoliveColgate body soaps are available. In the
dollar shoppings, milk imported from Spain is available to all who
can afford it. It is not uncommon to see clothing stores selling Levi
501 jeans for New York City prices. The streets of Havana today are
filled with cellular telephones, all kinds of cars, plenty of gasoline
(sold in US dollars, of course) and Nike T-shirts on the backs of youth.
Where then is the embargo? How can one account for the inconsistencies here?
Why are there plenty of US products on the dollar market, which
is still state run, but a lack of medical products, books for schools,
milk for the general population?
These inconsistencies do not go without explanation. The country
finds itself in a situation where it needs to recuperate its capacity to
produce and sell in the world market in hard currency. Since there
are no more five-year plans and no more guaranteed prices for its
main products, Cuba needs to sell everything it can in hard currency
(US dollars), in order to accumulate capital for the state. After all,
even the means and materials of reproducing the so-called conquests
of the Revolution housing, medicine and education are bought
from abroad in dollars. The states principal economic objective is
to accumulate as many dollars as it can (Rodrguez Beruff, 1995:23).
This not only means making dollar profits on domestic products,
but it also indicates the development of a mercantile economy in
which products are bought from abroad including US products
bought from the Panama Canal Free Trade Zone and profits are
made in the tourism industry. Certain products that are bought
abroad, even essential household items like cooking oil bought
from Spain, Panama and Mexico are then being sold in dollars.
Some of the prices seem quite inflated in comparison to neighbouring
Caribbean countries. Nevertheless, these products do sell. During the
1980s, the dollar stores were reserved for tourists and diplomats;
hence the term diplotiendas was applied to these entities. But today,
since the dollar has been legalised, the government seeks to benefit
from those Cubans who have relatives living abroad; gifts in dollars
have become a major source of hard currency income for Cuba.
Obviously, the dollars need to be spent. This is the explanation that
the PCC offers the general population.

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The effects of the embargo on the health-care system


Despite the ambiguities and contradictions that the embargo entails,
one thing is for certain, and that is the effect that it has had on the
national health-care system. No institution has been hit harder by
the economic crisis of the 1990s in which the embargo plays an
important role than Cubas health-care system, which provides free
services to all its citizens. Conditions like food shortages, power
outages and lack of materials for construction have always plagued
Cuba, even in the best of times. But for a short period during the
1990s, the health-care system was found to be crumbling, and diseases
that were preventable in the 1980s were becoming rampant in isolated
communities. As is well known, one of the Revolutions so-called
triumphs or conquests is the health-care system. Previously, the revolutionary medical and health-care system was not only a showcase
for the Third World, but the know-how in science and medical
technology was comparable to that of the United States and Western
Europe. Cubas infant mortality rate is among the worlds lowest and
life expectancy is equivalent to that of the industrial superpowers
(Lobe, 2001). But all this has been put in jeopardy. Today, lack of
both simple and essential materials, makes it difficult to provide the
best quality health care for Cubas citizens. Surgeons are forced to
reuse medical gloves and patients wait endlessly for simple X-rays
due to the shortages in film. Also a very telling fact of the Special
Period is that the number of surgical operations performed between
1990 and 1995, dropped by some 40 per cent (Cuba Information
Agency, 1998).
What is interesting about the medical aspect of the economic crisis
is that here is a case where the blame can be placed directly upon
the US embargo. The Torricelli Law enacted in 1992 banned the sale
of US products through third countries. In 1995, the Helms-Burton
Law sought out to punish any foreign company that invests in the
medical field. As a result, it became more difficult for the party/state
apparatus to buy medical equipment or medicines from US companies
or subsidiaries of those firms without permission from the US
government. Globalisation of the marketplace in the 1990s simply
exacerbated the problem. US pharmaceutical giants continue to buy
up droves of medical companies in Europe and Latin America. Now
some drugs are only made in the US or by US-owned monopolies,
and Cuba is thus shut off.

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Embargo and legitimacy


But what the embargo actually does in Cuba is to legitimise the
governments hostility to the United States, and its economic and
so-called democratic formulas. Fidel Castro has been successful in
gaining the popular support of the general population and the rest
of the world because of US aggression. Political repression and tough
police control on the streets and at the factories are legitimised because
of scarcity, which in turn is popularly understood as the result of the
embargo. One can say, This may be Castros finest hour. After the
Popes visit in January 1998 and his criticism of the embargo, the US
appeared to be dropping restrictions on humanitarian care. A limited
number of direct flights from Miami to Havana carrying medical
supplies and foodstuffs, is now permitted.
It should be no secret: the embargo actually unifies the country.
This is not to say that the state benefits economically from the
embargo, but politically there is every reason for the Cuban
government to call upon the masses to oppose this externally imposed
fact of life. Some day the embargo will be lifted. What then will be
the cause of shortages, underdevelopment and economic crisis?
I would not go as far as Jorge I. Domnguez and state that the
Torricelli Bill enacted in 1992 was a gift from God to the Cuban
government (Domnguez, 1995:34). However, the country did suffer
economically and the pressures created by this law, though rendering
legitimacy to the Cuban government, did have their effects on the
general population, who in turn must respond to the party/state
apparatus in supporting or resisting policies. Additionally, the HelmsBurton law, the way it was imposed and the manner in which it was
denounced worldwide, also affected the population and its view of
the United States. The attitude may be summed up by saying that
the most anti-Castro Cubans living on the island were pleased to
support the party/state apparatus in the face of US economic
aggression. The reinforced US economic embargo came just in time
to legitimise the anti-imperialist regime when its shortcomings were
becoming more obvious towards the end of the 1980s.
THE STATES RESPONSE AND THE IMPACT
UPON CUBAS POLITICAL SYSTEM
The end of the Cold War, the demise of the socialist bloc in Eastern
Europe and the hardening of the US economic embargo all led to a

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situation where Cuba was found to be more and more isolated within
the global economy. This predicament forced the revolutionary
leadership to deal with its own economic problems realistically and
begin a new search for alternatives within the framework of the pillars
and foundations of the party/state apparatus. As a result, the 1960s
debate on how to maintain sovereignty and promote development
was rehashed, and so was the idea of national development on terms
favourable to equitable domestic redistribution.
Here I will outline the impact that the economic crisis has had
upon Cubas political and economic structures. Many of the changes
explain how the revolutionary leadership was able to maintain stability
and overcome the dire straits of economic chaos. After delineating
the changes that accompanied or that were a direct reaction to
the economic crisis, this study will have come to answer the first half
of its central research question: Why and how does the one-party
communist political apparatus continue to exist?
First, it would be appropriate to review what has been stated so
far. I have already identified the four broad groups of causes to the
economic crisis that is often called El Periodo Especial, those being:
internal economic dynamics and logistics of Cuban revolutionary
social development; the evolutionary demise of the CMEA parallel
market system; the complete dissolution of the Soviet Union as a
global superpower and political structure; and lastly, the hardening
of the US economic embargo against the islands economy. These
factors caused a problem of shortages in fuel and energy, a lowering
in the consumption of food and a problem with its distribution, a
fall in general production, a setback in the national health-care system,
and the deterioration in the populations standard of living.
In contrast to the literature provided by official PCC research and
other independent cubanologos, I found the Periodo Especial to be a
useful term, not so much in describing the economic crisis as in
describing the governments immediate response to that crisis.
Ultimately, this period resulted in the inevitable restructuring of
Cubas domestic political economy and the implementation of what
is traditionally called market-orientated policies. In Spanish, this
would be called apertura, or opening, to the global market forces.
Actively forming a new model
The Special Period in the Time of Peace involved making political
reforms, seizing the economy, and pushing the population to make
various sacrifices in order to save the revolutionary social order. Using

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market reforms was nothing new to the party/state apparatus. As


stated earlier in this chapter, market strategies in domestic markets
as well as in the sphere of foreign investment were used as early as
the mid-1970s. However, during the 1990s the government had to
resort to certain market practices that would have been absolutely
inconceivable in revolutionary Cuba prior to the crisis. This idea was
best reflected in the words of a PCC member who told me: We have
to think like capitalists but continue to be socialists.
In terms of the actual political structure, some changes were made.
In the minds of some, these changes will always be seen as PCC
responses to the waves of anti-communism and the pro-democratic
fanfare that have swept across the former socialist bloc and around
the world during the neo-liberal triumph, mentioned in Chapter 1.
For others, political reform in Cuba is seen by the population as a
priority that has continued, as it did in the past, to influence party
decision-making. Communists in Cuba do not like to link the events
of economic turmoil and the demise of the worldwide Communist
movement with the political reforms that the country has experienced;
whereas the PCC leadership constantly re-emphasises that their
political model of democracy is authentic to Cuba and, as a sovereign
nation, no foreign models or pressures have been taken into consideration. However, the timing of the political and economic reforms
appears to be more than just a coincidence. Remember that since the
end of the 1980s, new democratic models, based on European liberal
and multi-party democracies, were being established worldwide by
popular demand. This was true for most of Eastern Europe and parts
of Africa, but also in Latin America, especially in Chile. Fidel Castro
and the PCC, who have been in power since 1959, had to respond
to the new world order that not only imposed a standard culture of
neo-liberal economic development in Third World countries, but also
ordained multi-party elections. In response to the liberal democratic
demands in the West, Castro said that no other regime is as democratic
as a Socialist regime (Granma Internacional, 27 December 1992). This
meant that the country would not turn to foreign, multi-party political
and neo-liberal models. Rather, that Cuba will continue to be ruled
by a single, solid party representing the interests of the masses and
built upon the historical events, legal resources and pillars that created
the Cuban revolutionary experience (August, 1999:225). In other
words, the one-party state apparatus would only endorse changes
that were consistent with the pillars of unity, continuity, state
supremacy and especially popular participation. The severity of

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the economic crisis that hit Cuba in 1991 caused the PCC to depend
more on the general population, as former socialist allies shunned
the Castro regime.
The fourth PCC Congress
In May 1991, with the USSR on the verge of collapse, Fidel Castro
made his llamamiento, or call to the general population to participate
in the changes that needed to be made in order to accommodate the
islandnation to the new global political economy (Granma
Internacional, 21 May 1991:8). Industrial sites provided for mass
meetings of workers where, for instance, during the days prior to the
1991 fourth PCC Congress, over a million people voiced their
complaints, suggestions, and ideas regarding more than 50 issues
that dealt with peoplegovernment relations. This occurred also in
the workplace of factories, schools, sugar-cane fields and hotels. Some
call this popular participation the hallmark of Cuban democracy. I
would say that this was really a sampling of opinions and popular
ideas from which the PCC could measure the extent to which it could
please the population without jeopardising state coherency or the
pillar of unity. It also offered a sense of accountability to the masses.
Eckstein criticised the llamamiento as a one-shot affair; there were
no follow-up sessions where people could, en masse, articulate
grievances without fear of reprisal (Eckstein, 1994:115). In my
experience in Cuba between 1996 and 2000, I could not say that I
witnessed any fear on behalf of the general population of reprisals
or penalties for complaining and articulating grievances. Furthermore,
another llamamiento for discussion was made later on in 1997 in
preparation for the fifth PCC Congress. In any case, the important
changes were the actual political reforms that took place and how
they came to pass. For instance, although the reformed constitution
of 1992 was filled with articles that seemingly enhanced democratic
rights in Cuba, it is important to note that the constitution was
never opened up to popular debate or criticism. Hence, the
constitution, or the base law of the land, continues to be a tool used
by the PCC in order to lead the domestic political economy. However,
it was the democratically elected legislative body (ANPP) that
approved the constitution.
In 1991, the fourth PCC Congress agreed to allow for the following:
the making of constitutional reforms, the incorporation of religious
leaders and laymen into the PCC, the listing of all guaranteed freedoms
and property rights under the reformed constitution, and secret and

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direct elections of representatives on all levels (municipal, provincial


and national) of the Assemblies of Popular Power. The reformed
constitution, which was implemented in 1992, created the legal
means by which the country could open up to a new model of
political/representative structures, and modes of production, planning
and redistribution that were nonexistent prior to the economic crisis.
On the high level of ministries and state management, there is
evidence of a new and sometimes decentralised group of institutions
or ministries that deal with the various sectors of society. For instance,
what was once called the Central Board of Economic Planning
(JUCEPLAN, formally the SDPE) has been broken down into what
are now called the Ministry of Economy and Planning and the
Ministry of Finance and Prices; the State Committee for Foreign
Economic Co-operation (CECE) is now the Ministry of Foreign
Investment and Economic Co-operation; the State Institute of Tourism
(INTUR) is today the Ministry of Tourism (MINTUR); the State
Committee of Labour and the Committee for Social Security have
been combined into one Ministry of Labour and Social Security. All
of these, especially the Ministry of Foreign Investment and the creation
of the Ministry of Tourism, depict how the state on an organisational
level has adjusted to the new needs induced by the economic crisis.
A new electoral regime and local economic organisation
Prior to the 199293 general elections, provincial deputies and national
representatives to the ANPP were elected by Municipal Assemblies.
Another political reform supposedly changed the level of authority
the PCC had in influencing the selection of candidates. Previously,
in order to be a candidate, one had to be selected by the candidacy
commission, which was traditionally chaired by a PCC member
appointed by the party. Since the reforms, this position is reserved
for appointment by the workers union (CTC), whereby worker representatives attain a higher level of participation in the political process
(August, 1999: 2257). By the elections of February 1993, half of the
225-person Central Committee of the PCC and the entire 25-member
Political Bureau had been replaced by a younger generation of
communists. The Council of State had also turned over by as much
as 50 per cent. Ninety-three per cent of all eligible voters participated
in municipal elections, and in the February 1993 Provincial and
National Assembly elections the voter turnout was 99 per cent (CEA,
1998:15). Castro remained in his position as head of the Council of
State and commander-in-chief of the Revolution. Dissidents were

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technically allowed to run for office, but, since Cuba has no multiparty tradition, no dissident was willing to run as an individual.
On the local provincial and municipal levels, new managerial
structures were created for the purpose of organising industry,
agricultural production and other economic activity. The constitutional reform of 1992 allowed for the creation of Consejos Populares,
or (local) Popular Councils, as a new strategy for economic and
planning governance. These councils are comprised of delegates from
the electoral college for municipal government and representatives
from mass organisations such as the FMC, the UJC, the CDR and the
trade unions (CTC). Elected local officials with a strong background
in economics, accounting or engineering head the Councils. In this
instance, the municipal government was relieved of its function in
the management of production. In turn, the Municipal Assemblies
could concentrate their efforts on infrastructure and public services.
The councils would oversee production in industrial and agricultural
bases and determine the action to be taken in the name of efficiency.
This would include the number of those employed, the amount of
subsidies requested and the planning of further economic growth
(Valds Paz, 1996:30). Prior to this, regional or local economic
planning was always headed by the Executive Committees of the
Municipal Assemblies, which was usually chaired by a member of
the Communist Party. Though at least one PCC member is always
present in the Popular Councils, the management is actually
conducted by a new managerial cadre who specialise in the areas of
economic planning at specific industrial and agricultural sites.
Adjusting state supremacy
In the economic realm, the reformed constitution redefined the idea
of socialist property and how it can be used. Article 15 of the
constitution was rewritten so that the state would appear as the
possessor of the fundamental means of production in contrast to
the previously mentioned owner of the total means of production.
Additionally, the constitutional reform allowed for legislation
concerning foreign investment. Article 23 now allows for the transfer
of state property to private property when deemed necessary by the
people (i.e., the National Assembly and the Council of State). While
affirming the state as the supreme manager of natural resources and
redistributor, the new constitution recognises that there are various
economic means of exploiting resources to create profit, which would
benefit the state and its socialist project. This includes the idea of

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inviting foreign companies to invest directly into the country, in


order to provide more infrastructure, capital and new technologies.
These constitutional changes, however, could never capture the real,
organisational reforms that have transformed the institutions of the
state and the political economy under which production in Cuba
takes place. Following the constitution, the laws concerning economic
reform emanated first from the need to recover from the economic
crisis.
The end of five-year plans
Domestic planning during the Periodo Especial differed from the
planned economy during the Cold War. No longer could five-year
plans mobilise the forces of production and set the standard for Cubas
participation in the global economy. Rather, it was the urgency of
meeting the basic needs of the party/state apparatus in order to carry
out production and redistribution. Since the fourth PCC Congress,
the government has taken measures to adjust the country to the
world market, one year at a time. The objectives of the PCC during
the 1990s were to:
recuperate Cubas capacity to produce for profit in the international market;
diversify the various sectors of the economy in accordance with
the present global conditions, i.e., produce only what can be
sold;
preserve the maximum level of economic socialisation in order
to maintain the fundamental conquests of the Revolution.
(PCC, 1997)
In one phrase, the idea was to integrate Cuba further into the world
market system while maintaining the fruits of state-led development.
Since the reforms and adjustments to the new global scenario were
not induced with the help of economic advisors from the United
States, as was the case with the former Soviet Union, we can speak
of native restructuring plans in the Cuban case. This native reconstruction and period of reforms can also be described as structural or
organisational transformations of the institutions and modes of
production that the state endorses (Monreal and Carranza Valds,
1995). The organisational transformation of state institutions is quite
clear, even though the mode of production essentially remains stateled. Nevertheless, the impact upon the social development of the

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country needs to be looked at critically. As will be pointed out towards


the end of this section, the results pose a threat to the egalitarian
structures that were instituted by the party/state apparatus.
Organisational transformation in Cuba has been manifested in the
following:
a)

the decentralisation of foreign trade, that is eliminating state


monopoly of power over foreign commerce;
b) the development of commercial infrastructure and financing;
c) new models of businesses, including new models of business
management and self-employment;
d) the auto-financing and decentralised managerial direction of
hard currency profit making companies;
e) the creation of new economic agents of the private sector;
f) a managerial revolution in terms of getting better qualified
managers of production and technical education to run
businesses;
g) development of a competitive culture in the marketing of products
and services;
h) the creation of new managerial positions;
i) gradual introduction of world market prices; that is the sale and
purchase of import goods in US dollars, as well as the sale of
certain Cuban products in the tourist industries only.
(Carranza Valds, 1994:32)
The economic reforms
In real terms, this organisational transformation was manifested in
six experimental and working programmes. The first was what has
been called the creation of a dual economy whereby a system of
production and consumption of goods and services based on the US
dollar (USD) would exist alongside the subsidised economy of sale
and purchase of guaranteed goods and services in the national
monetary unit. The second programme reflected the organisational
transformations in business, productive and agricultural management,
whereby the central government in Havana would no longer control
the process of specialised production, and company managers would
behave as they would in private corporations by implementing policies
favouring efficiency. The third was the opening up to new forms of
labour, namely self-employment, whereby the emerging popular
means of meeting essential and everyday needs (including what was
previously considered to be black market activity) became formal

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and recognised by the government. The fourth was the opening up


to foreign and direct investment (FDI), whereby private corporations
were welcomed to exploit resources, labour and production services
in partnership with the Cuban government on national territory.
The fifth organisational change was the move towards tourism as a
principal producer of hard currency for the party/state apparatus.
Following these immediate changes was a sixth: the need to establish
a new banking system to handle the income, savings and holdings
that the new economy produces (FI, 1998).
Legalisation of the dollar
One of the most problematic moves by the Cuban government, in
its quest to rid itself of the economic crisis, was the introduction of
the use of hard currency and its free circulation. In August of 1993,
the Council of State approved Decree-Law No. 140, which legalised
the possession and use of hard currency by Cuban citizens. The
legalisation of the US dollar allowed for those who had access to it
to purchase goods in the tourist industry, as some products could
only be sold in USD. Prior to this, possession of the USD was
punishable by imprisonment. Many Cubans illegally possessed US
dollars in order to participate in black market activity and the sale
of contraband. Long before this reform took place, many Cubans
with family in the United States had access to dollars. The government
eventually recognised that a large proportion of the Cuban population
possessed US dollars, and it had previously been the objective of the
party/state leadership to confiscate all dollars for the state to use for
the purchase abroad of state needs and infrastructure. Previously,
repressive tactics had commonly been used by the police to control
black market activity and round up the millions of dollars that Cuban
nationals possessed (Carmona Bez, 2000). In an attempt to fix the
economy, it finally made much more sense for the Cuban government
to legalise the use of foreign and hard currencies in order to create a
dual economy for the benefit of recuperating a potentially powerful
source of collective income.
The National Bank of Cuba declared that pesos would be freely
exchangeable for hard currency, at the newly set up casa de cambios,
for the purpose of buying products and services. Among the first hard
currencies recognised by the state were the US dollar, the German
mark, the Canadian dollar, the French franc, the Spanish peseta and
the British pound. The exchange rate for the peso to the dollar was
copied from the black market as a natural starting point; thereafter,

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other hard currencies were to be exchanged at the daily rate of the


dollar and those other European monetary units. There is no longer
an incentive for Cubans to engage in black market activity in order
to gain access to dollars or change dollars for pesos. The exchange
rate varied during the first couple of years. In 1994, the US dollar was
sold at 150 pesos. But after 1995, the value of the dollar in Cuba fell
to 20 pesos. Its value has remained relatively constant during the last
eight years (1995 to the present), from 20 to 25 pesos to the US dollar
(FI, 1998).
This aspect has contributed to the competitiveness of those sectors
of the economy that conduct their businesses in hard currency. Also,
the de-penalisation of the possession of hard currency has helped
create a working and competitive internal market on the island. The
supply of goods and services offered in USD has become one of the
major sources of income for state accumulation. Between 1994 and
1997, economic activity of services and small commerce brought in
US$1.5 billion (Marquetti Nodarse, 1998:51). This brought in more
than all other agricultural and traditional trade in products such as
citrus and tobacco during the same time period. By the same token,
the de-penalisation and free circulation of hard currency is related
to the increment in employment in the sectors of finance and trade,
which is conducted strictly in US dollars. This additionally resulted
in the financing of many industries strictly in dollars and the opening
up of private bank accounts for citizens and businesses in dollars.
The introduction of the USD has also aided Cuba in fully integrating
into the world economic system by bringing it up to par with international norms of state financing. At the same time, the presence of
US dollars has brought Cuba numerous problems, which, more than
anything else, make the political economy and the maintenance of
the pillars of the Revolution a delicate balance. Some of the disadvantages in legalising the USD, among many other sociological
implications, are the following:
the reduction of the use of the national peso in the domestic
market;
the weakening of the use of job salary as a stimulating incentive
for work;
the establishment of foreign monopoly services that conduct
business in dollars;
the difficulty in estimating real levels of efficiency and competitiveness of national production units and services.

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Making it both possible and legal for Cuban nationals to conduct


direct economic transactions in foreign hard currencies has led to
the return of certain economic practices that are pre-revolutionary;
these will be discussed later. Some of these practices had been
eliminated after 1959 due to the rigid system of monetary control,
which allowed only the party/state apparatus to conduct economic
transaction in USD or hard currencies, and only with businesses from
countries outside of the CMEA.
One of the principal objectives of the legalisation of the use of the
USD was to guarantee party/state accumulation of this powerful
resource from the hands of the populace and channel it into restoring
the value of the national monetary unit and supporting monetary
liquidity, which was a major economic problem for the country during
the 1990s crisis. It was thought to compensate the deficit of convertible
monies, which was due to the fall of export income since 1993. It
was also thought to help the balance of payments and foreign debt.
Additionally, this reform was an alternative to devaluation of the
national monetary unit. As is already known from the experiences
of Latin American countries, as well as the former socialist economies
of Eastern Europe, devaluation only expedites the recessive tendencies
in the already crisis-ridden economy. Devaluation of national
currencies does little to improve the productive structure of the
country; even though devaluation cheapens production for export,
it is not enough to produce a national jump in production. Objectively,
a country would have to wait a long time before being able to
incorporate new capacities for production and services. In the Cuban
case, the devaluation of the national monetary unit would not have
produced favourable conditions for the country. Worldwide, the peso
is already an invalid and non-convertible unit. For Cuba, this would
have meant the liquidation of the entire national reserve. The
estimated potential amount of USD that would be added to the
national reserve was $500 million. But by 1996, the free circulation
of USD produced approximately $800 million for the country
(Marquetti Nodarse, 1998:53).
As I shall demonstrate later in this section, the de-penalisation
together with the new modes of production of goods and services
like self-employment and agricultural co-operatives pushed the
Cuban economy towards recuperation. It also provided an emerging
market based on foreign enterprise trade and decentralised and autofinanced state companies. In a relatively short period of time, the
introduction of the USD has produced an important economic

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growth, which led to the improvement of the infrastructure and of


national income levels.
In 1994, the income from the supply of goods and services offered
in USD became one of the principal sources of income for the
party/state apparatus. This process became consolidated in 1996 and
1997, when internally, businesses in dollars provided the state with
US$600 million (Marquetti Nodarse, 1998:53). The result has been
the recuperation of the pesos buying power, though it is used only
in small transactions. For instance, foods in the co-operative markets
are sold in pesos and a great number of products and services can be
purchased in pesos. Individuals exchange dollars (which they may
receive abroad from family remittances or contacts with foreigners)
for the pesos that are necessary to buy these basic products. Yet I
would dare to say that the possession of the USD has become
absolutely necessary for many Cubans in order to meet their basic,
everyday needs, as the ration system had been debilitated and certain
products such as cooking oil are never delivered to the local ration
stores. Therefore, it would not be entirely correct to speak of a dual
economy, but of the dollarisation of the Cuban economy.
Cuba is not yet a typical consumer society where the market is
based on a variety of high quality products. The domestic dollar
economy is still based on a small retail market that depends on the
simple availability of products due to the free circulation of hard
currency. A very high concentration of this type of market is found
in the sales of household products like cooking oils, canned foods
and meats, soaps and cosmetics. A typical Cuban spends approximately $10 every time s/he enters these dollar markets (Marquetti
Nodarse, 1998:57). But in addition to this, there is the spending that
occurs in nightclubs and the nightlife of nationals, and McDonaldslike fast-food restaurants, which in the past were reserved for diplomats
and open only for the tourist industry. When it comes to the new
supermarkets and stores that sell in USD, tourists contribute or buy
the least (Rodrguez, 1998:6). This is probably due to the fact that
tourists are not interested in spending money on something that
they can buy at home at a better quality or price.
It took a while for Cubans to learn this market psychology. At the
same time the experience proved that Cuba has the capacity for
creating an internal market. In cafes and restaurants, the tourist
participates in the dollar market a little more, but the contribution
of nationals is still very important. When it comes to net profit, this
internal dollar market is superior to the net profit gained in tourism.

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The internal dollar market produces 100 per cent profit gain for the
state in comparison to the 30 per cent found in joint venture tourism
(Marquetti Nodarse, 1998:58). Finally, de-legalisation not only allowed
Cuban nationals to participate in and have access to this market but
also increased the states national reserve.
Decentralisation
Since the reforms, the government has decentralised the management
of business and rendered economic authority to the newly established,
local economic organs. Although most native businesses remained
state owned, they are not controlled from Havana. Rather, the fourth
PCC Congress anointed the practice of autogestin (self-management),
where the managers of each business would really manage their
particular businesses, make payments, receive payments, organise
employee benefits and deal with the demands of local unions; this
was conducted in order to cut government costs (PCC, 1998b). Local
businesses were made accountable to the Consejos Populares, which,
as mentioned earlier, would oversee industrial and agricultural
production. Socialist competition was implemented, whereby those
businesses that were not successful in the discipline of selfmanagement were inevitably closed down due to the lack of subsidies.
This experiment started off with sugar mills and factories, food stores
and also dollar businesses.
Decentralisation was also geared towards those companies that
deal with export production. Hence, an increased number of sociedades
anonimas (SAs) were created as the export services were loosened from
central government in order to run more efficiently. SAs, as mentioned
previously, are semi-autonomous state agencies that are set up to deal
with foreign capital and production for export. Day-to-day
management of finance for these agencies is run independently from
state budget restraints. In simple terms, their main purpose was to
make money for the country while working with hard currency. Again,
these agencies geared towards foreign enterprise relations are nothing
new. Many SAs in the 1980s, such as Cubanacan, dealing with tourism
and the hotel business, Contex, the fashion industry and sponsor of
Surchel beauty aids, and Artex, the company specialising in promoting
artists, musicians and dance abroad, are all now agencies that are
responsible for pouring millions of dollars into the Cuban economy.
Other SAs, such as Gaviota created a reputation with health tourists
and high-income visitors. All of the SAs were responsible for attracting
foreign investors to the island. Cubanacan, again, the tourism

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company and hotel constructor, has since the 1980s attracted foreign
investors from Mexico, Venezuela, Spain, and Italy (FI, 1989:8).
Cubalse, the countrys largest SA, was able to grow physically and in
profits due to the process of decentralisation; as a result, new SAs were
created under the Cubalse umbrella.
Similarly, production in agricultural businesses, to meet the
nutritional needs of the population, has also changed. During the
Special Period, the government instituted a mechanism thought to
be more efficient in the production of common agricultural products,
mainly sugar and its distribution. By 1992, 83 per cent of all arable
land was held within the hands of the party/state apparatus, which
due to the crisis was no longer capable of providing fuel, transportation and materials to carry out its exploitation (FI, 1998:40). As
a result, in September 1993 the ANPP approved the laws establishing
the UBPCs or Basic Units of Co-operative Production. These open up
private farms and unused but fertile agricultural sites, with workers
living on the plots; they resemble small farm businesses that work
independently of the state. Each UBPC consists of two committees,
one concerned with management and marketing, and a second
dealing with the technical and labour aspects. Most of these units
consist of already existing state farms, but they also include small
family farms and properties. Additionally, the workers on these fields
were given permission to use parts of the lands for growing food
products for their own consumption. At first, most of the production
was geared towards the sugar industry, which was still state-run. But
by 1994, the task of the UBPCs was opened to the production of basic
food and livestock goods. These self-managing entities were allowed
to sell their products in city and town markets (Echeverra Len and
Prez Rojas, 1997:69). According to documents prepared by the PCC,
in 1992 75.2 per cent of all agricultural land was held within state
hands. By 1995, the state possessed and conducted production on
only 27 per cent of arable land. The UBPCs now control 48 per cent
of the agricultural land in Cuba, whereas the private sectors and the
Credit and Services Co-operatives (CSC), which work similarly to
UBPCs, use the rest (FI, 1998:5).
Cuentapropismo
The concept of self-employment never ceased to exist in Cuba after
the 1959 Revolution. But because during the early years of radicalisation the country experienced big transformations towards
essentially collective modes of production, self-employment became

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an unusual way of making a living. Most of the participants in the


non-state sector were found in the rural areas of the country and
were characterised as a group of people generally older than 50 and
with low levels of education (Nez Moreno, 1997:41). Since these
groups of people only represented an insignificant percentage of the
workforce, little attention was paid to their existence. However, as a
result of the drastic conditions imposed by the economic crisis of
the 1990s, a larger percentage of the workforce started to turn to
informal means of acquiring goods and the means to purchase them.
Those who were able to harvest, roast and distribute coffee, for
instance, did so without involving the party/state apparatus. Where
the state was incapable of providing goods and services to the general
population, the black or underground marketeers stepped in to meet
the daily needs of the people.
As Nez Moreno (1997) has demonstrated, a jump in the number
of those participating in the self-employed/informal sector was a
direct result of the deformations that occurred in Cuba during the
crisis in 1990 and onwards. In 1988, only 41,000 workers were
considered to be officially self-employed (Daz, 1993:40). But no one
knows exactly how many individuals participated in the
black/informal market as a principal means of acquiring daily needs.
In my interviews with party members, the self-employed and a variety
of people off the streets, I found that the bulk of Cubas population
has always depended on the black market to supplement their income
in addition to meeting basic needs. No scientific investigation needs
to be conducted in order to arrive at the conclusion that during the
first years of economic turmoil, most Cubans depended on alternative
markets, including bartering. It seems only logical that, with the lack
of food and fuel deliveries, the economy in Cuba pushed the
population to create innovative means of survival, rather as happens
during a war. These alternative or clandestine markets eventually got
out of hand and hurt potential state accumulation.
Eventually, the Cuban government sought a cure for black market
activity in which the production of goods and services was
accomplished without the state benefiting from them and the police
force was used in a futile fashion to stop a popular means of survival.
Certain services, like butchery, transportation of agricultural products,
cosmetic services and restaurants were no longer profitable for the
state. The idea was that these services and the sale of products could
be done more efficiently by means that would entail personal
incentives. The idea was not to create free market capitalism, but to

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create an independent domestic economy based on supply and


demand in order for the state to profit and recuperate the excess of
cash in the country, not only in pesos but also in dollars.
As a result, in September 1993, the Council of State passed the
Decree-Law No. 141, which legalised or made formal the concept of
self-employment. This law allowed for individuals and singular family
units to exploit their own manual labour in small self-made businesses.
In maintaining the socialist value of prohibiting the exploitation of
man by man, cuentapropistas are not permitted to employ other
individuals; though two or more self-employed entrepreneurs are
allowed to register as partnerships, splitting the profits equally. The
biggest services are found in the restaurant and tourist accommodation businesses in private homes, butchery at the meat markets, taxi
transportation and car repair shops. On a smaller scale, there are hair
styling and beauticians, babysitting, bicycle taxis, carpentry and
delivery services. According to the accompanying rules of DecreeLaw No. 141, self-employment can be exercised in 157 different
occupations, and business transaction may be conducted in either
dollars or pesos. Since the laws and rules of cuentapropismo were made
in times of emergency planning, official government data on the
registering of the self-employed are not quite coherent for the first
two years of its existence. But some research does indicate that by
1995, 208,346 workers were registered in the self-employed sector
(Nez Moreno, 1997:43)
In any case, this newly recognised employment and market
structure produced a number of problems with which the legislative
powers of the country had to deal. These problems will be dealt with
more specifically in Chapter 4. But it is worth mentioning here that
the possibility for earning money in dollars, as opposed to pesos,
created a big divide among workers. The situation quickly got out of
hand, to the point that some individuals who opened their homes
to tourists could earn as much as US$500 per month, whereas a
physician or teacher would make only up to US$20 per month.
Towards the last part of this chapter I will demonstrate the effects
this income disparity has had upon the population. Naturally, a new
personal income tax regime was implemented in order for the state
to profit from self-employees and to control the income disparity.
Law No. 73 of 4 August 1994 was the first personal income tax
regime set up in all of the history of revolutionary Cuba. The
regulations are strictly enforced but are changing constantly. Taxes
on the profit of certain services amounted to up to 50 per cent on

