Cephalopods are animals whose arms stick out of their heads, for example, octopuses. What’s interesting, at least in the case of octopuses, is not only that, but also that they have a very complex nervous system distributed throughout the body, including their arms; they have three hearts and, since they do not have a shell or poisonous spines to protect them, they have developed a special ability to adapt to dangerous situations — their eyes are their main sensory organ — that does not take more than fractions of a second. In this way, they manage to confuse their enemies by camouflaging themselves with their inhabited environment.
Cuba is ending the year with important political events that made us think. It is also ending with an economic performance in some way expected — at least that is my case — because such an open economy, with a fragmented and relatively obsolete productive system, rearranging itself to an adjustment program that would necessarily have negative short-term effects are elements very difficult to handle given, in addition, the financial restrictions that the country suffers. But, above all, Cuba is ending the year with the highest inflation ever experienced before and with the conviction — hopefully permanent — that we cannot subject our internal decisions to the announcements of the U.S. administration of the moment. I have purposely made no mention of the blockade, because even without it, the pandemic would have deeply hit our economy.
Thanks to the vaccines, 100% Cuban and consequently to the control of the pandemic, the possibility of opening the country again, of resuming projects, of thinking about giving greater speed and depth to the changes that have been happening, has been achieved.
For our population, this has been the hardest of the years, trapped between the little access to freely convertible currency, without being able to bank the dollars they receive, suffering from the continuous devaluation of their salary — which very quickly lost its real purchasing power —, trapped in rampant inflation, which has its most evident expression in the price of pork meat, which has far exceeded the market value in the Special Period, and in the existence of four reference currencies, the Cuban peso (CUP), the US dollar, the euro and freely convertible currency, what a way to achieve the monetary unification! Once again our population, all of it, has shown an extraordinary resilience.
A good friend, who a long time ago was my student, affirms that in these two years so many new policies and regulations have been approved that sometimes there is no time to digest them or be updated on them and, above all, to know what their scope is. There are so many that it is likely that those abilities of the cephalopods will be needed to be able to adapt to an environment that has been changing at a speed never seen before — even when in particular I would like it to be greater — and with a depth not previously experienced, since that first transformation that turned the capitalist and underdeveloped Cuban economy into that other, socialist, but also underdeveloped.
Just as a sample, some of those measurements are listed below:
- The first measures that “made more flexible” the performance of state-owned enterprises. Among them, Resolution 315, which allowed self-employed workers’ export-import and later of MSMEs using some of the state-owned export-import enterprises.
- The cautious but constant granting of export-import rights to other state-owned enterprises.
- The Decree-Law that turned the positive list of private trades into a negative one and expanded the opportunities to “start” a “private or cooperative” business.
- The various measures associated with local development (at least four).
- The 263 measures aimed at transforming the situation of agro-food production, which in turn contain 658 actions, many of which require changes “of mentality” or of the owners of the mentality.
- The Decree-Law on MSMEs.
- The possibility that non-state forms of management can pay their suppliers from accounts abroad, which streamlines procedures, gives security to suppliers and helps to avoid the financial siege that the current U.S. administration has been reinforcing.
- The opening to businesses developed from the Cuban emigrant community, just materialized.
- The possibility for local governments to become promoters of Foreign Direct Investment (FDI) projects.
- The birth of the germ of the Banco de Fomento Agropecuario, which hopefully will finish germinating and become a creature capable of walking on its own arms.
- The permission granted to Financiera Iberoamericana to grant credits to non-state forms of management.
- The creation of the first non-banking microcredit financial institution for non-state forms of management.
Undoubtedly, there are some more, in fact, several of which I have tried to synthesize contain regulations that change the institutional context of the island. Some have even generated “concerns” regarding whether the socialist state enterprise will continue to be the most dynamic and decisive sector of the Cuban socialist economy.
They are, without a doubt, valid perceptions, especially if those who think this way continue to think about that state enterprise inherited from the Soviet style and still consider that our economy should continue to be operated from the ministries, also thought from that same style and that have not yet detached from many of the inherited hindrances and ways of doing things learned for decades, including supplanting the role of the entrepreneur. They are those minds that put “orientation” before the regulation, that force to ask permission to do what no one has prohibited, that demand to wait for their “circular” or their “memo” to take any action and that also use the power given to them to prevent rather than to facilitate. These minds have generated “zombie” entities that only move if pushed. Unlearning is much more difficult than learning.
Organizations and minds that have not yet understood that their mission is not business, but regulatory, that they must regulate for the entire economy and not only for a part of it and that this regulation must promote the growth of all, not just a few. I remember that in the field of employment, the so-called non-state sector employs as many people as the state sector.
This economy, which is already relatively diversified, will require a more diligent work of policy coordination, to, as far as possible, prevent and avoid frictions, which are still frequent in our regulations. An example? The creation of Local Development Projects is promoted, however, even today they continue to suffer from not having legal status, which puts them at a disadvantage in relation to MSMEs, thus generating disincentives that negatively impact the purpose of promoting those projects. Something similar happens with Foreign Direct Investment (FDI), trapped between obsolete provisions and outside international standards (for example, the mandatory nature of contracting through “state employer companies”) and feasibility studies that seek to take care of other people’s money. Or that need for premises to be occupied by new projects, whether they are MSMEs or non-agricultural cooperatives, coexisting with that other number of premises in the hands of enterprises and organizations that are not used, nor are they allowed to be used, and yet the local authorities do not have a regulation that supports them to evict those premises. There are undoubtedly many more examples.
Aligning regulations and regulators with the purpose will be an ongoing task if old persistent obstacles are to be removed and new ones are prevented from emerging.
A more diversified economy, blocked and unprotected from international economic support is like an octopus in the middle of the sand: survival and growth will depend on your ability to interpret and understand the environment and to adapt to it at a very high speed. Our octopus achieves this because each of its arms “thinks” for itself, moves independently, explores the different “environments” to which it is exposed, but its eight arms and all its neurons are aligned with a single purpose, they are all coordinated for that purpose, even when it may not seem like it. The octopus’s arms are as flexible as needed, some of them cling to a reef, others collect remains of shells and stones to create an “armor” and some others “sniff” with their rows of suckers looking for a better opportunity for defense or attack. All of them do different tasks, but they all lead to the same purpose. Our economic model and our enterprises are still far from functioning like this.
Expecting a less aggressive environment, even when the pandemic subsides and tourists and Cuban emigrants appear on the scene, and with them the much needed dollars, does not seem to be very realistic. Neither oil in the short term, nor a partial, small or minimal lifting of the blockade, we must wait. The obstacles are tremendous, but the opportunities can also be tremendous. Turning them into good businesses, growth and development will depend, to a great extent, on the ability we have to mutate from the body of a crustacean to that of a cephalopod.