People’s Democracy in Cuba
Rectifying errors in economic policy
The Second Ordinary Session of the Tenth Legislature of the National Assembly of People’s Power was held in Havana from December 18 through December 22, 2023. The Assembly met in commissions (permanent legislative committees) on December 18-19 and in plenary session on December 20-22, 2023. Among the items on the agenda were a report on the economy, ratification of decrees emitted by the government since the last session of the legislature, reports on the implementation of new laws on the Family Code and the Judicial Process, reports by the Minister of Agriculture and the Minister of Industry, and proposed new laws on public health and military budgeting.
The deputies gave full support to what the government is doing and intends to do with respect to these themes and to the proposals of the legislative commissions. Many of the deputies took to the floor to elaborate in support of the reports and proposals, based on their experiences in their local territory. Any deputy can take the floor to address the assembly, obtaining recognition through the simple procedure of passing a note to the President of the National Assembly. All deputies who solicitated the taking of the floor were recognized, although sometimes the President requested more succinct expression in the interest of time, and a few deputies withdrew their requests to speak because of limited time. The plenary session of the National Assembly was covered live on Cuban television.
The 470 deputies of the National Assembly are elected in a system of direct and indirect elections that ensures the orientation of the deputies toward the representation of the interests and needs of the people and the sovereignty of the nation, in that they are not required to conduct costly election campaigns, and they therefore have no political debts to particular economic or social sectors. The first stage in the process is the election of delegates to local assemblies in the 168 municipalities and local territories of the nation, with secret voting by citizens at least 16 years of age, choosing one of two or more candidates, who are nominated through a series of neighborhood nomination assemblies in each of the 12,427 voting districts in the nation. Once the 168 municipal assemblies are constituted, they nominate candidates for the national people’s assembly. Representatives of the mass organizations of workers, farmers, women, students, and neighborhoods recommend candidates for the national assembly to the delegates of the municipal assemblies, and the candidates approved by the delegates are then presented to the people in each municipality for ratification in direct secret voting. Half of the candidates for the National Assembly are municipal delegates, and half are other citizens who have been identified by the mass organizations.
We are describing here an electoral system that is highly decentralized and rooted in local neighborhoods, with influence divided among five organizations that represent the various sectors of the people, organizations that themselves have internal democratic processes of locally based direct and indirect elections. It therefore is a structure that minimizes the capacity of known national actors to control the process. In addition, money plays no role. There are no campaigns conducted in conventional or social media; basic biographical information concerning the candidates is disseminated in local posters and on national television.
The National Assembly of People’s Power is thus constituted for five-year terms, and it is the highest political authority in the nation. It elects the President, the Prime Minister, and the other ministers of the executive branch of the government as well as the highest members of the judicial branch. During the sessions of the National Assembly, the ministers of the executive branch “render accounts,” explaining and defending their direction of the government. In addition, during the sessions, the Assembly reviews laws that were issued by decree since the previous session of the Assembly, a review that includes an evaluation by relevant commissions. In addition, with respect to major legislation, the national people’s assembly enacts new laws.
The National Assembly meets in regular sessions two times a year, and extraordinary sessions can be called. Between sessions, the deputies work in one or more of the eleven commissions of the National Assembly, including commissions on Economic Affairs; International Affairs; Youth, Children, and the Equal Rights of Women; Health and Sport; Local Organs of People’s Power; and Services to the population. Commission work can include visits to communities to assess conditions. Most of the deputies of the National Assembly continue with their regular employment and salary, although some take leaves of absence due to duties in a commission or in the administration of the National Assembly. All receive the same salary that they receive in their regular employment, and there is no custom of paid speaking engagements for deputies, so that there are no financial rewards connected to service as a deputy in the National Assembly, although it is a position of high prestige.
The current national people’s assembly is the tenth that has been constituted since the system was established in 1976. Some 55.74% of the deputies are women and 45.11% are blacks and mulattoes, disproportionately high with respect to both. Twenty percent are between eighteen and thirty-five years of age, with an average age of forty-six years, and 94% have university education.
§
The Communist Party of Cuba is the highest moral authority in the nation. Its members, selected by the Party itself, consist of approximately 15% of the adult population. The Party has no legal or constitutional authority to elect the members of the executive branch, nor can it enact legislation. But it is held in high regard, and it guides the political process in the development of laws and policies. Many members of the legislative, executive, and judicial branches are members of the Party, but not all are. The recommendations of the Party are strongly influential, but they are not the final word. Legislative proposals of the Party are always accepted by the National Assembly, but always with modifications.
Although the Constitution in Article Five names the Party as the leading force of the Revolution, the Constitution confers actual political authority on the National Assembly of People’s Power, elected directly and indirectly by the people. Accordingly, the influence of the Party over the political process is not guaranteed. If it is to maintain influence over the political process, the Party must maintain its prestige among the people, which it can only do by giving high priority to the interests, needs, and dissatisfactions of the people.
