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  HOME | Cuba

Cuban Legislature Approves Fitting Private Firms into Socialism

HAVANA – The Cuban legislature approved on Thursday the latest version of the reforms being pushed by the Raul Castro government recognizing private firms within the island’s new socialist model, although state management will still dominate and the accumulation of wealth and/or property will not be permitted.

“These basic elements ... reaffirm the socialist character of the Cuban Revolution and the role of the Communist Party as the overriding directing force for society and the state,” said Castro in remarks closing the extraordinary session of the National Assembly.

The more than 500 lawmakers unanimously backed the new reforms to “update” the Cuban economic model and consolidated Castro’s economic legacy with the opening of the private sector and foreign investment as its fundamental pillars nine months before he leaves office at age 86.

According to Castro, the economic guidelines allow “changing all that must be changed,” wording included in the “Concept of the Revolution” coined by the late Fidel Castro in a 2000 speech.

“We will do so at the speed that allows us the consensus we can forge within our society and the capability to demonstrate how to do things well to avoid serious errors that could compromise the successful fulfillment of this gigantic and honorable task,” said Fidel’s younger brother.

The National Assembly gave the green light to the guiding documents approved at the 7th Communist Party Congress in April 2016, namely the economic development plan through 2030, the new 2016-2021 economic policy guidelines and the “conceptualization” of the new economic and social model.

After several years of discussion and delays, finally the new socialist model has been prepared, recognizing the legal status of small private companies but specifying their “complementary role” in the economy, where state management must prevail.

In opening up space for the private sector, the economic reforms launched in 2010 by Raul Castro – and revised at the 7th party congress – authorized autonomous work to Cuban-born citizens along with the creation of non-agricultural cooperatives.

The new laws, approved in 2011, allowed people working for their “own account” – who number more than 500,000 – to hire workers, which in practice led to the proliferation of medium, small and micro private companies, although they operated for years without the required legal status.

Vice President Marino Murillo – known as the “reform czar” and who served as economy minister from 2014-2016 – said on Wednesday that although forms of private management were being legalized, this did not mean that the concentration of wealth and property would be allowed, a message that Castro reiterated on Thursday.

The reforms have given a dynamic push to the island’s rigid centralized economy, where in recent years small businesses such as restaurants, beauty salons and assorted other companies have proliferated and certain sectors have been opened to foreign capital.

Those changes, however, did not prevent the island from sliding into recession for the first time in 23 years in 2016, experiencing negative growth of -0.9 percent primarily due to the Venezuelan crisis, which has reduced the supply of crude oil sent by Caracas to Havana by some 40 percent and severely hurt the Cuban economy.


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