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individuals earning in US dollars (CEA, 1994). Lo que hay es para


todos what exists is for everyone is the friendly picture painted
by government propaganda in newspapers (Juventud Rebelde, 19
January 1996:4). But the tax system on self-employed income contains
a number of aspects that indicate an underdeveloped scheme and
prove this mode of production to be only experimental. The manner
in which the taxes are collected appears to be rudimentary in
comparison to the tax regime in most countries. Local inspectors of
the Provincial Committees of Economic Planning collect taxes on a
monthly basis; the money is collected in cash.
Another problem that emerged instantly out of the experience of
self-employment was the question of representation. Were the cuentapropistas to have representation in the CTC? What were their rights?
Certainly, because of the experiences that were witnessed in Eastern
Europe, especially Polands Solidarnosc ascension to power and the
demise of the Communist Party in that country, most PCC members
that I have interviewed stated that the state leadership would never
give any thought to the idea of promoting an alternative self-employed
workers union. Again, these among other contradictions will be dealt
with more concretely in Chapter 4.
FOREIGN DIRECT INVESTMENT
As mentioned before, Cuba already had a legal avenue for foreign
investment since 1980, when the government passed Decree-Law
No. 50 on the establishment of economic associations between Cuban
SAs and foreign companies in joint ventures. During the 1980s, foreign
companies were invited to invest up to 49 per cent in joint ventures
with the state. Though the country did benefit from the capital inflows
that foreign investment produced, this law was insufficient in
attracting the desired level of badly needed hard-currency production
during the 1990s. The biggest problem was that few foreign investors
were willing to invest in a business in which they would only receive
49 per cent of the profits.
Finally, in September 1995, the National Assembly of Popular Power
approved the New Law on Foreign Investment (Decree-Law No. 77).
This law codifies property rights for all foreign investors and does
not discriminate according to nationality. Additionally, the law allows
for Cubans residing abroad to invest and buy property in Cuba. The
New Law also codifies property rights for all foreign investors, taxes
on profits, the rights of nationals who work in private businesses,

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and the profit ratio for remaining stateprivate joint ventures. Private
foreign companies are now welcome to install capital and production
sites for the exploitation of natural resources and production labour.
The law allows for investment in any and all sectors, excluding the
national health-care system and hospitals, education and the military,
although investments may be made in enterprises controlled by these
essential state institutions. According to the law, and in accordance
with the constitution, which abolishes the exploitation of man by
man, all Cuban workers remain employees of the state and will
receive state payment and securities in the national monetary unit.
Of course, the governments share of profit or sale of property is paid
for in hard currency. These dollars in return are to be used for the
improvement of public health and educational facilities, as well as
for the repayment of foreign debt.
Due to its highly skilled and educated labour force, Cuba has always
been an attractive site for foreign investors. In tourism, the country
offers a wealth of natural resources and sites that invite hotel
construction and tourist services. In this sense, the New Law on
Foreign Investment opened the door to potential earnings that the
country already possessed. Every year, Havana holds its International
Fair to welcome new businesses to the island.
The Cuban government planned this move carefully; it was studied
by the PCC and CTC research centres since the reforming of the
constitution in 1991. Hence, it took approximately five years before
this law was actually implemented. During that time, the government
set up consulting agencies for the long line of prospective foreign
investors. By 1993 approximately 280 companies from 36 countries
had representatives in Cuba for joint venture agreements (Granma
Internacional, 7 July 1993:13). By the close of 1995, over 200 agreements
had been signed involving FDI of 100 per cent ownership by transnational corporations, from a total of 40 different countries. This provided
the state with an income of US$2.1 billion for that year (CEA, 1996:8).
The countries with the largest investors in Cuba were Spain, Canada,
Venezuela, Mexico, France and Italy. Foreign companies have invested
into the exploitation of natural resources such as nickel mining and
petroleum explorations, in addition to fishing. But the sale of technological services to other foreign businesses has also been a big area
of investment. Because of the legalisation of the possession of the US
dollar and other hard currencies, a market has now opened to investors
to sell products and services directly to the population. However, the

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largest sector affected by the New Law on Foreign Investment has


been the tourist industry.
Tourism, a realm apart
Unfortunately, there is not room to go into much detail about the
topic of tourism here. Tourism is a very important sector for Cuba,
and generates all kinds of funds for the country. Because of the organisational and normative changes in Cubas political economy, tourism
has been able to grow to its potential, as the island is now a hot spot
for European, North American and Latin American visitors.
The rapid development of tourism as a major source of hard
currency income produced the need to utilise the resources the country
possessed in the most efficient manner. Again, the state set out to
control a new dollar-earning industry by creating new institutions
that would monitor and handle this large sector. To this end, in 1994,
the Ministry of Tourism was established.
Tourism accounts for most dollar accumulation in Cuba. According
to the Ministry of Tourism, holiday visitors brought in approximately
US$1 billion between 1995 and 1997. Cubas dependency on tourism
is continuing to grow and it has begun to simulate pre-Revolution
economics. Of course, the difference here is that tourism remains in
the hands of the Cuban Ministry of Tourism in partnership with
foreign investors. By 1997, there were 28,000 hotel rooms; 30 per
cent of them run by foreign enterprises (Granma Internacional, 7
September 1997:1).
In 1996, Castro made his comment on tourism and the economy;
he stated that tourism will not change the economic culture in Cuba,
nor will tourism replace the rest of the traditional economies. However,
during the PCC Congress, tourism turned out to be the salvation of
the Cuban economy (PCC, 1998b). Cubanacan SA now provides stateof-the-art health spas, which attract Cuba-friendly world celebrities
such as South African Nelson Mandela and Argentine football star
Diego Maradona. Wealthy visitors contribute hundreds of thousands
of dollars to the health and ecological tourist sectors, which in turn
are pumped back into health and education (Granma Internacional,
8 January 1999).
The accelerated process of investment during the first few years
after the implementation of the New Law on Foreign Investment
created a strong demand for a heterogeneous workforce. Professionals
from a wide array of backgrounds flooded the tourist sector: engineers,
lawyers, and teachers have abandoned their careers in order to work

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for tourism. Even during the most difficult of economic times for
Cuba during the 1990s, those who worked in tourism were seen as
having the best jobs and positions in Cuban society. For some, working
for tourism presents an image of a new class of materially well-off
individuals, who within months acquired access to cars and new
homes; workers in this sector see such material benefits as estimulo
(incentives). Workers in tourism are often presented with jabitas
(plastic bags of goods available only in dollars) and the opportunity
to buy products normally sold in dollars in the numerical equivalent
in pesos: shoes, clothing and household products from abroad. Tourist
industry workers are seen as the motor of the domestic economy
because they are responsible for the management of the bulk of dollars
that enters the country. Some Cubans think that those who work in
the tourist sector live like tourists, that they are always receiving tips
and that they live like kings with access to satellite television in the
hotel lobbies, although this is not always true. However, already there
exists a perception of class difference; a job in the tourism industry
is an envied opportunity.
Tourism brings on other social problems like prostitution, access
to drugs from abroad and violent theft. So far, party/state control of
these problems has manifested itself in the form of police-sponsored
repression and the attempt to keep young native spectators away
from the tourists. The country does not know quite how to deal with
the problems that a tourist-led economy can bring. Traditionally,
the PCC is called the (ideological) motor for the revolutionary state;
but it is not uncommon to hear managers and economists halfjokingly say that now tourism is the motor of the Revolution. It
would be more than fair to say that to enter the tourist sector of the
national economy is the dream of a large portion of Cuban youth
and recent university graduates. Direct access to dollars, optimal
working conditions, ample space for professional mobility and a
diversity of available positions are what the sector offers. Even
sociology and philosophy students are entering the sector, taking on
positions in teaching aesthetics at FORMATUR, the school for tourism
sector training.
There are 75,000 employees in the tourist sector, more than 30,000
of whom are young adults less than 30 years of age; many of them
are members of the UJC (CEA, 1998). The members of the UJC are
said to have a better political preparation; they are thought of as
those strong enough to enter a world surrounded by opulence while
maintaining their commitment to the principles of the Revolution.

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Tourism is called the face of Cuba, because tourists gets their general
impression from contact with tourism workers. That might mean
quality services at the bars and the beaches; that might also mean
prostitution. Accordingly, Juan Jos Vega, President of Cubanacan
Group SA says, the first trenches of ideological struggle is in the
tourist sector (Granma Internacional, 7 September 1997:3).
State welfare has benefited from these young workers. At many
sites the employees, under the direction of the UJC, have organised
tip campaigns, calling for a voluntary surrender of tips for the benefit
of the Revolution. For example, between 1993 and 1998, El Aljibe
restaurant in La Habana gathered US$360,000, all of it going to the
Ministry of Public Health (JR, 15 November 1998:2). These and many
other such projects are what make the tourism industry a dynamic
contribution to the economy of Cuba. But the contribution itself
automatically implies contradictions in Cuban society, between those
chosen to work in tourism, with access to nice commodities, and
those who cannot find their way into the sector. Each economic space
becomes an area for ideological struggle and critical analysis; the
Cuban leaderships job is to find out how to control the contradictions and minimise the social costs.
Bank system reform
Due to the already mentioned organisational transformations of state
institutions and norms of economic legislation, Cuba was forced into
restructuring its monetary policy and banking system. Prior to the
reforms, the only existing bank in Cuba was the Banco Nacional. It
was initially the legalisation of the possession of hard currency that
created the need for these reforms. The first scheme in decentralising the bank system was the creation of the Banco Popular de Ahorros,
a savings bank, in 1993 (FI, 1998). This bank relieved the national
banks responsibility of holding personal savings in the national
monetary unit. A separate bank was created for the savings of hard
currency earnings: the Banco International de Comercio (BCI), which
opened up in 1994. But because of the increasing number of foreign
investors, expatriate residents on the island and the new self-employed
businesses that were created, this small reform did not suffice. Hence,
also in 1994, the government passed Decree-Law No. 84. Under this
legislative measure, Cubas Banco Nacional ceased to hold the banking
monopoly, which governed all monetary and business transactions
on the island. Previously, all savings and personal bank accounts,
hard currency conversion, foreign investment and money transfers

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were controlled by the above-mentioned centralised state institution.


This law opened space for private banks and financial organisations
to operate on the island, as well as for the presence of representative
and working offices of foreign and privately owned banks.
The National Bank was renamed the Banco Central de Cuba; this
entity now deals strictly with national reserves and state capital
holdings. Additionally, CADECA SA (casas de cambio) was created in
October 1995 for the purpose of issuing convertible pesos (a new
monetary unit representing dollar purchasing power domestically)
and for actual pesodollar exchange for individuals. This entity was
recognised as an independent corporation, free from central state
control (FI, 1998).
These consequential reforms have opened up the island to more
than twelve large foreign banks and five private or non-governmental
Cuban banks. Among the foreign banks are ING Bank of the
Netherlands, Banco Bilbao Vizcaya, Banco Exterior of Spain, National
Bank of Canada and Socit Gnrale of France. The domestic private
banks, such as the Agricultural and Industrial Bank (a commercial
bank), deal mainly with budget enterprises and UBPCs. The result,
though still in the making, is a surrender to what can be referred to
as the international norms of banking systems. Additionally, the
upgrading of computing and the technological infrastructure of
money transfers and credit systems has been implemented in order
to leave room for the future possibility of receiving credits from
European and global financial institutions (La Jornada, 4 June 1996).
Other recent economic strategies
Though I have already mentioned the six major components of
the organisational transformations of state institutions, other
developments have continued to take place in the Cuban
governments attempt at inserting the country into the global political
economy. From among them, I can briefly mention here the creation
of Free Economic Zones (FEZs) or what are called in Spanish Zonas
Francas. This has been another organisational change, which it is
hoped will generate capital and make space for rapid levels of
commerce. Since 1997, through these new FEZs, the Cuban
government allows foreign companies to conduct commerce which
benefits all parties, especially those that need to purchase products
for the reproduction of services in joint ventures like tourism. This
facilitates the necessary acquisition and access to foreign products
which Cuba itself cannot produce; it also generates a moving economy

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where competition benefits the national economy as a whole. The


advantage of providing room for free competition among international corporations in the sales and purchases of products, especially
high-tech products, is that the highest quality of the commodities
at the lowest prices will raise domestic standards of corporate and
industrial materials to those of the global norms. Furthermore, the
opening of the FEZs has provided more employment possibilities for
the working population. Once again, the government continues to
manage wages for the nationals that work at the five FEZ sites on the
island (Granma Internacional, 7 January 1998).
I have found more than 40 detailed articles of law regarding the
implementation of the FEZs. These laws are meticulously tailored to
maintain strict control of the treatment of Cuban workers, the way
in which foreign enterprises must relate to government agencies on
the ground, the definition of property, insurance and security, and
the creation of the new Ministry of Foreign Capital and Economic
Collaboration. The laws make clear the geographical limitations of
Free Economic Zones, which are always kept far away from city centres
and residential quarters. No person can enter the FEZs without
permission from the Ministry of Foreign Capital and Economic
Collaboration or without possessing an identity card issued by the
Ministry of Labour and Social Security (MTSS, 1998; CEA, 1998:40).
SIGNS OF SLOW RECOVERY
In classical terms, using Gross Domestic Product (GDP), the result of
the reforms implemented since 1995 has been a slow recuperation
of economic growth. In terms of the long-range results on GDP prior
to and during Cubas economic crisis, we can note that in 1989 the
countrys GDP grew only 0.7 per cent in relation to the previous year;
in 1990, when the Soviets delayed all their oil deliveries, the GDP
contracted by 2.9 per cent. This fall into economic crisis continued
throughout 1993, when the recorded GDP growth amounted to 14.9
per cent. It was in 1994 that the countrys domestic economy started
to demonstrate signs of getting out of the crisis, but still there was
no sign of recuperation; for this year the GDP experienced a 0.7 per
cent growth. The following years showed signs of some improvement:
2.5 per cent in 1995, 5 per cent in 1996 and 2.5 per cent in 1997
which in all but one year was low compared to the predicted average
growth of 4.55.0 per cent (CEA, 1996:15). According to government
sources and PCC literature, the principal factors which hindered such

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planned growth were the following: worsening external financial


conditions as a result of the Helms-Burton law; the fall in sugar
production; the deteriorating terms of trade due to the fall in nickel
prices; adverse climatic conditions which affected agriculture; and
Thrips Palemi bacteria which (blamed on a certain US conspiracy)
plagued many crops (CubaNews, 1 July 1997). I would venture to say
that though the US embargo (in its Torricelli and Helms-Burton phase)
did have an effect upon further potential growth, the main factors
that affected domestic production were the lack of inputs and spare
parts in the industrial sector, the weak position of the peso, the social
adjustments that needed to be made in new managerial structures
and the lack of experience in local managerial directorship.
Though the economy never reached the leaderships annual
planned goal, the 1997 GDP 2.5 per cent increase demonstrates that
the planned economy can maintain a tendency of gradual and
sustainable recuperation of the national economy, a return to growth
rates as seen in the early 1980s but only as a result of prioritising
certain sectors. For instance in 1996, when the GDP growth rate was
recorded at 5 per cent, UBPC production shrunk 2.8 per cent due to
low efficiency in economic terms of the sugar and non-sugar sectors
of that area. There were 1,576 units of UBPCs, with 37 per cent of all
arable land; these units projected an output of 5 million tons of sugar,
whereas the year only offered 4,252,000. In this same year (1996)
industrial production grew by 7.8 per cent; sectors of light industry,
such as detergent, cosmetics, and household cleaning goods, grew
10 per cent; materials for infrastructure construction, 12 per cent;
production of electricity grew by 7 per cent; the food industry, 9 per
cent; crude natural products (nickel and petroleum), 12 per cent; the
sugar industry, that is not only the production of sugar but the
manufacturing of sugar-related products like rum, foods, juices and
combustibles, 4.4 per cent (CEA, 1998:35).
The growth in the nickel industry is particularly interesting in that
it shows a relationship between success in production and the reforms
that were made, especially in terms of foreign investment. Although
the world demand for nickel is today nowhere near the demand
during the 1970s, due to plastic substitutes, certain foreign industries
continue to have an interest in its production due to the need for
nickel for producing sulphides in the metal-refining industry. An
example of this was the Sheritt of Canada Group, which agreed to
join the Cuban governments Compania General de Niquel in creating
the Moa Nickel Company in 1994 (FI, 1998: 48). This partnership in

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exploiting this primary product has had an extraordinary effect on


its production. The figures produced, by the Cuban government, and
also confirmed by the Canadian government, testified to a 64.4 per
cent increase between 1994 and 1995. Whereas nickel production in
Cuba during 1994 resulted in approximately 27,000 tons of the metal,
in 1995 Cuba, in partnership with the private Canadian group,
registered a production of over 46,000 tons of nickel. This result
superseded nickel production in 1987, which only amounted to
37,000 tons. In 1996, production levels increased again by 31 per
cent. This has meant an additional annual income into the country
worth over US$100 million. In 1996, one year after the passing of
the New Law on Foreign Investment, the Australian Western Mining
Corporation sealed a US$600 million agreement with the Cuban
government to exploit the lateretic nickel reserves in Holguin Province
(FI, 1998:4850).
In terms of the tourist sector, growth in production, construction
and services grew, as did the inflow of tourists on a yearly basis. In
1995 over 740,000 visitors spent their holidays in Cuba on tourist
visas; this was a 19 per cent increase over 1994. In 1996, 900,000
tourists arrived on the island. And in 1996 and 1997, over 1 million
tourists per year chose Cuba as their holiday destination. In terms of
net revenues from tourism throughout the first half of the decade,
government figures conclude that in 1991, tourism provided Cuba
with a little over US$500 million, whereas in 1995 revenues amounted
to over US$1 billion (CEE, 1999:20).
In order to guarantee economic recuperation and in order to reach
a GDP growth between 2.5 and 3.5 per cent in 1998, the Cuban
government considered it essential to increase the level of economic
efficiency and the optimal usage of scarce resources in hard currency
and achieve a productivity growth of between 1.5 and 2.5 per cent;
whereas the index for energy consumption growth was only 1.3 per
cent (CEE, 1998: 36). Additionally, a reduction in the excess of
monetary liquidity in the hands of the population (in cash or in
savings accounts) was deemed necessary by state economists.
Nevertheless, some improvement has been made. In 1993, liquidity
of the population amounted to over 11 million pesos; in 1994 liquidity
fell to 9,940,000 pesos; in 1995 this fell to 9,251,300 and in 1996 it
was down to 9,039,600 pesos. This last figure amounted to 38.8 per
cent of the entire GDP for 1996, which still does not reflect a slightly
healthier 21.6 per cent as was indicated for 1989. However, an
improvement was witnessed in comparing 1996 liquidity rates in

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percentage of the GDP to 1993s liquidity rate, which amounted to


73 per cent of Cubas GDP for that year. The large reduction of liquidity
can be attributed mostly to legalisation of the possession of hard
currencies and the dollarisation of the economy, which led Cubans
to change their pesos for dollars in order to purchase essential goods.
In terms of foreign debt, which now is counted only in hard currency
terms, the government provided figures indicating that the total
foreign debt did increase between 1994, when in US dollars it amounted
to $9,082,800,000 to $9,161,008,000 in 1995. But the state budget
deficit (to current GDP) decreased drastically between 1993 and 1995;
in percentages the former (1993) reached a level of 32.7 per cent, and
in 1995 fell to 3.5 per cent (FI, 1998:45). All these indicators prove
that Cuba began to recuperate its production process in 1995 and the
economy was open to more growth in capital accumulation.
Social indicators and contradictions in Cubas political economy
Despite the desire of many in Miami, the Cuban people did not follow
the path of their erstwhile Eastern European comrades. During the
crisis of the 1990s demonstrations and riots were not seen on the
streets, and the government, concerned with developing strategies,
received overwhelming support from the masses. People adjusted
their diets and ate less varied food, as bread queues grew longer.
Transportation in the cities as well as in the hilly countryside was
reduced to the Chinese bicycle and large, cheap cargo wagons
imitating public buses (the camellos). Nevertheless, Fidel Castro boasted
that during this difficult time, not one school, hospital or day-care
centre was shut down (Granma Internacional, 8 February 1995:3).
As I have shown in Chapters 1 and 2, the Cuban governments
primary responsibilities to the country have been to maintain a
relatively high level of egalitarian social indicators through redistribution among the population, welfare in housing, food, education
and medicine, and social stability based on the growth of the economy.
The social achievements that have been accomplished since the
party/state apparatus was established are considered to be among the
most important fruits of the Revolution, which legitimises the regime.
Though few would argue with the fact that no schools or hospitals
were ever shut down during the crisis of the 1990s, other socioeconomic indicators need to be taken into consideration in order for
the analysis to be complete.
In terms of total public spending, government sources indicate a
pattern simulating the rest of production and spending in all other

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sectors of the countrys economy during the crisis. The comparison,


beginning in 1989 with an outlay of budgeted activities totalling over
7 billion pesos, reaching the lowest trough in 1992 with an outlay
of 6 billion pesos and rising again in 1996 back to 7 billion pesos,
demonstrates an overall improvement. The largest expenses for the
state have been education, public health and social security. Social
security and retirement benefits increased by 5 per cent between
January 1997 and January 1998 (MTSS, 1998) and have increased at
least this much ever since. An identical pattern is found in terms of
welfare expenditure directly to the population.
But the same could not be said of public health; from 1990 to 1991,
expenditure in this field contracted from 937.4 million pesos to 924.9
million. However, in 1992, public health spending did increase to
over 1 billion pesos. There was a slight decrease in 1994, although
spending was still over 1 billion pesos. Every year thereafter up until
the year 2000, the Cuban government has kept up its commitment
to increasing expenditures in the public health sector, including
salaries for those in the health profession. Additionally, the number
of health-care workers has continuously increased between 1993,
when there was a total of 308,352 to 320,427 in 1995. During this
same crucial period, the population per physician ratio fell from 214:1
to 193:1. Again, the figures from 1996 to 2000 demonstrate a
continuous growth in the number of doctors that Cuban universities
produce (FI, 1998:12) This point will be elaborated on in Chapter 4.
Despite the effects that the embargo had on the health-care system,
certain achievements in this sector can be noted, including the 1997
infant mortality rate (7.2 per 1,000) which puts Cuba among the 25
countries with the lowest infant mortality rate in the world. In this
same year, the mortality rate of those younger than 5 years of age
was 9.3 per 1,000. National vaccination programmes continued to
guarantee the immunity against twelve illnesses commonly found
among infants (CEA, 1998:8).
The figures for unemployment are less impressive. In 1997, the
rate was 6.9 per cent of the able working population, which was a
drop from 7.5 per cent in the previous year, with 66,300 positions
in the service sector (15 per cent state and 53 per cent non-state and
30 per cent mixed). The cuentapropismo solution could then have also
been seen as an attempt to remedy unemployment. Many of the cuentapropistas between 1994 (when the law of self-employment was
implemented) and 1997 were displaced workers from assembly
factories closed down during the first half of the 1990s, or university

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or high-school dropouts who had discovered money-making on the


streets before self-employment was normalised. Nevertheless, and in
contrast, the unemployment rate for 1998, which was 8 per cent,
indicated a reversal in the trend to turn to self-employment (MTSS,
1998). But the unemployment rate for 1999 did decrease back to 7.3
per cent (CEE, 2000:7). More recent figures on cuentapropismo and
unemployment will be delivered in the next chapter.
Social welfare
Few can contest the grand social achievements that were accomplished
during Cubas economic crisis during the 1990s. They not only
contrast sharply with neighbouring countries but also indicate a
tendency to maintain and increase the states responsibility to the
population. How the Cuban economy was able to produce a set of
programmes resulting in slow recuperation while at the same time
reinforcing the commitment to welfare is what amazes social scientists.
However, even though these official figures seem impressive, another
part of the story is not told. Socioeconomic indicators usually concern
themselves only with numbers that indicate government output in
social expenditure and the condition of the general population, for
example, life expectancy, infant mortality rates, etc. However, I have
chosen to take other social aspects into consideration, namely:
disparity in income and capital accumulation, the effects of legalising
the dollar, social problems such as prostitution and the development
of racial discrimination, and the contradictions emanating from the
new forms of labour, such as self-employment. These aspects can be
related directly to the list of organisational and normative transformations mentioned earlier in this chapter.
Disparity in income
The biggest social problem that I have identified in Cuba today is
the disparity in income and material goods among the population.
As I will demonstrate, this is a direct result of the reforms and organisational and normative transformations that the political economy
has experienced during the crisis. As a rough introductory guide, we
can look at the concentration of liquid capital into fewer hands.
Haraldo Dilla (1999) notes that by looking at the statistics derived
from bank accounts (information provided by the National Bank of
Cuba), we see a progressively smaller group of people holding an ever
greater share of the capital.

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in late 1994 14.1 per cent of the total accounts contained 77.8
per cent of the total amount of savings. A year later, 13.1 per cent
of the accounts contained 83.7 per cent of the total and by 1996
the concentration had reached the point where 12.8 per cent of
the total number of accounts (some 600,000 accounts) represented
84.7 per cent of the total savings accumulated, some 6.6 billion
Pesos. More significant perhaps is the fact that in the same year
2.7 per cent of accounts contained 43.8 per cent of all savings.
These figures indicate personal savings at the National Bank alone.
They do not take into account the savings accounts in the new and
private banks, which hold savings in the national monetary unit as
well as in dollars. Though no figures were provided, as they would
be difficult to gather during the current time of bank system restructuring, I would venture to say that figures from all the dollar savings
accounts on the island most probably indicate an even larger concentration of capital into even fewer hands. This gross reality provides
proof of a growing disparity among Cuban nationals, a big contradiction due to the reforms. The growing unequal distribution of
wealth to which Dilla alludes is, in my opinion, due to the creation
of a dual monetary system and the opening of self-employment as
a new mode of production.
As mentioned earlier, prior to 1993, Cubans possessing US dollars
would be severely punished. One of the first economic reforms that
were made during the Special Period was the legalisation of the
possession of hard currencies by Cuban nationals. This process
which I identify more realistically as the dollarisation of the economy
can be studied by looking at the effects it had upon the general
population and the instant differences that it created among certain
social groups. The first divisive effect is the rift that is created between
those with FE (literally faith, but short for Familia en el Exterior, or
those with family abroad) and those without. Those with relatives
in North America or Western Europe are the first to benefit from the
dollarisation process. They experienced a different Special Period,
possibly a glorious Special Period. These are the individuals who
immediately went to the stores, traditionally reserved for diplomats
and directors of corporations, to buy cement and paint for their home
repair, stylish clothing from Benetton, Sony televisions and sound
systems, Fiat cars and mopeds, fresh meats and fine wines from
Europe. These small material differences should not be underestimated. They create deep scars among neighbours and relatives,

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between blacks and whites (recognising the fact the more well-to-do
Cuban population outside Cuba are white), and especially between
employees and managers or PCC members.
Again, this legalisation created a dual economy, in which many
products from abroad and many services produced domestically are
sold in US dollars. The only products and services which continue
to be sold in pesos are monthly rations, daily bread rations, supplementary foods from the UBPC markets, transportation, refreshments
and beverages provided by cuentapropistas, secondhand books, cultural
activities (theatre, ballet, concerts) and local entertainment (bars,
cinema and sports halls). The so-called dollar shoppings or
diplotiendas, which were initially opened for the tourist, became
providers of Cubas occasional consumer goods paid for in dollars.
Some medicines that are considered to be non-essential by the
government, cough medicines, anti-diarrhoea medicines and aspirins,
for example, have to be paid for in US dollars.
In terms of nutrition, only the minimal food basket is guaranteed
for Cuban families. A typical food basket per person comes to $2.25
per month, but that food basket does not have all the nutritional value
that it had during the 1980s. Fresh fruit is not usually included, neither
are meats, cooking oil, or dairy products. The monthly rationed food
basket consists of basic staple products (rice and beans) and includes
a guaranteed round piece of bread per day. Hence, most Cubans
continue to turn to the black market to supplement their needs.
The drive towards tourism
Meanwhile, in the tourism industry workers are comforted by new
forms of work incentives. Jabitas, plastic bags of cosmetic and clothing
goodies, which can only be bought in dollars but are specially given
or on occasion sold to workers in tourism at subsidised prices, provide
the prime example. This is a sort of stimulus for tourist industry
workers, who can also receive tips in dollars directly from the tourists.
Previously it was illegal for Cuban workers to accept the dollars; today
it is not only commonplace and legal, but it is encouraged. Out of
100 Cuban workers that I interviewed at random, 94 stated that there
is a big difference in the standard of living between those who work
in tourism and those in other sectors (interviews, 1998). Many of
those interviewed used the word abysmal in describing the standard
of living of those who do not work in tourism. The remaining six,
who included professional athletes, a physician, and accounting
specialists in the new financial sectors, were opposed to the idea that

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there was any difference in standard of living. Clearly, many students


graduating from the universities are more inclined to want to work
for the tourist sector. The difference between those who come in
contact with foreign capital and those that do not is becoming more
and more obvious.
Self-employment and inequality
As far as cuentapropismo is concerned, the self-employed generally
make much more money than state workers; those who can earn
dollars are at an advantage compared with those earning pesos. Dollar
earners can buy materials for the production of services. Profits for
those who conduct businesses in pesos are based on the sale of
products made from (raw) materials t bought from the state, whereas
dollar earners conduct their businesses strictly in the service industry
(restaurants, bed-and-breakfasts, etc.). Material earnings and benefits
for dollar earners (home improvement, cars, televisions, etc.) lead to
a significant hike in the standard of living. There is a considerable
difference between the average income of those who conduct their
business in the national monetary unit and those who use the US
dollar for the production and sale of their services. I found that cuentapropistas dealing in dollars can make nearly $500 a month after
taxes, whereas the peso-earning pizza maker may earn as little as 150
pesos. Additionally, most of the dollar-earning self-employed are
those individuals and families with FE. This indicates that many of
the new and successful businesses, such as paladares (home-restaurants)
and bed-and-breakfasts, are funded by family abroad, who have been
able to send their island-resident relatives money to start and maintain
high-income earnings. My study also demonstrated a possible rift in
ideology and sympathy towards the Cuban government; 56 per cent
of the cuentapropistas with FE that I interviewed said that they did
not care so much for the communist government. In contrast, of
those that did not have family abroad, 63 per cent answered not only
favourably but also quite enthusiastically in their support for the
Communist Party-led state. Though the former group represents a
small percentage of the entire population, their attitudes do represent
a developing difference in ideas between those with access to dollars
and those without.
Racism
Though many claim that the Revolution abolished racism in Cuba
at least institutionally 40 years of progressive social order cannot

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erase 500 years of history. The attitudes and prejudices of racist


ideology remain prevalent and are manifested in the way individuals
identify themselves. Even to this day, the colour of ones skin is still
inscribed on passports and identification cards (Bazuin, 1997:83).
The same can be said for cuentapropismo, especially in the light of
what was explained earlier about those self-employed who receive
dollar remittances from abroad they are usually white. It is interesting
to see what prospects racist attitudes have in the developing domestic
market; will the inequalities between whites and blacks in pre-revolutionary times be manifested again? What is certain is that the largest
represented race in cuentapropismo is white. Additionally, there is a
longer family tradition of running small businesses among whites
than blacks, who prior to the Revolution were usually not found in
the small proprietor class. A sweeping though accurate generalisation can be made that white families have more experience in setting
up small, family-run shops, restaurants and stores. The kiosks and
restaurants are usually run by families and relatives, parents and
grandparents who remember pre-revolutionary days and possess the
knowledge of how businesses are run; they in turn hand these
traditions down to their children.
Tourism, prostitution and racism
As tourism is expanding, a feeling of fear is being conjured up among
Cubans. This fear dates back to the Cuba of the 1950s. Those over
50 years old remember Havana when it was a US tourist playground
dominated by gangsters who also owned other industries like
gambling, drug trafficking and prostitution. Government policies
regarding tourism show evidence of contradictions. For example,
Cubans are denied access to many tourist facilities, or hotels are only
open to those Cubans who can pay in dollars. This creates an
ideological and political problem and highlights the contradictory
values of government policies, because through the Revolution Cubans
have been trained in a quasi-egalitarian system.
Tourism greatly affects wages and one can no longer speak of
equality among Cubans. For example, within one week, a tourist cab
driver (or a prostitute) earns the equivalent of a doctors monthly
salary. Furthermore, today the stream of tourists mainly coming
from Europe confront the Cubans with other ideologies, which has
both positive (knowledge and consciousness) and negative (frustration
at not having those dollars and not having the ability to travel) effects.
Tourism is a catalyst to change; it increases the domestic understand-

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ing of world affairs and the world market system. At the same time
it brings with it materialism, prostitution and frustration. The
governments intention when it first promoted tourism during the
1980s, and then during the Special Period, was to keep the tourists
in their hotels and on the beaches, visiting Cuba only through guided
tours. The tourist industry was set up as an industry apart from the
population. But this changed, as more and more workers were drawn
into the tourist industry, the fastest growing and most profitable
business in Cuba. But one cannot have two spheres (domestic and
foreign) kept separate from each other. Tourists want to meet Cubans
and vice versa; to hinder that is to play with nature. Furthermore,
realising the importance of the dollar, Cubans make an effort to get
into contact with tourists.
Even though the numbers of black and white Cubans working in
the tourist industry are about the same, tourism also means more
racism. Blacks tend to witness their passports and identity cards being
checked more often when entering a hotel. If the passport is Cuban
and one is black, entrance is often denied unless, of course, dollars
accompany him or her. Of course one can argue that this is a prejudice
based upon the attempt to separate the tourist community from the
natives, for the purpose of ensuring that tourists are comfortable and
are not bothered by needy Cubans. But the fact remains that these
prejudices are manifested in segregating blacks from whites. Why
cant a black man be a tourist? The ideas of racism reminiscent of
the 1950s are only reinforced.
The increasing number of joint ventures and the legalisation of
the dollar are two other important outcomes of the Special Period,
contributing to increasing class differences and stronger lines of
racism. The head of the Anthropology Department at the University
of Havana reaffirmed the notion that racism has grown as foreign
influence increased. She stated, for example, that the firmas mixtas
(joint ventures) prefer to employ white Cubans. Even though the
Cuban state organises all workers to apply, foreign firms choose white
males, which surprised her as she is used to working, in the same
type of company, with many women and blacks. Not only the joint
ventures, but also the legalisation of the dollar had consequences
that played along racist lines (Bazuin, 1997).
Curiously enough, prostitution was not outlawed immediately in
1959. Pimping became prohibited only in 1961, but the traditional
posadas (government-run hotels) were to remain open to satisfy a
social need. Prostitution thereby became state-controlled (Matthews

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and Salas, in Bunk, 1994:96). In 1970, the government changed its


approach and considered prostitution to be a growing social problem,
which needed to be outlawed (Bunk, 1994:104). Today prostitution
is an everyday phenomenon in which the borders between simply
talking, friendship and something beyond this seem very blurred.
Jineterismo is a broad term that is used to describe a range of activities
such as having a good time and a drink at a hotel with a foreigner.
It could be extended to dancing with tourists, letting the foreigners
buy nice clothing or having sex with the visitor. The different ranges
or scales of jineterismo make Cubans say that it is not prostitution in
the conventional use of the term. In Cuba there are male jineteros
and female jineteras. Bazuin notes that it is the latter that are talked
about more often in Cuba, even though the number of males and
females in prostitution is equal (Bazuin, 1997). Even the government
have openly expressed their view towards jineterismo. Fidel Castro
himself seems to have changed his mind in the times of economic
hardship. The excuse he gave for Cuban prostitution today is that
these women are jineteras and not prostitutes since no one forced
them to do it. Castro stated that these jineteras were highly educated
hookers and quite healthy (Washington Post, 3 March 1992:A31).
When speaking to Brazilian government officials, Castro said: Our
hookers do not do it out of obligation, or necessity. Here prostitution
does not occur for that reason but because somehow they like it. But
government policy remains unclear, as more youth turn to these
means in quest for the US dollar.
Consequences and legitimacy
All together, the combination of the economic crisis and the
responsive reforms can be understood as an apertura (or opening),
which has been conscientiously and gradually implemented for the
purpose of adapting Cuban society to global changes. All the while,
the PCC under the leadership of Fidel Castro has maintained social
stability and continuity (at least in words) with the socialist project.
In line with the 40-year-old project, the specific changes in Cubas
political economy remain self-imposed. This is not a World Bank or
IMF plan, but it is a profound change that essentially modifies the
relationship between Cuba and the global economy.
To the dismay of those who watched in hope for the fall of the
Communist Party/state apparatus and predicted an eventual demise
of the revolutionary political structure, the PCC has remained firm
and has led the country out of economic chaos. In turn, the population

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has responded by adapting to the imposed changes. No one knows


how many more reforms will be implemented in the future, but what
remains clear is that market-like strategies in Cuba have never
interfered with social spending. On the contrary, the Cuban
government continues to maintain its commitment to the essential
social achievements of the Revolution. Nevertheless, the unorthodox
socioeconomic indicators that I have taken into consideration do
indicate that ever since the state leadership implemented the reforms
leading towards the organisational transformation of production and
accumulation, rifts of inequality have appeared among the population.
Hence, egalitarian values and equal distribution of wealth and
resources have experienced a shaky imbalance.
Changes were made in the political structure, more specifically in
the representative electoral process and in the definition of private
property. The constitutional reforms and the laws and programmes
that followed up through the Special Period, were welcomed by the
population. Additionally, Party discourse on social justice and antiimperialism were ever-present. It is in this light that one can conclude
that the preservation and even enhancement of the essential pillars
and foundations of the Cuban Revolution, described in Chapter 3,
were a necessary element, if not the most important, in maintaining
and protecting the one-party/state apparatus.