There is no organized internal political opposition in Cuba, although legal and constitutional structures make possible the emergence of a political opposition, if determined political sectors were to mobilize the political will, penetrating the neighborhood nomination assemblies and the mass organizations. There is political opposition from the extreme Marxist Left and the capitalist Right, but neither has sufficient presence to constitute itself as an organized opposition. There is an apolitical opposition, expressing itself in criminal behavior, citizenship passivity, and emigration, which has more force than the political opposition of the Left or Right, but it lacks the capacity to organize itself politically. The Cuban revolutionary project is constantly on a campaign against these apolitical forms of opposition, which the Revolution perceives as a potential political threat. The enemies of the Revolution, located principally in Miami, are always trying to tap into the apolitical opposition, with the support of the U.S. government, but with very limited success.
§
Problems in the Cuban economy and the rectification of errors
The economy was the central theme of discussion, analysis, and proposals at the session of the National Assembly of People’s Power from December 18 through December 22, 2023. Important presentations and interventions with respect to the Cuban economy were made by Cuban President Miguel Díaz-Canel, Prime Minister Manuel Marrero Cruz, and Vice-Prime Minister and Minister of the Economy Alejandro Gil, and presidents of various commissions.
It was recognized that Cuba today has serious economic problems, and there is dissatisfaction among the people as a result. The causes of the economic crisis were stressed. The principal cause is the intensification of the U.S. blockade, especially the inclusion of Cuba on a list of countries that supposedly sponsor terrorism, which enables the USA to block banks and companies in third countries from carrying out financial and commercial transactions with Cuba. In addition, there has been a significant decline in income from tourism, which is the nation’s principal industry, as a result of COVID-19 and the world economic crisis. Tourism will finish 2023 with 2,240,000 visitors, which is a 50% increase over 2022, but the figure is 64% of what was attained in 2019. Moreover, there has been a decline in the price of nickel, an important Cuban export, and an increase in the prices of imported food.
There are multifaceted consequences of these dynamics. The final figures for the year 2023 will show a decline in the economy of 1-2%. There is insufficient foreign currency, which limits the importation of petroleum, fertilizers, equipment and supplies necessary for national agricultural and light industrial production and for the energy system. The production of viands, corn, pork, milk, and eggs declined from their 2022 levels, affected by insufficient fertilizer and petroleum. The providing of products for the subsidized monthly family basket has been disturbed, as has been the generation of electricity. There is a state budget deficit, provoked by the continuation of state subsidies for necessary food and retail goods combined with a decline in state income. There is monetary instability, in which the official exchange rate for the Cuban peso is much higher than its value in the informal market. This provokes the sale and purchase of many retail goods in the informal market, outside the regulation and control of the banking system, which leads to speculative prices, the selling of goods far above their actual value.
Speculative pricing is not the only source of inflation, in that there is a low supply of goods relative to demand, which is the fundamental source of inflation in any economy. The rate of inflation is 30% for 2023, which is less than it was in 2022 (39%) and 2021 (77%), but it remains at a level that provokes a decline in the standard of living and dissatisfaction among the people. The inflation is concentrated in the non-state sector and in the prices of food, which is primarily produced in the non-state sector.
The principal cause of these problems is the U.S. blockade, a factor concerning which the Cuban government has no control. The government proceeds on the assumption that the blockade will continue indefinitely, and it has been formulating a plan that addresses the factors that are under the control of the government.
The government economic plan has stressed in recent years the need to increase national production, both in agriculture and light industry, and to this end, it has expanded space for private enterprises, constitutionally recognizing private property as a form of property in its socialist economic system, operating under the regulation and control of the state. Currently, the Cuban economic system has 17,429 economic enterprises (2,513 state, 9,652 small and medium-sized private enterprises, 5,138 cooperatives, and 106 mixed state/private). But the state enterprises are much larger, such that state enterprises account for 92% of sales and 75% of exports. The plan envisions expanding productive capacity through the granting of licenses to private and medium-sized enterprises in high priority sectors in production and commerce, thus reducing dependency on the use of foreign currencies to import food, light industrial goods, and supplies for production. And the plan seeks to increase production in the natural Cuban export industries of tourism, sugar, rum, and tobacco, thus generating more foreign currency, which can be utilized to invest in productive capacity.
As immediate measures in the context of the current emergency, tariffs on the importation of sugar, rum, and tobacco will be imposed, in order to facilitate their sale in the Cuban domestic market, where they enjoy strong appeal. And it seeks to expand national production of equipment and supplies necessary for national production, through creative strategies of local production, creative new applications of science and technology, and identifying new sources of foreign investment. The government will continue on its road of authorizing new small and medium-sized private and state companies, but it will do so with greater attention to the regulation and control of the companies, to ensure that they are operating in accordance with the national plan with respect to increasing national production in areas of priority.
Some 80% of national agriculture production is carried out by cooperatives, independent farmers, and other forms of non-state property, with 20% carried out by state enterprises. This is a consequence of agrarian reforms of the 1960s and the 1990s. The government directs production through contracts with the non-state enterprises, specifying what products they will produce at what quantity, and the prices they will receive. In this way, the government obtains food products that it sells to the people at subsidized prices. The government previously announced that it will gradually move from the subsidizing of goods to the subsidizing of persons most in need, but it has made little progress toward implementation.
