Cuba announces sweeping economic reforms

In what is widely seen as a response to the intensifying pressure from the Trump administration, the Cuban government has hurriedly punished through a series of dramatic reforms in the past few days.

On Thursdays,Cuba’s National Assembly unanimously rushed through a swathe of free-market economic reforms, in the biggest policy - and some suggest ideological adjustment - to the island’s socialist system since the 1959 revolution.

Over 200 measures were announced, relaxing the communist-run island’s government strict control of economic activity and clearing the way for more private sector involvement. The changes embrace not only foreign investment but also more local private sector business activity.

The dramatic policy shift also opens the door for several Cuban agencies and state enterprises to be either fully privatised or corporate and public-private partnerships with local and foreign investors, with a special outreach to Cubans in the diaspora.

One of the more radical, far-reaching changes is said to be opening up the tightly-restricted Cuban finance sector to private banks.

Other reforms include removing administratively fixed prices with those now being determined by market forces, and eliminating the state monopoly on foreign trade. In the key agricultural industry, farmers will now be able to directly import fuel, commercialise it, and export their products independently. Foreign trade authorisation is being taken out of state control and placed under non-state management, and land use rights for foreign investment are being extended to 99 years.

TOURISM TROUBLES

Analysts familiar with the situation in Cuba have told Caymanian Times that the Cuban government was running out of room to manoeuvre with the US ramping up the economic strangulation of the country. The tourism sector has been particularly hard hit. Several airlines - including Cayman Airways in the past few days - have announced their withdrawal from the destination. Other international companies nervous about US sanctions against them have scaled back their Cuban operations.

“With the peak tourism season looking extremely bleak for Cuba this year, that would have made an already bad situation worse. The pressure on the average Cuban has been enormous. “Time was running out to plan for the season, so the government in Havana had to take some action with that in mind.”

MEA CULPA?

The Cuban President Miguel Diaz-Canal said: “The situation (in Cuba) calls for urgent and necessary changes.” He also noted that what he referred to as the “obstacles” facing his country, “don’t come from outside, nor the blockade.”

President Diaz-Canal blamed what he described as “slowness, bureaucracy and norms that impede those who want to produce.”

Cuba has been facing its worst economic crisis, made worse by an aggressive stance against the island led by the Trump administration’s Cuban-American Secretary of State Marco Rubio.

Earlier relaxations of the US embargo by the previous Obama and Biden governments were overturned by President Donald Trump in his first term and intensified during his second term.

The United States has had a trade embargo against Cuba since 1960 - over 66 years - making it the longest trade embargo in modern history.

‘FRIENDLY TAKEOVER’ THREAT HOVERS

Speculation has been mounting in recent weeks over the likely next steps against Cuba by the Trump administration. Some observers have indicated that there is a real prospect of the US taking possible direct action in some form to topple the Cuban government.

In January, President Donald Trump called on Cuba to “make a deal before it’s too late” and threatened the country with what he called a “friendly takeover” if it didn’t agree to the policy shifts demanded by the US.

The US has called Cuba a “national security threat” and recently announced an indictment against former Cuban leader Raul Castro on charges including conspiracy to kill US nationals, murder,, and the destruction of US aircraft.

This is based on an incident three decades ago when the Cuban military shot down two civilian aircraft owned by a group of Cuban exiles in Miami, which the Cuban government said had violated its airspace. Raul Castro was the Cuban Minister of Defence at the time.