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4
Structural Adjustments
and Social Forces in Cuba:
How Cubas Economic Model
was Shaped by Global Trends
In Chapter 3, I explained the causes and consequences of Cubas
economic crisis during the first half of the 1990s, the necessary process
of political and economic restructuring that the country endured
after the disintegration of the socialist bloc in Eastern Europe and
the reinforcement of the US economic embargo. The survey conducted
on the domestic response called the Special Period answered the
questions as to why and how Cubas party/state apparatus survived
the crisis and continues to exist. This chapter is dedicated to
identifying newly established social structures that have emanated
from the measures and reforms executed during the Special Period.
Parallel to this task, I will identify the similarities and discrepancies
between Cubas new economic model and those global trends
identified in Chapter 1 as the central characteristics of neo-liberal
globalisation and transition economies. My principal argument here
is that while the policies of economic and political reform
implemented by the party/state apparatus were portrayed as a
temporary or emergency reaction to global pressures, some new
structures have been instituted and have proved to be stable and
quasi-permanent. These new structures, which were shaped by global
trends, create new social forces and reposition old ones in order to
maintain the pillars and foundations of the Revolutions existence.
By identifying the new structures, both organisational/institutional
and normative, it will be possible to estimate the extent to which
global pressures determine or shape the current Cuban model. In
short, what has been demonstrated up till now is that the Cuban
party/state apparatus has utilised the world market as a substitute for
the benefits it used to receive from the former Soviet bloc; in this
chapter, I will demonstrate the effects this replacement has had upon
Cubas political and economic structure and the consequences for
152

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153

the pillars that have maintained the party/state apparatus throughout


the last four decades.
The first part of this chapter consists of a brief survey of Cubas
demonstrated economic and social growth between 1996 and 2000.
The purpose of this section is to provide a background to the euphoria
of success that the Cuban government stresses. I will use both domestic
sources and also international and critical ones in order to avoid
oficialismos. From that point on, two specific practices that characterise
the countrys new economy will be analysed in order to reveal the
structures and repositioned social forces that define Cubas adjustment
to the global political economy. These are what have been called the
process of entrepreneurial perfection (perfeccionamiento empresarial)
and the system of self-employment (cuentapropismo) mentioned in
Chapter 3.
Though I defend the idea that the Cuban party/state apparatus
distances itself from the fashionable measures taken up by most other
countries, I will expose the areas of Cuban society that are moulded
by and most resemble trends in the global political economy.
Among them, downsizing at the workplace, labour flexibility and
dependency on foreign investment. The Cuban response, which is
essentially based on the foundations of anti-imperialism and social
justice, will then be deconstructed and evaluated according to the
pillars of the Revolutions existence.
DEMONSTRATED ECONOMIC GROWTH
Since 1996, Cubas GNP growth rate has averaged 4.6 per cent per
annum. In 2000, the GNP registered a growth of 5.6 per cent. This
overall growth was fostered and accompanied by a 2.9 per cent
reduction in energy use, a 3.5 per cent increase in labour productivity
and a 16 per cent increase in domestic and foreign investments. The
demonstrated growth in productivity in communal and social services
was recorded as 3.4 per cent. Meanwhile, state workers salaries have
increased by 7.7 per cent with a global increase targeted at schoolteachers and health-care workers. Cuba remains a service-oriented
economy, as 62 per cent of its exports are concentrated in services.
Nevertheless, there was a 16 per cent increase in the export of goods
and an 11 per cent increase in imports for domestic consumption
(MEP, 2001:15).
It is this miracle that has continued to amaze global economists,
friends and enemies of the Revolution. How does the basic-level

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industrial and service-oriented Third World economy of a socialist


government and state supremacy, with an anti-neo-liberal stance
demonstrated in its discourse, produce such exceptional results while
maintaining and providing for the majority of the population a
guaranteed access to health care and education? According to
government propaganda, this economic growth is not yet satisfactory
and still does not resemble the economic growth experienced during
the 1980s and prior to the collapse of the former socialist bloc.
Nevertheless, the country has just begun to recover and, according
to government propaganda and the countrys leading economists, is
on its way to irreversible social and capital growth (Granma
Internacional, 22 December 2001).
The sector that experienced the largest growth in 2000 was
agriculture, which registered a 14.5 per cent increase in comparison
to the previous year. This was followed by transport and communications, with a 9.3 per cent increase for the same period. Industry,
including small arms production, mining (minerals and petroleum)
and manufacturing, grew by 5 per cent. Cubas historical and
traditional primary export industry, sugar, likewise experienced a
relative growth towards the end of the crisis decade. The 19992000
harvest produced 4 million tons of sugar within 114 days. This
represents a 7.3 per cent increase in relation to the year before. The
gains from sugar export after the last harvest totalled US$2.2 billion
according to the Ministry of Sugar (MINAZ, 2001).
Loans for small businesses and construction have also increased,
not only in the national monetary unit but in US dollars as well.
During 2000, Cuban banks lent out approximately US$2 billion. In
the national currency, banks lent up to 5.5 billion pesos. It was
reported that 40 per cent of the population have saving accounts in
both the national and foreign currencies. This reveals an increasing
trust in the national banking system. The technological advances
made in Cubas finance system have been just as impressive. Currently,
200 national companies in Cuba operate their monetary transactions
electronically. 350,000 black-strip cards have been produced and are
currently in use for the distribution of employees salaries and for
the deposit of money into savings and cheque accounts. Since 2000,
78 ATM machines have been operating in the country. Havana is
now awash with mobile telephones, computer stores, shopping malls
and tourists. The picture is quite different in 2001 from what it was
in 1996 (Granma Internacional, 22 December 2001).

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155

CAUSES FOR ECONOMIC GROWTH


During the 2001 session of the Central Committee of the PCC, party
officials cited four principal factors that have contributed to the
economic success story and, more specifically, to the acquisition of
foreign capital (Granma Internacional, 15 May 2001). Firstly, they
attributed the growth to the expansion of the service sector, especially
tourism, which experienced a 10 per cent growth during 2000, with
1.8 million visitors, primarily from Canada, Germany, Italy, Spain,
France, the United Kingdom, Mexico and Argentina. Seventy per cent
of Cubas tourists are concentrated in this group of countries. That
is five times more visitors than in 1990 (the start of Cubas economic
crisis). While in 1990, Cuba had only 12,900 hotel rooms, 35,000
rooms were available at the start of 2000. These figures are in addition
to the accommodation provided by self-employed or family hostel
businesses (Granma Internacional, 22 December 2000).
In 2000, the Cuban state corporations poured 522 million pesos
or US$21.6 million into the tourism industry. The national earnings
from this sector reached US$1.9 billion. Tourism now employs 90,000
workers directly (hotels and accommodation, airport, transport and
guides). Indirectly, this service industry links a network of 300,000
workers in the service line (renting of automobiles and other popular
services provided for the tourist, such as massage, mineral baths,
sport facilities, and restaurants) (Granma Internacional, 15 May 2001).
This demonstrates a very large dependency on tourism as the main
provider of foreign capital to Cuba.
The dangers of depending on tourism were affirmed in 2000, when
state economists had expected over 2 million visitors. The problem
was found in the fall in value of the euro and European national
monetary units in comparison to the US dollar. Since the economy,
especially the tourist industry, is based on the dollar as its primary
unit of exchange and costs, the number of European visitors tended
to stagnate and will most likely decrease until the value of the dollar
is reduced. According to the commercial director of urban hotels of
the Sol Meli Group, Carmen Martinez Teran, 2000 was not a good
year for any Caribbean country or tourist market. The failure was due
to the hike in oil prices, which had substantially increased the price
of airline tickets. In any case, Cuba continues to be the hottest spot
for tourist growth in the region. Between 1996 and 2000, the average
annual increase in the number of visitors to Cuba was 18.6 per cent,

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while in the rest of the Caribbean it was between 3 and 4 per cent
(Comellas, 2001a).
The second area of improvement that contributed to Cubas
economic growth was the reduction in wasteful energy usage, achieved
through efficiency plans rather than austerity measures. The PCC
pointed out that in agriculture for example, a more efficient use of
energy has been demonstrated. In 1989, the harvesting of one ton
of tropical vegetables and tubers used up 95 kg of diesel and 19 kg
of gasoline. In 2000, 37 kg of diesel and 3 kg of gasoline were used
to produce the same amount. A similar tendency was demonstrated
in the production of nickel. In the most important and productive
nickel mining and refinery plant, Ernesto Che Guevara, located in
Moa, half the amount of combustibles used to produce a ton of the
mineral in 1989 was used in the year 2000. During this last year,
72,000 tons of nickel were produced. This reflects a giant step in
nickel production, as the total amount of nickel produced in 1989
was only 45,591 tons (Granma Internacional, 21 April 2001).
The third causal attribute to Cubas new economy has been the
increase in the extraction of local petroleum and its input at the
service of electricity and the production of cement and nickel. This
has led the country to a greater self-sufficiency in combustible energy.
The prospects for more exploitation of local oil seem hopeful. In
2000, 2.8 million tons of crude oil was discovered on national territory.
With the recent news of other large untapped petroleum pools lying
in Cuban territorial waters in the Gulf of Mexico, the government
estimates that by the year 2005 production might reach as much as
5 million tons per year (Granma, 15 January 2001). The increase in
petroleum production saved the state US$400 million in 2000.
Currently, 70 per cent of the countrys electricity is generated by the
burning of petroleum produced by the countrys own oil reserves.
Additionally, and thanks to foreign investors, most central generators
have been updated or reconstructed using Japanese technology in
electricity production this has replaced the outdated and inefficient
Eastern European generators. This same method will be introduced
into nickel ventures and the production of cement. Half of Havanas
population depend on natural gas for their household purposes,
including cooking and water heating. This natural gas accompanies
the extraction of crude oil in Cubas north coast by the CojimarVaradero Company (Granma Internacional, 27 April 2001). But none
of this petroleum extraction would have been possible without the
participation of foreign capital in the form of joint ventures. The

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costs and deductible profits which will most likely revert to the home
countries have not yet been estimated. Therefore, PCC prospects can
be considered a little too optimistic.
Finally, foreign investment is revered as the most important
contributor to Cubas economic growth. Without it, the sectors of
tourism, petroleum extraction and tobacco export would not have
succeeded in experiencing growth. As was mentioned in Chapter 3,
FDI was recognised officially in 1995. Prior to that, the Cuban
government allowed foreign entities to invest only up to 49 per cent
in joint ventures. Although most investors are still participating
through partial ownership contracts with the Cuban government,
direct investment of up to 100 per cent has increased since the law
on FDI was passed. Between 1995 and 2000, approximately US$4
billion has been invested in the country by foreign enterprises. In
total, there are currently 394 associations operating with foreign
capital (MEP, 2001:34).
In terms of joint venture or private investments in the country, in
2000 there was an increase of 11 per cent in comparison to the
previous year. Out of the US$5 billion that were poured into the
Cuban economy, US$1.5 billion was invested in construction and
the modernisation or renovation of thermoelectric plants, the
transport of crude oil, gas and nickel, the construction of hotels, and
in telecommunications. By the close of 2000, 31 new joint venture
companies had been created (MEP, 2001:34).
Brascuba, a cigarette company founded in 1996 with private
Brazilian and Cuban national capital, can be considered an example
of successful joint venturing. With two co-presidents, Adolfo Daz
Surez (Cuba) and Fernando Teixeira of the Souza Cruz Tobacco group
(Brazil), the company earned US$20 million in 2000. Due to the
investment-income policy, Cuba receives half of this amount. To
demonstrate a real entrepreneurial growth, in 1996 Brascuba produced
and distributed 571 million cigarettes under three brand names; in
the first half of 2001, the company produced 2 billion cigarettes in
six varieties. This joint venture depends on local as well as foreign
markets (within the region as well as in Europe) by selling under the
brand names Hollywood, Continental, Popular, Romeo y Julieta,
Monterey and Vargas. Though the number of employees was not
revealed by corporate or government sources, Brascuba boasts that
the average age of their workers is 32, mostly women, with 40 per
cent being university educated (engineers and executive office
managers) and 58 per cent having a middle degree in vocational and

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technical training (Granma Internacional, 21 June 2001). These last


statistics reflect the professional environment that surrounds joint
ventures in Cuba and explain why the island is currently a desirable
market for foreign investors.
In 2001, FDI provided the national economy with US$1.2 billion.
Fifty-one new contracts were signed for 2001, with Venezuela being
the number one investor specialising in petroleum exploration and
refining (Volkskrant, 12 July 2001). The Sol Meli Group, a Spanish
pioneer investing in the Cuban tourism market, finished the year
2000 managing 20 hotels around the island. Additionally, Sol Meli
bought up Havanas historical Habana Libre Hotel. (Granma
Internacional, 18 January 2001). The French group Total-Elf is currently
the number one private gas provider for Cuba. They, together with
Trafigura, a British company, provide the Cuban state corporations
with the most up-to-date technological advances in the use of natural
gas (Granma Internacional, 27 April 2001).
Whether 100 per cent FDI or joint venture, foreign investment in
Cuba has played an extraordinary role in the islands survival during
the past five years. While companies like Hitachi, Total-Elf and Sol
Meli are providing Cuba with capital and new technology, the
party/state apparatus is providing healthy and highly educated Cuban
workers to exploit the new markets.
SOCIAL GROWTH
Cuban government statements and propaganda often reiterate the
importance of social development in accordance with economic
growth. According to the PCC Statement of Social Policy, since the
Revolution of 1959, the main priorities of the leadership in social
policy have been to:
provide the entire population with access to a minimal or basic
food source;
guarantee each citizen equal access to a decent health system
and education;
disperse an adequate income for the retired and those
economically vulnerable sectors of the Cuban population;
provide every worker with sources of employment, protection
and benefits;

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provide every citizen comfortable and affordable housing,


preferably private housing (most Cuban citizens own their
houses);
attain a society that progresses towards justice and human
solidarity.
(Source: Government of Cuba, 2001)
Clearly, there exists a correlation between economic growth and
social development in Cuba. It is understood that social development
could not happen without economic growth, as humans can only
satisfy their material needs with collective material gain, and as
economic growth provides the necessary resources to satisfy the needs
of society as a whole. Social policy in Cuba has officially followed
the line that all economic gains should be directly invested in the
national programmes that promote social development. In Cuba,
resources invested in the social programmes that guarantee social
development are not considered to be mere costs, as is the case in
most countries that practise the neo-liberal reductionism that was
mentioned in Chapter 1. Rather, investment of capital and materials
in social programmes is considered to be the satisfaction of the PCCs
objective priorities. This was demonstrated during the 1990s economic
crisis, which was highlighted in Chapter 3. But this investment in
social programmes for the states contribution to social development
is not simply moralistic. The investment in maintaining social
development is rewarded with high levels of education; in other
words, the creation of a highly educated cadre of workers who are
ready to confront the global political economy. Vice-President of the
Council of State Carlos Lage once mentioned that what makes Cuba
so attractive to foreign investors, besides political stability, is the
populations health record and the fact that it has the most educated
group of workers that any developing country can provide (Lage
Dvila, 1996).
Cubas social development did backfire during the mid-1980s,
when the first generation of educated youth entered the job market
and found only jobs that required lower levels of education. The job
market was flooded with engineers, doctors, lawyers, translators and
other university-educated professionals (Carranza Valds et al., 1997:3).
But as the country recovered its economic and productive capacity,
in addition to opening up to foreign investment, the need for these
professionals began to grow. Today, there are more workers needed
in informatics (IT) than ever before. Economists that have studied

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capitalist economy (as it is called at Cuban universities) are now


employed as directors and managers of state companies. Engineers
are now hired on a continual and contracted basis by foreign
enterprises via government temporary agencies. The need for workers
with computer and Internet knowledge has also increased (Granma
Internacional, 29 November 2000). In no other Latin American country
are the numbers of educated professionals so high per population as
they are in Cuba. Therefore, there is no incentive to give up these
social programmes. On the contrary, the government is compelled
to continue this social policy as the party/state apparatus benefits
from it. As demonstrated through the crisis of the 1990s, the
productive capacity of Cubas healthy and educated population can
withstand the worst economic crisis and the new global economic
order. Cuba is competitive precisely because of its policy emphasis
on social development.
As far as health care and education are concerned, the party/state
apparatus continues to demonstrate its commitment to rising above
global standards. As of 2001, there is one physician per 168
inhabitants. In the national family-care programme alone, the country
counts on 30,600 physicians. Approximately 1.7 billion pesos are
dedicated to the salaries and benefits of health-care workers annually.
These include physicians, specialists at major hospitals, nurses, nurse
technicians, laboratory workers and assistants, etc. In 1999, 98 per
cent of the Cuban population were given general physical
examinations by family doctors. Access to health care continues to
be free of charge to Cuban citizens, as it is considered a human right.
Education follows health care in social priorities; obviously the costs
are much lower. The party/state apparatus is still responsible for the
education and professional training of Cuban citizens, including
kindergarten, nurseries and adult education. All this indicates an
increase in government investment (Government of Cuba, 2001).
Statistics on health and education will be revisited using international sources in the next section. In terms of living conditions, some
improvements should be noted here.
Between 1997 and 2000, the newly recognised unemployment rate
dropped considerably. Whereas in 1998, the official unemployment
rate was 7 per cent, the rate dropped during the course of 2000 by
1.5 per cent. This was largely due to the creation of jobs by gearing
the countrys economy towards tourism. An additional help was the
opening of new enterprises with foreign capital. In 1999, 87,000 new
permanent jobs were created in tourism in the Eastern provinces of

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the country. Womens participation in the job market is especially


notable. As of 2001, women constitute 42.9 per cent of the entire
workforce. The average monthly salary among Cuban state workers
went from 211 pesos in 1998 to 223 pesos in 1999. This is excluding
bonuses that are given at the workplace in US dollars. Workplace
bonuses increased by 18.9 per cent between 1999 and 2000; in 2000,
US$53.2 million were distributed as bonus incentives (MTSS, 2001).
These figures do not reflect the salary of those working in the new
state corporate sector, because those workers receive additional salaries
linked to their productivity. Currently, there are 781,000 workers
under the new system. The new state corporate sector is discussed
below in the section concerning the process of entrepreneurial
perfection or el perfeccionamiento empresarial.
The Cuban government has been successful in ensuring that hunger
and illnesses caused by malnutrition are kept at a minimum. Food
consumption experienced a jump between 1998 and 1999 when
caloric intake averaged 2,369 kilocalories and 59.4 g of protein (based
on beans, soya and meats) daily. During the same year, sales at public
food markets increased by 18 per cent. Nevertheless, prices at public
markets did increase by 6 per cent, putting a higher burden on the
Cuban worker and making it difficult for the individual to believe
that their living standards were rising (PCC, 2000; 2001).
Housing for the Cuban population did experience an improvement
in 1999. This sector has always been a problem for Cuba, as the
party/state apparatus, in its ideologically driven days, established
that comfortable, affordable and preferably private housing for all
Cuban citizens was a necessity. During 2000, the Cuban government
completed the construction of 35,000 new homes for families.
Additionally, the co-operative mini-brigades composed of volunteers
who help build housing in order to acquire their own privately owned
houses built an additional 15,000 homes and flats, bringing the
total number of homes constructed in 2000 to 50,000. The
government records that there was in addition an increase in the
number of completed home repairs of 21.2 per cent in comparison
to 1999 (PCC, 2001).
There are a number of other social indicators and statistics that
may reveal a hike in the standard of living of the common Cuban.
Reliable as they may be, it is impossible to verify their relevance to
this research. While the government uses the fact that (for example)
40,000 new telephones have been installed by the state corporation
ETECSA in 1999, there is no indication as to whether these telephones

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went to new businesses or private homes. Likewise, the reduction of


what Cubans call apagones (blackouts or power outages), which was
recorded as having decreased by 25 per cent in comparison to 1998,
does not show how it affected the standard of living of the Cuban
worker. However, one Venezuelan writer did say that the lessening
in frequency of power outages is a visible sign that the Cuban way
of life is getting better (Rangel, 2001).
WORLD BANK DEVELOPMENT REPORTS
AND OTHER INTERNATIONAL SOURCES
In order to keep this background on social growth indicators objective,
it is necessary to include reports from institutions other than those
that belong to the Cuban party/state apparatus. Though Cuban sources
are rarely questioned or contested by international sources, there are
reasons to look outside Cuba for comparative figures. Most
importantly, the Cuban government does not have the resources to
acquire indicators for other countries, and, has always depended on
transnational research to confirm their own position in the global
political economy. In other words, Cuban sources are relatively reliable,
but not sufficient.
The largest source for social development reports is the United
Nations Human Development Report of the UNDP, which uses tools
such as the Index on Human Poverty (IHP). This index categorises
countries according to the percentage of each countrys population
living beneath the poverty level. Factors such as access to clean drinking
water, adult literacy, infants average weight and the number of
nationals that die before the age of 40, are all taken into consideration. According to this index, in 1997 Cuba had 5.1 per cent of its
population living beneath the poverty level. That places the country
second out of the 78 developing countries that allowed the UNDP to
measure their social development standards (UNDP, 1997). The same
organisation compiles what is called the Index for Gender Development
(IGD). The purpose of this tool is to measure differences between the
sexes in standard of living, education and employment (profession
and salary). The UNDP includes 104 countries in this report, including
industrialised and economically advanced countries. Cuba ranks 21st
in the most gender-equal countries, with more than half of its technical
managers and engineers being female (UNDP, 1997).
Cubas social record has even caught the eye of international
financial institutions that have promoted many of the neo-liberal

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policies that the revolutionary leadership has rejected. According to


World Bank indicators and statistics, Cuba, despite the slow and stable
progress to economic recovery, has a record that demonstrates the
enhancement of its social achievements. The party/state apparatus
has reduced the countrys infant mortality rate from 11 per 1,000 in
1990 to 7 per 1,000 in 1999. This places Cuba firmly in the ranks of
the most economically advanced nations. According to World Bank
Vice-President for Development Policy Jo Ritzen, the infant mortality
rate for 2000 stood at 6 per 1,000 (Lobe, 2001). This is the same rate
as Spain during the same year. The infant mortality rate is just another
indicator that demonstrates Cubas superiority in social development
in comparison to its neighbouring Latin American countries, which
follow the neo-liberal policies prescribed by the World Bank and the
IMF. In 1999, Argentinas infant mortality rate stood at 18 per 1,000;
Chiles was 10 per 1,000 and Costa Ricas 12 per 1,000. For the entire
Latin American and Caribbean region, the average infant mortality
rate was 30 per 1,000 in 1999. The infant mortality rate can also be
broken down to give the rate for children under the age of five. For
Latin America as a whole, the infant mortality rate for children under
five averaged 38 per 1,000 in 1999. Cubas infant mortality rate for
the same age group during the same year was 8 per 1,000. This last
figure is 50 per cent lower than the rate in Chile, the Latin American
country that comes closest to Cubas social achievements (World
Bank, 2000).
Public spending on education during 2000 in Cuba amounted to
approximately 6.7 per cent of the gross national income; this
continues to be twice that of other Latin American and Caribbean
countries and is even comparable to Singapores spending. During
the Special Period, net primary school enrolment for both boys and
girls reached 100 per cent; this figure from 1997 was an increase from
92 per cent in 1990. This rate was not only well above the 8090 per
cent rates achieved by the most advanced Latin American countries,
it also surpassed the United States, according to Ritzen (Lobe, 2001).
In 1997, there were 12 primary students for every Cuban teacher;
this ratio ranked equally with Sweden. The Latin American and East
Asian average ratio was 25:1. The youth illiteracy rate in Cuba is zero.
In Latin America the average is 7 per cent. Only Uruguay comes close
to Cuba with its 1 per cent youth illiteracy rate (Lobe, 2001).
Similarly, and again according to World Bank statistics, Cubas
health-care system remains outstanding. The government dedicated
9.1 per cent of its GDP during the entire decade of the 1990s to health

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care; this is equivalent to Canadas rate for the same time period. In
2000, Cuba achieved the highest doctor-per-population ratio in the
world; the rate was 5.3 doctors per 1,000 people. It is therefore no
wonder that Cuba has no problem sending off medical experts to
disaster areas in neighbouring Latin American countries, free of charge
(Granma Internacional, 15 March 2001). World Bank officials went so
far as to say that other developing countries have a lot to learn from
Cuba, that it is a model (Lobe, 2001). These statistics reflect a growing
appreciation in the World Bank for Cubas social record despite the
fact that Cubas economic policies are virtually the antithesis of the
Washington Consensus on neo-liberal economic orthodoxy with
its Structural Adjustment Programmes (SAPs), described in Chapter 1.
It is ironic that the same institutions that have prescribed privatisation and state reductionism praise Cubas anti-model. For the past
decade, the World Bank has insisted that its core mission has been
to improve the lives of the poor. But it did so by promoting policies
that were geared towards concentrating all efforts on orthodox
economic growth. Productivity and increasing GNP rates were
considered to be the prerequisites for social development. The
experience of Cuba, even during the worst years of the Special Period,
has proved this assumption wrong.
CUBAS MOST RADICAL CHANGE
SISTEMA DE PERFECCIONAMIENTO EMPRESARIAL
Up to this point, I have described the miraculous success in economic
growth and social development that the Cuban people have
experienced since the reforms that were implemented during and
after the crisis of the 1990s. The party/state apparatus and its leadership
initiated a series of reforms that were characterised in Chapter 3 as
basically an apertura or state-controlled opening to the hegemony of
the world market. The opening to the market reflects the adjustments
that the Cuban government was forced to make after the fall of the
Soviet bloc. In short, the results of this event had consequences that
were favourable to production and to the stability of the revolutionary regime. However, economic indicators of growth alone cannot
explain the impact that the series of reforms had upon Cuban society.
Nor can the reforms that were implemented during the first half of
the 1990s solely explain the new structures governing Cubas political
economy. In order to understand the impact of global pressures upon
the country, it is necessary to look at structural changes that emanated

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after 1996. Some of the changes reflect a development or extension


of the programmes implemented during the 1990s and others recently
came to the fore with the adoption of specific production policies.
During the fifth PCC Congress in 1997, the themes of decentralisation, economic efficiency and competition became more
pronounced in party discourse. Cubas political economy was said
to have reached a new stage of development.
la Politca Econmica inicia una nueva etapa, que debe abarcar
aspectos estructurales de la economa como la diversificacin,
crecimiento y dinamizacin de las exportaciones, el desarrollo de
la base alimentaria, y la eficiencia econmica en sus aspectos
energticos, materiales y financieros, por solo mencionar algunos;
y comprende asimismo la coordinacin de polticas especficas y
la utilizacin de instrumentos econmicos y jurdicos ms
complejos y eficaces.
En las nuevas condiciones en que opera la economa, con un
mayor grado de decentralizacin y ms vinculadas a las exigencias
de la competencia internacional, el control oportuno y eficaz de
la actividad econmica es esencial para la direccin a cualquier
nivel, priorizando en particular la auditora estatal. (PCC, 1998a)
In turn, Party discourse became officially a programme for
furthering economic growth and national development under a new
model. It was based upon the idea that socialism needs to be constantly
improved in order to serve the needs of the revolutionary state and
the population (Government of Cuba, 2001). The party programme
called for a change in the line of production. It consisted of a
managerial revolution, the purpose of which was a move towards
the mentality of entrepreneurial leadership, towards behaving and
conducting business as if the Cuban economy were based upon
private, market capitalism. This was made possible by allowing more
autonomous room for the directorship of enterprises to behave as
they deemed wisest, but within the confines of state or public
ownership. In this sense, production in socialist Cuba is no longer
geared towards meeting the basic needs of its citizens, but towards
meeting the demands of consumers, both inside and outside of Cuba.
Along with this change of raison dtre, came also the fall of state
subsidies for inefficient production, or production that was not
profitable, so that it made no sense for the state to sustain it. This
section will outline what this economic programme entails.

