Wednesday, September 22, 2010

Adapt or perish choice for Cuba

Adapt or perish choice for Cuba
The New Indian Express
Last Updated : 22 Sep 2010 12:13:26 AM IST

First it was systemic failure, then a 'laughable misinterpretation', and
now it's the wholesale sack for half-a-million government employees.
It's all a bit confusing, but the one thing certain about Cuba today is
that Fidel Castro is up and about from a near-fatal illness, and his
country's in the news again.

Apart from North Korea, Cuba is about the only substantial country that
still hews to its communist reformation. But on September 8, Latin
America's most famous living revolutionary caused a minor sensation when
he told a journalist from The Atlantic magazine that "The Cuban model
doesn't even work for us anymore." Castro was replying to Jeffrey
Goldberg's question whether the model was still worth exporting. That
statement fed speculation that statist Cuba, on its last legs, is poised
to welcome private enterprise and foreign investment to improve its
long-term prospects. Then came the usual disclaimer. "I was joking," he
protested, but the reporter took him at his word.

Perhaps Castro really was joking, but it seems his government also took
him seriously, for it announced on September 12 that the state would be
shedding about half a million jobs, starting right away. Cuba's public
sector employs about five million people so that is a 10 per cent cut in
the workforce. And it means the transition is going to be rough on
everyone, even those who keep their jobs, because the state is
signalling that no one is safe anymore. The news must come as a shock
though it's not entirely unexpected, given Raul Castro's small steps to
open up the economy since he took over. Decades of state protection has
vanished with one fell blow and no one knows what happens next.

As the public sector shrinks, the hope is that private enterprise will
expand, but things rarely work out so smoothly. The private sector is
too small to make a dent on this sudden rash of joblessness, and the
finance and investment for speedy expansion are simply not in place. The
likely net result is dislocation and misery as jobs vanish, and there's
no saying when things will turn around. There can be no going back to
the socialist model either. It's adapt or perish. So while the Cuban
Revision should bring some delight to the beleaguered prophets of free
markets, it can't be much comfort as their own world is teetering on the

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