FAR: MASTERING REFORMS

Domingo Amuchastegui

More than 15 years ago, something very important Sandinistas and other guerrilla movements in Central began to take shape. The Fuerzas Armadas Revolucio- America, in open opposition to Soviet policies, was narias (FAR) began to restructure their industries another major source of conflict. and services. Such changes became to be known as By 1979 two events came to aggravate bilateral rela- perfeccionamiento empresarial (managerial improve- tions. One was the failure of Cuban leaders to make ment). No one paid too much attention to this devel- the Soviet leadership accept their views and ap- opment at the time despite of its tremendous impor- proaches regarding the dangers of the Reagan option tance. Nowadays, and especially after the V Congress and the impact of the Santa Fe program. Subse- of the Cuban Communist Party (PCC), held in Oc- quently, the Soviets denied any possibility for addi- tober of 1997, when perfeccionamiento empresarial tional commitments regarding defense and security, was adopted as the Party official policy to guide the including requests for large increases in military sup- full restructuring of the Cuban state economic sys- plies, particularly with updated technology; Moscow tem, it has become a must for a clear understanding made it clear that security arrangements would have of the latter and the current dynamics of reforms in to adjust to the new and changing circumstances and . Soviet leaders increasingly challenged Cuban views Before entering into a discussion on perfeccionamien- and actions. Soviet reactions on issues such as the to, it is important to clarify the reasons why in the submarine base at Cienfuegos and the subsequent de- early 1980s the FAR embarked on a process that de- ployment of Cuban submarines near U.S. targets, the parted so radically from the existing policies and in- incidents over the supply of MiG 23s, among others, stitutions. Let us outline some of the reasons behind were additional episodes perceived in the eyes of the such a decision. Cuban leaders as dangerous signs of a potential sell- out. Cuban demands and pressures found blunt and First, Soviet-Cuban relations were entering an in- unwavering Soviet rebuttals. These strained relations creasingly conflicting stage, which began in the late had an enormous impact on the Cuban leaders, who 1970s, the last years of the Brezhnev era. A chain of felt a growing sense of unreliability and insecurity dramatic clashes with Soviet policies and actions about their Soviet allies as never before. characterized bilateral relations since then. Cuban unilateral actions in Angola (1975) and Ethiopia At the time, Cuba’s international position had been (1977) caused great concern and displeased the Sovi- boosted by its chairmanship of the Non-Aligned et leadership. The Soviets even tried to stop Cuba’s Movement (NAM), an achievement not appreciated initial involvement in Ethiopia. In Angola, as in the by Moscow. The Soviets did not hesitate or consult past, they supported the fraccionistas and their armed with their Cuban allies on the decision to invade Af- uprising against Neto, who was being supported by ghanistan, a NAM member country. Fidel Castro felt the Cuban forces. Clashes over the support of the humiliated, outraged and, once again, frustrated al-

433 Cuba in Transition · ASCE 2000 most as much as during the days of the Missile Crisis. such purposes, in opposition to Soviet advice; Forced to support — at least publicly — the Soviet and invasion of Afghanistan, he took special care in con- • the accelerated dismantling of the Sistema de Di- veying to the Soviet leadership his strongest condem- rección y Planificación de la Economía (SDPE), nation and total disagreement with such action. At the overall economic management and planning the same time, he shared these views with close asso- system sponsored by the Soviet Union. ciates and several Third World leaders. Second, Soviet economic and military cooperation These decisions confirmed the crisis of the Soviet- was seriously questioned and all kinds of uncertain- Cuban alliance, a crisis that did not result from the ties flourished among Cuban leaders. The repeated coming into power of Gorbachev — it simply culmi- visits of to of Nikolai Baibakov, Chairman of nated during Gorbachev’s tenure — or from the col- the Soviet Central Planning Agency, GOSPLAN, lapse of the Berlin Wall. pointed to a cul-de-sac in relations and some key im- It is in this context that perfeccionamiento empresarial portant economic projects in Cuba could not be is born: the prototype of a new economic system, im- properly implemented. The days of a second Soviet plying a total restructuring of the economic, institu- economic and oil embargo, as in 1965-1968, was tional, social, and, eventually, of the existing political perceived as a serious possibility. system. The task of developing and implementing And third, among Cuban experts dealing with Sovi- perfeccionamiento was not entrusted to the Junta Cen- et/COMECOM affairs there was a growing percep- tral de Planificación (a dying institution at that time), tion that the economic decline in Cuba’s foreign al- the Economic Department of the Central Commit- lies was reaching new and unprecedented heights — tee of the Cuban Communist Party, the School of although no one predicted an imminent collapse — Economics of the University of Havana, or any other and that this was going to have a very negative im- Cuban think-tank specialized in economic affairs. In- pact over relations with Cuba. stead, the FAR is the institution entrusted with this project. Why the FAR? Within the existing power Later on, in the course of the first half of the 1980s, structure the FAR provided important advantages: relations would get even worse. Events in Central America and Granada had Soviet and Cuban policies • The highest degree of legitimacy in terms of his- clashing again and again. And military coordination torical background, performance, efficiency, with Moscow over Angola was cancelled completely. control, honesty, prestige, dedication, loyalty, trustworthiness, popularity, representation/pro- This is the context in which the Cuban leaders began motion of blacks, and real authority. to seek new ways and alternatives. This is the context in which Fidel Castro took several key decisions: • The highest degree of reliability to meet the complexities and challenges of the drastic chang- • his overture to the Cuban-American community es, something that was, and continues to be, per- as a permanent component of Cuba’s economic ceived as entailing very high risks in terms of na- and political security; the orchestrating of the tional security (“defensa de la Revolución,” is the Mariel boatlift; and engaging in secret talks with equivalent concept in Cuban rhetoric) consider- representatives of the Reagan administration; ing the changes in the nature of the system, the • the adoption and proclamation of the strategic emerging social tensions, and the implications of policy of Guerra de Todo el Pueblo (All People’s close association with foreign capital/technology/ War); influence. • the creation of the Milicias de Tropas Territori- • The best infrastructure, within Cuban standards, ales, MTT (Militia Territorial Troops) and the in every field (resources, reserves, transport, com- acceptance of a special Vietnamese advisory for munications, financial accountability, manage-