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Prior to the Special Period, during the Campaign to Rectify Errors


and Negative Tendencies, the Cuban governments discourse had
often centred on perfecting Cuban socialism. In Spanish, this is known
as el proceso de perfeccionamiento. Eckstein (1994:603, 11619) noted
that, in discourse, perfeccionamiento was geared towards re-emphasising
the values of socialist society. I have depicted some of these values
while describing the foundations of the 1959 Cuban Revolution in
Chapter 2. Nevertheless, perfeccionamiento also meant making the
state-run economy, which was formally dependent upon the support
received from the former socialist bloc and especially the USSR, more
efficient. In contrast to this concept exists the present day process
of perfeccionamiento, which is not directly related to the values of
socialist society by any means. The revolutionary leadership can only
argue that the change that Party discourse has promoted since the
fifth PCC Congress is indirectly involved in sustaining socialist values
in that it supports the party/state apparatus in keeping public
governance over the market (state supremacy). But this is only
obviously so in Fidel Castros speeches. The process of change in
Cubas production line has to do more with adjusting state-owned
business practice in order to increase profits and making production
and service more efficient. In order to realise this, it became necessary
to link Cuban productivity to the global market, since economic
growth (import and export) needs to be measured in hard currency.
Along with this growing link to the global market, more autonomy
was rendered to business leaders, and labour wages were linked to
productivity. This process is what is understood as the perfeccionamiento
empresarial (hereafter, sistema de perfeccionamiento empresarial or SPE).
The programme, which will be outlined in the following pages, is
considered by the PCC itself to be the most radical of all reforms that
post-Cold War Cuba has yet experienced (Granma Internacional, 16,
18 March 2001).
The SPE has its roots in the reform processes that have been
experienced by the nations militaryindustrial complex, headed by
General Raul Castro (Fidel Castros brother). By militaryindustrial
complex meant is here the business line that the military created for
its own benefits and purposes. As mentioned in Chapter 3, during
the Special Period even the military cut down its expenditure and
conditions proved to be difficult for those who made the military
their lifetime career. Troops were no longer sent out to foreign
countries but had to concentrate on producing their own food for
subsistence. Rauls famous words were beans are more important

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than guns (EIU, 1993:7; Granma Internacional, 5 May 1993:4). The


militarys main contribution to society during the years of economic
crisis was the transport of produce to markets and government centres
for redistribution, and work in the sugar fields. But what it did, it did
with efficiency. This meant that when the military took over a business
or task that was usually covered by civilians, it reduced the number
of workers that were involved in the process and it completed the
task in a timely fashion. The guiding thought was to produce more
and better quality results with a smaller workforce, less energy use
and no waste. After the worst years of the economic crisis (1996 and
on), Raul Castro remained in control of the tasks that were taken
over by the military. And as the entire nation went in search of hard
currency, the military likewise sought capital growth. Raul Castro
became, then, a sort of president or CEO of the entrepreneurial
Revolutionary Armed Forces (FAR).
The Army restarted a small assembly line of ammunition that had
formally been used during the war in Angola (EIU, 1991). This business
now exports bullets, small bombs, and guns, and earns hard currency
profits from the sale of these products. Exact information on this
industry has been concealed by the government and has been
protected by security intelligence laws (Granma Internacional, 29
November 2000). But further good examples of entities that produce
for military consumption and sale can be found in Uniones Agropecuaria
Militar, which deals with agricultural products produced by the Army,
mostly sugar; Industria Militar, which produces everything from
military clothing to guns and tanks; Construcciones Militares, which
produces cement and construction materials for public housing as
well as defence centres, schools and hospitals; and GEOCUBA, which
is an excavation company that locates and exploits natural petroleum
deposits. These four companies are under the direct leadership of
Raul Castro (Granma Internacional, 18 May 2001).
The Council of State, together with a number of social and economic
research centres in Havana, the FAR and also a number of business
leaders, formed a work group that sought means to implement the
military mode of production to all state enterprises. Officially, this
entity, known as the Executives Commission for the SPE, came into
being in 1998. Nevertheless, I would venture to say that the work
group was started well before the fifth PCC Congress, as the SPE was
legitimised by the Party Congress documents and 1997 Economic
Resolution. The militarys experience was to be applied to state
corporations and to serve as a model for the future Cuban economy.

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Therefore, the Executive Commission for the SPE continues to be


monitored by the FAR (Nueva Empresa Cubana (hereafter NEC) on
Decree-Law 187/98: Sobre las bases generales del perfeccionamiento
empresarial). Its current director is former military colonel Armando
Betancourt Prez. Since 2000, the FAR has set up five Juntas de Gobierno
(government boards of direction) that monitor businesses in the SPE.
According to General Raul Castro, the SPE has to be a journey without
delay or going back (Granma Internacional, 18 May 2001).
Logically, the SPE would have begun with the newest state
enterprises, as these would be starting fresh without deficits and with
young business leaders. But what gave Cuban economic leaders the
confidence to prepare all national businesses for hard currency
operations and competition was the states own hard currencygenerating experience. Remember that Cuba was never completely
dependent on Soviet aid and that on certain occasions up to 40 per
cent of its national income was dependent on the private, Western
market (see Chapter 2). Hence, the concept of conducting business
with orthodox market rules is not totally foreign to the experience
of the Revolution or party/state apparatus. Cubalse and CIMEX will
be used as two concrete examples to depict the inspiration by which
the Cuban party/state apparatus pursued the SPE.
Cubalse
Cubalse is a state-owned corporation consisting of a group of
companies with diverse social functions.4 It offers clients, both foreign
and domestic dollar holders, a diversity of products and services. The
corporations head office draws up policies and strategies and
supervises the activities of each company. The corporate structure
consists of the president and three vice-presidents in the fields of
development, budget control and planning, who in turn govern the
individual companies, and the general stores and office managers.
Throughout Cuba the group directly employs 6,200 individuals.
Cubalse controls a network of more than 170 shops and service units
shopping centres, supermarkets, boutiques, restaurants, a golf club,
photo and video shops, laundry and dry cleaning establishments,
cafeterias and veterinary clinics. Principally, it serves members of the
4. All the information gathered for this section derives from documents
prepared by the directorship of Cubalse and CIMEX, and also from
interviews with some of its employees and information technology (IT)
specialists (Cubalse, 2000).

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diplomatic corps, businessmen, foreigners who live in Cuba, tourists


and Cubans who have access to dollars. It also does business in real
estate, automobile, wholesale, financial, legal, land transport and
shipping sectors and offers specialised services in photography, graphic
design and advertising. It is an importexport entity with its own
resources and offices throughout the country and abroad. The figures
testify to the corporations success. Cubalse has an income of over
US$248 million per year. But the history of the corporation and how
it came into being is extraordinary for a state-run economy of the
Third World, in addition to being very informative about what the
new corporations in Cuba can look like.
Cubalse, like most corporations and companies in Cuba, receives
its name from the combination of two or more words that describe
the service provided. Cubalse stands for Cuba al servicio del extranjero
(Cuba at the service of foreigners). The name indicates those the
corporation serves historically and the type of state funds it will be
generating, i.e., hard currency, mostly US dollars. In 1962, the
government, in a first experimental stage, established an agency
dedicated to the recovery of state assets (RVE), the purpose of which
was to discover how valuable the country actually was and collect
an initial domestic funding source for the revolutionary state. It
became an organisation in charge of recovering and caring for real
estate, objets dart and other national patrimony. In the same year,
the Enterprise for Service for the Diplomatic Corps (ESCD) was created
to provide services for the members of the remaining diplomatic
missions in Cuba. In 1964, the RVE opened up a small chain of food
and hardware shops (diplotiendas) for the ESCD. By 1969, the RVEs
network of retail shops began to engage in operations in hard currency
(US dollars); the commercial activities started growing at an enormous
rate and a process of diversification began.
In 1974, the RVE absorbed the ESCD and assumed that entitys
commitment in the sphere of service for foreign state representatives
in the country. This is when Cubalse, SA was founded. Cubalse would
run independently of the SDPE (the revolutionary Ministry of
Economy), which was organised by Che Guevara, but the budgetary
constraints were still imposed by members of the Central Committee
of the PCC. Between 1975 and 1980, the network of retail shops and
services experienced a steady growth along with the countrys general
economy. The steady increase in imports led Cubalse to be classified
as a foreign trade enterprise. During the early 1980s, Cubalse
established an agency for real estate which, in addition to preparing

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homes and property for foreign diplomats, engaged in offering a


repair service. With profits generated from these new agencies, Cubalse
opened the Havana Golf Club in 1984. As the corporation grew, so
did the need to find employees. Thus, an employment agency was
established for the purpose of hiring qualified individuals who would
serve as personnel for diplomatic missions and international organisations with offices in Cuba and commercial firms run by Cubalse.
The diplomatic missions and other foreign entities would pay the
state in hard currency for these services, but workers would always
receive their benefits in national currency.
The corporation grew so big that by 1992 a Cubalse office opened
in Panama. Now, while the country was suffering a serious economic
problem during 1993, more pressure was put on Cubalse to increase
profit rates. Each of Cubalses operations was expected to contribute
to the increase in profits, and a five-year expansion plan was
implemented. But the existing operations were not enough, new
operations were needed to carry out import and export transactions.
Hence, in 1994, Cubalse created its own shipping company, which
began operations with two regular routes: one to Panama, where
Cuban companies could purchase products from the United States,
and another to Mexico, which became one of Cubas most important
trading partners. By the end of 1994, Cubalse had 99 shops and service
units in operation in 29 cities and towns around the country. The
expansion created a need for the renovation and extension of
informatics systems and the establishment of more offices abroad,
mostly in Latin America. One of the contributing factors to the
immense expansion of the corporation was the Council of State and
the parliament-approved Decree-Law in 1993 allowing for Cuban
nationals to possess hard currency. Those with access to US dollars
went on shopping sprees and a domestic dollar market was
constructed, with Cubalse as the basic provider of goods and services
to dollar owners.
By 1995 Cubalse became the principal leader of Fiat and Peugeot
automobile sales in Cuba; this made it easier for companies and even
individuals to purchase cars and motorcycles. On Havanas Malecon,
a large Fiat store was opened along with a Cuban speciality shop
selling rum, ice creams and pastries. The store attracted not only
tourists; it also added a commercial flavour to the romantic scenery
traditionally enjoyed by habaneros at Malecon. The Food and Beverage
Company was created as a wholesale distributor; Aster laundry and
dry cleaning services was introduced and a new chain called Oro

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Negro gasoline and service stations and Cubanitas cafeterias are


now extended to all the provinces.
In 1996, Cubalse opened a new line of businesses. Photo printing
centres, graphic arts and advertising companies were opened in
Havana and Santiago de Cuba. A new alternative to the world famous
McDonalds fast-food restaurants, Rapidito, was opened as a chain
business, and initiated a sort of service import substitute that has
proved to work just as efficiently as its North American inspiration.
Cubalse even started opening up disco-clubs and bars. Also in 1996,
the effects of the 1995 New Law on Foreign Investment (explained
in Chapter 3) were found in the inauguration of Lares, a real estate
company that started generating profits from the sales and rentals
of renovated luxury homes in the lavish Miramar area of Havana.
Between 1997 and 1998, Cubalse continued to grow, with the establishment of a finance company and legal bureau dealing with
import/export issues. By 1997, the five-year expansion plan that
had begun in 1993 was completed in full. Cubalse is currently a
state corporation holding 21 companies involved in a wide range of
competitive businesses throughout the country. Plans are now being
called for to create a business system abroad in five countries.
Cubalse is Cubas only state enterprise that has always operated
independently from the centralised socialist economy. The production
of goods and services operates on a hard currency budget, while the
workers salaries have always been linked to the national currency.
During its history Cubalse has experienced some changes in its
structure. This is especially true in the boom experience that was
caused by the Periodo Especial. Due to the economic crisis Cuba
endured during the first half of the 1990s, the Cuban party/state
apparatus looked for all kinds of options that would generate income
for the state. Since Cubalse was already a state corporation operating
in hard currency, the leadership took advantage of this corporation
and allowed more autonomy for its managers in planning expansion.
This experience was an essential inspiration for the programme that
became known as perfeccionamiento empresarial.
CIMEX
CIMEX, SA is Cubas largest corporation, with 29 companies in its
organisation. It was set up in 1980 with the purpose of capitalising
on visiting migrs and their expenditure, though its name derives
from Cuban Import/Export (Eckstein, 1994:70). As government
initiatives started to redevelop the tourism industry, this semi-

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autonomous agency provided services to foreigners in the fields of


holiday packages, flight bookings, car rental and organised tours.
CIMEX is currently the primary entity responsible for joint venture
contributions. As was mentioned before, the Cuban government
adjusted the laws during the 1980s to accommodate foreign
investment, allowing up to 49 per cent of private foreign ownership.
By 1989 this corporation grew to the point where it controlled 49
companies in the aforementioned services, in the manufacturing of
national products and wholesale distribution of seafood, biotechnological products and medicine. During the reform and decentralisation
process of the 1990s, CIMEX relinquished responsibility for over 20
semi-autonomous agencies, enabling them to start up as independent
small chain businesses. Among those remaining in CIMEXs hands
is Havantur, Cubas biggest tour operator. In 1991, during the PanAmerican games that were hosted in Havana, CIMEX took charge of
most of the commercial activities associated with the event. During
the same period, CIMEX opened up a shipping line for trade between
Havana and Panama. Cubalse later took this over. Most recently,
CIMEX has demonstrated increased growth and continues to conduct
business in hard currency.
During 2000, CIMEX surpassed its annual financial target by 5 per
cent and has achieved 11 per cent growth in its hard currency
operations over the last five years. CIMEXs total sales reached US$167
million with a $10 million increase in the sales of national products.
CIMEX has invested in a chain of joint venture companies, including
gasoline stations, real estate agencies, tour operators, an international
financial bank, business in the duty free trading ports (FEZs) and
import agencies and other associations. Between January and
November 2000, Havantur brought in 334,000 visitors (their years
target) to the island via Canada, Spain and Mexico. Continuing with
joint ventures, CIMEX attracted Total-Elf, a French petroleum product
distributor, to open petrol stations in every major city in the country.
The increase in the sales of national products has been demonstrated
as well. Today, state companies and joint ventures produce 89 per
cent of CIMEXs consumer food commodities. Among the products
with the highest demands during 2000 were food and soft and
alcoholic drinks. Over 87 per cent of Cubas toiletry products were
also produced on the island by the Cuban company Surchel, SA. Fifty
per cent of household appliances, such as refrigerators, were also
produced in Cuba. What is seen here is a retail company that operates
in hard currency, while specialising in the sale of national products.

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All of CIMEXs workers are paid their salaries in pesos, but those who
provide direct services to foreigners may receive tips in hard currency.
However, according to Executive Manager Elizabeth Prez, the
tradition of rendering (volunteer) tips to the state continues, and
CIMEX workers inside and out of the country contributed US$180
million to help finance a childrens cancer hospital (Granma
Internacional, 10 January 2001).
The relevance and implications of CIMEX and Cubalse
The revolutionary leadership was keen to have Cubalse and CIMEX
expand their services and businesses years before the opening up of
foreign direct investment. This gave a head start for the state to invest
in monopoly services and production without being in competition
with foreign enterprises. If it were not for Cubalse or CIMEX being
given the opportunity to operate autonomously from the central
government, foreign enterprises would surely have stepped in to
provide the expatriate community with all the products and services
the state itself had and could offer. Now Cubalse has the opportunity
to conduct business not only with individual expatriates, diplomatic
missions and foreign government agencies, but also with a bigger
tourist pool in addition to foreign investors and their corporations
in the free economic zones (FEZs). Due to the legalisation of the use
of hard currency, Cuban nationals who possess US dollars are now
important consumers of Cubalses and CIMEXs products and services.
From Cubalse and CIMEX a number of things can be discovered.
First, the Cuban party/state apparatus never abandoned its ties with
the world market system. It was impossible for the party/state
apparatus to function as a legitimate state recognised by foreign
entities while operating solely in socialist currencies like the peso or
even the Russian rouble. Secondly, the state corporations experienced
a boom only when they were exposed to the world market. This
implies not only an already existing or potential entrepreneurial spirit
within the revolutionary leadership, but also the viability of a future
managerialentrepreneurial social bloc. Thirdly, in order for these
state corporations to increase profits, they had to have a controlled
number of employees selected by top management and not by the
PCC or the Ministry of Labour and Social Security (MTSS). The
numbers were small, and though there is no exact government or
official statistic concerning the downsizing of employees during the
recent economic boom, I was able to interview a number of exemployees who testified to their displacement from their positions.

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Some of them have ended up in self-employment, something that


will be dealt with in the following section. Fourthly, Cuba now more
than ever depends on international capital in order to upgrade its
corporate enterprises. Since the demise of the Soviet bloc, Cubas
access to new technology is now dependent on what the foreign
investors can offer national industrial intelligence. Fifthly, and
especially in the case of Cubalse, the creation of a temporary
employment agency or office of employment, offering what is known
in the Netherlands as uitzendbureaus, indicates that there will always
be a need for freelance or temporary workers who operate on contracts
designed by foreign investors and managers of joint ventures. The
tendency is to create a reserve army of labour that is subject to the
international financial market. This tendency will be elaborated later.
Already, there are clues as to what structural influences the global
political economy has upon the party/state model. From the above
examples, we can conclude that there is a move towards increasing
the flexibility of labour. Ultimately, what has been learned from these
experiences is that state supremacy over the national market can
work in coexistence with the world market dominated by private
enterprise. It was this evidence that motivated the Cuban party/state
apparatus to explore further means of employing market-like structures
for state-sponsored production and marketable services.
There are, nevertheless, essential differences between the
experiences described above and those methods and goals that are
implicated in the SPE. Although increased autonomy and decentralisation in the SPE resemble the modus operandi of Cubalse and
CIMEX, the disbursement of wages, salary scales and benefits are
grossly different. There are many aspects of the SPE that can be studied,
but the most interesting for this study is the amount of autonomous
power that the new managers possess and execute in the line of
production and, just as importantly, labour policy. As I will
demonstrate, the changes resemble a private market reform rather
than any of the measures the revolutionary government might have
employed during the existence of the socialist bloc.
How the SPE works
How the process of entrepreneurial perfection actually works has
been documented by the Ministry of Labour and Social Security
(MTSS) and its SPE Executive Commission (Government of Cuba,
2001). While recognising that production in an isolated socialist
economy does not have the purpose of serving the needs of the

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worker directly only indirectly the language in the texts prepared


for the SPE also demonstrates a change in labour relations. The SPE
resembles more a state capitalist economy, as explored in the writings
of the Frankfurt School mentioned in Chapter 1, than the morally
socialist line of production that Che Guevara envisioned. The PCCsponsored texts are decorated with socialist wording but their structure
resembles that of the private corporations that are found in market
economies. The texts are available to the public via the Internet
(www.nuevaempresa.cu).
The ultimate goal of the SPE is to transform all national businesses
into modern, efficient and globally competitive entities that produce
commodities and provide services that are marketable and profitable.
In order to do this, each company must conform to the standards
and requisites that make national enterprises eligible to participate
in the new economy without major investments coming from public
resources.
According to the Introduction to the documents prepared for the
process of entrepreneurial perfection on the web site, application of
the SPE entails passing each participating company or corporation
through a series of four phases. The first phase entails organising and
computerising all systems of accounting in order to make the
companies nationally compatible with the standards that guide the
SPE. The second phase is to achieve an accurate balance of expenditure
and income in order to prepare for profit maximisation. The third
phase consists of implementing the new hierarchical structure of
production and management that is indicated in the documents that
govern the SPEs activities. This phase includes reducing the number
of overlapping positions within the company in order to reduce costs,
i.e., downsizing. The final phase is reaching a substantial level of
profit; this is planned upon compromise between the Executive
Commission for the SPE and the Directorship Committee (explained
in detail below) of each enterprise within a two-year period.
Additionally this phase will include a demonstrated continual decrease
in the ratio of energy used to production of services and an annual
reduction of waste. In order for a company to be considered as a
participant in the SPE, it must follow these phases. Again, approval
to proceed from one phase to another is strictly controlled by the
Executive Commission of the SPE, which is heavily influenced by
the military leadership of General Raul Castro and Armando
Betancourt Prez (NEC, 2001 Introduccin).

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Structural changes in the line of production


Each business, company or corporation is appointed a director by
the Executive Commission of the SPE that guides the entity in every
aspect of operations, personnel relations and financial planning. As
mentioned above, the Executive Commission of the SPE is composed
of members from the Council of State, a number of economic
researchers from Havana and the military. Under the director, just as
with Cubalse, there are three vice-presidents or directors who control
specifically the areas of accounting, management and future planning.
To assist the director or president of each entity, a Directorship
Committee serves as a board to deal specifically with personnel
relations and monitor planning and economic growth. The
Directorship Committee consists of a group of so-called experts to
oversee the changes being made during integration into the SPE. This
committee of experts has no executive power but rather serves as a
witnessing group and base for input in ideas for discussion, suggestions
and considerations. It is also considered to be an organ for conflict
resolution and studying problems between management and workers.
This committee is the democratic and socialist aspect of the SPE. It
is composed of between five and seven members, with one position
reserved for the workers union (CTC), one for the UJC (Union of
Young Communists) and two or four workers elected by their
colleagues. A member of the PCC may also be invited to participate
in this committee (NEC, 2001:1). This Directorship Committee
replaces many of the functions that the CTC representatives in each
workplace had, including planning, work schedule, personnel
regulating, etc.
In a company that is applying the SPE, a certain hierarchy exists
that distinguishes the various levels of production. Though the
distinctions may have always existed in Cuba, they have never been
as pronounced and ordained by state authority as they are today. In
the new Cuban model of state-owned enterprises, workers are divided
into categories that reflect the same kind of division of labour that
would be found in a capitalist economy or private company. The
various levels involved in production are broken down into the
following categories: worker, service and dispensation operator, administration and secretarial worker, technician and project manager, and
directors. The following details are derived from the information
publicly available from the governments web pages on the Nueva
Empresa Cubana for 2001 (NEC, 2001).

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Salaries are offered on a sliding scale and are graded according to


experience and capacity. The grading system uses a scale from I to
XXI, in which workers, service operators and administration start off
with a Grade I salary and may rise as far as grade IX. Grade I workers
start off earning 150 pesos per month and their salary at grade IX is
345 pesos per month. Service operators can start off at 130 pesos per
month and their grade IX is, at best, 285 pesos per month; the same
scale is used for administration. Technicians receive salaries on grades
IV to XIII. Directors can be ranged from III to XXI, depending on the
size, productivity and capacity of the company. Technicians starting
at grade IVV earn 205 pesos per month and may increase their
salaries to 375 pesos per month. Directors salaries start at 205 pesos
per month and may reach grade XXI at 700 pesos per month. These
salaries represent the minimum wage and do not include added tips
and profit sharing, offered according to productivity. All in all, the
minimum wage for all participants in the production process ranges
from 130 pesos per month, for part-time employees, to 700 pesos per
month. In hard currency, that is between US$6.50 per month and
US$35 per month. The average salary for full-time work in an SPE
enterprise (in hard currency) is $20.75 per month. The salaries are
dispensed directly by the companys administration and no longer
by the MTSS or CTC representative as was the case prior to the SPE
(NEC, 2001).
But these salaries reflect only the minimum wages for workers,
managers and directors. What is peculiar to the SPE is the possibility
and indeed the necessity of earning more than the salaries indicated
by law. Though the average minimal salary in an SPE enterprise
amounts to $20.75 per month, no one is expected to live off this
small amount of money. Propaganda concerning workers wages,
specifically those clichs stating that salaries are low because other
costs are covered or subsidised by the government (e.g., housing,
health care and education), has fallen by the wayside during the
Special Period; this was emphasised in Chapter 3. Since the economy
has been dollarised, and most material goods of value related to the
increase in standard of living are sold in hard currency only, Cubans
continue to be limited in their purchasing power. Again, only those
with access to the US dollar can purchase materials that will improve
their living conditions beyond the basic welfare measures maintained
by the state. Hence, a supplementary system has been developed
alongside the SPE that allows the director together with the
Directorship Committee to set standards in salary increase. The salary

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increments are not uniform and are to be related directly to the


productivity and profits of each company individually after the
company has made its contribution to the national budget. This is
where the old system of equal income for all workers is replaced by
a market-like plan of worker compensation (NEC, 2001).
The most essential and peculiar quality of the SPE is the link between
workers salaries and productivity. Prior to this process, no worker
(including the manager) of a company had his/her salary directly
linked to the level of production or services provided by the company.
This was not even so under Cubalse or CIMEX. Earlier product bonuses
and holiday packages that served as material incentives did indicate
a type of supplementary income. In Chapter 3, I mentioned the jabita
tradition of offering workers plastic bags of goods only available in
dollars. But this was not practised on a regular, not to mention a
monthly, basis. Under the new system, salaries of all employees and
directors depend directly on output. This implies a development of
unstable salaries and a direct dependence upon global structures and
financial fluctuations. For the first time, the Cuban government is
exposing its workers directly to the oscillating tendencies that the
domestic and world market produce. This is especially true when the
state companies specialise in basic material export, like nickel. The
difference here is that certain human rights considered by the PCC
are guaranteed, such as housing, education, medicine and social
security. But for the first time in Cuban revolutionary history,
managers are being rewarded according to the results of their
subordinates work.
Not only managers, but also administrators and workers have their
monthly income adjusted on an irregular basis. Nevertheless, it is
the top directorship that handles accounting and reports on profit
increases to the MTSS and the Ministry of Finance. One does not
have to be an expert to imagine the level of corruption this new
system of supplementary income might attract. But whether there
is corruption or not, the fact is that no longer does central authority
oversee redistribution of profits at the workplace. If the Directorship
Committee does its job justly, then the results can imply a welcome
jump in the standard of living for Cuban workers. If not, the Cuban
worker will be the victim of the same market structures that oppress
his/her counterpart in market societies. Despite the danger, the SPEs
web site organ Nueva Empresa Cubana states that the organisation
of salaries is specified to reflect the application of the socialist principle

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of distribution: from each according to his/her capacity and to each


according to his work (NEC, 2001).
Downsizing, wages and prices
Together with the SPEs new structural scheme there exists a policy
that relates specifically to the position of contractual labour rules
and personnel relations. A new contracting system has been invented
or, rather, it has been copied from the market system of corporate
employment. All workers, managers, technicians and other employees
beneath the director are currently obliged to sign a work contract
that guarantees employment and spells out the positions requirements
and duties. The contract is based on a years service, including a threemonth proof and evaluation period during which the worker must
demonstrate his/her commitment to the enterprise. At any point,
the director is free to dismiss workers for their non-compliance with
company regulation and work standards. Prior to the Special Period
and the construction of the SPE, firing an employee was much more
difficult, and no proof period was ever required. Additionally, the
director, together with the Directorship Committee, has absolute
control over benefits like paid holidays and vacations. Again, what
was once controlled centrally by the state is now transferred to the
will and discretion of administration (NEC, 2001). This is what was
called autogestin during the fifth PCC Congress.
Since downsizing is an essential characteristic of the implementation of the structural reforms of self-management and
decentralisation, the SPE has had to formulate a national policy of
labour dismissal that is compatible with the PCC concerns about
reducing unemployment that were mentioned in Chapter 3. Workers
can be dismissed from their workplace on the basis of necessary
downsizing, low level of productivity or the finalisation of a contract
period. In order to keep a human or socialist face on labour relations,
the termination of employment is described as worker relocation
or displacement. According to this policy, the SPE takes upon itself
a responsibility with which the state no longer deals: that is,
unemployment benefits and guaranteeing a new job for the displaced
worker.
The central government, via the MTSS, continues to provide social
security for displaced workers, but only through the companys budget
and for up to six months (NEC, 2001). Thereafter, if no other
employment is found, the salary will be reduced to 50 per cent. If
after a full year no employment or contract is designated to the

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worker, then the worker will be sent to a temporary employment


agency and the company will be obliged to offer the ex-employee a
three-option solution outside the sphere of influence in which the
company operates. One of these options is self-employment. The
options are limited and self-employment will be studied in the
following section of this chapter. But it suffices to say here that no
engineer in his right mind will opt for self-employment and the rigid
conditions that that system entails when his/her salary and tips are
linked to productivity in an efficient state enterprise, foreign company
or joint venture. Therefore, the state-corporation really offers only
two alternatives after the worker is dismissed from a job.
Currently, the SPE is developing a relocation policy whereby a
relocated employee may have the right to find employment within
the SPE system. In other words, workers entering the SPE will be
guaranteed the right to remain in highly productive state corporations.
But this makes desirable employment much more of a competitive
market, as a manager might be relocated to a position with an inferior
salary or grade.
Logically, if workers wages are related to productivity, commodity
prices in Cuba must likewise experience a transformation. Prices are
determined by a committee, which is organised by representatives
of the Ministry of Finance and Prices (NEC, 2001). No entity is allowed
to determine its own prices if it receives subsidies from this Ministry.
Once the company or enterprise is self-sufficient and has earned its
budget for the following year, it may determine its own scale of prices
in hard currency, but always with the final approval of the Ministry
of Finance and Prices. At once, the contradiction of price and wages
is controlled by the central government. Apparently, food, medicine,
housing for nationals, school materials such as books and household
products such as bath soap and other items that are found in the
rationing system will continue to maintain their subsidised pricing
as the producers of such commodities remain directly under central
control. The producers of household products and services that are
guaranteed by the state will be the last ones to enter the SPE, if they
ever do so.
So far, only a limited number of companies have been successful
in the application of the SPE and have conformed to the rigidity of
the programme. Again, the guidelines include:
a substantial profit gain within a period of two years;
a reduced number of full-time employees;

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a continual decrease in the use of energy in ratio to the


production of services;
an annual reduction of waste.
In 1998, 300 companies attempted to insert themselves into the
new system. By the end of 1999, 295 enterprises were suspended from
the programme for not having kept good accounting. Nevertheless,
the SPE spread rapidly within a two-year period. As of March 2001,
64 state-owned businesses have conformed to the requisites of the
SPE and have passed the four principal phases. Government sources
indicate that by the end of 2001, 300 companies will have applied
the SPE and be working under its new market system of initiatives
(Granma Internacional, 16 March 2001).
According to SPE publicity, by the end of 2001, all of the nickel
industry, a high portion of petroleum production and a substantial
percentage of the mineral-processing industry in short, practically
all of the Ministry of Basic Industry will be under the SPE. The
Institute of Hydraulic Resources will be included as well. Nickel and
electricity companies are the most successful. The new companies,
for example, the new oil companies, are most likely to succeed, as
they are starting from scratch and do not have an accounting history
to clean up. In the 64 companies that have undergone the managerial
reforms, around 2.5 per cent of the employees have been laid off and
gradually relocated to other companies (Granma Internacional, 16
March 2001).
SPE conformity to the pillars of the Revolution
The current experience of SPE and the notions that sustained its
development throughout the last half of the 1990s revalidate some
of the conclusions of a number of the writers from the Frankfurt
School most importantly, that state capitalism is a viable means of
economic development, since the state can be just as efficient in
leading production as the private capitalist (Pollock, 1941:7194).
This discussion was opened up in Chapter 1. My argument, that state
capitalism can compete in the global political economy while
imitating private capitalisms mode of production, has been confirmed.
The difference between what the Frankfurt School envisioned as state
capitalism and the new Cuban enterprise is that the latter entails
denying what the revolutionary leadership has tried to emphasise
on various occasions during its history: that is, that the worker needs
to be stimulated to produce by moral incentives. All this is lost. Today,

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only real, visible and material incentives drive the producers of state
corporations to increase profits and efficiency. Logically, this has
meant linking income (wages) to productivity; now wages are linked
to what productivity is worth on a global level. Even in Cubalses
and CIMEXs experience, this was never seen before.
During Pollocks and Horkheimers time, state capitalism was a
global trend among industrialised countries. The writers never
contemplated the economic development of post-colonial states.
Nevertheless, the analysis of state capitalism in Stalinist Russia does
offer some clues as to how a backward agricultural society can jump
into a modern economy. The state of siege and wartime economy
that Russia experienced was the motor in acquiring new
technologies. The Soviets depended on a militaryindustrial complex
that drove the economy to high-tech development and then, after
a number of crises, to its grave. What has been experienced in Cuba
is the acquisition of new technologies and modes of production
that have been dependent on foreign investment and the adjustment
of labour relations to the world market. Hence, through Cuba,
Pollocks vision of an efficient state-controlled economy is now
being extended into the anti-imperialist context during the era of
neo-liberal globalisation.
The SPE is a working model that entails greater acquisition of power
by the military. Just as in the wartime economies of the 1930s, when
bureaucratic and authoritarian state capitalist regimes depended on
the military to direct the economy, Cubas FAR leads the SPE or Cuban
model of state enterprises. There are, nonetheless, real differences
between the models that were studied by the Frankfurt School and
the SPE. Most notable is the existence of the Directorship Committee,
which includes workers, PCC members and CTC representatives in
planning. Once again, the Directorship Committee required by the
SPE can be seen as the socialist or democratic face of Cubas new
economy. During the spring of 2001, Executive Secretary of the
Council of Ministers Carlos Lage stated that the socialist (Cuban)
model of entrepreneurial production is much more efficient than
private enterprises, because the norms keep in line with social conscientiousness towards the workers. The social conscientiousness is
manifested in worker participation in planning, regular CTC branch
meetings and the compromise that PCC leadership at the workplace
installs with regard to social justice and a collective contribution to
the national economy (Granma Internacional, 16 March 2001). It is
the manifestation of one of the pillars of the Revolution described in

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Chapter 2 popular participation. This has not been seen in private


capitalism or market economies of the neo-liberal era. Likewise, in
PCC discourse, the essential characteristics of the SPE conform to the
remaining three pillars that explain the Revolution. The most obvious
is that of state supremacy.
Although the decentralisation of state enterprises resembled a sort
of privatisation programme in order to reduce the states burden of
economic responsibility, what is experienced in the application of
the SPE is the maximisation of state influence over the market. This
time, control has shifted from the PCC and civilian planning towards
military hegemony over production. Unity is another pillar that is
maintained in the birth of the SPE. Again, the top managers and
directors are appointed by the Executive Commission, which consists
of members of the Council of State and top officers in the FAR. This
strategy is used purposely in order to ensure loyalty to the party/state
apparatus and avoid a divergence of interests. Whether or not a future
split or divergence might emanate from the existing structures, for
example, between directors and managers on the one hand and the
Executive Commission on the other, is a question to be dealt with
in the concluding chapter. But it suffices to say here that a split could
occur when business leaders are bent on increasing their profits
(therefore reducing their expenditure on labour), and when labour
representation step up their demands in working conditions, salaries
and other forms of redistribution.
The theme of continuity, the last of the features to which the SPE
needs to conform, is also noteworthy here. In government discourse,
continuity of revolutionary ideas and tendencies is manifested in the
endurance that the party/state apparatus experienced during the
economic crisis of the 1990s. In reality, this means the continuation
of the old Rebel Armys position in the Council of State and top
leadership of the country. General Raul Castro one of the original
revolutionaries has recently been appointed as successor to Fidel
Castro as commander-in-chief of the Revolution (Granma Internacional,
12 July 2001). The politics and presence of old guard cadre like Raul
Castro and Armando Betancourt Prez reveal continuity in the line
of men that remain at the apex of party/state leadership. More
importantly, the essence of a state-run economy can be considered,
if not anti-imperialist, then at least nationalistic. The structural reforms
that have been presented in the SPE indicate nothing more than the
revolutionary leaderships defiant insistence on proclaiming that a
state-run economy is the only way to maintain the foundations of

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the party/state apparatus the anti-imperialist struggle and social


justice. On this point, Fidel Castro and the PCC continue to graft
from historical passages and especially from the writings of Jos Mart,
who established the struggle for national liberation and advocated
a state-run economy. But whether it is historical references to a
continuity in revolutionary ideas or simply contemporary inclusion
of labour in the process of decentralisation, all of the original revolutionary forces have a role to play in the SPE.
CUENTAPROPISMO: THE NEW SELF-EMPLOYMENT IN CUBA
As was mentioned in Chapter 3, Cubas economic crisis during the
early 1990s forced the party/state apparatus to employ a number of
emergency-like policies that were thought of as quick and temporary
remedies to save the Revolution during its turmoil. Among them was
the official recognition of self-employed individuals. Again, where
the state was incapable of providing goods and services to the general
population, the black or underground marketeers stepped in on
meeting the daily needs of the people. The Cuban government sought
a cure for black market activity where the production of goods and
services was accomplished without the state benefiting from them
and where the police force was used, in futile fashion, to stop a popular
means of survival. This, together with the states inability to provide
the population with the most basic of daily needs, is what created
the new system of self-employment (Decree-Law No. 141, 1993)
known in Cuba as trabajo por cuenta propia or cuentapropismo. In
contrast to the new state-corporate world that was represented in the
last section by the boom experience of Cubalse, the self-employed
sector of the Cuban labour market receives scant attention from the
PCC and government propaganda. There has been no official plan
for making this sector more efficient, nor have there been any
additional funds invested into making the system of self-employment
more accessible to other sectors of the population.
Initially, the opening up to self-employment might have been
thought of as the precepts of small-scale private capitalism in Cuba
(Espinosa Chepe, CubaNet Independiente, 22 December 2000). With
this in mind, some critics of the Revolution might have assumed that
state supremacy over the market was to see its last days. The hopes
of Cuba opening up to small-scale private capitalism, is constantly
expressed in Miami-based newsgroups such as CubaNet Independiente
(see its web site, www.cubanet.org). In a growing economy, it was

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thought, self-employment should have become a more popular means


of obtaining income. Curiously enough, although the domestic
economy has experienced relatively stable growth in almost all sectors,
the number of registered self-employed workers has steadily decreased
since the implementation of the tax regime in 1996. Whereas in 1995
there were 208,346 registered cuentapropistas, by mid-2000 the number
had fallen to 109,502.
250,000

200,000

150,000

100,000
Registered
Self-employed
50,000

0
1995:
2.5%

1996:
7.8%

1997:
2.5%

1998:
1.2%

1999:
6.2%

2000:
5.6%

Figure 1 Number of Registered Self-employed in Comparison with GDP


Growth Rate
Source: Cuban Ministry of Economic Planning and Ministry of Labour and Social Security.
Informe Econmico, 19962000; Informe sobre el cuentapropismo, 199520005

A sharp fall was experienced in 1996 when 19,668 cuentapropistas


moved from self-employment into unemployment, the black market
or back into the state sector. In 1997, when the GDP rate grew but
not as much as the year before only 14,417 cuentapropistas submitted
their registration. When economic growth slowed down in 1998,
5. The figures provided for the number of self-employed individuals between
1998 and 1999 are estimates given by the Office of Provincial Inspectors
at Santiago de Cuba. The Ministry of Labour and Social Security has not
provided exact figures for this period.