The report to the National Assembly of Prime Minister Manuel Marrero Cruz attracted the most attention, because of its comprehensive character, its announcement of several new measures, its call for the rectification of errors, and its declaration of a more active Ministry of Economy and Planning and Ministry of Finances and Prices, in order to ensure compliance with the measures announced.
The Prime Minister denounced the lack of implementation of economic policies adopted by the government and approved by the National Assembly. He declared that the ministers of the government have “a high level of dissatisfaction” for not having advanced further to diminish the effects of the U.S. blockade and the world economic crisis. There are many insufficiencies, he declared, that reduce the effectiveness of the adopted economic policies. He declared that “we need a stronger Ministry of Economy and Planification,” and we need to strengthen the work of the Ministry of Finances and Prices, in order to overcome difficulties, like high prices, and “to correct policies that have not permitted us to advance.” In his view, there are “acute distortions that violate the institutionality and the regulations of the country.”
The Prime Minister cited examples. The country has not moved forward during the past year with the generation of income through increased exportation, in spite of the 2020 Resolution 115, which involved the decentralization of the rate of exchange, giving private and mixed companies the autonomy to set the currency exchange rate in international transactions. However, this has not led to increased exportation nor to the diversification of the economy nor to greater foreign investment, but it has generated distortions. Resolution 115 must be rescinded, he noted.
In addition, the Prime Minister declared, there are deficiencies in the control of agricultural land through contracts between the state and productive non-state entities. There is non-compliance and violations of the contracts. And there is not adequate management of the tributary system, creating a situation in which tax evasion through income under-reporting is the norm.
There has emerged, therefore, a situation in which the state monopoly of commerce has been displaced by non-state actors, who develop operations outside the control of the state, applying abusive and speculative prices. The prices of the non-state sector are based in a rate of exchange set by the illegal exchange of currency, which implies a devaluation of the Cuban peso.
In addition, the provincial and municipal governments have not always exercised their authority to manage the development of the economic and social life of their territories. There is insufficient confrontation of illegalities, corruption, and social indiscipline.
We must attain, the Prime Minister declared, an understanding of the most secure resources at our disposal to increase production and to increase the demand in relation to the supply. We must work more and work well.
The Prime Minister also noted that the government has been striving during the past year to improve the work of the Ministry of Foreign Commerce. These efforts have been fruitful, and new projects of foreign investment in areas of high priority national production are now in the early stages of implementation, and additional proposals by foreign investors have been made.
The government and the National Assembly reaffirmed their commitment to free health and education, and it announced that a bonus will be emitted to workers in these sectors. The National Assembly approved a new law on public health, which reaffirms the right of the people to free public health and defines the rights and duties of doctors, nurses, and patients. It enacts the right of women to abortion, which had been the practice since 1965, but never codified in law. It gives special attention to the health needs of women, children, and the elderly; and it addresses the rights of the families of sick persons. And it affirms the right of all citizens to die in dignity.
The message of the Prime Minister was reaffirmed by President Diaz-Canel, who declared in his closing address to the National Assembly:
This last session of the Assembly of 2023 may mark the beginning of a new trend in the behavior of the Cuban economy. Correcting profound distortions and structural deviations that hinder economic performance is a watchword to overcome the very complex situation we face today due to the combined impacts of the U.S. encirclement, the crisis in international economic relations, and our own errors. Once again, everything will depend on our capacity to properly execute and implement the measures set out here.
….
Just as we have recognized errors in the design of the economic plan and its inadequate implementation, we have questioned the approval of new economic actors without precision concerning the rules of action, which could have avoided numerous deviations.
It is also important to point out that the lack of control and defense of the norms that are approved and the inadequate functioning of state entities responsible in implementing them have reinforced the errors. It is now time to move forward with gradual rectification.
….
Special attention needs to be paid to food production, in order to resolve locally the needs of each territory; to recover tourism; to halt the decline in the sugar industry; and to take control of foreign exchange and reorganize the financial system, guaranteeing levels of self-financing and management of foreign currency to those who generate them.
….
I am not going to dwell on these issues any further, because they have already been extensively developed by the Prime Minister and the Minister of the Economy. It is now up to us to create the conditions for the implementation of the decisions, explaining, arguing and, above all, taking care that each one serves the higher purpose of overcoming the country's economic difficulties.
….
So the will to work is imposed on us, along with the eagerness to advance, the willingness to improve, and the deep conviction that we are going to prevail!
A free subscription option is available, with capacity to read, send, and share all posts. A paid subscription ($5 per month or $40 per year) enables you to make comments and to support the costs of the column; paid subscribers also receive a free PDF copy of my book on Cuba and the world-system. Ten percent of income generated through subscriptions to the column is donated to the Cuban Society for Philosophical Investigations.
Follow me on Twitter: Charles McKelvey@CharlesMcKelv14