434 FAR: Mastering Reforms

ment, and others) together with a highly quali- Within 5 years, perfeccionamiento was already being fied structure of professional personnel and applied within the FAR. Close to 40 percent (some cadres. 27,000 workers, technicians, and professionals) of the FAR civilian workforce (a key component within Mastering the reforms associated with perfecciona- the military industries) was laid-off, while the gradual miento has become the biggest and most difficult bat- reduction of the armed forces reached 50 percent of tle ever to be waged by the FAR, seeking to achieve its 1980 level. The incredible paradox in 1991 was survival and continuity. that while the country was crumbling, virtually in HOW DID IT COME ABOUT? shambles, the FAR were doing pretty well in a com- The growing sense that the whole economic system parative sense. had to be redefined and restructured was already very much in the minds of Fidel Castro and his brother The question then was: why not expand the experi- Raúl by the early 1980s, but with very different per- ment to the rest of the country? The answer was nei- ceptions and perspectives. While Fidel Castro was ther economic nor technical — it was essentially po- still considering various options and unrealistic litical. The internal pressures on Fidel Castro to projects, his brother Raúl focused on the need to ex- move ahead and swiftly with reforms had caused seri- periment with one specific and coherent system, ous internal clashes within the Cuban leadership. more in line with the major trends in the real world. Men who had had the courage to advocate for urgent Fidel Castro, while eager to dismantle the SDPE changes since the mid-1980s had been dismissed (some called it Baibakov’s pet project), was absolute- from the Politburo — like Julio Camacho Aguilera ly reluctant to Raúl’s project and ideas and had no al- and Sergio del Valle. Juan Almeida was on the verge ternative solution of his own. The ultimate compro- of a major confrontation with Fidel. And last, but mise was to let Raúl experiment with his project, but not least, his own brother, Raúl, had had another only within the confines of the FAR. major confrontation with his older brother on the same grounds as the others. Carlos Aldana and other By 1984-85 everything was ready to start the project. low-level members of the Politburo were also in favor The enterprise chosen to begin the experiment was of changes, but Fidel Castro could not tolerate any- the huge “Ernesto Ché Guevara” industrial plant in thing along such a line. It all smelled to him of pere- Manicaragua, one of the key industries of the Unión stroika and glasnost, and the consequences were too de la Industria Militar. The team of planners, execu- evident: el desmerangamiento, as he called it, meaning tives, and administrators (later in 1986 known as the crumbling of the systems in Easter Europe and Grupo de Perfeccionamiento Empresarial, whose exec- the Soviet Union. He was unwilling to take any risk utive secretary was and continues to be Engineer that could place in jeopardy his domestic control. Colonel Armando Pérez Betancourt), mostly com- And for Fidel Castro, expanding perfeccionamiento posed of engineers and economists, were under the outside of the FAR and into the rest of the country supervision of Division General Julio Casas could have very risky consequences. Regueiro, who reported to Raúl Castro. Gradually, it expanded to all of the Unión de la Industria Militar It was only after the popular demonstrations and (industries, services, and finance) and its 230 enter- clashes in Cojímar-Regla in the summer of 1993 and prises. By 1987, the slogan that the FAR was the lab- in Havana in August of 1994, that Fidel Castro be- oratory for economic organization and leadership gan yielding to the enormous pressures from within. was becoming very popular among military leaders. It was only then that the imperative for reforms be- To realize how subversive the experiment was, we gan to gain momentum, but even then any attempt must realize that a special authorization had to be is- to adopt perfeccionamiento as a general policy was re- sued by the government to allow the FAR to violate, jected. His concession was that a small number of ignore, bypass, more than 100 norms, codes, and key enterprises (telecommunications, mining, bever- regulations of the existing system. ages, rubber, energy, fisheries, and others) could