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over 41,000 cuentapropistas relinquished their licences. However,


between 1999 and 2000 the number of self-employed individuals did
not rise. On the contrary, it descended slowly and levelled out.
According to government sources, the drop in self-employment is
attributed to the implementation of the tax regime and new
employment possibilities (MFP, 2001; Nez Moreno, 1997:4150).
But this is only partially true. From my own surveys and interviews,
in combination with government reports and other documentation,
I have found that the state leadership is bent on diminishing this
sector or at least curbing the number of its participants. By analysing
this tendency of the state to control the self-employed sector, some
important factors concerning the impact of Cubas insertion into the
global political economy can be revealed.
The new system of self-employment is very telling with respect to
Cubas political economy. Within it are manifested the contradictions of the new mixed market, influenced by factors such as access
to the US dollar, tourism, black market activity, unemployment and
state supremacy. Most of the information gathered for this section
depends on my own original research, which consisted of a randomsampling inquiry and a series of interviews conducted in 1998, in
which 179 formal and informal cuentapropistas were interviewed.
The new self-employment system presents Cuban society with a
number of problems. Seven of these problems will be dealt with here.
The first four are problems that can be considered unmeasurable, as
the impact or damage they have produced has not been tested due
to a lack (intentional or not) of government information. The last
three are measurable, as they present a real, proven problem to the
domestic political economy.
What is cuentapropismo?
The first and foremost issue is the question of defining cuentapropismo.
In Latin America, self-employment is often associated with either
the generation of peasantry following agricultural reforms
implemented during popular regimes, who sell their own products
informally without government control, or with those urban workers,
who as well as having regular jobs, provide services to a small segment
of the population (usually to neighbours) as a means of earning
additional income (Nez Moreno, 1997:13). Self-employment can
also be associated with those alienated classes of society that
participate in illicit activity which is usually suppressed by the state,
e.g., drug trafficking, prostitution, theft, illegal sale of weapons, etc.

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In Spanish economic diction this category receives the term sector


informal (Marqus, 1991). The causes of this are attributed to an
increase in population without a corresponding availability in formal
employment.
After the 1959 Revolution, self-employment in Cuba never ceased
to exist. Mostly of rural origin, the self-employed were characterised
as non-state workers. This group of workers suffered under many
revolutionary state reforms that led to their fall in numbers.
According to some official estimates, by 1988, the self-employed
sector represented only 4.2 per cent of the labour market (Espina et
al., 1995). Likewise, neither had underground black market activity
(including theft from the state) disappeared. Government policy
was never encouraging to this minority. For this reason the selfemployed, together with black marketers, were placed in the informal
sector category.
Today in Cuba, the term trabajo por cuentapropia (self-employed)
refers only to those individuals registered with the Ministry of Labour
and Social Security (MTSS) as self-employed workers who earn in
either dollars or pesos and pay all required taxes (MFP, 1996).
Contrarily, in my field research, I have intentionally included in my
survey participants in the informal/illegal sectors, in order to gather
diverse opinions and to emphasise the limitations and (especially)
the possibilities of income disparity. Workers in the informal sector
do not pay taxes. This is true. However, they are also subordinate to
the party/state apparatus and are subject to police repression.
Additionally, as participants in Cubas dollarised economy, they also
contribute to the countrys economic wealth. When it comes to the
role that self-employed individuals and informal workers play in
society, there should be little reason to distinguish these two groups
from each other. The only time that it is necessary to make a
distinction between them is when the time comes to estimate the
amount of money that the state receives in revenues from the tax
system imposed upon officially registered workers. This will be dealt
with later. But the parallel black market continues to flourish in Cuba.
Again, there are no available statistics for this market. According to
the International Labour Organisation and the Centre for Labour
Studies of Cuba, for every registered self-employed worker, there are
approximately 3.5 individuals conducting small informal businesses
or involved in illicit activity (MTSS, 1995a). If the 3.5 per registered
cuentapropista is taken as a close-to-accurate estimate, then the real
number of non-state workers would have reached over 1 million or

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21 per cent of the working population by 1995. In 2000, the number


of cuentapropistas (officially registered and informal) would not be
109,502, but 383,257, or 11 per cent of Cubas workforce.
The second issue that concerns cuentapropismo is the question of
recognising private incentives for work. This is more an ideological
problem than a practical one, as self-employment relieved the issue
of distribution of food and services. But when the ideological manifests
itself in economic reality, then the problem arises of maintaining
state supremacy over the means of production and services. The state
has had to take measures in order to control this new sector and
prohibit it from developing into a new social class (like a renovated
petit-bourgeoisie). This will be discussed later. But in terms of state
ideology, Che Guevaras dream of creating a society where incentives
for work are strictly or mostly moral (an idea found in the propaganda
of the Campaign to Rectify Errors and Negative Tendencies during
the mid-1980s) is lost. The third problem, the monitoring of business
practices, puts another cost on government spending; new positions
and committees for research in the self-employed sectors have had
to be set up (MFP, 2001). Additionally, a group of health inspectors
are employed to control standards in the sale of food. Again, there
is no way of measuring this phenomenon, as the amount of money
spent on police control of the self-employment system and on research
is currently not available from the Cuban government. The fourth
problem is the unjust, quite rigid and rudimentary means of collecting
taxes. The state depends on a badly trained, inexperienced group of
tax inspectors and collectors, who are often accompanied by the
police, to handle the contribution the self-employed make to the
national economy. It does not require much imagination to consider
the possibilities of corruption, abuse against the self-employed and
government losses.
Measurable problems in cuentapropismo
Among the real or proven problems that cuentapropismo presents in
Cuba today, there is, fifth, the accelerating problem of varying levels
of income. This presents not only an ideological problem, but also
a concrete contradiction in the socialist project of maintaining
economic equality for its citizens. Since the new law on selfemployment made cuentapropismo open to the dollar market, many
individuals have begun making money at high rates. An example
based on my 1998 inquiry demonstrated a grotesque difference
between some individuals who earned a net income of US$500 per

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month and those state employees who earned the average and
miserable US$10 per month (223 pesos) (see also, Granma Internacional,
1 June 2001:1). The difference is not only reflected in comparing
cuentapropistas with state workers, but also by distinguishing those
self-employed individuals earning in pesos from those earning in
dollars. As mentioned in Chapter 3, there is a vast difference between
the average income of those who conduct their business in the
national monetary unit and those who use the US dollar for the
production and sale of their services. While cuentapropistas dealing
in dollars can make over $500 per month after taxes, a peso-earning
pizza maker can earn as little as 150 pesos (US$6.25) per month.
According to state sources, the government is prepared to acknowledge
and tax self-employed dollar earners making over US$60,000 a year
(MFP, 1995a). Most of the dollar-earning self-employed whom I have
interviewed had family residing outside Cuba.
Income disparity has been somewhat curbed by the implementation of the tax system in 1996. Prior to this (between 1993 and 1995)
the difference in income levels must have been astronomical. But
according to one PCC representative, today there are millionaires in
Cuba, who have worked both legally and illegally in order to
accumulate wealth and property. Indeed, while state workers are
receiving their miserable salaries, some cuentapropistas are making
tens of thousands of US dollars.
The majority of those cuentapropistas interviewed stated that they
did not consider themselves to compose a social or economic class
different from state workers. The reason is that most of their earnings
fall into the hands of the state in the form of taxes. Additionally, the
cuentapropistas are forced to purchase all their input from state
businesses wholesale. So even if some self-employed individuals and
small business owners may have ideas about themselves that represent
a certain divergence from the reality of most Cuban workers, their
position in production and providing services remains subordinate
to the state. Nevertheless, income disparity provides Cuban society
with a class-like structure that distinguishes between those with
greater economic opportunities and comfort, and those without.
Essentially, cuentapropismo and the income disparity that follows
undermine the Revolutions mission to implement economic equality
among Cuban citizens.
The sixth problem is that of representation of self-employed
interests in the party/state apparatus. The cuentapropistas have no
collective voice in the national trade union (CTC). In other words,

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almost a quarter of the countrys workforce had no representation


in the socialist government (Nez Moreno, 1997:43). This is a serious
problem as it alienates a large segment of the population and expels
them from popular participation in the workplace and other circles.
Both the number of officially registered self-employed individuals
and that of unofficial informal workers have been reduced.
Nevertheless, registered cuentapropistas represent 3 per cent of the
working population and informal workers are 11 per cent of the
workforce. That is, 3 per cent of the registered working population
has no representation and in real terms 11 per cent of workers have
no influence in government or decisions concerning their informal
labour. The numbers are significant. This is a factor affecting yet
another pillar of the Revolution (popular participation), and will be
dealt with towards the end of this chapter. Though there has been
documented discussion of self-employment within the PCC, in
addition to one example of a self-employed interest section with
observer status in Santiago de Cubas CTC, as of 2000 no state policy
has emerged.
The seventh and final problem I have encountered concerns the
issue of racial relations in the self-employment system. Ultimately
this is linked to the fifth problem of income inequality. This has
already been dealt with in Chapter 3.
State control over cuentapropismo
To this day, few government reports on cuentapropismo have been
made public and few, if any, of the above-mentioned problems are
dealt within PCC discourse. The only interesting point of discussion
presented by the government was the reduction in the number of
participants in the self-employed sector. As mentioned above, the
reduction in the number of officially registered cuentapropistas can
be related to the overall national economic growth. But I would
venture to say that there is more to it than that. Though the PCC
does not make its attitude towards the self-employed obvious in
public discourse, the restrictions under which cuentapropistas must
operate indicate a number of considerations that should be analysed.
Among them, strict control over this sector, steep taxation, the use
of the police force to control it, and the link between self-employment
and unemployment.
Government policy towards self-employment has never been clear
in discourse, but the attitude of the state leadership seems to be
obvious in the laws applied to this case. State regulations concerning

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cuentapropistas are vested in a document called Orientaciones a


Trabajadores por Cuenta Propia, published by the MTSS (MTSS, 1995b).
This document makes clear who can and cannot participate in the
new self-employment system. The rules concern the conduct of
business, the procedure for the paying of taxes and monthly contributions, the number of partners a cuentapropista may have, etc. The
rules are strict and sometimes complicated. For instance, a recent
university graduate is barred from participating in cuentapropismo,
whereas a retired or displaced worker with a university degree may
set up his/her own business. At some points the rules can be
fastidiously detailed. For example, elaborated or processed food (pizza,
cakes, sandwiches, etc.) cannot be served on a plate or with utensils.
The popular paladares, or family-run restaurants, can only have twelve
seats to service their customers. These examples demonstrate what
the state wants to allow in the space that it provides for private
business. Since the state is proprietor of most of Cubas restaurants,
it does not want to have a domestic competitor. Whether this control
is effective or not is another question (especially when paladares are
known to serve better quality food at a cheaper price), but the states
intentions are here revealed (Prez, 1999).
Eventually, cuentapropismo proved to be a new state mechanism
that recovered an excess of cash that was running through the hands
of the population through black market activity. In other words,
the party/state appropriated a portion of the black market. The new
revenue (tax) system, run by the Office of Tributary Collections
(ONAT), implemented in 1996, was the mechanism that assisted
the state in reaping from this sector a considerable amount of money.
In 2001, the Ministry of Finance and Prices (MPF) published the
amount of state income generated by taxes on the self-employed.
During the whole of 2000, the state recouped 1.05 billion pesos
from taxes imposed upon this sector. That is, state income generated
from the official self-employed system amounted to approximately
US$50 million.
The means of collecting taxes are quite rudimentary. Cuentapropistas
have the option of paying their annual income tax on a yearly or a
monthly basis. If the yearly basis is chosen, taxes must be paid in
advance. The amount of money to be paid to the ONAT is set according
to the profession and to the area in which the self-employed are
conducting their business. For instance, someone operating a hostel
out of his/her home in Varadero (a popular tourist area equipped
with beaches and five-star hotels), will pay close to US$1,000 per

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month, as opposed to his/her counterpart in the centre of Santiago


city, who would pay US$300500 per month. On top of the monthly
contribution, the cuentapropista will pay an additional tax on the
excess amount of profits made throughout the month. This profit
tax is scheduled by the provincial committee of the ONAT, which
obliges every private establishment to keep a book of records indicating
sales or services provided on a daily basis. The register must be available
to inspectors and police on demand (MTSS, 1996).
Another form of control that is employed by the government is
the use of the police force and the group of inspectors delegated to
control cuentapropismo. The police are used in conjunction with
provincial inspectors of the MTSS to implement state policy and
execute controls like fines and taxes. This makes it more difficult for
those who choose to participate in illegal or unregistered activity. As
a tourist or dollar holder, it is not uncommon to be invited to illegal
paladares, for instance, where a home-cooked meal might be served
at a reasonable price. But if one goes to these illegal establishments,
one will always sense the fear and secretiveness of those who are
serving. At times, police raids upon houses of cuentapropistas are
conducted. One of my principal problems when interviewing cuentapropistas was their fear that I might be a state inspector or undercover
policeman. The fear of police repression as well as of being turned
in by neighbourhood spies is real.
Another example is the control over self-employed taxi drivers
who use their own cars for transportation services. Once in Cuba,
tourists are welcome to travel freely throughout the island at their
own expense and by using state-run transportation services, but
Cuban self-employed taxi drivers are prohibited from serving tourists.
As a result, police blockades and control points are seen everywhere
on the roads of the island. If a foreigner is caught in a cuentapropista
taxi, the taxi driver (and not the tourist) is fined up to US$100. When
it comes to prostitution, police control is not that much different
from the control over taxis. Since the jineteras or jineteros (see Chapter
3) are usually at the service of foreign tourists, the police target Cuban
nationals who are found in the company of European-looking
individuals. At times, the police conduct round-ups of young Cubans
in tourist areas on the beach, near hotels or at dollar bars. Those
nationals who are suspected of sexual misconduct or prostitution are
temporarily detained and may be fined hundreds of dollars (in pesos)
rather than put in prison. Police control over illicit activity such as
prostitution is understandable, but the penal system concerning it

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is not, especially as it resembles the kind of control put upon other


forms of cuentapropismo.
Cuentapropismo as a tool
But there is more to placing strict controls on the cuentapropista than
just bureaucracy for bureaucracys sake. Out of all the reforms that
came out of the Special Period, this was the most backward and contradictory to the model of full employment by the state under a
so-called socialist economy. It represents the most rudimentary form
of dialectic digression, even if it was meant as a temporary backward
measure in order to move forwards. The conditions upon which the
participants work might be acceptable under emergency circumstances. However, the present self-employment regime cannot last
much longer, as police oppression, theft and corruption collide with
each other on a daily basis, in a growing economy where the demands
for goods and services are high. One could not expect that an educated
cuentapropista will tolerate the volatile conditions which cuentapropismo
has to offer. No PCC programme concerning the self-employed has
yet been adopted.
From my inquiry into the experiences of the self-employed, one
can conclude that the dip in the number of practising and registered
cuentapropistas between 1993 and 2001 is not due to the betterment
of the Cuban economy alone. Rather, the drop is also related to the
realisation that many self-employed individuals cannot handle the
pressures imposed upon them by the party/state apparatus. On the
other hand, with the exception of recent university graduates, Cubans
are free to choose their job occupation. Though some may have to
enter the world of theft and prostitution in order to make ends meet
in their household, no one is forced to apply for a licence of selfemployment. Or are they?
As mentioned earlier in this chapter, the worker displacement
policy dictates that a former employer (meaning the director and the
Directorship Committee of the new state corporations in Cuba) has
the obligation to provide the ex-employee with three options for
employment alternatives. One of these three options is selfemployment. If the former employee is unhappy with the other two
options, then s/he will be forced to take on cuentapropismo as his/her
principal means of income. But the problems do not stop here. There
is also the issue of unemployment
According to figures provided by the Ministry of Labour and Social
Security, 30.8 per cent of those officially registered as self-employed

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were previously considered to be unemployed or displaced workers.


Another 24.9 per cent held regular state sector jobs, 23 per cent were
retired state workers, and another 19.2 per cent were formerly
housewives. The remaining 1.9 per cent of registered cuentapropistas
were classified as having some other economic history (source: MTSS,
1996). Whether or not Cubas housewives should be considered apart
from the unemployed is a question to be dealt with by economic
sociologists. But that over 30 per cent of Cubas self-employed were
previously and formally considered to be unemployed or displaced
workers says a great deal about the states purpose for maintaining
the possibility of the small individual private market. Cuentapropismo
is, evidently, a cure for unemployment that only recently has been
recognised by the party/state apparatus. If cuentapropismo did not
exist, then the unemployment rate would continue to be higher.
The significance of cuentapropismo is that the state leadership underhandedly recognised that unemployment is a chronic problem in
Cuba, meaning that it will never be solved under the restrictions it
is facing; the restrictions have been caused by global and domestic
factors which dictate or define Cubas new political economy. Even
though the state in its discourse is bent on reducing the
unemployment rate, there are no guarantees that unemployment
will cease to exist (PCC, 1997). One of the measures that the
government has taken in order to control unemployment has been
the reduction of classroom sizes in order to open the job market for
more elementary school teachers (Notimex, 1 June 2001). But this
solves the problem of unemployment only among university and
middle-level pedagogy-educated youth. It does not solve the problem
for those workers with lower levels of education, who are subjected
to the rigid framework of efficient state corporations that require
fewer workers.
Cuentapropismo can also be seen as a relief for retired citizens (many
of whom are members of the PCC) by adding to their household
income and offering an alternative activity to occupy their day (Nez
Moreno, 1997:3). But it is really the need to earn an extra dollar that
turns retirees to self-employment. The same is true for housewives;
why would a housewife opt to work under the strict conditions
imposed upon cuentapropistas instead of working for a government
business, agency or organisation? If the housewife is willing to use
her home as a place of employment, or walk the streets to sell peanuts,
this means that she is in search of an extra income. One may conclude
that unemployment has come to Cuba to stay for a while and that

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cuentapropismo is a small remedy that the government offers to the


most vulnerable sectors of society. However, if the party/state apparatus
finds a remedy to unemployment in cuentapropismo, why all the
control and harassment of self-employed individuals?
The problem is that while self-employment is a controlled and
suppressed alternative to state employment, it can offer a higher level
of income than state salaries. Those who are earning hundreds and
even thousands of dollars on a monthly basis can be expected to
remain among those labelled cuentapropistas because they can afford
it. This produces a contradiction, as it groups a number of self-employed
individuals into a category which is anti-state, or in competition with
the state. From the sample provided by my inquiry, I found that those
who earn in dollars while receiving benefits from family abroad tended
to rate the Cuban government less favourably than their peso-earning
counterparts. The state is intentionally avoiding the building of a
petit-bourgeois class. But while it does this, the ones that suffer the
most are those poorer sectors of society that have no alternative than
to turn to cuentapropismo. In short, cuentapropismo has a triple purpose
that can be summed up by the following:
1. to control the level of unemployment;
2. to allow the most fortunate sectors of Cubas economy (i.e. those
who have access to dollars from family remittances) to generate
capital for the government;
3. to allow the state to appropriate or extract taxes from lucrative
and morally sustainable business (i.e. not prostitution) that have
traditionally been considered efficient black market activities.
In the following sections of this chapter, I will demonstrate how
these conclusions, together with those arrived at in the section dealing
with the SPE, reveal social contradictions that might also be translated
into future divergences of party/state interests. These contradictions
are paramount in understanding the impact of Cubas insertion into
the global political economy.
NEW STRUCTURES
While the Cuban government boasts about its social achievements
and while certain personalities of the World Bank evidently open
up the process of recognising alternative models for development,
there exists another aspect to Cubas economic survival during this

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late stage of neo-liberal globalisation. It is an aspect that concerns


the repositioning or rearrangement of social forces in Cubas political
economy. This section will be dedicated to conceptualising visible
emerging social structures that have emanated from the Special
Period and the need to integrate Cubas economy further into the
global context. From a critical viewpoint, it will accentuate the
similarities between the Cuban model and those trends found in the
global political economy. The purpose is not to discredit the socialist
project of building a classless society, because the research material
does not indicate the formation of new classes though some
cubanologos do share the view that there are new classes forming
(Dilla, 1999). Rather, the purpose of this part is to demonstrate that
certain social bloc formations can be identified and that these indicate
the extent to which global trends influence or shape Cubas transformation.
In Chapter 3, concerning the causes and consequences of Cubas
crisis during the 1990s, I demonstrated that the revolutionary
leadership expressed a genuine interest in maintaining the pillars
upon which the Cuban Revolution had been built. In discourse and
in action, the reforms reflected a continuous concern for the
foundations that characterise the Cuban party/state apparatus: antiimperialism and social justice. This was manifested in the increased
amount of expenditure that the state invested in its national healthcare system, social security, education and the political propaganda
that centred on the US economic embargo. On the political scale,
the party/state apparatus insistence on maintaining a one-party
political system with autochthonous democratic reforms, in
combination with the refusal to privatise major industries or sell
them to foreign entities, testifies to the resistance against the foreign
models that have been imposed upon most of Cubas neighbouring
countries (Castro, 1997:4). At the same time, the crisis of the 1990s
required that the party/state apparatus adjust to the new global
context defined by the fall of the Soviet bloc and its parallel market
system (the COMECON), and the rise in the globalisation of market
trends. In order for the Cuban economy to remain competitive and
survive within the new global context, it was necessary for the revolutionary leadership to adopt measures that imitate some current
global tendencies and at the same time reject others. The revolutionary leadership, nevertheless, continues to claim that the changes that
have taken place in Cuba do not in any way reflect or imitate the

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process of transition that was experienced in other post-Socialist


states (Castro, 1997; Monreal and Carranza Valds, 1997). The PCC
also insists that the neo-liberal formulas that were popularly taken
on by neighbouring countries such as Argentina and Brazil, which
promoted the reduction of state spending on social projects and
human development, were not replicated in Cubas experience during
and after the Special Period. The first task of this section is, thus, to
delineate the differences between the global trends in political
economy, much of which was outlined in Chapter 1, and the way
that the Cuban economy is presently inverted.
In order to understand PCC discourse and propaganda concerning
revolutionary Cubas insertion into the global political economy, one
can look to the collection of Fidel Castros speeches that condemn
what he precisely refers to as neo-liberal globalisation. In his work,
at conferences and in publications, Fidel recognises that some forms
of globalisation are inevitable and even desirable (see Castro, 1999b).
The changes in information and communication technology that
have been experienced during the last two decades have made the
world smaller and have also allowed for the sharing of techniques
in efficient production and services. Additionally, the striving for
new means of cultural expression has brought people from the far
reaches of the Earth to enjoy the same music, food, clothing and
material needs. What Castro opposes, as does the PCC in its discourse,
is the monopolisation and privatisation of industries and markets to
the point where developing countries cannot compete. He also
recognises the opening of national borders for multinational
corporations to penetrate the domestic markets of underdeveloped
countries and the closing of doors in the technologically and
industrially advanced countries of the North to products from the
Southern countries (Bustamante Molina, 23 May 2001). In discourse,
the essence of the PCC critique against neo-liberal globalisation stems
from the resistance to the growing gaps between the rich and the
poor in the international context. This gap, which is accompanied
by environmental degradation, the spread of preventable diseases
and organised crime, is seen as the irresponsible but logical
consequence of global capitalism. In its place, the revolutionary
leadership on an international level has dedicated most of its work
to advocating new means of sustainable development.
In Havana, Fidel Castro has opened up various forums and
conferences dedicated to criticising the condition of neo-liberal
capitalism. These gatherings have specialised on topics from education

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and health to the prospects for the usage of renewable energy sources
(Castro, 1999b:21). There was even an International Hearings Court
on Neo-liberalism in 2000, where professionals and activists, mostly
from countries in the South, congregated to denounce the injustices
that have been committed to the most economically vulnerable
sections of the worlds population (Granma Internacional, 21 January
2000). Another example of Castros work can be found in his extraordinary invitation to Pope John Paul II to visit Cuba, as a result of
which the pope joined the PCC in denouncing the injustices against
humanity for which neo-liberal capitalism can be blamed (Granma,
December 1997; December 1998; Alarcn de Quesada, 1999).
Nevertheless, by taking into consideration the pillars upon which
the Cuban Revolution was built, it suffices to say that the leaderships
real and central concern is the withering away of the state, or at least
the reduction of state intervention in society and the national
economy. This state-reductionism is what Susan George, Susan Strange
and William Graf have in numerous works described as the essential
and global character of neo-liberalism (Strange, 1996:366). William
Graf calls it re-commodification, under which the state in the Third
World has been forced to employ policies of non-intervention in
the economy in order to receive loans and grants from the international financial institutions; namely the World Bank and the
International Monetary Fund (Graf, 1995). In the works of these
critics, the growth in poverty, the lack of programmes dedicated to
disease prevention and the drop in investment dedicated to the infrastructure for education, transportation and other social institutions
are all to be blamed on the rolling back of state activities in Third
World society. In contrast, the revolutionary leadership in Cuba has
resisted any measure to make the states role in society smaller. As
was mentioned earlier in this chapter, in the section entitled Social
Growth, the Cuban party/state apparatus has demonstrated a strong
commitment to continuing growth and investment into the vital
sectors of society, such as education, medicine and housing. For this
reason and by the same logic, Cubans can boast that on their island,
homelessness, illiteracy and starvation do not exist, because the state
has not been reduced. The party/state apparatus in Cuba remains
supreme.
The PCCs arguments against the concept of transition are similar
to those against neo-liberalism. They are also based on the idea that
post-socialist states must go from one sort of political economy to
another in which the state loses much of its power. In critiquing the

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so-called transition states, Fidel Castro and the PCC highlight the
tragedies that have occurred in the former Soviet bloc, especially in
Russia. The fall in value of the Russian rouble in 1997 and 1998, and
the reports of Mafia control, organised crime and the lack of funds
to pay state workers their salaries were all features that were not
replicated in Cuba (Castro, 1999b:40).
As mentioned in Chapter 1, the term transition has been used with
reference to ongoing sociopolitical and economic shifts in various
regions of the world. During the 1980s and the first part of the 1990s,
transition tactics with neo-liberal prescriptions have been applied to
the process of sociopolitical change not only in the former socialist
bloc but in neighbouring Latin American countries as well. Moving
from state-led to market-led economies that allow an optimal amount
of foreign direct investment to buy up national industries and services
is what has identified the concept of transition in Latin America
(Jeffries, 1993). These economic structural changes went hand-inhand with the opening up to democratic rights and practices that
allowed for new political parties to dominate the state. This
phenomenon is what Graf called democratisation or re-commodification (Graf, 1995). From documented cases, we know that transition
has had varying effects on developing countries. In Africa, transition
has even resulted in state collapse (Hughes, 1992). Many of the
negative effects are blatant, and in Eastern Europe transition has
caused perpetual instability and social unrest.
Case studies of economic transition on a national scale often
conclude that economic reforms are the outcome of sociopolitical
and ideological change, when, in fact, economic development
historically often preceded political transformation (Carranza Valds,
1994:7). Examples of these were mentioned in Chapter 1. Though
there is a lot written on transition, its theoretical implications and
processes are still not well understood. But what has occurred in
countries that were supposedly in transition has been the application
of a package of economic reforms. All economic reforms, in practice,
end up in consolidations or replacements of political power. This
notion is supported by the fact that, on occasion, economic reforms
in transition economies end up diminishing the base of political
power of the social forces that promote the very reforms (as was the
case with Gorbachevs Russia). The case of Eastern Europe after 1989
is the clearest example of politically inspired economic reforms leading
into transition. In this instance, the demise of the socialist bloc ended
up in a radical sociopolitical breakdown. On the other hand, the

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speed at which the economic reforms take place can be considered


to be a political action by the economic groups that might benefit
from transition. The usage of shock therapy as instituted in Russia
was a prescription from the neo-liberal doctors and international
financial institutions to Eastern Europe (Carranza Valds, 1994). Such
prescriptions were sponsored by specific interests groups and were
therefore political tactics to implement radical and rapid change
before the various antagonistic sectors of society had any time to
organise a counter-position to the new structures. Nevertheless, it
remains clear that political transition in the former socialist economies
was based upon the development of economic interests and the
application of neo-liberal ideas. In this sense, according to Cubas
revolutionary leadership, the purpose of transition and implementing
neo-liberal reforms is deliberately to reduce state supremacy and
dismiss those in power in order to promote the goals of foreign entities
and their political and economic interests.
The problem with this view is that Cubas party/state apparatus
has experienced some of its own economic reforms, most of which
have already been discussed. Would this indicate that Cuba is no
different from those transition societies? The answer is yes and no.
Yes, Cubas experience of economic restructuring is different from
the transition economies in Eastern Europe and Latin America, in
that political power has not been replaced and the state has not
rendered up its supremacy, neither to foreign countries nor to the
market. No, Cuba is not so different from transition economies, in
that there has been not a replacement, but a shift of political power
within the party/state apparatus. This is evident in the militarys role
in the SPE. Both instances must be given theoretical consideration.
Among Cuban cubanologos, the concept of economic restructuring and reforms is viewed as different from what is going on in the
rest of the world. Political economist Pedro Monreal distinguishes
between the two independent, indeed different, phenomena of
economic transition and institutional transformation (Monreal and Ra,
1994:30). Each concept can be perceived as a means to economic
reforms and the restructuring of state functions and institutions.
Transition economies have moved almost instantaneously from a
supposed socialist project to free-market capitalism. But according
to Monreal, in Cuba there exists a distinct perception of change that
recognises both the need for reforms and the need to maintain state
power. This format negates the idea of replacing immediately the old
structure with a final one. What is popularly used in describing this

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perspective is an old Sino-Cuban phrase Crossing the river by feeling


the rocks under your feet. This management of crisis is consistent
with the history of the Cuban Revolution since 1959 and was
manifested in the various phases of Cubas party/state development.
For instance, when radical reforms proved to be exhausted during
Cubas jump into ideological communism (led by Che Guevara),
the PCC instituted a system of adjustment and reforms labelled by
Eckstein the return to Socialism (Eckstein, 1994:4159). This is also
an affirmation of one of the pillars of the Revolution that I identified
as continuity.
Under institutional transformation, cubanologos like Monreal and
Carranza understand that economic reforms do not necessarily
represent transitions from one mode of production to the other, i.e.,
state-run to private enterprise (Carranza Valds et al., 1997). Instead,
economic reforms are essentially processes of institutional
construction and reconstruction that embark upon two big spheres
of action: organisational and normative. Whereas the organisational
transformation refers to the restructuring of financial institutions
and modes of production, normative transformation refers to
legitimising the changes through reforms in the law that
accommodate the country to global norms. The two aspects of state
institutional transformation were implemented simultaneously and
with order. Hence, it was not overnight that foreign enterprises were
welcomed to invest directly and up to 100 per cent. First, there had
to be a consensus that foreign direct investment was a viable means
of maintaining the Cuban economy during tough times, and from
that point on legal measures that would permit it were taken into
consideration and implemented. However, institutional transformation in Cuba has never meant that socialism was to be given up, that
the PCC would lose its influence over civil society or that the
leaderships political power would be compromised. All reforms were
done in the name of salvaging Cubas socialist project. From this
discourse, state supremacy and state-led economy are understood as
being at the heart of the revolutionary leaderships argument against
neo-liberal transition.
According to PCC discourse, during the past four decades Cubas
socialist project has required that the party/state be elastic and
adjustable to changes in the global political economy. The economic
crisis that plagued Cuba during the 1990s was so deep that it required
and pushed forward great transformations in the national economy
and its organisational and legal structures. However, the revolution-

