By Dalia Acosta
HAVANA, Oct 2 1997 (IPS)

The limits of Cuba’s economic reforms, initiated by the government of President Fidel Castro four years ago may, mmay become more clear this month when the ruling Communist Party holds its fifth congress, according to political sources.

Debate is centred around those advocating a new push for structural reforms and those who believe the concessions granted so far are at the limit within the framework of communist ideology.

Another group, holding a centrist position, believes that the government could take steps aimed at increasing control over private initiatives while continuing to promote the external opening up of the economy and transforming the financial system.

Political sources say there are high expectations over a new economic resolution that will be presented to the congress to be held Oct 8-10. The Party has disseminated the resolution only to delegates.

The official Granma newspaper, however, says that the resolution synthesizes the experience accumulated during the current economioc crisis and ” analyzes economic policy in detail, outlining in a realistic manner the prospects for the economy.”

Polkitical sources say the economic issue remains the main cause of the increasingly difficult external situation for this Caribbean country. problems include foreign debt, attracting foreign capital and long-term credits, trade imbalances, and the imperative of assuming a more realistic official exchange rate for the Cuban peso.

While one dollar can now be purchased with 23 pesos in the government exchange bueaus opened last year, the official rate still establishes parity between the dollar and the Cuban currency.

The Ministry of Economy and Planning admitted last month declared that the Cuban economy registered a “decline” in its external financial situation that is worse than expected, and that this situation could continue into the following year.

Cuba ended 1996 with a growth rate of 7.8 percent of gross domestic product, an external debt estimated at 11 billion dollars, and a trade deficit of 1.7 billion dollars. But economic growth took off at very low levels and may suffer new drops this year, given the decline in sugar production, say economists. The government has allocated loans estimated at of over 300 million dollars payable over the short term to this sector.

The official silence over the results of the sugar harvest and the classification of practically all statistical information in the last few months has led experts to believe that the economic recovery that began three years ago has ground to a halt.

“Survival” is the key word of the day among the population, and it also has become a dilemma for authorities, who are trying to save the essence of the socialist system by introducing market mechanisms and capitalist practices.

According to Gilberto Valdes, researcher at the Havana Philosophy Institute, “the need to open up new spaces to the market, which is the basis of the restructuring of the Cuban economy, does not imply a preference to implement new forms of regulation on the part of the state.”

In an essay on “The socialist alternative: reform and strategy of order,” Valdes says that the challenge is to find new formulas for the socialization of production and of politics – and modes of self-management, cooperation, economic democracy, and popular and citizen control.

High-ranking government officials have reiterated that in Cuba, public investment will continue to have majority holdings in relation to foreign investment and that a good part of agricultural and livestock activities will be carried out by cooperatives.

The reforms, begun with caution in 1993, responded to the demands imposed by the crisis that already had lasted seven years. Since then, the crisis been characterized as “undesirable” but, at the same time, “inevitable.”

Granma said that the communist congress will evaluate “the transformations that have taken place in the economy and the not always favorable, although foreseeable, consequences that have come as a result of these transformations.”

Official sources attribute the economic crisis to the combination of the United States blockade and the disappearance of the European socialist bloc, which was Cuba’s main trading partner.

Local economic experts add to the list of causes “internal errors” in economic policy management.

The depression, which caused a drop of 34.8 percent of the gross domestic product between 1990 and 1993, directly affected the population, whose living standards deteriorated rapidly in comparison to a decade ago.

Between 1992 and 1994, considered the worst years of the crisis, Cubans faced a generalized situation of scarcity of basic products, continuous blackouts, a crisis of public transportation, and the devaluation of the peso to 140 units to the dollar.

The package of measures intended to ease the crisis included a relaxation of on self-employment, the legalization of the dollar, the liberalization of agricultural and livestock and of industrial markets. To improve the situation of Cuba’s internal finances, the government increased rates and tariffs, eliminated free services such as tickets to sports events and museums, and increased the prices of non-basic products – cigarettes and alcoholic beverages.

At the same time, the government gave a cautious green light to structural reforms in the economy in the business and labor sector, in banking, and in foreign trade and property rights. But this year, the greatest public efforts were directed at internal measures against people who were accused of being “socially undisciplined.”

The authorities recognize that self-employment is an alternative that could provide a solution to the state’s incapacity to satisfy the entire country’s employment needs and the need to cut unemployment, which has undermined state-owned enterprises for years, economists said.

At the same time, the government is not willing to tolerate allowing this sector to use illegal mechanisms to buy and sell products, and it will do everything possible to avoid the growth of a newly-rich class of citizen.

Specialists say that until November 1996, 12.8 percent of individuals holding savings accounts possessed 84.7 percent of all the money deposited in Cuban banks.

Growing social inequality, and an increase in prostitution, pimping and corruption are, according to the Cuban authorities, some of the “foreseen” but “undesirable” consequences of the crisis and of the economic reforms.

While philosophers and economists try to establish a theoretical foundation for the transformations carried within the socialist system, some analysts are inclined to believe that the authorities favor a return to the models in place prior to the crisis.

According to this line of thinking, the government may seek to stop as soon as possible the capitalist-style measures and to minimize the sectors that have been opened to private initiative. (FIN/IPS/da/dg/if-ip/jmb/mk/97)

Excerpt: