| Welcome to The Latell
Report. The Report, analyzing Cuba's contemporary domestic and
foreign policy, is published monthly except August and December
and distributed by the electronic information service of the
Cuba Transition Project (CTP) at the University of Miami's Institute
for Cuban and Cuban-American Studies (ICCAS).
The Latell Report is a publication of ICCAS and
no government funding has been used in its publication. The
opinions expressed herein are those of the author and do not
necessarily reflect the views of ICCAS and/or the U.S. Agency
for International Development (USAID).
Like other observers I have often speculated since
the transfer of power in Havana last summer that Raul Castro
and other Cuban leaders are attracted to “the China model.”
But is any comparison between countries of such vastly different
realities useful? What in the mix of initiatives taken by Mao’s
successors over the last twenty-eight years might Fidel Castro’s
heirs be interested in pursuing?
Like Castro, most Cuban leaders abhor the corruption,
materialism, and growing social inequities of contemporary China.
It is difficult to imagine they would permit a new class of
millionaires on the island or a free-wheeling, largely capitalist
society resembling China’s today. Few if any of them envision
an industrialized, rapidly urbanizing Cuba that produces enormous
quantities of consumer goods for the American market.
And if China’s economic reform process were
to be imitated in Cuba, how would leaders insure against the
kind of violence and instability that occurred in Beijing’s
Tiananmen Square in June, 1989? In short, how can it be reasonably
postulated that, in defiance of Fidel Castro’s well known
contempt for and fear of the China model, his successors might
be attracted to it? Don’t they appreciate that the risks
could outweigh the advantages?
Surely they do, yet many seem already to have concluded
that once Fidel Castro passes from the scene (and possibly before),
they will have no better alternative than the early China model,
that is to say, the first stage of reforms implemented there
between 1979 and 1983. China opened its economy to market forces
and stimulated vigorous economic growth while repressing political
expression independent of the ruling communist party. That dichotomy
is attractive to Fidel Castro’s heirs. Like the Chinese
leadership, they have no intention of allowing free speech,
assembly, or political participation.
But they also recognize they will have to open
and liberalize the centrally planned economy. If they are to
prevent social instability, they will have to provide more opportunity,
higher living standards, material rewards, and stimulus for
the masses of disenchanted Cubans, especially the youth. Simply
stated, they will have to provide the populace with bread rather
than the distracting revolutionary circuses Fidel Castro regularly
staged. Thus, despite the risks, his successors probably are
now busy designing plans to gradually emulate the first stage
of China’s economic reform experience.
Mao died in 1976 and it took his heirs some time
to build enough political capital to launch the process that
resulted in the abandonment of many of his stubborn orthodoxies.
The dismantling of the centrally planned economic system began
with a speech to a communist party plenum by Deng Xiaoping,
on December 18, 1978. Deng enjoyed considerable legitimacy because
of his ties to Mao beginning with the Long March in the 1930s,
but had to proceed slowly nonetheless because of entrenched
opposition from the Maoist old guard. He and his reformist allies
began with no blueprint or plan. They were willing to try almost
anything that might fan economic growth, create employment,
and improve conditions in the countryside. They improvised and
tinkered, never intending to create a full-market system.
According to Harvard University scholar Dwight
Perkins, the reformers believed that agriculture and foreign
trade were the two sectors of the economy most in need of reform.
He has written that “Mao’s bias against foreign
technology and foreign products had severely hurt China’s
modernization.” Food production was also calamitously
impaired. The reform process began in earnest in January 1979
in agriculture as the decollectivization of rural society accelerated
and markets for farm goods were gradually opened.
The crucial change was in moving from the fulfillment
of central plans toward profitability to measure performance.
By late 1983, the end of the first phase of the reform process,
the Maoist system of oppressive people’s communes had
ceased to exist through most of China. Household agriculture
became the norm instead and the production of food for profit
soared.
The second major area of reform during those early
years was the creation of special economic zones that introduced
market mechanisms and, for the first time, encouraged foreign
investment. These initiatives quickly resulted in the breakup
of the monopoly on foreign trade held by state corporations.
Strategically located near the thriving capitalist enclave of
Hong Kong, the special zones proved to be powerful engines of
industrialization and growth. Incentives provided to foreign
investors attracted huge capital inflows. The foundations of
modern Chinese industry and commerce were established.
A third major area of innovation was in the service
sector. Private restaurants and personal services had been suppressed
by the ideologically intransigent Mao. Commerce and finance
were entirely state owned. But as most of those old strictures
were abolished or ignored beginning in 1979, small scale enterprise
immediately flourished. The labor force engaged in these activities
expanded exponentially. Perkins notes that traders and transport
workers were the first to take advantage of the new opportunities.
Then, new restaurants and shops sprung up everywhere and labor
contracting services proliferated.
Once the new small enterprises were legalized,
millions of people were prepared to supply them. With some exceptions,
the capital investments needed to establish the new service
activities were small. And, according to Perkins, nothing comparable
to the Mafia-style organizations that distorted and beleaguered
service markets in post-communist Russia developed.
In his study of the Chinese reforms, University
of California scholar Barry Naughton emphasizes that China was
the only socialist, centrally-planned country to undertake system
transformation without falling into a profound economic crisis.
But of course, ten years after the first tentative steps taken
by Deng Xiaoping, central Beijing was gripped by the terrible
violence and repression of Tiananmen Square.
In Havana today, those opposing poles –dramatic
economic progress and political peril-- are being carefully
weighed and sifted as Raul Castro and the new leadership around
him consider how they should proceed.
Source Note:
Dr. James Kilpatrick of the University of Miami Business School
provided me invaluable lessons and insights. I have also relied
on Dwight Perkins, “Completing China’s Move to the
Market,” Journal of Economic Perspectives, Vol.
8, No. 2, Spring 1994; and Barry Naughton, Growing Out of
the Plan: Chinese Economic Reform, 1978-1993,
Cambridge University Press, 1995.
_________________________________
Dr. Brian Latell, distinguished Cuba analyst and
recent author of the book, After Fidel: The Inside Story
of Castro’s Regime and Cuba’s Next Leader,
is a Senior Research Associate at ICCAS. He has informed American
and foreign presidents, cabinet members, and legislators about
Cuba and Fidel Castro in a number of capacities. He served in
the early 1990s as National Intelligence Officer for Latin America
at the Central Intelligence Agency and taught at Georgetown
University for a quarter century. Dr. Latell has written, lectured,
and consulted extensively.
________________________________
The CTP, funded by a grant
from the U.S. Agency for International Development (USAID),
can be contacted at P.O. Box 248174, Coral Gables, Florida 33124-3010,
Tel: 305-284-CUBA (2822), Fax: 305-284-4875, and by email at
ctp.iccas@miami.edu.
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