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ary leadership says that the reforms were not enforced, nor inspired,
by global trends following the neo-liberal path chosen by other
countries. Power, productivity and economic growth remain in the
hands of the state, which receives legitimacy by maintaining the
foundations and the pillars of the Revolution. Even today, the main
objectives in PCC discourse continue to be self-determination for the
country and socio-economic progress (PCC, 1997). When in 1993
the object of self-determination remained constant, progress did not.
And so during this crisis, the participants in the fourth and fifth PCC
Congresses had to find solutions that would not rock social stability.
Evidently, the main solution was freeing up the market. The issue
became how much of the market. In Cuba, the forces of the world
market were seen as not irresponsibly unleashed, rather, they were
applied to sectors of society which were prepared for a managerial
revolution, decentralisation and opening up to foreign capital. Behind
the banner of perfecting socialism, and the need for high productivity
in order to reach the goals of socio-economic progress, Cubas
party/state apparatus underwent institutional transformation. This
was the experience that came out of the Special Period and that which
was institutionalised with the SPE.
The Cuban argument, so to speak, against neo-liberalism and
transition from a state-led economy to free-market capitalism has
been well defended. No other contemporary statesman has been able
to dedicate most of his/her discourse and political thought to
criticising the global political economy in the way that Fidel Castro
has. Nevertheless there remain some similarities between Cubas state
institutional transformation and current trends in the global political
economy. In other words, rarely does the leadership point to the
qualities of neo-liberalism that are replicated on the local terrain and
implicated through institutional transformation. The similarities will
eventually undermine the notion that reforms in Cuba were not
inspired or moulded by global trends.
Furthermore, I take issue with the idea that modes of production
are defined according to who or what controls the production
processes. As mentioned in the theoretical framework, whether an
economic model is run by the state or private entities has little bearing
on how labour and production are actually organised. In order for
the Cuban state apparatus to compete on the global level and increase
productivity, it has had to employ hierarchical structures that resemble
those found in capitalist economies. Cuba, hence, followed the global
trends. And though the revolutionary leadership continues to claim

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that production in Cuba is based on democratic socialist organisation,


because it is run by the state, what really existed and continues to
exist is a bureaucratic layer that controls and plans production. But
the mode of production is in fact the same; more so now under the
SPE than ever before.
As was mentioned in Chapter 1, neo-liberalism has been studied
by various social scientists, each giving it a different definition or
conceptual framework. What have been pertinent to this study are
the five general prescriptions that have given neo-liberalism its peculiar
identity. These prescriptions are what I identified in the theoretical
framework as trends in the global political economy; they are: privatisation of state corporations; fiscal reform for reducing budget deficits;
flexibility of the labour market; opening to free trade; and in the case
of developing countries, the opening up to foreign financial markets.
The first and foremost global trend is the privatisation of state
firms. The goal of this action is supposedly to eliminate inefficiency
and government expenditure. But privatisation is also known as a
fundraiser for the state during the process of restructuring and
repayment of foreign debts. Of course this sort of income could only
last as long as there are public or state firms left to privatise; it is a
short-term fundraising plan, very near-sighted. The government that
employs regulatory agencies to monitor the transition to privatisations needs funding. This is especially true in the case of monopolies
(such as transportation and energy), to ensure and monitor quality
issues and the efficiency of public service. Often, and this is true of
highly developed countries as well as of the Third World, privatisation is met with popular resistance, as it tends to result in the freezing
or lowering of workers salaries and even in downsizing. These disadvantages, among others, are what deter the Cuban leadership from
privatisation.
Fiscal reform has the purpose of reducing budget deficits by
decreasing subsidies to local industries and social programmes in
addition to creating independent national (central) banks. The only
fiscal reforms that have affected social spending in Cuba are those
that have resulted in greater spending in the areas of education,
health care and social security. The same is true of state workers
salaries, which have experienced a small increase. Fiscal reform in
Cuba can be found in the SPE, as the practice of accountability ensures
that the state will continually reduce the amount of subsidies for
each state corporation. As mentioned in the section concerning the
SPE, state corporations under the new system will no longer depend

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on the state to supply emergency funds or salary increases. All the


fiscal management has undergone decentralisation. Those companies
that cannot adhere to the new structures are condemned to
dissolution. The exception has been the sugar industry, which has
been taken over by direct military management. Also mentioned in
the last chapter, was the party/state apparatus intention of creating
a Central Bank. This bank, though not independent from party/state
control, has made room for other private banks to be present on the
island. Additionally, there are new state banks that specialise in
services other than the state budget and accounts. The new banks
are geared towards private investment, personal savings and credit
for new entrepreneurs, including the self-employed and agricultural
co-operatives.
Legislation concerning new labour policies that has been introduced
during transitions to neo-liberal regimes has had the purpose of
providing more autonomy for employers in deciding wages and
benefits. Trade unions are often stripped of their powers to negotiate
with private firms. The results have additionally been a significant
downsizing in the number of employees of a given enterprise and
an increase in unemployment or under-employment, with workers
being offered part-time or temporary jobs rather than secure and
full-time positions. This flexibility has the purpose of reducing the
social security contributions that employers have to make. In the
name of increasing profitability and therefore attracting investment,
the lower-wage workers are subjected to more elusive hiring and
firing policies. The experience of the SPE and cuentapropismo has
demonstrated that labour in Cuba has become more flexible.
Decentralised state firms now have the authority to employ and
dismiss workers at their own discretion, without intervention from
the CTC or the Ministry of Labour. As mentioned earlier, the director
of any given company operating within the framework of the SPE,
together with the Directorship Committee (which includes a limited
number of CTC and PCC representatives), are the actors in defining
how workers are treated. However, Cubas experience does differ from
transitional and neo-liberal regimes in that each state company or
corporation is obligated to assist in finding employment for the
dismissed worker. Nevertheless, the opening up of temporary
employment agencies, as has been documented, and the conditions
of labour contracted by the year indicates the level of flexible labour
that is present in socialist Cuba. This trend is the most obvious of

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the similarities between Cubas economic restructuring and neoliberal globalisation.


Trade reforms are concerned with making the private sector of the
national economies more competitive internationally and more
export-oriented, with updated technologies in production. Developing
countries have reduced tariffs on imports, thinking that this will
increase the exposure of their national production to foreign markets.
But instead, the highly industrialised countries have not lowered
their tariffs to a level that would allow much greater imports. Besides
production for social consumption, Cubas national economy had
always been oriented towards export. Even when the Soviet Union
delivered oil to the island, the party/state apparatus re-exported some
of the petroleum to other countries. During the existence of the Soviet
bloc, Cuba exported its sugar for materials and industrial goods from
socialist economies. But Cuba was never totally dependent on Soviet
aid. As mentioned in Chapter 3, at some points during the Cold War,
40 per cent of Cubas trade was dependent on the West (Eckstein,
1994: 68). Since the crisis of the 1990s, Cubas only trade treaties
have been bilateral in character. Some trade reforms allowed foreign
entities to enter the Cuban market, but never without having the
party/state apparatus enjoy the right to export Cuban national
products (Alarcn de Quesada, 1999). However, there has been some
room for free trade in Cubas national economy; that is, in the Free
Economic Zones (FEZs) that are located near major ports. In terms
of acquiring new technologies that make the Cuban market
competitive, Cubas legislation on joint ventures and foreign direct
investment in limited economic sectors has allowed the party/state
apparatus to enjoy access to the most up-to-date means of communication and sharing of information. In any case, Cubas trade reforms
are all based on fair and basically equal trade; this is what the revolutionary leadership promotes in discourse and in action.
The opening up to foreign financial markets has had the objective
of reducing government intervention and has aimed at the operation
of free markets, in which national enterprises and the economies as
a whole become heavily influenced by international or foreign
financial institutions, such as the IMF and the World Bank. The
advantage of this is an increase in capital inflow and the modernisation of industries. The disadvantages arise when global institutions
determine the allocations of revenues, as in the Mexican crisis of
1994, when the impact of the high volatility of capital outflow
affected the monetary unit and thus the purchasing power of

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nationals. Additionally, the capital outflow from host states to multinational corporate home states is far greater than the inflow. In Cuba,
the party/state apparatus still controls the value of the national
monetary unit, as it controls the rules of play in financing. It does
so with the help of companies that wish to invest in Cuba and without
the World Bank or the IMF, which propose radical changes in order
to access foreign credit. The Cuban market is an attractive market
for foreign investors for reasons mentioned in Chapter 3, in that
Cuba is politically stable and the population is healthy and well
educated (Lage Dvila, 1996). Ironically though, PCC propaganda
depends on blaming the US economic embargo for the lack of access
to foreign financial markets and credit. This implies, therefore, that
once the US embargo has been lifted, the leadership will search for
more foreign financial markets and access provided by international
financial institutions.
At this point, it is evident that the economic restructuring that
Cuba has endured throughout the 1990s and the post-Cold War era,
what Monreal and others called state institutional transformation,
has replicated some global trends on domestic terrain. The reforms
cannot be considered neo-liberal, primarily because the party/state
apparatus did not follow through with privatisation. Nevertheless,
the future prospects for employing the other global trends in Cuba
seem quite bright. This is especially evident when it comes to labour
flexibility and the opening to foreign financial institutions in a postembargo era. But even now, certain trends have already shaped Cubas
political economy. In turn these global trends, which already appear
to exist in Cuban society, have created structures that help define
the domestic political economy and the countrys insertion in or
adjustment to the global political economy.
NEW STRUCTURES AND SOCIAL BLOC FORMATIONS
In the study of both economics and politics, structures cannot by
any means be considered permanent, as both global and local trends
often change with time and are met with resistance. But I have come
to identify real global trends and hard domestic structures that seem
to characterise the new Cuban model. The new structures that have
been imposed upon Cuban society will be defined in this section.
Again, it was during the fourth and fifth PCC Congresses that
Cubas leadership publicly recognised the need for decentralising the
entrepreneurial sectors of the planned economy, improving economic

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efficiency, reducing waste and increasing profit, introducing foreign


direct investment and making the labour market more flexible.
However, it was the demise of the socialist bloc and insertion into
the global political economy that forced the party/state apparatus to
restructure or transform some of its institutions. The profound changes
that the Cuban political economy experienced during and after the
economic crisis of the 1990s can be summarised as:
dollarisation of the economy;
foreign direct investment and the acquisition through this of
new technology;
a restructuring of production and labour relations in the new
Cuban state enterprise in order to meet the demands of the
global competitive market;
the provision of limited opportunities for the self-employed in
order to generate new funds for the state and to reduce the level
of unemployment;
increased flexibility of the labour market.
The results of the policies mentioned above have been measured
by the economic success and continual social growth in certain sectors
that have been highlighted in the present chapter. At the same time,
economic growth has resulted in some unfavourable conditions for
the Cuban worker; namely, in reduced job security and purchasing
power. Overall, the policies that were instituted during the Special
Period, which extended into the latter half of the 1990s and the first
years of the new century, can be summarised as:
making state production more efficient;
a maximisation of the countrys natural and labour resources;
income disparity and its social consequences (rise in prostitution,
vestiges of racial discrimination);
the expansion of state supremacy over the market (including
taking over some black market activity);
the militarys ascension into controlling the new economic
sphere;
workers wages above the minimum salary dependent on global
market structures and a reduction in job security.
Out of these developed policies, which have their advantages and
disadvantages, certain social forces have apparently been rearranged

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or highlighted, with the resulting creation of new structures. I call


this process social bloc formation, as the above-mentioned nuances
indicate that certain sectors of society attain high priority on the
party/states agenda, and other internal structures are displaced or
adjusted to new (global) circumstances. Social bloc formation is a
direct result of the institutional/structural reforms that the country
has undergone. It is also the clearest manifestation of the impact, or
influence, that global trends have had upon Cuban society. This has
been a difficult task because social bloc formation is currently taking
place and has not fully solidified, but I have provided evidence enough
to show that certain social structures do exist and that certain social
forces have been rearranged.
Haraldo Dilla, former head of the Department of Social Philosophy
at the University of Havana, argues that a new layer of technocrats
and business leaders has already formed in Cuba (Dilla, 1999). He
calls this the technocraticentrepreneurial social bloc. It is a social
bloc that was born out of the policies put forth by the PCC during
the Special Period. This supposed new social bloc, which, as he
indicates, eventually resembles a class, has three basic components.
The first can be found within the circles of foreign investment and
joint ventures. Today there are over 800 foreign and private firms
operating in the country. As the corporations are joint enterprises
with the state, the foreign owners are tied to a layer of domestic entrepreneurs and local businessmen who share their experiences, lifestyles
and aspirations. The second component is comprised of the directors
of state enterprises, who have achieved a level of autonomy from the
government. Their functions differ greatly from those of the traditional
white-collar manager of centralised state corporations prior to the
Special Period. This layer is concerned with maximising profits, more
so than with any other political consideration.
The third component of this bloc is classified as those who have
accumulated large sums of money and property, usually at the
expense of state resources. Dilla argues that it is impossible to
quantify the amount of capital that lies in the hands of this layer,
since their possessions are not documented and have often been
obtained illegally (Dilla, 1999). In the research material that was
mentioned in the previous chapter as demonstrating a high and
rising concentration of capital in fewer hands, Dilla estimates that
60 per cent of their cash is deposited in banks (see Chapter 3). These
actors of the technocraticentrepreneurial bloc are mostly wealthy

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peasants, commercial intermediaries or self-employed service


providers (cuentapropistas).
Finally, Dilla argues that there is a close connection between those
from military and civilian bureaucratic circles (and family members)
and this new social bloc. However, Dilla gives no evidence to defend
this argument. Due to the secretive nature of information in Cuba,
it is very difficult to make a connection between this emerging
technocraticentrepreneurial social bloc and their relatives in the
ministries and military. But because so many members of the PCC
are involved in this process, it is quite evident that there is some kind
of link between the two.
I would agree with Dillas classification of the first two components
of his social bloc. State business leaders, directors of joint enterprises
and those who work directly under foreign investors do share a reality
that is different from that of most other Cubans. Their interests are
geared towards strengthening the ties between state firms and
expatriate entrepreneurs. Their primary interest is nothing other than
the increase in profits and the expansion of their particular market.
The case of Brascuba and co-president Adolfo Daz, mentioned earlier
in this chapter, concerning joint ventures, makes clear their intentions
and their preoccupation with expanding profit margins (Granma
Internacional, 21 June 2001). Most other Cubans work for subsistence.
Additionally, there are those Cuban accountants and engineers who
work indirectly for foreign entities via the temporary employment
agencies set up by state corporations like Cubalse. Their contracts
and basic salary do not differ much from those of most Cubans.
However, the fringe benefits in housing, access to automobiles and
tips for incentives do distinguish them from other nationals. Their
right to travel with foreign business partners also affords them a
freedom that other Cubans do not enjoy.
The second component of the technocraticentrepreneurial social
bloc is not so different from the first. Under the now functioning
SPE, directors of state enterprises have a freedom to organise and
plan production that they never had before. At their command,
workers may be fired or relocated to other state enterprises. They
have power. Additionally, the company accountants are accountable
to the new directors only. This leaves room for corruption and playing
favourites within the Directorship Committee. As mentioned before,
the director, together with the Directorship Committee, decides how
salaries are dispersed, how much of the remaining profits will be
added to whose take-home pay or reinvested into expansion projects.

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The SPE constitutes a new form of business planning in which the


director behaves like a private entrepreneur. This is even more clearly
the case when a company is enabled to export and conduct business
in hard currency.
Dillas third component is less credible, though I have demonstrated
that there are a number of Cuban nationals who are enjoying a high
standard of living due to the amount of money they have accumulated
since the legalisation of the possession of hard currency. This is
especially evident among the self-employed (cuentapropistas). However,
since this group is not homogeneous, it is difficult to group them
into a component of Dillas social bloc.
I estimate that most dollar-earners have family abroad or access
to an inflow from remittances, or are favourites of wealthy foreign
investors and expatriate residents. Dollar remittances from the United
States have reached US$800 million per year (Alarcn de Quesada,
1999). Obviously, this amount of money is concentrated in a smaller
number of hands, otherwise Cuba would be a country of millionaires.
But as far as the cuentapropistas are concerned, there is no evidence
so far that this group constitutes a social class or even a component
of the emerging social bloc as a whole. As was mentioned earlier in
the discussion of the self-employed, most of the surviving cuentapropistas are those who have access to money coming from abroad. Others
are involved in black market activity because they cannot deal with
the pressures that are imposed upon them by the strict framework
under which they are to operate. Yet another section of the selfemployed (albeit small) is composed of those who are trying to escape
unemployment.
The governments big stick of discipline lies within the hands of
inspectors, tax collectors and police actions. As mentioned earlier,
this form of market opening is extremely primitive, resembling that
of feudalistic societies, when the wealth of peasants and serfs was
confiscated by the noble lords. Police repression and sometimes
corruption is so extreme that some individuals prefer to be considered
unemployed and to participate in black market activity rather than
to subject themselves to the harshness of the police and inspectors.
Of those with access to dollars, there are some who also turn down
the opportunity for self-employment.
The diversity among cuentapropistas can also be found in their
attitudes towards the Cuban government, discussed in Chapter 3.
This diversity is reflected among other groups within the general
population as well, including members of the PCC. For these reasons

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I would not agree with Dilla that the cuentapropistas constitute a


group or component within this technocraticentrepreneurial social
bloc, particularly since this social bloc is supposed to represent a
bureaucratic layer that rises above the masses and organises
production.
I have concluded that the cuentapropistas, just like any other social
group, can be divided into those that have money and those that do
not. Those who lack funds or cannot handle the pressure imposed
upon them by the state framework of conduct tend to leave the world
of self-employment and end up in state-sponsored economic activity
or illegal practices. Additionally, I have identified that those who
remain successful in their self-employment are used as a tool by the
government to obtain extra funds through the tax regime. One last
detail that would distinguish all self-employed individuals from the
other two components of the technocraticentrepreneurial social
bloc would be their lack of participation in civil politics. Although
some cuentapropistas were found to be retired workers who are at the
same time members of the PCC, the self-employed worker remains
an individual and cannot organise his or her work with other
comrades. Cuentapropistas are different from state-workers in that
they do not have stable salaries and their existence is not protected
by detailed law or representation within the CTC. Their peculiar
position in society indicates that they do not form part of a rising
class. Nevertheless, cuentapropistas are subordinate to other social
structures, namely the police and the ONAT, which in turn are
controlled by central authority. Cuentapropistas are a small social force
of their own and are subordinated to the structures that were created
to exploit their labour.
Another characteristic of this supposed technocraticentrepreneurial social bloc is their link to elites within the civil and military
bureaucratic circles. Perhaps Dilla searched for evidence to sustain
this argument. For one reason or another, he did not mention this
in his work and hence his assumption remains questionable. In any
case, the search for new structures or the arrangement of social forces
should not end up in mysterious family links and buddy socialism
(sociolismo) (Eckstein, 1994:21). Rather, I would emphasise the
relationship between top military officers and the directors of state
corporations under the SPE. It is a relationship that includes superior
and subordinate positions. As mentioned earlier, the Executive
Commission appoints directors to state enterprises and monitors
their work in making production more efficient. Whether or not the

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directors are the sons and daughters of the members of the Executive
Commission is irrelevant. The point is that the Executive Commission
exists as an entity that represents a real power over the national
economy and intends on trying to bring all forces of production
under its direction. The most influential group in the Executive
Commission is in fact the top echelon of Cubas armed forces (FAR);
i.e. General Raul Castro and Colonel Armando Betancourt Prez.
Ultimately, the FAR controls production and has been made
responsible for reinserting Cuba into the global political economy
of the twenty-first century.
Hence, in addition to my modification of Dillas technocratic
entrepreneurial social bloc, I have revealed another social bloc that
supersedes the layer of directors, local businessmen and dollar-earners.
It is an overriding social force that Dilla failed to identify. The social
force is composed of the top leaders of the party/state apparatus, who
include old-time revolutionaries like Fidel Castro, his brother Raul
and Armando Betancourt Prez, those who are loyal to them (the
Political Bureau and Central Committee) and other members of
society, mostly those who fought against Batista (and over 70 years
of age). I call this the old guard of the Revolution or the established
militarycivil bureaucracy, those who are responsible for having unified
the party/state apparatus, as mentioned in Chapter 2. As long as this
top layer continues to exist, the members of the Executive
Commission, and thus the directors of Cubas new state corporations,
will remain loyal to this entity. It was no coincidence that in June
2001, Fidel Castro proclaimed his brother General Raul Castro as his
successor to the title Defender of the Revolution (Granma Internacional,
21 June 2001). In this sense, the constitution of the SPE and the
recognition of the Executive Commission implied a re-organising of
Cuban social forces, here placing the armed forces at the top of power
and production. This is in contrast to previous experiences of keeping
local management in the hands of party cadre who in turn were
accountable to central planning only a system that proved to be
inefficient and became defunct in the post-Cold War context. It is
noteworthy to mention here Raul Castros power over the PCC. He
is second-in-command of the PCC and chair of the Partys Camaguey
provincial committee.
The ascension of the FAR to power and control over production
has become the most essential characteristic of Cubas state institutional transformation. Accordingly, it has become the party/state
apparatus response to global pressures. The revolutionary leadership,

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which continued to maintain the policy of state supremacy over the


market, ensured that the new technocraticentrepreneurial bloc was
able to employ trends in production that would allow Cuba to
participate in the global market. In other words, Dillas
technocraticentrepreneurial bloc minus the third element (i.e. the
cuentapropistas) became a tool for the party/state apparatus to update
its economic practices. But only by subordinating the key players of
the Cuban economy to the FAR (and thus to the central figures of
the party/state apparatus) can the Revolution continue to exist. The
relevance of this subordination of the emerging social bloc structure
is to deter the technocraticentrepreneurial bloc from forming an
independent class of its own; a class that, in the future, might
destabilise the party/state apparatus and bring an end to revolutionary Cuba as it seeks alliances outside the domestic sphere. Only in
this way could the Revolution continue to exist upon the pillars of
its existence. This idea will be explored further in the concluding
chapter.
State service workers and their position
Up to this point I have concentrated on those forces of society that
control production and the emergence of new structures resulting
from state institutional transformations that were a response to global
pressures. Additionally, I have analysed the peculiar position of cuentapropistas in Cuban society and recognised their subordination to
the ONAT and the police force. Following my hypothetical assumption
that these emerging social blocs were created by the party/state, there
is one other sector of Cuban society that has received scant attention
and deserves brief attention. Without its inclusion in my scheme of
social bloc formation, the picture would not be complete. This group
of people constitutes the organisers of state service workers; they are
the labour leaders (CTC) and representatives of the mass organisations (i.e., FMC, UJC, FEU, CDR) that monitor the work of service
professionals (i.e., teachers, physicians, university staff, sanitation
workers, municipal and provincial functionaries). The relationship
between service professionals and the old guard has kept constant
and has not experienced much change. From time to time, state
service workers salaries do increase, but their positions in society
remain the same. State service professionals have only the mass organisations above their head, which in turn are subordinate to the
party/state apparatus. No new hierarchical structure has emanated
and thus they are protected. Additionally, they are protected by the

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revolutionary leaderships propaganda machine that makes them feel


that they are the most essential leaders in Cuban society. For this
reason, Teacher Days and Health Worker Days are organised in every
municipality. Once a year, top leaders of the local PCC cadre organise
party functions in celebration of these workers service, and all
members of the community are invited to pay respect to those who
choose to continue in their work.
It is extraordinary that these workers have not suffered any changes
as a result of the global trends that have been adopted in Cuba. This
fact goes hand in hand with the governments discourse on not
committing to a transition to neo-liberalism. Nevertheless, they retain
a standard of living that has been left behind by those in the new
technocraticentrepreneurial social bloc and they remain subordinate
(willingly or not) to the collective of mass organisations. It is often
the case that these workers and their representatives have no access
to dollar remittances and depend on solidarity action from abroad
or state programmes that maintain their welfare. But because the SPE
was not applied to state service workers, these workers enjoy more
security than their industrial counterparts; their salaries are not
influenced by the oscillating tendencies of the world market. Finally,
state service workers are free to express their concerns, discontentment and support for government policies through the mass
organisations. They are protected by the state and hence they are
free or feel free. The collective of state service workers can be considered
the party/state apparatus best friend.
All in all I have identified three major social blocs in Cuban society.
Their existence and positioning depends heavily on the new structures
that were created by the party/state apparatus in order to adapt to
global market trends and the new international context. The bottom
layer of this model is represented by what is commonly called the
working class. The 1991 Constitutional Reform slighted their standing,
when the state was defined as belonging to the people (el pueblo),
as opposed to the proletariat. This layer represents a fragmented
social force that is actually that which creates the wealth of society:
industrial and high service workers in the SPE, state service workers
and cuentapropistas. The first and last of this group are new to Cubas
domestic economy. They are fragmented because the industrial
workers and service workers under the SPE share a different reality
from that of their counterparts in state service workers and cuentapropistas blocs; their real salaries are dependent on productivity,
whereas the state service workers receive stable salaries regardless of

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the economic condition of the country. Additionally, state service


workers cannot be displaced or dismissed from their employment as
easily as the workers under the SPE. The advantage that the industrial
and service workers have over state service workers is that their salaries
can increase to levels way beyond the teachers or physicians
imagination. Cuentapropistas make up another social bloc that has
the peculiar characteristic of diversity among its constituencies; their
standard of living is dependent on whether or not they receive money
from abroad and whether they conduct business in US dollars or
pesos. Nevertheless, these three groups are subordinate to a layer
above them or between them and the top leadership of the entire
party/state apparatus.
In the same way that the bottom layer of social blocs is fragmented,
the second or intermediary group of social blocs are not necessarily
linked. But what they all have in common is their position in
managing the social bloc assigned to and below them and the fact
that they are answerable to the revolutionary leadership. Within
this group is included my modified version of Dillas
technocraticentrepreneurial bloc, the leadership of mass organisations, and, finally, the PoliceRevenue authority. Whereas the
technocraticentrepreneurial social bloc consists of those who work
closely with foreign enterprises and the directors and managers of
SPE industries and services, the mass organisations continue to
represent the interests of the state service workers; and the
PoliceRevenue authority, which consists of the police, inspectors
and the tax service employees (ONAT), is the power or tool that the
party/state apparatus uses to exploit the small group of legally selfemployed individuals.
The top layer or social bloc is the social bloc that represents the
party/state apparatus. This is a group consisting of the old guard of
revolutionaries that have consolidated the power of the PCC, the
military (FAR) and now the Executive Commission whose current
purpose is to control, organise and make efficient Cubas productive
forces. This group is labelled the MilitaryCivil Bureaucratic social
bloc. It is the leading social force in socialist Cuba. The other layers
of social blocs can also be considered social forces. Their mobility
and behaviour in society greatly depends on their self-consciousness
and awareness of their position and importance in society. But it
suffices to say that their structural fragmentation will keep them in
their place. This has been the first attempt at looking at social bloc

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formation and how state structures have been arranged in order to


accommodate to global pressures and trends.
STRUCTURAL CHANGES AND THE REVOLUTIONS IDENTITY
This chapter has documented the effects of the economic and political
policies that were implemented during and after the Special Period.
Monreal and other native cubanologos have reiterated that the changes
that have come to the fore do not represent a transition from one
mode of production to another (Monreal and Carranza Valds, 1995).
What they are really saying is that the Cuban model, in both political
and economic aspects, differs greatly from the undesired neo-liberal
alternatives. The basis for recognising the differences stems from only
two points: the issues of privatisation and reduction in public
spending. The party/state apparatus in Cuba has been a wonder
precisely because, in the roughest of times, the government has
allocated more money than at any other time in revolutionary history
to medicine, education and social security. The argument against
neo-liberalism and against any notion that Cuba is currently
experiencing a transition to private capitalism is well founded.
Nevertheless, I have found similarities between the modes of
production and new developments in the nueva empresa cubana or
the SPE and the contradictions that are prevalent in and familiar
to the rest of the world. Among them: corporate downsizing, linking
wages to productivity, the weakened power of the trade union (CTC)
or its transformation into a discipline apparatus, the ever increasing
disparity in income spawned by the dollarising of the economy and
the double purpose of Cubas new self-employment system or cuentapropismo. These changes were entitled state institutional
transformation. The central concern of this chapter was to express
how global trends and pressures shaped the institutional transformation. The apertura or opening of the market in the sectors of
foreign investment and self-employment are only two examples of
the institutional transformation. Along with them came the restructuring of production relations in what is called the SPE and the
ascension of the military over production. What became evident was
that the party/state apparatus was forced to create new structures in
Cuban society in order to adapt to the new international context.
It would be appropriate to state here that Carranza and Monreal
are correct in their insistence that institutional transformation did
not represent a move from one mode of production to another. But

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this is not because the state did not surrender its productive forces
to private entrepreneurs and multinational corporations. In the
Introduction I mentioned my reasoning for believing that the modes
of production in private capitalist society, state capitalism and the
Cuban model are all one and the same. The latter may or may not
have more (participatory) democratic involvement in the productive
process. Regardless of the scenarios, the task, in addition to explaining
how global trends influenced or shaped the national political
economy, was to explain how the party/state apparatus has kept
Cubas domestic economy under its control. What has been revealed,
thus far, is the repositioning of certain social forces within the
party/state apparatus and the institutionalisation of new structures:
specifically the militarys hegemony over an important part of the
production process.
The task of this last section is to explain how the new structures
in Cubas political economy conform to the Revolutions identity.
Following the framework provided for conceptualising the Cuban
Revolution, it is necessary to offer brief attention to each of the four
pillars and the two foundations upon which the party/state apparatus
rests: unity, continuity, state supremacy and popular participation, on
the foundations of anti-imperialism and social justice, which were used
when describing the make-up of revolutionary Cubas existence in
Chapter 2. While I have not yet postulated that the pillars of the
Revolution are shaking, I do think that the social contradictions in
Cubas new model need to be reconciled with what those pillars and
foundations meant.
With regard to unity, this seems to be the single factor holding
Cuban society together despite the social contradictions that have
occurred throughout the last decade. It has been expressed in the
maintenance of the unified forces that uphold the idea of a single
party/state apparatus. The PCC, together with other revealed social
forces (namely, the military and the mass organisations), are
recognised as having hegemony over the entire society. The
experience of the SPE, in which the top military leaders were
repositioned to control industrial production and lucrative services,
demonstrates that it is possible for a Communist Party-controlled
economy to unleash certain global market features within the country,
without losing or compromising social or political control. This is
possible only because the military is so tightly connected to the PCC
and is still under the auspices of the original revolutionary leadership.
By allowing for open discussion of state plans prior to each PCC

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Congress and making public the intentions of the revolutionary


leadership, the general population confided in the PCC and trusted
the reforms that were to be implemented. Another issue that has
kept the country unified is the continuance of the US economic
embargo against Cuba. As mentioned in Chapter 3, the PCC and the
revolutionary leadership have manipulated the situation in order to
receive popular support for the anti-imperialist stance. Certain
conditions in Cuba, namely, shortage of medicines and lack of access
to international financial credit, can still be justifiably blamed on
the United States. This pushes the general population to support
their government against external injustice.
There may never be any evidence indicating that there exist
divergent opinions towards the private market within the PCC,
especially when the cadre is trained to follow the collective rather
than individual interests or philosophies. Perhaps there does exist a
group of individuals within party circles that is preparing for Castros
death and will impose an opposition to the PCC or the military. But
before that happens, legal standards would have to be modified in
order to accommodate a multi-party democracy and there would
need to be a break between the immediate supervisors of production
(the directors) and the Executive Committee of the SPE. Future consideration on this particular pillar and the possibility of party
divergences will be offered in the concluding chapter. Nonetheless,
after having reviewed the new structural reforms that Cuba has
undergone, it suffices to say here that now more than ever the
party/state apparatus is dependent on the pillar of unity. Now, more
than ever, unity is an essential characteristic of the party/state
apparatus. The unity between civil bureaucratic circles and the military
has been the key to Cubas success in its insertion into the global
political economy.
For the moment, continuity in maintaining a one-party system is
unquestionable (Castro, 2001c; 2001d). So the theme of continuity,
as far as the unified party is concerned, remains intact in certain
areas. Continuity in the anti-imperialist movement has remained
the same. Fidel Castro continues to promote the idea of Third World
countries ignoring their debt to the most industrially advanced nations
and the international financial institutions (Castro, 1999b). Not only
in discourse has the Cuban government promoted a reduction in US
interference, but also in opposition to economic policies that would
make Latin America more subordinate to the US market than it is

