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Cuban Economists Envision Role For Markets in Post-Castro Era - WSJ.com

Bob Davis tells us about the future of Cuba:

Cuban Economists Envision Role For Markets in Post-Castro Era - WSJ.com: By BOB DAVIS: With Fidel Castro ailing and absent from the public stage, some influential Cuban intellectuals are laying plans for a more market-oriented approach.... Cuban economists' proposals would cut down on state interference in businesses and aim to wring more productivity out of the island nation's economy. Among the steps under discussion: decentralizing control, expanding the power of managers at privately owned agricultural cooperatives, extending private ownership to other sectors, boosting investment in infrastructure and increasing incentives to workers.

None of the plans would shuck communism for capitalism or open the island further to foreign investment -- which economists outside Cuba say are critical for the island to prosper. But the fact that the government is permitting -- and perhaps even encouraging -- the debate suggests regime officials might find these kinds of changes acceptable, though it may take Mr. Castro's death to put them into action.

"We are in the midst of a process of debate, which is cautious and controlled, but is happening for the first time in many years," said Pedro Monreal, a senior professor at the Center for Research on the International Economy in Havana. "It's an historic moment," says Julia Sweig, a Cuba specialist at the Council on Foreign Relations in Washington. "The Cuban regime feels confident enough to have voices it once purged be at the center of the economic debate on reform."...

Cuba claims its economy grew at 12.5% last year, after an 11.8% gain in 2005, which would make it one of the world's fastest-growing nations, but critics say the numbers are as phony as those once produced by the Soviet Union. Carmelo Mesa-Lago, a professor emeritus at the University of Pittsburgh, who has long tracked the Cuban economy, says Cuba engages in statistical sleights of hand, such as double-counting entries, changing base years to yield better results and failing to show how it estimates revenue produced by Cuban doctors and other professionals working overseas.

"I don't see anything [in Cuban economic statistics] that would warrant this magic rate of growth," says Mr. Mesa-Lago, who figures the government is probably inflating its growth statistics by at least two-thirds.

Whatever growth Cuba manages owes a lot to Venezuela, which provides it with subsidized oil -- some of which Cuba re-exports -- and employs tens of thousands of Cuban professionals....

The disconnect between the Cuban government's claims and the Cuban's people's bleak living standards may increase popular pressure for change. "The Cuban people can believe that the economy is growing statistically, but it's not growing in their homes," says Rafael Hernández, editor of the magazine "Temas" -- "Issues" in English -- a scholarly quarterly in Havana that writes about the Cuban political-economy and society.

Mr. Hernández says the government should pick up the renovation agenda that Mr. Castro and his brother Raúl, now Cuba's acting president, shut down in 1996 for straying too far from socialist ideology and for potentially undermining political control. At the time, the regime approved agricultural co-ops -- which survive today -- where the state continues to own the land but members own the business and equipment. These entities can sell a portion of their output in farmer's markets at prices higher than those set by the state. Now, Mr. Hernández says the co-ops should be used as a model for other sectors.

Small textile or shoe makers should be able to start co-ops that sell in private markets, he said. Currently, the government permits only families to own such private businesses; a co-op would be able to expand and hire employees outside the family. But under Mr. Hernández's concept, co-op members wouldn't be permitted to sell shares in their venture, which might accelerate capital accumulation. "Co-ops are socialist," he says. "You could do it without violating socialist principles."...

Even to well-connected Cubans, the direction of the debate is difficult to follow. "It's a kind of black-box process," says Mr. Monreal. He views Raúl Castro's decision last month to examine agricultural problems, but to defer any decisions for six months until an economic survey is completed, as a template of how the regime will incorporate changes. The president's brother, who has served for decades as defense minister, has frequently backed economic overhauls and the companies owned by Cuba's armed forces -- including tourism firms, cigar marketers and consumer-goods retailers -- are among the best-managed on the island....

Cuban economic history under Fidel Castro is a tale of timid liberalization and retrenchment, with purges of reformers caught taking the wrong positions. During one crackdown in 1996, Mr. Monreal, Mr. Hernández and others were forced out of their jobs.... It may take Mr. Castro's death -- or at the very least, a public declaration that he is permanently incapacitated -- to give government officials the confidence to institute even modest economic retoolings. Mr. Castro has relentlessly opposed any changes that smack of capitalism, and believes Venezuelan oil subsidies have reduced the island's economic problems and need for market-based incentives.

In the past few years, Mr. Castro has led drives to recentralize the economy and stamp out corruption, which has often meant more repression of Cuba's tiny private sector. For instance, he fired thousands of gas-station attendants he suspected of siphoning off gasoline to sell on the black market, and replaced them with "social workers" -- Cuban youths doing government service. The government has even banned private citizens from starting businesses as masseuses and clowns.

Except, of course, for the 24-7 clowns who are the Cuban Communist Party's Central Committee.