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30 Nov 2016 | Commentary

Factsheet: Reforms in Cuba

President Raul Castro has shown himself to be a reformer since taking over the office from his late brother, Fidel, in 2008. Change has been happening in Cuba.

Though he remained an “elder statesman,” sometimes commenting on political affairs, Fidel Castro has not had an official political position in 10 years, since he resigned due to illness. Raul Castro has been the de facto head of government for a decade, and the elected president for eight years.

During Raul Castro’s tenure, the Cuban government has launched a slow, but real process of economic reform, and seen moves toward political relaxation. These processes will almost certainly continue in the coming years: Fidel Castro’s death is unlikely to slow or shift the reform process now underway in Cuba; if anything, the process may accelerate slightly.

These changes respond to economic realities. While the pace of change, and the specifics of reform are up for discussion, the reality is that Cuba has been changing and will continue to change, as it updates its economic model and reintegrates more fully into the international economy.

The process of normalization between the United States and Cuba has accelerated some of these changes. But the changes are not dependent on United States’ action, and in many ways the question for the United States is whether or not it wishes to play a role as Cuba changes, or to stand on the sidelines and let others take the lead.

Below are some of the most significant changes that the island has seen in the past five years:

Cuba has been moving towards a more mixed economy, with state owned enterprises alongside a growing private sector. This means that more people are renting out their homes, buying and selling property, and working for themselves or cooperatives than ever before:

  • In 2011 the government approved plans to reduce the state sector. At the outset the Cuban government claimed it was interested in trimming state payrolls by one million jobs, or more. By 2014, payrolls had been reduced by almost 600,000. There are now over 180 different types of jobs that can be held by self-employed individuals.
  • The private sector employed about two million people, over one-third of Cuba’s workforce as of December 2015. This includes roughly 500,000 licensed entrepreneurs, 600,000 unlicensed or part-time entrepreneurs, 575,000 private farmers and those working in cooperatives, and 50,000 joint venture employees. Licensed entrepreneurs are mostly in the service sector: food, transport, housing, and telecommunications. This number today is likely higher as tourism has expanded, increasing demand. About 115,000 people are reportedly working for others in the private sector. A boom in tourism has fueled this private sector.
  • Most farmland in Cuba is now held by agricultural cooperatives or private farmers, instead of bureaucratic state-owned operations. Over 167,000 land grants, mostly to individuals, have provided long-term, rent free leases of unused farmland to private farmers.
  • There are over 360 non-farm cooperatives today, involved in manufacturing, construction, food services, and the commercial sector. The government has also announced plans to convert all of the country’s 8,984 state-owned restaurants into worker-owned, cooperatively managed businesses.
  • Cuba legalized the private sale of cars and homes in late 2011, and also authorized banks to provide small loans for home repairs. This reform also allowed them to rent out rooms on a private real estate market. Since Airbnb began operating in the country in 2015, well over 4,000 renters have signed up for the service, with hosts making an average of $250 USD per booking.
  • These changes have not transformed Cuba into a market-led economy, but taken together, they have reduced the size and increased the efficiency of the public sector, and increased the size and the dynamism of the private sector in the country this is a significant transformation in a five year time span.

Foreign investment has increased and diversified. Cuba’s long-term economic prospects depend on restoring its international credit, establishing new commercial relationships, and attracting the investment that will generate growth.

  • Cuba opened the first elements of a new deep water container port and special development zone in the city of Mariel in 2014, which has attracted even further attention from major companies. Corporations like Unilever have announced plans to open factories in Mariel, which will create new job opportunities for Cubans.
  • Cuba negotiated a debt reduction and debt payment agreement with the Paris Club of industrialized countries in December, 2015. It has been meeting its payment targets, in a plan designed to generate confidence, gain access to international credit, and attract foreign investment.

Cubans have seen an increase in freedom of information, freedom of expression and freedom to travel in recent years. Information is moving around the island and opinions publicly expressed in ways not previously seen before.

  • Political debate has expanded significantly in Cuba, both in social media and in official media, where letters and readers’ comments increasingly reflect criticisms of official positions, through art, and academia. The Cuban blogosphere has expanded, and independent and foreign news, information, and entertainment is circulated widely through the “paquete semanal,”a weekly offering available via flashdrive and shared with thousands of Cubans.
  • In late 2013, the Cuban National Assembly banned workplace discrimination against gay men, lesbians, and bisexual individuals, as part of a new labor code.
  • In January 2013, Cuba eliminated its “exit visa” requirement, allowing citizens to leave the country without advance approval. This has allowed high-profile dissidents like blogger Yoani Sanchez and Berta Soler, a leader of the Ladies in White, to travel outside the country and criticize the government. The first year following this announcement, travel abroad by Cubans increased by 35 percent. Cubans can also now live outside of the country longer without forfeiting their Cuban residency, as long as they visit the island every two years.
  • In 2008, Cuba legalized access to personal cell phone and text messaging services. By 2009, roughly 443,000 Cubans had mobile phones. By 2011 that number increased to about 1.3 million and by 2014, there were 3 million cell phone users on the island. Cubans can also access email on their phones; in 2014, about 100,000 Cubans had signed up for the service.
  • In June 2015, the Cuban state installed 35 WiFi zones in the country. The Cuban government committed to expand this number to 80 by the end of 2016. The number of daily internet users in Cuba has grown to 150,000, more than double the 2014 total. Cuba has committed to ensuring internet access for 50% of the population by 2020.