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219

today. This was evidently so in the ACLA conferences in Quebec


during 2001 (Bustamante Molina, 2001). Using discourse borrowed
from Mart and other national heroes, the party/state apparatus
continues to oppose US hegemony over the region and the global
political economy. This is what characterises Cuba as an antiimperialist state. Finally, the miraculous economic success and
ongoing social growth that keeps social scientists in awe itself promotes
continuity with Cubas revolutionary project.
Some policies, on the other hand have been discontinued. This
was primarily as a result of ideological confrontations with practical
reality. In order for Cuba to reinsert itself or adjust to new global circumstances, it was necessary to adopt measures that would have been
unthinkable during the first two decades of the Revolution. These
measures include linking the most productive workers salaries to the
world market via the SPE. Providing greater material incentives for
higher levels of production was unheard of during Che Guevaras
time. Another example is the invitation of multinational corporations
to invest directly and up to 100 per cent. When this law was passed
in 1995, the idea that the state can satisfy all of the economys needs
had to be revised. The Cuban party/state apparatus now depends on
foreign investors to provide new technologies in the domestic market
as well as infrastructure for their market openings. In tourism, foreign
investors provide a treasure box from which the party/state apparatus
can earn hard currencies and business intelligence. Nevertheless,
discourse on continuity with the socialist project has fitted well with
the adjustments that the party/state apparatus has had to endure,
especially since the majority of productive forces remain in the hands
of the state and foreign investors are willing to invest in Cuba.
Now more than ever the party/state apparatus in Cuba is supreme.
It has not been reduced and, on the contrary, it has expanded its
capacity to engulf what has traditionally been considered the
underground economy by providing a limited opportunity for the
self-employed (cuentapropismo). Even with the presence of small
private enterprises, family businesses and the peasant market, the
state produces at a more efficient rate than the self-employed, so that
the majority of the population still depends on the state to provide
for their basic needs. Additionally, the self-employed have no access
to international markets. Therefore, the self-employed do not represent
a social force in competition with the state. Contrarily, cuentapropistas continue to be subordinate to the party/state apparatus and to

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contribute financially via the revenues that are paid on monthly and
yearly bases. The party/state apparatus has had to share some space
with foreign investors, this is true. Nevertheless, the state has allowed
foreign investment into very controlled areas, spheres in which the
Cuban party/state apparatus could not afford to invest. However,
these foreign investments, whether they be direct and full or partial
through joint ventures, have always benefited the state. This has
been demonstrated especially in the fields of petroleum exploration
and tourism.
The revolutionary leaderships resistance to state reductionism has
been an essential aspect of keeping the Revolution intact. In discourse
and in deed, the PCC has proved that it is not necessary to roll back
the states intervention in society in order to continue economic and
social growth. The leadership has gone even further than that, by
pointing out the failures of transition and neo-liberal projects in
neighbouring countries trying to achieve even half of what the
Revolution has been able to provide for Cuban citizens. Cubas social
record is still unmatched anywhere among the developing countries
and is comparable in certain aspects to those of the highly industrialised world. Any attempt to loosen state control beyond the sphere
of decentralisation could prove to be an asinine experiment that
would threaten collective progress and the foundation of social justice.
In the final chapter, I will explore some limits and possibilities for
state supremacy in Cuba. But what can be gathered from this chapter
is that the new structures that have been formed throughout the last
decade can, if not tended to properly, prepare the stage for alternatives
to a state-dominated economy. All this depends on how much
autonomy will be allowed to the new social blocs in the future.
As demonstrated in Chapter 3, popular participation, which was
enhanced during the fourth and fifth PCC Congresses, continues to
grow, though the general population is still not directly involved in
actual economic planning. Even when the Popular Councils (Consejos
Populares) mentioned in Chapter 3 were instituted, their role was
primarily the monitoring of local projects already set in place. For
this reason, I emphasised in Chapter 1 the theory that the modes of
production in so-called socialist economies and private capitalism
are just the same. The party/state apparatus was keen on creating
new microstructures in the SPE. More specifically, the inclusion of
Directorship Committees to serve both as a board and as a monitoring
system within the line of production, alongside company directors,

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221

has been most helpful in fulfilling the discursive needs of popular


participation. It is true that the role of the CTC in production planning
and advocating the rights of workers has been reduced. But without
resistance, the tools of voicing the concerns of the common workers
were replaced, as the Directorship Committee in each business setting
began to operate. In 2000, this system was implemented in 64
companies and government sources estimate that by 2001, 300 state
companies or corporations will undergo this process (Granma
Internacional, 16 March, 2001). The SPE represents another phase of
the state-run economy, in which new structures have replaced
outdated ones.
As far as state service workers are concerned, their position has
experienced little change. Teachers, physicians, sanitation workers,
social workers and local functionaries all continue to use the mass
organisations to express their concerns, support or disenchantment.
The vehicles of popular participation will become more significant
as the changes in Cubas social structures are reflected in real, material
inequalities. The disparity in income between whites and blacks, as
demonstrated in the experience of cuentapropistas, must be dealt with
on a national level. Since the top layers of the social bloc formation
do not feel these contradictions, the ideas for solutions to these
problems will undoubtedly have to come from those in subordinate
positions. If this is to be the case, it must be the duty of the
professional cadre to raise their voices, at the workplace and through
the mass organisations. This would require an enlargement of the
PCC at the local level and, hence, allow more room for popular participation in national forums. In any case, the unemployed sectors
of society and those individuals that continue to participate in illicit
activities in order to make ends meet, can be considered as the most
alienated of Cuban society. According to government sources, their
numbers are falling. But the question remains, are they falling as
quickly as are the opportunities to involve more youth into
undesirable circumstances like unemployment and prostitution? If
not, then alienation will continue to be a social structure from which
socialist Cuba cannot escape.
Finally, as the party/state apparatus creates new structures for
controlling production, popular participation is pushed more into
the sphere of social relations and correcting the injustices or contradictions that come about as a result of social bloc formation. In the
near future the vehicles of popular expression might become a

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battleground for popular resistance to the implications of newly


imposed (repositioned) social structures or global trends in political
economy. But so far, the revolutionary leaderships commitment to
the foundations of social justice and anti-imperialism has been well
defended and continues to characterise Cubas party/state apparatus.
Cuba, in this sense, as an anti-imperialist state, is at the same time
incorporated into the global political economy.

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5
Conclusions and Considerations
This study has concentrated on the particular form of state resistance
to global structures and processes, more specifically, the Cuban
experience of resistance to trends which are currently found in the
process of neo-liberal globalisation. These final pages will reiterate and
extract key findings from the previous chapters and assess the attempt
to answer the twofold question proposed in the Introduction of this
book: Why does the Cuban Communist Party/state apparatus continue to
exist? To what extent is the process of social, political and productive restructuring in Cuba shaped by global trend and pressures? Towards the end,
theoretical consequences and implications from the Cuban experience
and some possible future scenarios will be considered.
In Chapter 1, some basic theoretical frameworks and historical
themes were laid out in order to provide a basis for comprehending
Cuban socialism. This was done, firstly, by assessing the international
context that was identified as the world capitalist system undergoing
the process of neo-liberal globalisation and, secondly, by reviewing
the history of state resistance to expanding capital and imperialism.
The review of state resistance to world capitalism and imperialism
in the twentieth century explained the historical experience and the
failing attempt to break away totally from capitalist modes of
production and development. As the Soviet and Cuban experiences
have shown, nation-states, which do not live in an international
vacuum, cannot break away from capitalist modes of production
entirely. Up until now, the only successful form of state resistance to
capitalism and now to neo-liberal globalisation is a state-dominated
economy, which has been called state capitalism by members of the
Frankfurt School and some present day left-wing radicals. Instead of
having workers exploited by private capitalist enterprises, workers in
a so-called socialist economy are thought to be exploited by the
party/state apparatus in order to promote national development.
The previous chapters of this book tested the basic theories
concerning the party/state apparatus and demonstrated the results
of state resistance to the process of neo-liberal globalisation. The story
really began with the demise of the socialist bloc in Eastern Europe.
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This included the break-up of the parallel international trading system


the CMEA and the political and economic breakdown of the
superpower to which Cuba allied itself the Soviet Union. In the
minds of most state leaders, the end of the Cold War meant the end
of alternatives to development through capitalist globalisation and
the acceptance of the United States as the uncontested military and
political hegemonic power. On the contrary, the case of Cuba has
shown that a state-dominated economy is capable of surviving the
process of neo-liberal globalisation and with relative economic success.
In fact, by maintaining state supremacy over market forces, unity in
political forces, popular participation as an essential quality and
continuity in the ideas of resistance and emancipation, the Cuban
political economy has actually witnessed economic growth. This was
possible only by the will and consent of the majority of the population,
which was ideologically prepared to make certain material sacrifices;
we can recall this in the 1991 and 1998 general elections. This point
requires revisiting an essential theme found in Chapter 1, ideology
as consolidating hegemony.
The Gramscian perspective of analysing societal structures requires
paying attention to the importance of ideas, history and culture.
Again, in Chapter 1, the triumph or ascent of neo-liberal practices
was found in the consolidation of free-market capitalist ideas in
domestic and international circles of power. On a national scale, what
was found in the Cuban experience was not very different. The Cuban
government could not afford to depend solely on the economic
structures that the revolutionary experience developed. The PCC also
had the duty to legitimise the supposed necessity of maintaining
state power over market forces. In Cuba, the PCC developed a counterhegemonic bloc of 12 million citizens who oppose neo-liberal
globalisation. Just like the conservative think tanks that convinced
state leaders and international institutions that neo-liberal practice
will bring the world to economic prosperity, Cuban socialist thinkers
convinced their own people of the communist alternative. Therefore,
it was not simply the pillars and the foundations reproduced
throughout the past 40 years that explain the continuing existence
of socialist Cuba. It was also the ability of state leaders to strengthen
the ideas of resistance in the rest of the population. Additionally, by
being able to witness the experience of Eastern European and
neighbouring Latin American peoples in their transition, the people
of Cuba were convinced that neo-liberal ideology and practice would
only bring them to ruin. The maintenance of the single party/state

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apparatus and state socialist ideology was a conscious decision that


was supported by the bulk of the population. For this reason, Cuba
has been able to say no, to the privatisation of production and major
services; to the World Bank, the International Monetary Fund and
the reduction in social welfare; and to US hegemony. This answered
the first half of the central research question.
The study of Cuban socialism reveals that, yes, there are alternatives
and that states do have the capacity to resist and publicly denounce
global trends that have proved to be harmful for the worlds
population. Nevertheless, all global processes eventually do have
consequences upon the nation-state. No matter how much the state
leadership may try, some global trends are hard to resist. In Chapter
3, the impact of the disintegration of the Soviet bloc upon Cuba was
described as one that forced the Cuban leadership to search for an
alternative. The alternative was not found in kneeling before the
triumphant superpower after the bipolar world order had come to
an end. Nor was it found in submitting to the fashionable formulas
sponsored by the international financial institutions. Any viable
alternative for Cuba had to conform to the confines of the party/state
apparatus, its pillars and foundations. The so-called Special Period
amounted to experimenting with measures, some temporary and
others permanent, that expanded the states power over the market.
After the leadership found success in maintaining state supremacy,
the question was: How can a state-dominated economy become more
efficient? The documents produced by the PCCs fourth and fifth
Congresses, together with the laws that were created during the dire
economic crisis of the 1990s, laid the foundation for a new form of
state-led development.
Together with the new opportunities in self-employment (cuentapropismo) and the process of decentralisation and entrepreneurial
perfection (SPE), the reforms of the Special Period, in combination
with the series of newly created social blocs (in which the top layer
represents an alliance between a leading managerial class closely
linked to foreign enterprises and the military), demonstrate how
Cubas new economic model was shaped by global trends. I have
been able to show the inevitable shifts in production power and the
consequences that global trends and forces have had for the pillars
and foundations of the one-party/state apparatus. This study has
demonstrated that much of the political, economic and social restructuring in Cuba following the Cold War era was done by need and
not by will. The old saying, If you cant beat them, join them, is

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manifested in this experience. The most important difference is that


the changes were accomplished in the name of maintaining the
essence or pillars and foundations of the Cuban Revolution. The most
positive changes that took place were in the political structure of the
country through the enhanced democratic structures of popular participation: the Constitutional Reform of 1991, the electoral reforms
and the creation of Consejos Populares (Popular Councils), which
consist of elected community leaders to plan the economic life of
cities and other urban areas.
SHAKY PILLARS?
The economic crisis of the 1990s came down hard upon the people
of Cuba. The results have been increased income inequalities, the
shifting of power in production from common workers and political
leaders to the military and a new class of market managers, the making
of a more flexible labour force, and an overall increased dependency
on international markets through the introduction of foreign direct
investment, and reliance upon tourism as a major source of income.
These shifts or social changes in Cuban society have made the political
and economic structure much more vulnerable to certain aspects of
society that were unseen or irrelevant prior to the heyday of neoliberal globalisation and ideology. Among them, a return of racist
conduct, a turn to prostitution by an unknown but large number of
youth, the emergence of a new consumer culture, a brief period of
rampant informal economics and self-employment, to mention just
a few. Unfortunately, most of these social consequences have not
been dealt with extensively in this book due to the complicated nature
of the themes and the background needed to study the phenomena.
Nevertheless, the Cuban leadership is aware of these societal contradictions, and their concerns have been noted in government
documents and research conducted by members of the PCC. Policies
geared towards controlling the contradictions produced by the apertura
or opening towards the market can be seen as those that tried to
conserve the pillars and foundations of the party/state apparatus.
But do these pillars stand strong?
There may never be any evidence indicating that there exist
divergent opinions within the PCC concerning production or markets.
But it does follow logically to assume that after four decades of PCC
discourse against capitalism in its various forms there should be
those who have become discontented and even resistant to the

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reforms and new structures that have emanated from the Special
Period. Certainly, Haraldo Dilla, a long-time academic socialist, has
expressed his concerns about the social contradictions that were born
out of the structural reforms. His and others objections to gross
income disparities among Cuban citizens reveal the first cracks in
the pillar of unity and in the foundation of social justice. The cracks
in this foundation have already been described in Chapter 4. Certain
pre-revolutionary aspects have returned to haunt the Cuban people.
Above, these were identified as racist attitudes, income disparity, lost
youth, just to name a few. I believe that these social phenomena
now have a great chance to shake all four pillars and corrode the
traditional values of socialist society. In government discourse of
late, the Cuban leadership has been aware of the dangers that are
thought to be by-products of the opening towards the market. But
it takes more than just official recognition in national newspapers
to combat social ills such as racism and income equalities. In order
to minimise these experiences the PCC and the mass organisations
need to be forced into conducting intense social training programmes
to regenerate the ideas of social equality, solidarity and community
among the masses. This can only be done if the Cuban people take
seriously their role in the mass organisations and voice their opinions
and concerns out loud. In many ways, the future of the Cuban
Revolution lies in the hands of the Cuban people. However, the more
individuals are divided according to income disparity, the more likely
it is that there will be a growth in divergent opinions about what
social justice really means. This leads any observer to question the
other pillars and the one other foundation of the Cuban Revolution,
anti-imperialism.
The second pillar that is at risk is that of continuity. Principally, the
theme of continuity was related to ideas: the emancipation of peoples,
national sovereignty, a single political party to gear the masses against
capitalism; in short, the ideas that were heralded by the Rebel Army
and those sectors of society that supported the Revolution of 1959.
There are certainly many other important ideas that have not been
dealt with in this study, but these were the main ideas that are
continuous in Cuban political discourse. However, external and
internal changes have redefined this particular pillar. Antiquated
ideas of emancipation, in other words, ideas that were developed at
a certain historical moment, do not necessarily follow through with
the times. For example, during the first radical years of the Revolution,
work through moral incentives was an important feature of the

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transformed political economy. But in various phases, the Cuban


leadership has retreated on this matter. Somehow, the need to make
the national production process more efficient has instituted a new
value in Cuban society. That is the recognition that workers must be
rewarded with material incentives. This was already demonstrated
during the 1970s in the institutionalisation of the Revolution and
the retreat to socialism. But this study has gone beyond this. More
than just paying workers according to productivity, economic
leadership meaning managerial direction is stimulated with more
pay than that of subordinates.
How, then, does the spirit of Che Guevara follow through in Cubas
economic restructuring today? It does not. Hence, the continuity of
ideas becomes dependent on how the leadership directs the country
throughout the toughest of times, i.e. from the economic crisis of
the 1990s into a growing Cuban economy filled with many social
contradictions. But what happens when the old guard of the
Revolution are gone? Have they left the new generation of revolutionaries something to continue?
The answer to this last question is yes. That is, efficient state
management of public enterprises and political discourse against
imperialist forces. During this era of neo-liberal globalisation, both
of these values remain revolutionary and important in the search for
alternatives in the global political economy. However, anti-imperialism
and public ownership of the means of production do not equal
socialism. Apparently the socialist project of workers emancipation
is discontinued, while the leadership and their concern for the
economic betterment of the island has remained constant.
Unfortunately, the new generation of revolutionaries is learning how
to achieve economic growth for the party/state apparatus at any cost.
Again, there is a correlation between sacrifices that the Cuban
leadership is willing or forced to make in order to achieve economic
growth and the attitude of state leaders in other countries when
adopting neo-liberal policies and selling off services like health care
or transportation. Both methods, neo-liberal policy and state-corporate
efficiency, are used in the name of bettering national economies and
making them more competitive in todays global market.
State supremacy seems to be the one pillar that remains constant.
While leaders in other countries end up privatising state enterprises,
the Cuban party/state apparatus, on the contrary, expands its
productive capacity. Of course, in order to achieve state enterprise
expansion, foreign investment becomes a necessary evil. But what

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are the limits to foreign direct investment? So far, it has been clear
that all the sectors of society, excluding the health system, education
and the military, are open to foreign/private investment. Investments
have been made in tourism, petroleum exploration, nickel production
and tobacco. These examples are viewed as beneficial to Cuba, in
that foreign investment brings in new technologies and hard currency.
The question is, what happens when foreign enterprises want to
invest in or appropriate services that are provided to the general
population, like the energy sector or water? Will that top echelon of
revolutionary leadership be willing to sell these services off? What
then will happen to state supremacy and the concept of public
ownership of most of the countrys resources?
Beyond this concern is that of private company leverage on the
party/state apparatus in joint ventures and labour flexibility. In the
race to cut costs, especially during times of global economic crisis,
foreign corporations will always want to find the cheapest source of
labour. Here, the state proves to be not so supreme. Continuing a
pattern of dependency on and further integration into the global
market, Cubas party/state apparatus is finding itself engaging with
foreign enterprises at the bargaining table. Meanwhile, labours
presence within the party/state apparatus is becoming less relevant.
Not only does this go for workers found in joint ventures and foreign
direct investment initiatives, but within the completely statecontrolled enterprise itself. This was demonstrated in the experience
of the SPE.
Popular participation proves to be another shaky pillar. This is already
evident in labour flexibility and the new hierarchy imposed through
the SPE. Although workers are given between two and four seats on
Directorship Committees of state enterprises, profit and efficiency
become the primary goals. The vulnerability of working peoples
collective interests becomes immense when a few workers are
separated from their colleagues in order to engage in profit considerations together with management. This is especially true when the
concerned corporation is inserted into the competitive global market.
If the participation of worker representatives in the SPE is sold to the
people of Cuba as a satisfactory and reassuring means of maintaining
popular input into the political economy, then it is the
technocraticentrepreneurial bloc that has consolidated the
Revolution under its firm hand. The same has become true on the
local level with the creation of Consejos Populares, which guide and
implement municipal economic projects. After these changes, the

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workers and general population will have no interest in participating


in the decisions that affect their daily lives. Unless, that is, participatory democracy is reduced to representation in the electoral process,
as it is in most forms of democracy around the world. If that is the
case, then this pillar will be doomed, because all representatives will
be held responsible only in the approving of laws that will assist in
the forming of Cubas new economic model; all this under one,
united political party.
The last theme that must be dealt with is the Revolutions
foundation of anti-imperialism. This is the one theme that does remain
constant in the Cuban governments political discourse as well as in
practice. Cubas revolutionary experience has been marked by a 40year struggle against political, military and economic aggression
coming from the United States, currently the worlds only superpower.
Considering the geographical proximity of the United States, it is a
wonder that the revolutionary leadership and the Cuban people have
resisted the intentions of right-wing forces and the harsh and cruel
economic embargo which has impeded the country from gaining
access to essential goods. Because of its alignment with the Soviet
bloc during the Cold War, the Cuban party/state apparatus was able
to resist with military as well as economic leverage. From 2001, all
military support from Russia has been cancelled. Now, especially
during the US New War Against Terrorism, Cuba is isolated in the
face of US aggression and left to fend for itself. But regardless of the
situation, both the Cuban people and government leadership have
demonstrated their dedication to the value of sovereignty of all
nations and peoples by participating in and even sponsoring
gatherings, conferences and other events that call attention to the
imperialist character of global capitalism and the process of neoliberal globalisation.
Nevertheless, during the process of neo-liberal or corporate-led
globalisation, imperialism and therefore also resistance to it has
taken on a new definition. Previously, imperialism was thought of
in terms of civilisations embodied in nation-states, and the imposition
of the values and structures of certain nation-states upon others. But
this all changes when multinational corporations and their allies in
government become much more powerful than the state itself.
Interestingly, Cuban political discourse tackles neo-liberalism as an
unsustainable and unfair practice and ideology imposed by the United
States, the technologically advanced countries of the North and the
international financial institutions like the IMF and the World Bank.

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Indeed, no one can question the power that these global structures
have upon the poorer countries of the South and the negative effects
that have come out of the neo-liberal triumph. However, it would
also seem logical to tackle the very same corporations that sponsor
neo-liberal ideology and practice through government lobbying.
When it comes to criticising multinational corporations, the PCC
becomes shy. To be sure, the revolutionary leadership has denounced
monopoly structures and financial speculation, but never the
corporations that practise them. The fact is that the party/state
apparatus is in no position to make enemies out of the multinational
or transnational corporations, because Cuba depends on many of
these for foreign investment and the acquisition of new technologies.
One case in point is the joint venture Brascuba mentioned in Chapter
4. The Brazilian partner, Souza Cruz Tobacco, is not only a private
company, but also a subsidiary of the British American Tobacco
Corporation (BAT Group), one of the largest tobacco enterprises in
the world. Hence, the tendency of anti-imperialism has been modified.
Previously, it was a necessary stance in the fight against global
capitalism. Today, in Cuba, it is a movement to strengthen popular
influence upon nation-states of all countries to control markets and
make room for a fairer trading system. For the PCC leadership, this
is not a contradiction, but, again, a modification in the discourse.
The enemy is not private capitalism or large corporations, but the
governments that allow large corporations to behave as they will.
POSSIBLE FUTURE SCENARIOS
Cubas experience during most of the 1990s and the start of the new
millennium has demonstrated new possibilities in state-led economies.
The government has proved to be flexible and economic efficiency
has overridden traditional PCC ideology, or at least adjusted it to
accommodate income disparity and the disposal of workers at
managements command. Disturbing as it may sound, in a state-run
economy labour can also become flexible, it can even allow for private
enterprise to exist in the form of self-employment or as state partners
in the form of foreign investment. Decentralisation plans that allow
business leaders to become more autonomous in directing their lines
of production can also exist without threatening the base of political
power in central government. This was demonstrated through the
militarys influence over the new state corporations. The information
provided in this book on the new Cuban economic model might be

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disheartening for left-wing romantics, as income disparity and


unemployment represent new contradictions. Cuba has become the
exception that proves the rule. But the study should not be as
disturbing to anti-globalists as it is to orthodox economists who
have insisted that state-led economies are doomed to fail.
The Cuban experience has established the fact that a state-led
economy can work and that in certain instances the state can resist
some global trends. However, after having revealed the effects of
global structures and pressures upon the one-party/state apparatus,
some consideration on the future of this form of state resistance
should be given here.
During the preparation of this book, many colleagues and friends
have asked me the question: What will happen after Fidel Castro
passes away? This question, now very popular, comes as no surprise
as even many cubanologos, who have dedicated their life to studying
the Revolution, are left with the same question in their own research.
In Chapter 1, I delivered an explanation of why this study would not
concentrate on the personality of the historical leader. I suggested
that political and economic structures and ideas have more impact
on societies than individuals. Intriguing as the above question may
be, it is only appropriate to stick to the method employed throughout
the entirety of this work. Therefore, I will conclude with some considerations on the future of the Cuban revolutionary experience based
on my own findings in the analyses of global and domestic political,
economic and ideological structures.
When looking towards the future of Cuban state resistance to neoliberal globalisation, two elements should be taken into account.
First, since the drastic changes brought upon the island during the
1990s were induced primarily by the collapse of the Soviet bloc and
the alternative international trading system (CMEA), all post-Cold
War studies show that any attempt at speculating about future
scenarios for Cuba will have to consider the trajectory of international relations and the global political economy. Secondly, the Cuban
party/state apparatus, born out of domestic historical movements
and established on the above-mentioned pillars and foundations,
has its own internal dynamics that, as demonstrated above, are also
changing due to the repositioning of social forces and political and
economic restructuring. With these in mind and taking the present
condition of both the global political economy and the structural
transformations in Cuba as a given, this study will conclude with
two sorts of future scenario. One involves change in the Cuban

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government and the collapse of the party/state apparatus, meaning


structural change and the breaking with the pillars and foundations
of the Revolution. The second involves the continuance of the
party/state apparatus, keeping it intact. This will require attention
to future changes in response to the global political economy and
recognising the possibility of a future triumph of the alternative
global movements mentioned in Chapter 1 of this book.
A DISINTEGRATION OF THE PARTY/STATE APPARATUS?
The disintegration of Cubas one-party state apparatus can come
about in either one of two ways or a combination of both. The first
is through mounting pressure from the outside and/or US military
coercion. The final preparations for this book coincided with the
monumental US New War Against Terrorism, in which US military
forces are found to be expanding their hegemonic reach simultaneously to all the corners of the Earth. This fact, in combination with
Russian President Putins announcement that the final vestiges of
military intelligence co-operation between Russia and Cuba have
ceased to exist, puts the island into a vulnerable predicament. As no
country has been willing or able to contest US hegemony, the threat
of US intervention in Cuba is alive and strong. Hence, this will be
the easiest scenario to imagine. Although the revolutionary forces in
Cuba would certainly put up a strong fight against US imperialist
interests and the consequences would be bloody, this scenario would
not end up so differently from those examples that have already
taken place. US military forces would occupy the island, establish a
government favourable to US hegemony probably from the pool
of anti-revolutionaries based in Miami, Florida and open the market
to US corporations and international financial institutions. Again,
before this happens, the aggressor would be met by great resistance
and a long battle against the majority of Cuban people who support
their government, the idea of national sovereignty and the fruits or
social conquests born out of the Revolution.
The second possibility in considering the break-up of the
Communist Party/state apparatus is the internal corrosion of the
pillars and foundations upon which it is built. Taking into account
the reality described in this study, this possibility seems to be more
of a real threat than US military intervention. Both Cuban government
leadership and the Cuban population as a whole should be more
concerned with the internal contradictions that social, political and

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economic restructuring have brought forth than with the always


present external danger. I should repeat, as income distribution gaps
increase with the dollarised economy and the possibility of linking
wages to productivity, so will the ideas of individuals concerning the
definition of social justice. Furthermore, the repositioning of social
and productive forces in the country leaves room for a widening gap
in interests between labour and management in the SPE. As a
consequence, the global trend of labour flexibility has been instituted
in Cuba. This threatens the pillars of unity and popular participation, and forges cracks in the foundation of social justice. In order
to save these qualities, the established militarycivil bureaucracy (the
old guard of the Revolution) mentioned in Chapter 4 and the
technocraticentrepreneurial bloc would have to assert their
commitment to social justice by periodically revisiting the impact of
all reforms and economic action. But as the old guard of the Revolution
die off, there exists a greater likelihood for a future division in
economic interests among top business leaders and loyalties between
the general population and competition in the global market. Since
this internal threat is real, it should be dealt with immediately. If not,
market capitalism will slowly eat away at the fabric of revolutionary
Cuba like a growing cancer. I would conclude that the only way to
treat the problem of shaking pillars and cracking foundations is for
the general population to be mobilised within the framework of the
present party/state apparatus. In other words, Cubans should be
motivated to participate in the mass organisations and confront the
contradictions that are brought about by economic reform without
delay. Naturally, this would entail heavy conflicts among the new
social blocs of Cuban society, which might precipitate the demise of
the present order.
The third possibility in the fall of the party/state apparatus reflects
a combination between the other two. That would entail US
government or other intelligence in its working with dissenting sectors
of the PCC and the technocraticentrepreneurial social bloc.
Intelligence does not necessarily have to come from the CIA or from
any other government. A change in alliance among business leaders
might also originate in private/corporate intelligence, which
throughout the experience of neo-liberal globalisation has proved to
be just as detrimental. A corporate conflict, either among state-owned
businesses or between foreign enterprises, could bring on economic
and social instability to Cuba. As has been the case with most countries
of the South, social crisis would eventually invite foreign intervention.

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MAINTAINING CUBAN SOCIALISM


It is hard to think that the delicate balance in which Cuban society
is now standing can last for a long time. The contradictions are much
too large. However, the Cuban people should receive the grand award
for being the most resistant to global changes and the most flexible
in making necessary adjustments. Having gone from a prosperous
Cold War to a new world order has not changed the essential characteristics of the Cuban party/state apparatus. Starting with Solidarnosc
in Poland and the fall of the Berlin Wall, the world has seen the
collapse of the entire so-called socialist bloc in Eastern Europe. In
Cuba, however, you might almost say: The Berlin Wall did not fall
on us. Something must have been different about Cuban socialism.
The difference should be primarily attributed to the pillars and
foundations that culminated in what is known as the Revolution.
Additionally, the Cuban Revolution was born out of an autochthonous struggle, not imposed by a military superpower. This may explain
the affinity that the Cuban masses have with their leaders. But how
and why should the current condition of the party/state apparatus
remain the same for some time?
With all the contradictions that it entails, the Cuban model of
economic development and political participation is still better off
than many of the neo-liberal economies in neighbouring Latin
American countries. At least the people of Cuba realise the differences.
Homelessness, illiteracy, and street violence still do not plague Cuba.
If a hurricane hits the island, the military is prepared to concentrate
its efforts on relief. For these simple reasons alone, there are many
advantages to keeping up with the contradictions that Cubas new
economic model entails. As long as the Cuban government continues
to approve annual budgets that reflect an increase in public spending
on social services, Cubans will be content with their Caribbean
welfare state.
The maintenance of the party/state apparatus can take one of two
courses in the future; both depend on economic questions. The
principal concern becomes the US economic embargo against the
island because it is precisely this that the PCC points to in order to
excuse Cubas material shortcomings. In Chapter 3, I explained that
the embargo has had its effect on social development in Cuba,
especially in the health-care sector. As long as the embargo continues
to be imposed upon the people of Cuba, the government can maintain
legitimacy in the face of US aggression. Hence, the future of Cuban

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socialism can be conceived of as an anti-imperialist state with an


economic embargo or one without.
Again, with the US economic embargo, the Cuban government
receives favour in the eyes of the Cuban masses. Why should the
population support a foreign government that imposes misery and
delay in economic growth against a government that is willing to
provide free health services, education and housing? But it does not
stop here. The party/state apparatus also receives support from the
international community within structures like the United Nations,
as well as from international solidarity groups including some that
are inside the United States itself. Whether it be through a romantic
vision of revolutionary Cuba or through encounters at international
political rallies, many people around the world uphold an admiration
for the Cuban government. The tens-of-thousands-strong reception
for Fidel Castro at the World Conference Against Racism in Durban,
South Africa, in 2001 is a case in point. Fidel Castro has been a hero
to many in the South since his rebel days in the Sierra Maestra. But
he continues to be received by masses worldwide because he preaches
against present-day Yankee imperialism while tackling the presentday economic embargo. People do not support Cuban solidarity
efforts that fortify the country just because the long-bearded law
student can still speak on for hours on end in a charismatic way.
They do so because Dr Fidel Castro represents a party/state apparatus
a real movement that has been able to resist superpower pressure,
accommodate itself to the new world order and maintain the faith
that there are alternatives to the process of neo-liberal globalisation
regardless of the contradictions that alternative might entail.
My purpose here is not to idealise the embargo as a tool for
legitimacy, but to explain the role it can play in support for the
party/state apparatus. In any case, if the US economic embargo
continues to be a threat to economic development for the party/state
apparatus, the Cuban government will have to continue its search
for substitutes. It has already done so in the case of tourism, but it
will most likely have to do so in the health sector; for instance, by
fortifying beneficial bilateral agreements on pharmaceuticals between
Cuba and South Africa or Brazil. Additionally, the Cuban government
will have to step up its efforts in building stronger regional ties with
its neighbouring countries in order to purchase US-patented materials
more easily. Here the Cuban government will be found seeking more
fair trade deals with other countries and integration into economic
communities of states like the CARICOM and the Association of

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Caribbean states. Also, it will seek a stronger alliance with the industrialised countries of the South (South Africa, Brazil, India) in
international trade structures like the WTO. To conclude this future
scenario of maintaining the party/state apparatus with the economic
embargo, it should not go unremarked that things cannot really get
worse. As I mentioned in Chapter 1, the US government is already
making concessions to Cuba, when US farmers and agricultural
producers are demanding the right to sell to neighbouring countries.
A one-party/state future for Cuba without the US economic embargo
is a more complicated scenario. Perhaps this scenario should have
been placed in the section concerning the possibilities of a disintegrated Cuban socialism, because the chances of maintaining the
pillars and foundations in a word, the raison dtre of the Cuban
anti-imperialist state, would be quite slim. If the US economic embargo
against Cuba ever falls, this would mean that the party/state apparatus
would have to maximise its control over imports so as not to allow
Cuba to be flooded by US products. This would be the most difficult
task ever required of the revolutionary leadership, much more difficult
than legalising the possession of hard currency or US dollars. Imagine
an anti-imperialist, so-called socialist state only 90 miles away from
the largest economy on the face of the Earth with its door open to
US investment. However would the central government try to handle
such economic pressure? This study has already looked at the cracks,
splits and shakes in the Revolutions pillars and foundations after
moderate apertura towards the global market. But it is almost
unimaginable to conceive of a one-party/state-led economy surviving
the flood of big multinational corporations such as McDonalds.
There is no way Cubas state corporations could compete with them,
regardless of the efficiency that state-owned companies pretend to
have developed. The foreign private enterprises would outnumber
the state companies, especially in services. Additionally, with the
New Law on Foreign Investment, which by the way contains a nondiscriminatory clause with regard to the country of origin of private
enterprises, the party/state apparatus would be forced into making
concessions to the principal enemy, the United States. Cuban business
leaders in the technocraticentrepreneurial bloc would be pushed
further away from the Cuban working class and the pillar of unity
would see its last days. The only way to avoid such disaster would
be for the governmental leadership to maintain strict controls over
every single financial transaction and reproduce a discourse against
global capitalism. This would result in the governments turning its

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back on some of the reforms that came out of the Special Period. This
leaves this concluding chapter to yet another future scenario.
A third scenario would be global in nature. This would be a
rediscovery of the state as the most essential and irreplaceable player
in the global political economy, where power is taken back by the
state and where people demand that the state intervenes in society.
In many respects, after the terrorist attacks against the United States
on 11 September 2001, states have come to play a more important
role in domestic and transnational security matters. It would only
take an economic crisis of the same calibre to push states into
becoming more dominant players in financial markets. Some would
even have us believe that the current war against terrorism is really
a solution to the economic downturn experienced in the United
States. In any case, I would venture to say that there is always time
and room for the state to come back. If this were to happen, Cubas
efforts of maintaining state supremacy over market and other social
forces would be applauded as the example to follow. Unless, of course,
the superpower dealing with its own economic problems finds an
excuse to destroy Cuba the way it did Afghanistan.
This third scenario would also include the possibility of state
corporate development, where state corporations would develop into
globally competitive entities offering products or services unmatched
by private multinationals. A future scenario might entail health
management organisations of the North, including health insurance
companies, offering their clients the right to fly to Cuba for medical
attention because Cuban health care is high quality and costs less.
At that point, the Cuban government would have to consider creating
a separate health-tourism corporation that deals with foreign patients
or even expanding its services to the point of becoming a publicly
owned multinational corporation. In a friendly international
environment, this could very well happen.
There is a fourth scenario that might seem far-fetched for most
observers but only requires a little imagination. That is the total
collapse of the international capitalist system or a worldwide revolt
against it. During the past couple of years, the world has witnessed
mounting forms of resistance to the process of neo-liberal globalisation in a variety of ways. As I mentioned in Chapter 1 of this book,
these struggles have been found among popular and intellectual
groups in domestic settings as well as on a global level. While neoliberal ideas have nestled into the structures that comprise national
economies and governments in most countries, the progressive forces

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of the left have been largely spread amongst organisations concerned


with topics such as fair trade, the environment, indigenous and
womens rights, and labour. But more recently, in some countries,
these new social movements have taken political shape in order to
counter neo-liberal ideology and practice. There is no room in this
book to discuss the examples. However, one can look to the rising
political movements such as the Workers Party in Brazil or the struggle
against the Free Trade Agreement of the Americas in order to find
the possibilities of resistance and global solidarity. These represent
the possibility of bringing an end to neo-liberal globalisation as we
know it today.
Finally, the fall of neo-liberalism should also be taken into consideration. Though no global order has ever come to pass without the
backing of intellectual and social movements, it would not be crazy
to imagine a radical change in the structures and ideology currently
governing the global political economy. Also coinciding with the
writing of this book was the economic crisis in Argentina, which was
induced by the irresponsible application of neo-liberal practice forced
down that countrys throat by international financial institutions
such as the World Bank and the IMF. It would only take a couple
more of these scenarios at a single moment, with movements of
resistance again taking to the streets and building their own alternative
structures, to destabilise the entire global economy.
In this last scenario, nation-states might return to the experiences
of pre-neo-liberal days and revert to the state-capitalism of yesteryear,
in which large enterprises and the capitalist mode of production
would have to contend with a social contract. In this case, Cuba
would be among the first and most prepared to take on a comfortable
position in that new world order. But the ever growing global
movement for socio-economic justice seems to be demanding more
than just a return to state-led development. It is asking for more
popular participation. If this movement succeeds in reaching that
Other Possible World, then Cubas party/state apparatus would have
to take the Revolution a step further.

