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Cuban Prime Minister Manuel Marrero Cruz, during his address at an urgent session of the National Assembly of People\u2019s Power on Thursday, June 18.<\/p>\n
Abel Padr\u00f3n Padilla<\/p>\n
Cubadebate<\/p>\n
Cuba\u2019s communist government will open key economic sectors such as banking and energy to private capital and foreign companies and begin privatizing state companies through share sales, the island\u2019s prime minister told the National Assembly Thursday.<\/p>\n
The measures are among the most consequential in a market-reform package that Cuban leaders have rushed to approve in an effort to remain in power amid a severe humanitarian crisis, daily protests and significant pressure from the Trump administration to modernize the country and make democratic changes.<\/p>\n
In comments to reporters and in a speech at a Communist Party meeting this week to approve the reforms, D\u00edaz-Canel announced some of the changes, including decentralizing the economy, granting more autonomy to state enterprises, reducing the government\u2019s role and allowing foreign investment in the private sector. Some of the most impactful measures announced by Cuba\u2019s Prime Minister Manuel Marrero Thursday include allowing:<\/p>\n
Private and foreign capital to purchase and sell fuelThe creation of private corporate bankingPrivate business owners to own more than one company and hire more than 100 workersPrivate businesses in agriculture and tourismTourism property sales, evaluated case-by-case, for Cubans resident in the country and abroadForeign investors to hire workers directlyForeign investment in Old Havana and other tourist spots, in state telecom ETECSA data centers, mobile networks, and other digital infrastructureThe extension of surface rights up to 99 years and leases up to 50 years for foreign investmentsReal estate development in tourismFarmland lease rights for an \u201cindefinite period\u201dWholesale and retail trade without limits by foreign entitiesThe sale of state assets and state companies\u2019 shares to the private sector and foreign companies. According to a report by Cuban state outlet Cubadebate, Marrero proposed \u201callowing the purchase of shares in state-owned enterprises by legal entities and individuals\u2014both domestic and foreign\u2014as well as authorizing the sale of state assets to these same economic actors.\u201dDire Straits<\/p>\n
Taken together, the reforms proposed significantly expand the private sector six decades after Cuba\u2019s communist leaders forbade all private business\u2014even frita stands\u2014 and adopted a centrally planned economy model that ended up ruining the country and dragging Cubans into a severe humanitarian crisis.<\/p>\n
Currently, the government is in such dire straits that it is even seeking to transfer the management of the country\u2019s zoos and aquariums to private hands, another announced change.<\/p>\n
It is unclear whether the Cuban government has the capacity to enact these reforms under the current circumstances, when daily blackouts last more than 20 hours, and the government is broke and unable to import fuel, food and medicines. As Cuban leaders were laying out their proposals, protests were taking place across the country, especially at night during the power cuts.<\/p>\n
The United States holds much leverage over how these reforms could go, not just due to the embargo but also to a recent executive order that allows the administration to sanction foreign companies doing business with Cuba, which has caused several to leave the island.<\/p>\n
In a speech to the National Assembly on Thursday, the country\u2019s handpicked president D\u00edaz-Canel said that changes were necessary because these were not normal times. Cuba has been resisting \u201ca barbaric punishment,\u201d he said in reference to U.S. sanctions and military threats by President Donald Trump.<\/p>\n
\u201cOur beloved Cuba is living through the most difficult hours of this century, and we have the historic responsibility to save it,\u201d D\u00edaz-Canel said. \u201cIn our effort to correct errors and shortcomings while facing the external blockade, we have agreed to undertake the always delicate mission of further opening up the economy, prioritizing Cubans\u2014whether residing in the country or abroad.\u201d<\/p>\n
He said those decisions were not linked to negotiations with the United States. He again made it clear that Cuba was not making political concessions.<\/p>\n
\u201cCuba remains willing to engage in respectful dialogue with the United States government on all possible issues,\u201d he said, adding that \u201cCuba will not ask for permission to exist, nor will it surrender its sovereignty.\u201d<\/p>\n
Raul Guillermo Rodr\u00edguez Castro, the grandson of Cuba\u2019s nonagenarian leader Ra\u00fal Castro, who has been negotiating with the Trump administration and is believed to be behind the push for reforms, made a similar point in a rare interview published Thursday by The National, an English-language media outlet in Abu Dhabi.<\/p>\n
\u201cWe continue to believe that the path of dialogue is the one that brings us closer, not confrontation. But those opportunities will never be based on conditioning, on impositions, and our people bowing to demands that will not be possible,\u201d he said.<\/p>\n
Implications for the Future<\/p>\n
The reform package is extensive, and it will take time for economists, experts, and the business community to fully grasp its scope. The details are still scarce, and key questions about its implementation remain unanswered.<\/p>\n
\u201cThe announced measures represent an acknowledgment of economic realities that many of us Cubans have been pointing out for years,\u201d Hugo Cancio, a Cuban-American businessman who had been pushing for reforms in Cuba, told the Herald. \u201cThey are a positive step, but the real challenge is not announcing changes; it is creating the legal, financial, and property guarantees that generate the confidence needed to attract investment and produce concrete results.\u201d<\/p>\n
D\u00edaz-Canel promised a new legal framework to protect investments, though he and Marrero made clear that the reform would not imply changes to Cuba\u2019s communist constitution, which mandates a one-party communist system and lacks the core pillars of the rule of law.<\/p>\n
\u201cAny Cuban citizen residing in Cuba or abroad who is interested in investing, donating, contributing technology, opening a market, or launching a project in the country will benefit from a clear, stable, and respectful framework, just as foreign investors do,\u201d he said.<\/p>\n
But trust in the government and its ability to turn words into action is low among Cubans abroad and foreign investors. Several Cuban-American businessmen from Miami, including Cuba Study Group Chairman Carlos Saladrigas and Inter Miami owner and Mas Tec president Jorge Mas, told the Herald that major investments will not flow until there is a rule of law in Cuba.<\/p>\n
Ric Herrero, the executive director of the Cuba Study Group, who studied similar market-reform processes in China and Vietnam, said that in communist countries opening up their economies, the rule of law was not immediately enshrined and that constitutional changes followed reforms first decided by those in power.<\/p>\n
\u201cSo the proof will be in whether Cuban leaders can actually implement these reforms in an urgent way, given the crisis,\u201d he said.<\/p>\n
Herrero also fears that the sale of state companies\u2019 shares and assets will turn into \u201ca pi\u00f1ata,\u201d with American and foreign companies buying Cuba\u2019s assets on the cheap, similar to the rapid privatizations after the fall of communism in Russia.<\/p>\n
\u201cGiven this administration\u2019s focus on America first, it is foreseeable that you\u2019re going to see American enterprises be the first ones to move in and try to see if there\u2019s an opportunity here to secure a license and invest in some of these distressed assets,\u201d he said.<\/p>\n
The Trump administration has yet to comment on the proposed reforms. But Cuban exiles, who eye a democratic opening in Cuba under President Trump and Secretary of State Marco Rubio, will likely be disappointed if the administration looks at the reforms approvingly and seeks to engage with the current leadership to advance an economic agenda, similar to how it is dealing with Venezuela after the capture of Nicol\u00e1s Maduro.<\/p>\n
\u201cMake no mistake, the playbook is Venezuela,\u201d said Herrero. \u201cAnd that\u2019s going to disappoint a lot of people.\u201d<\/p>\n
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