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United Nations Development Programme (1996, 1997, 1998), Human
Development Report, New York: Oxford University Press.
United States Cane Sugar Refiners Association (1938), Sugar Economics: New
York.
Urrutia, M. (1964), Fidel Castro and Company Inc.: Communist Tyranny in Cuba,
New York: Frederick A. Praeger.
Valds, N.P. (1971), Health and Revolution in Cuba, Science and Society, Vol.
35, No. 3, Fall.
(1972), The Radical Transformation of Cuban Education, in Bonachea,
R. and Valds, N. (eds), Cuba in Revolution, Garden City, New York:
Doubleday.
(1975), Ideological Roots of the Cuban Revolutionary Movement,
Occasional Papers, No. 15, Glasgow: University of Glasgow, Institute of Latin
American Studies.
(1992), Cuban Political Culture Between Betrayal and Death, in
Halebsky and Kirk, 1992.
Valds Paz, J. (1996), Poder local y participacin, in Dilla, 1996a.
(1997), Agricultura y gobierno local, Temas, No. 11, Havana.
Varas, A. (1987), El Partido Comunista en Chile, Santiago de Chile: FLACSO.
(1989), Democracy Under Siege: New Military Power in Latin America, London:
Greenwood Press.
Wainwright, H. (2002), Notes Towards a New Politics: New Strategies for
People Power, Briefing Series, No. 3, Amsterdam: Transnational Institute.
Wallerstein, I. (1974), The Modern World System, New York: Academic Press.
(1979), The Modern World System (second edition), Cambridge: Cambridge
University Press.
(1980), The Rise and Demise of the World Capitalist System: Concepts for
Comparative Analysis, Cambridge: Cambridge University Press.

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State Resistance to Globalisation in Cuba

(1984), The Politics of the World-Economy: The States, the Movements and
Civilizations, Cambridge: Cambridge University Press.
Wallerstein, E., Hopkins, J. et al. (1996), The Age of Transition: Trajectory of the
World System 19452025, London: Zed Books.
Wesselius, E. (2001), GATSwatch, in INI Actual, Vol. 1, December, Amsterdam:
Transnational Institute.
World Bank (1979, 1983, 1990, 1995, 1997a), World Development Report, New
York: Oxford University Press.
(1997b), The Long March: A Reform Agenda for Latin America and the
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(1998), Beyond the Washington Consensus: Institutions Matter, Washington:
The World Bank.
(2000), Human Development Report, Washington: The World Bank.
Worsely, P. (1980), One World or Three? A Critique of The World-System
Theory of Immanuel Wallerstein, in The Socialist Register 1980, London:
Lawrence and Wishart.
Zanzabar, I. (1986), La economa en la dcada del 50, Havana: Editorial de
Ciencias Sociales.
Zats, M. (1994), Producing Legality: Law and Socialism in Cuba, New York:
Routledge.
Zeitlin, M. (1967), Revolutionary Politics and the Cuban Working Class, New
Brunswick: Princeton.
(1970a), Revolutionary Politics and the Cuban Working Class, New York:
Evanston and London: Harper and Row Publishers.
(1970b), Cuba: Revolution without a Blueprint, in Horowitz, I. (ed.)
Cuban Communism, New Brunswick: Transaction Books, Inc.
Zimbalist, A. (ed.) (1987), Cubas Socialist Economy Towards the 1990s, Boulder:
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Zimbalist, A. and Brundenius, C. (1989), The Cuban Economy: Measurement
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Zimbalist, A. and Pastor, M. (1995), Waiting for Change: Adjustment and
Reform in Cuba, World Development, Vol. 23, No. 5, May.

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Index
Compiled by Auriol Griffith-Jones
Agricultural and Industrial Bank 138
agriculture 73, 130, 140, 154, see also
sugar
ANAP (National Small Peasants
Association) 65, 77
anarchists 501
Andropov, Yuri 98
Angola 80, 100
ANPP (legislative body) 120, 121, 130
anti-colonialism 435
anti-imperialism 28, 32, 236; as
foundation of Revolution 42, 82,
21819; risk to 227, 2301
Argentina 197, 239
Army 64, 100, 1678, see also FAR
Artex (SA) 129
Assemblies of Popular Power 121
Association of Caribbean States 2367
Authenticos (Partido Revolucionario
Cubano Autentico) 53, 56, 578

Brazil 16, 197, 239


Brezhnev, Leonid 98
British Empire 47
Brooke, General John Rutter 48
Brutents, Karen 98
Bulgaria 95
business management: decentralisation of 12930; organisational
changes 1245, 1658, see also SPE
business practices, monitoring of 188

Bacardi Rum 113


Baires, El Grito de 467
Baker, James 103
Balio, Carlos 50; and URC 52
Banco Central de Cuba 138
Banco International de Comercio
(BCI) 137
Banco Nacional 125, 137, 1445
Banco Popular de Ahorros 137
banking reforms 1378
banks: foreign and private 138, 203,
204; lending 154; technological
infrastructure 138, 154
Batista, Fulgencio 53; and communist
movement 546; populism 556; as
President (1952-59) 5961; radical
opposition to 601
Bay of Pigs (1961) 69, 77
black market 131, 146, 187; and
corruption 92, 93; and economic
reforms 124, 126, see also selfemployment
Blas Roca 54; Fundamentos del
Socialismo en Cuba 69
Bolshevik Revolution (1917) 17, 19,
51
bourgeoisie, as leaders 29
Brascuba, joint venture 1578, 209,
231

CADECA SA. 138


Campaign to Rectify Errors and
Negative Tendencies (1986) 924,
99100, 166; contradictions in
934; moral aspects of 92, 93, 188
Canada 68, 134, 1401
CANF (Cuban-American Foundation)
111, 112
capital accumulation, and income
disparity 1445
Cardenas, President of Mexico 56
CARICOM 236
Castro, Fidel 3, 37, 60, 232; and 26
July Movement 616; and collapse
of USSR 99100, 225; conversion to
Marxist-Leninism 6972; exile in
Mexico 624; and Gorbachev 101;
ideology of 1959 Revolution 679;
llamamiento at 4th PCC Congress
120; named as Prime Minister 66;
popular support for 67, 117, 236;
and push to communism 703;
rejection of neo-liberal economics
32, 1978, 199; resistance to globalisation 2, 6n, 8, 197, 21819; state
transformation (1959) 669
Castro, Ral 37, 63, 66; and SPE
1667, 168, 175, 183, 212
CDR (Committees for Defence of the
Revolution) 75, 77
CECE (State Committee for Foreign
Economic Cooperation) 121
Centre for Labour Studies 187
Cespedes, Carlos Manuel 53
Chavez, Hugh 16
Chibs, Eduardo 58, 60
Chile 15
China 68, 96, 107
CIA 32

257

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State Resistance to Globalisation in Cuba

CIMEX, SA, state corporation 1713


civil society 15, 778, 201; and WTO
6n, 11, see also OPP
class see social bloc formation
Cliff, Tony 21, 234
Clinton, Bill 111, 113
Club of Socialist Propaganda 50
CMEA or COMECON (Council of
Mutual Economic Assistance) 1, 3,
20, 35; Cubas membership of
(1972-91) 7981, 82; demise of
947, 224
Commonwealth of Independent
States 104
communist movement: and 1959
Revolution 65, 6970; Batista and
546; and Cuban nationalism 534,
69
Communist Party of Cuba (URC) 52
Communist Party of the Soviet Union
(CPSU) 29
competition 124, 126
Consejos Populares 122, 129, 220
Constitution of 1940 55, 567
Constitution of the Republic of Cuba
(1976) 756; reforms (1992) 1201,
214
constitutions 434, 47; (1902) and
Platt Amendment 42, 489
continuity: and new structures
21819; as pillar of Revolution 41,
83, 1834; risk to 2278, see also
anti-imperialism
corruption 58, 59, 934; police 210;
potential for 178, 209
Council of Mutual Economic
Assistance (CMEA or COMECON),
disintegration 37
Creoles, white elite 43, 44, 48
CSC (Credit and Services Cooperatives) 130
CTC (Cuban Workers Central) 55 and
n, 59, 68, 70, 75, 77; reform
programmes 745; role reduced
221; and self-employment 133,
18990; and SPE 182
Cuba 25, 43; aid from USSR 100;
decentralised bureaucratic state
capitalism 256; economic recovery
(1996-2000) 13, 38, 1279; effects
of US embargo on 11417, 206;
expected fall of socialism in 34,
11011, 2245; human
development standards 1624;
independence (1898) 478;
independence movement 428;
political isolation 11718; possible

future scenarios 2313; present


contradictions in 195, 2316; push
to communism 703, 201;
relations with US 117, 234, 2356,
238; relations with USSR 36, 79,
801, 979, 1003; retreat to
socialism (1970s) 89, 201; state-led
economy 314, 735, 823, 86;
structural changes 195222; as
Third World superpower 80, 86; US
military occupation (1898-1902)
489; withdrawal of Soviet troops
103, see also economic crisis
(1990s); economy; party/state
apparatus
Cubalse, state-owned corporation 130,
16871
Cuban Committee for Democracy 112
Cuban Democracy Act (Torricelli Act)
(US, 1992) 111, 114, 117; effect on
Cuban health care 116
Cuban Revolution (1959) 637;
ideology of 679, 813, 2245; new
model reconciled with 21722;
pillars of 412, 835, 1814, 196,
21622, 22631; popular participation 36, 645, 67
Cuban, Spanish and American War
(1898) 32, 478
Cuban Trade Union 36
Cubanacan (tourism SA) 93, 12930,
135, 137
Cubanet Independiente, Miami
newsgroup 184
cuentapropismo see self-employment
currency: exchange rates 1256;
legalisation of US dollar 1249;
need for hard currency income 38,
90, 115; value of peso 127
Czechoslovakia 95, 96, 100
decentralisation 25, 73, 12930; of
foreign trade 124; of state
enterprises 183, 204
Decree-Laws: No.77 (New Law of
Foreign Investment) 1334, 171,
237; No.84 (banking reform) 137;
No.140 (legalisation of dollar) 125;
No.141 (legalisation of selfemployment) 39, 1323; No.187/98
168
dependency theory 30
development theories 267, 301;
dependency theory 30; modernisation theory 30
Daz Surez, Adolfo 157, 209
Dilla, Haraldo 2089, 227

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Index
diplotiendas see dollar markets
Directorio Universitario 65, 67
dissidents, as election candidates
1212
dollar markets (diplotiendas) 1289,
1456, 169
dollar-earners, as social bloc 210
downsizing 179, 204
drug trafficking 100, 148
Eastern Europe: collapse 1, 5, 10, 86,
103; and failure of socialism 17,
356; trade imports from 945;
transition 96, 196, 199200
Eastern Liberation Army 43
Economic Council on Latin America
(ECLA) 30
economic crisis (1990s) 20, 37, 869,
13940, 2067; background to
8990; effect of collapse of USSR
1056, 108; effect of US embargo
on 10917; effects of integration
902; energy shortages 1067;
social strategies 142; state budget
deficit (1992) 108; zero option
period 1048, see also Campaign to
Rectify Errors; Special Period
economic development 2930, 31;
Leninist model 19, 24; in Special
Period 1235; Stalinist 19, 20
economic growth 2, 1538, 224; 1970s
8990
economic planning 73, 74, 75, 121;
five-year plans 94, 96, 115, 1234
economic transition 199201
economy: availability of US goods
11415; and dollar markets 1289,
1456; inherent weaknesses 140;
integration into Soviet Bloc 7981,
82; liquidity rates 1412;
productivity 912, 105, 1412;
recovery (1996-2000) 38, 1279,
1389, 1402; state management of
314, 735, 823, 86; state
subsidies 165, 2034, see also living
standards; sugar
education 134, 158, 15960, 214;
public expenditure on 143, 163
egalitarianism 70, 142, 151; and new
social structures 196, 20813
Egypt 68, 81
Eisenhower, Dwight, US President 68
El Salvador 80, 98
elections 121; 1952 (annulled) 61;
(1944) 578; (1992-93) 1212;
popular participation in 85, 121

259

elites: party/state 21113, 215; white


Creole 43, 44, 48, see also social
bloc
emigration: 1993-4 crisis 11112; of
gusanos 69; Mariel exodus (1980)
112
employment: offers of 17980;
temporary agencies 174, 204; in
tourism 1356, 1601
energy use 156, 162
environment, and privatisation 9, 10
ESCD (Enterprise for Service for the
Diplomatic Corps) 169
Ethiopia 80, 86, 99
FAR (Revolutionary Armed Forces) 75,
167, 168; power of 21213; role in
SPE 182, 200, 212, see also SPE
FE (Familia en el Exterior) (relatives
abroad) 145, 147, 189, 195
FEZs (Free Economic Zones) 1389,
172, 205
financial markets 12, 2056
First War of Independence (1868-78)
434
fiscal reform 12, 2034
FMC (Federation of Cuban Women)
36, 75, 77
FONU (Workers Front for National
Unity) 65
Food and Beverage Company 170
food consumption 161
food distribution 72, 130; crisis (1992)
107; guaranteed minimum basket
146, 158, 180; rationing 73, 87, 92
foreign debt 90, 106
foreign direct investment (FDI) 256,
38, 201; contribution to economic
growth 1578; and employment of
blacks 149; Foreign Investment
Code (1982) 8990; Helms-Burton
Law (1995) 11214; joint venture
arrangements 923, 134, 1578,
172, 205, 231; legalised (1995) 25,
125, 1339, 171, 237; in newly
independent states 2930; and oil
and gas extraction 1567; and
profit ratio 1334; revisions 122; in
tourism 1357
foreign policy: independence of 68,
801, 99; Latin America 80, 99;
regional links 2367; relations with
USSR 36, 801, see also trade
FORMATUR, tourist sector training
school 136
France, FDI in Cuba 134, 158

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State Resistance to Globalisation in Cuba

Frankfurt Institute of Social Research


(Frankfurt School) 21, 23, 245
Free Trade Agreement of the Americas
239
Gaviota (SA) 129
George, Susan 67
Germany, reunification 96
globalisation, alternatives to 8
Gorbachev, Mikhail 35, 99, 101, 103
Gramsci, Antonio 7, 224
Granma, rebels boat from Mexico 63
grassroots movements 56n, 8;
growing influence of 239
Grau San Martn, Dr 534, 56, 579
Grenada 86
Guatemala 63n
Guevara, Ernesto Che 63 and n, 70,
92, 188, 228
Guiterras, Rafael 50
gusanos, mass emigration of 69
Haiti 43
Havana, bus drivers strike 53
Havana Golf Club 170
Havantur 172
Hay, John, US Secretary of State 48
Hayek, Friedrich von 7
health care 80, 158, 214; effect of US
embargo on 116, 143; public
expenditures 143, 160, 1634
Helms-Burton Law (1995) 11214, 116
Hermanos al Rescate 113
Hong Kong 31
housewives, as cuentapropistas 194
housing 159, 161
Hungary 95, 100
ILO (International Labour
Organisation) 187
IMF (International Monetary Fund)
11, 163, 239; Cubas refusal to deal
with 12, 83, 111, 206, 230
import substitution 667
incentives for workers 74, 178, 209,
2278; potential for corruption
178, 209; and self-employment
188, see also jabita
income disparity 132, 1446, 226,
227; cuentapropistas 147; and those
with family abroad (FE) 1456
independence movements 20, 289,
334; Cuban 428; newly
independent states 2930
Index for Gender Development 162
Index of Human Poverty 162
India 81

Industria Militar 167


infant mortality rate 80, 116, 143, 163
informal economy 14, 15; Cuba 39,
1867, see also black market; selfemployment
Institute of Agrarian Reform (INRA) 65
institutional transformation 200,
2012, 216; and social bloc
formation 208
Inter-American Development Bank 15
international financial institutions
(IFIs) 10, 2056
International Monetary Fund (IMF) 11
International Socialist Tendency 21,
24
International Sugar Council 68
INTUR (State Institute of Tourism) 121
Italy, FDI in Cuba 134
Izquierda, Ala 53
jabita incentives 136, 146, 178
Jamaica 86
Japan 30, 68
jineterismo 150, 192
John Paul II, Pope, visit (1992) 117,
198
JUCEPLAN (Central Board of
Economic Planning) 75, 121
Karl Marx Club 50
Kennedy, John F., US President 68
Keynesian economics 7, 31
Kornai, Janos 35
labour: contractual rules 179, 204;
effect of privatisation on 910;
productivity 912, 105
labour force, education and skills 134,
15960
labour market flexibility 12, 174, 204
labour movement: Castro and 689,
71; and neo-liberal globalisation
14; under Machado 52, see also
CTC
labour organisation: reforms 745,
124, see also self-employment; SPE
Lage, Carlos 159, 182
land reform 60, 71, 72, 73
Latin America 10, 99, 109; neo-liberal
globalisation in 1416
Lenin, V.I. 18, 19, 24
liberation movements 31, 334
Liga de Instruccin, La 46
literacy 70, 80, 163
Maceo, Antonio 42, 43, 44, 64
MacEwan, Arthur 6

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Index
Machado, President Gerardo 52, 53
Mandela, Nelson 135
Maradona, Diego 135
Marinello, Juan 56
market economy, domestic 1289
Mart, Jos 32, 42, 456, 47; influence
of 51, 61, 6970; and US influence
48
Marx, Karl 18
Marxism 502
Marxism-Leninism, and antiimperialism 28
Marxist socialism 1720
mass organisation see OPP
Matanzas province 71
medical schools 81, 116, 143
Melndez, Ernesto 96
Mexico 16, 634, 134, 205
middle class, lacking in Cuba 423, 60
military-industrial complex 1667
Ministry of Basic Industry 181
Ministry of Economy and Planning
121
Ministry of Finance and Prices 121,
180, 191
Ministry of Foreign Investment and
Economic Co-operation 121, 139
Ministry of Labour and Social Security
121, 173; registration of selfemployed 187, 191; and SPE
process 174
MINTUR (Ministry of Tourism) 121,
135
Moa Nickel Company 1401, 156
modernisation theory 30
modes of production: military 167; in
state and private capitalism 201,
26, 181, 216
Moncada military barracks, attack on
(26 July 1953) 612
Monroe Doctrine 42
Municipal Assemblies 121, 122
National Bank of Cuba 125, 137,
1445
National Confederation of Cuban
Workers 523
national development theory 267, 33
nationalisation 60, 712
nationalism, and communism 534
nationality, development of Cuban
445
natural gas 156, 158
NEC (Nueva Empresa Cubana) 168,
176, 216
neo-liberal globalisation 1, 5, 223;
compared with new Cuban

261

structures 21617; global trends 12,


197, 203, 206; hegemony of 68;
possibility of collapse of 2389; in
practice 813; resistance to 5, 8,
164, 197, 2245, 2301; social
consequences of 1416
neo-liberalism 67, 239
newly independent states 2930
Nicaragua 80, 86, 98, 99
nickel 91, 95, 105, 106, 134; industry
growth 1401, 156
Non-Aligned Movement 29, 81, 86
Ochoa, General Arnaldo 100
OECD (Organisation for Economic
Cooperation and Development) 79
oil refining industry 79, 90, 93, 205;
reduction in Soviet deliveries 101,
105
oil reserves 156
ONAT (Office of Tributary Collections)
191, 211
OPP (Organs of Popular Power) 75;
membership of 77, 789; and
Popular Councils 122, see also
ANAP; CDR; CTC; FMC; UJC
Ortodoxos (Partido del Pueblo
Cubano Orthodoxo) 58, 60; and 26
July Movement 61
Palma, Tomas Estrada 48
Paris Club, debt rescheduling (1986)
92
Paris, Treaty of (1898) 48
Partido Obrero Socialista 501
party/state apparatus 29, 31, 3440,
86, 1501; and market practices
119, 1734, 1834, 2067; and
pillars of Revolution 218, 21920,
225, 231; possibility of future
collapse of 2334; theoretical
foundations (Cuba) 367, 198, see
also PCC
PCC (Communist Party of Cuba) 2,
34, 70; constitutional position of
75, 76; continuing strength of
1501; and global economy 197,
2012; and institutional transformation 2013, 218; and pillar of
unity 218, 2267; Statement of
Social Policy 1589
PCC Congresses 88; 1st (1975) 73; 3rd
(1986) 912, 99100; 4th (1991) 87,
1056, 1201; 5th (1997) 38, 165,
167
Pea, Lazaro, CTC 55, 59

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State Resistance to Globalisation in Cuba

Prez, Colonel Armando Betancourt


168, 175, 183, 212
perfeccionamiento 166
peripheral states, in world systems
theory 33
petit-bourgeoisie: as leaders 29; and
push to communism 72
Petras, James and Henry Veltmeyer,
Globalisation Unmasked 17, 33
pharmaceuticals 93, 116, 236
Platt, Senator Oliver 49
Poland 100; Solidarnosc 133, 235
police force: control of black market
125, 131, 134; corruption 210;
repression 192, 210; to control
cuentapropismo 187, 188, 190, 192,
210; and tourism 136, 192
Pollock, Friedrich 213
Popular Councils 122, 129, 220
popular participation 239; in Cuban
Revolution 36, 645, 67; lacking in
USSR and Eastern Europe 356; and
new structures 2202; as pillar of
Revolution 41, 845, 183; risks to
22930, see also OPP
poverty, Latin America 15
PRC (Cuban Revolutionary Party) 46,
50
prices: and wages 180; world market
124
Pro, Carlos, President 59
private corporations: power of 8,
2301, see also TNCs
privatisation 2, 811, 12, 1415, 203
property: private 71, 122; rights for
foreign investors 133
prostitution 1923; and tourism 148,
14950
PSP (Cuban Communist Party) 32, 57,
59, 67
Puerto Rico 46
PURS (United Party of Socialist
Revolution) 70, see also PCC
push to communism 703
racism 1478, 149, 227
Reagan, Ronald 98
Rebel Army, formed in Cuba 634
Reciprocal Trade Agreement (1934)
5960
referendum, on constitution (1975)
756
regionalism 30
Revolutionary Offensive 70, 72
revolutionary socialism 1617
Rodrguez, Carlos Rafael 96

rural workers, and 1959 Revolution


645, 71
Russian Federation 104, 199, 200
RVE (agency for recovery of state
assets) 169
Santiago de Cuba, Rebel Army in 64
SAs (Sociedades Anonimas) 93, 129, see
also SPE
Schools of Revolutionary Instruction
69
SDPE (System of Economic
Management and Planning) 73, 74,
121, 169
Second War of Independence (1895)
467
Second World War 19, 56
see also PCC
self-determination, national 289, 30
self-employment system (cuentapropismo) 38, 39, 124, 1303,
18495; decline in 1856, 185, 193;
defined 1868; disproportionately
white 148, 190; dollar earnings
210; eligibility for 191; and income
disparity 147, 1889; and
perception of state 195; problems
of 18790; and representation in
CTC 133, 18990, 211; as smallscale capitalism 184; social
diversity within 209, 21011; state
control of 186, 1903, 1945;
taxation of 1323, 186, 189, 1912;
and unemployment rate 1434,
1935
service sector 153, 155
Sheritt Company, Canada 140
Shmeliov, Nikolai 100
Singapore 31
slavery 43, 44
Smith, Adam 27
social bloc formations 20613, 225;
cuentapropistas 209, 21011, 215;
and future of Cuba 234; MilitaryCivil Bureaucratic 211, 215;
party/state elite 21213, 215; and
popular participation 2202; state
business leaders 208, 209; state
service professionals 213; state
service workers 21316;
technocratic-entrepreneurial 2089,
21112; workers under SPE 21415
social development, international
reports 1624
social expenditure 1423, 203;
reductions in 2, 934

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Index
social indicators 1424, 220, 235; and
commitment to social growth
15862
social justice 42, 159, 227
social welfare: continuing
commitment to 144, 158, 235;
unemployment benefits 179
socialism: and state capitalism 234;
as transitional phase 17
socialism in one country 18, 20
Sofia, Bulgaria, CMEA meeting (1990)
956
Sol Mela Group 158
South Africa 236, 237
South Korea 31
Spain 43, 48, 501, 134, 158
SPE (sistema de perfeccionamiento
empresarial) 1668, 216;
applications to join scheme 1801;
company management 1769, 204,
20910; conformity to pillars of
revolution 1814, 202; Directorship
Committee 175, 176, 178, 182,
209, 2201; Executive Committee
for 174, 175, 183, 21112; process
of 1745
Special Period (1991-96) 378, 87,
106; political reforms 11820,
1645, 2013, 207; response to new
world order 119, 152, 225, see also
economic crisis
Stalin, Josef 18, 19, 20
Stalinism 51
standard of living: 1950s 65; during
CMEA years 80, 86; recent
improvements 1612
state 34; and neo-liberal globalisation
1314, 198, 2389; shift of power
from 12, 8, 12, 1989, 238
state business leaders 208, 209
state capitalism 20, 214, 31, 182,
223; bureaucratic 234; decentralised bureaucratic (Cuba) 256;
democratic 223; totalitarian 22
state institutions 89; reformed 1212,
1234, 1645, 201
state service workers 21316, 221
state socialism 1, 1617
state supremacy: and means of
production 122; and new structures
21920, 225; as pillar of Revolution
41, 84, 183; risk to 2289, see also
party/state structure
state-owned corporations 38, 16874,
see also SPE
Strange, Susan 1314
strikes 523, 61

263

structural adjustment programmes


(SAPs) 11
student organisations 53, 57, 65
sugar 43; continued dependency on
49, 60, 66, 72; deals with USSR 56,
68, 723; and economic crisis
(1992) 107; productivity 723, 154;
strikes (1933) 523
sugar prices 73, 89, 901
taxes 9; collection of 188, 191; personal
income tax regime 1323
technocratic-entrepreneurial social
bloc 2089; links with elites 21112
technology: access to 174; bank infrastructure 138, 154
Teran, Carmen Martinez 155
terrorism, US war against 230, 238
TNCs (transnational corporations)
1011, 14, 231, 237
tobacco production 60, see also
Brascuba
Torricelli, Senator Robert 111
Total-Elf 158, 172
tourism 26, 38, 60, 93; dependence on
1556; and dollar markets 1289;
employment in 1356, 1467; FDI
and 1357; incomes from 132, 146;
industry growth 141, 1467, 155;
and social problems 136, 14850;
to produce hard currency 125
trade: Cuba and world markets 314,
66, 8990, 92; debt 90, 91, 95;
effect of collapse of communism
867, 947, 1056; reforms 12,
2056; regional 2367; with
Russian Federation 104; with US
109, 111; US embargo 3, 89,
10917, 206, 2357; with West 89,
205, see also CMEA; oil; sugar
trade unions 204, see also CTC
transition states 96, 196, 199200
transport, crisis (1992) 107
Trotsky, Leon 18
Trotskyites 21, 51
26 July Movement 616, 678
UBPCs (Basic Units of Co-operative
Production) 130, 138, 140, see also
economy
UJC (Union of Young Communists)
68, 75, 77, 136
unemployment 107, 1434, 179;
cuentapropismo and 1434, 1935;
options 17980, 193; reduced 1601
Uniones Agropecuaria Militar 167
United Kingdom 158

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State Resistance to Globalisation in Cuba

United Nations 30, 68, 236; General


Assembly 29; and illegality of US
embargo 114
United Nations Human Development
Report (UNDP) 162
United States 3, 1920, 49, 109; and
Bay of Pigs 69; Cuban Democracy
Act (Torricelli Act) 111, 114, 116,
117; and Cuban independence
(1898) 478; and Cuban Revolution
678; embargo on Cuba 3, 89,
10917, 206, 2357; expectation of
fall of Cuban socialism 11011; and
future of Cuba 234, 2356, 238;
hegemonic position of 102, 219;
Helms-Burton Law (1995) 11214,
116; migration policies 11112;
military occupation of Cuba (18981902) 489; New War Against
Terrorism 230, 238; Reciprocal
Trade Agreement (1934) 5960
unity: and new structures 21718; as
pillar of Revolution 41, 834, 183;
risks to 2267, see also party/state
structure
urban workers 64, 71
URC (Union Revolucionaria
Comunista) (Communist Party of
Cuba) 52, 546, see also PSP
US dollar 91; legalisation 125; role in
economic reforms 1249, 145
USSR 56; disintegration of 1, 3, 17, 36,
867, 96109; dismantling of
1034, 199, 200; economic models
1920; and end of Cold War 98100,
1023; military aid from 80, 99,
100; perestroika and glasnost 356;
relations with US 989; sugar deals
with Cuba 56, 68, 723; trade with
Cuba 79, 90, 95, 105, see also CMEA;
Russian Federation

Vanguard Peasant and Worker


Movement 71
Vega, Juan Jos 137
Veloz, Augustn Martn 50
Venezuela 16, 134, 158
wages 15, 161; linked to national
productivity 74, 178, 182; and
prices 180; SPE salaries 1778
Wallerstein, Immanuel: and
development theory 301;
Eurocentricity 323; world system
theory 267, 29, 33
Weaver, Richard 7
Wilson, Woodrow, 14 Points 27, 32
women: employment 161; FMC 36,
75, 77
Workers League of Oriente 50
Workers Party, Brazil 16
working class 49, 60; movements 46,
502
World Bank 11, 164; Cubas refusal to
deal with 12, 83, 111, 206, 230;
praise for Cuba 164, 195
World Conference Against Racism
(Durban 2001) 236
world markets 278, 30; Cubas
relations with 314, 66, 8990, 92,
1239; Eastern Europe and 356;
effect on future of Cuba 2368; and
trade deals with Russian Federation
104
world system theory 267, 29, 33
World Trade Organisation (WTO) 6n,
11; General Agreement on Trade in
Services 11
Yeltsin, Boris 96
Zanjn, Pact of 44
Zapatista movement, Mexico 16