435 Cuba in Transition · ASCE 2000 adopt the new system on an experimental basis. Fi- formists under Khruschev. In my humble opinion nally, a group of 100 enterprises carefully selected be- they are missing the current context and a clear un- gan preparing for the different steps and stages. A derstanding of the Cuban “big picture.” combination of increased domestic and international Others will argue that perfeccionamiento is inspired pressures plus encouraging good experimental results by the Chinese or even the Burmese paths, suggest- finally led, 12 years later, to the doption by the V ing a more conservative, fragmented, approach to re- Congress of the Cuban Communist Party of perfec- forms. To some extent the arguments may be valid, cionamiento as a general economic strategy. but they are still far from real, local dynamics. By 1999, approximately 900 enterprises (close to 30 The Chinese pattern has had considerable influence; percent of the existing industries in the country) were after all it preserves a certain flavor of nostalgia asso- involved in implementing the early stages of perfec- ciated with socialist and communist past experiences. cionamiento. The group of 100 enterprises that began And Cuban leaders travelling to China — as part of to implement perfeccionamiento has moved ahead the ritual of their host — are regularly taken to see rather successfully; 45 of them have been approved to and learn from Shenzhen. Zhu Rongji and his advis- continue on the path of implementation on the basis ers are well known to Cuban leaders and executives. of their diagnoses, reliable accounting systems, and When Raúl Castro went to China, he spent long other previous studies, and 22 others have fulfilled hours talking to Zhu (something that was not reflect- the requirements for step one. ed in the Cuban press) and invited his main adviser Currently — as of June 2000 — 1,419 out of a to travel to Cuba (something that Fidel did not do grand total of more than 3,000 enterprises are al- when he visited China). This famous adviser went to ready involved in the early stages of the perfecciona- Cuba, caused a tremendous impact, talked to leaders miento. They employ approximately 810,000 work- and executives for many hours and days, but there ers. The process is moving ahead cautiously, looking was one person who refused to do so, except for a for reliable results, beginning with the diagnoses. For brief and formal reception: Fidel Castro. This shows, example, in one very sensitive and important prov- once more, the different approaches, attitudes, and ince like there were 72 enterprises inclinations that coexist inside the Cuban leadership, already involved in the different steps in conducting and that Fidel Castro is, as always, the less enthusias- the diagnoses, but only 4 have been approved to tic person regarding the Chinese approach and this move ahead to the next stage. helps to curtail and prevent, to a considerable extent, the influence of the Chinese model. But this should The slow and cautious implementation of perfeccio- not mislead us to underestimate China’s enormous namiento is currently subject to various pressures: importance for the Cuban leadership. This impor- from worker’s unions, provincial and local adminis- tance is not so much as a model but as a practical alli- trators, collapsing industries, tensions derived from ance in terms of cooperation, trade, technology, mili- unemployment, need to expand to other areas, grow- tary supplies and cooperation, and the political and ing private sector, increased foreign investment, in- diplomatic support that China can lend as a big pow- ternational sources. These pressures are likely to play er and a permanent member of the U.N. Security a role in accelerating and expanding perfeccionamien- Council. to. What is then the theoretical and practical basis of SOURCES AND LEADERSHIP perfeccionamiento? The best economists in the Euro- What are the sources and experiences guiding perfec- pean Union, the United States, Canada, Latin Amer- cionamiento? Some who favor comparative studies ica, and Japan. Their views translated, duplicated, will say that it is an ill-conceived, and too late, mix- circulated, from hand to hand, through lectures, ture of economic reforms from Hungary and Yugo- workshops, and seminars. These views are all over the slavia with a touch of Leiberman’s legacy of Soviet re- place together with IDB and ECLAC studies and lec-

436 FAR: Mastering Reforms tures from experts from the IMF and the World GUIDING FORCE OR MILITARIZATION? Bank, going back to the early 1980s, when U.S. ex- Perfeccionamiento has led to a considerable increase of perts began lecturing Cuban leaders under the spon- the direct share of power in the hands of the FAR or sorship of the Ford Foundation and other U.S. insti- former FAR leaders. A brief overview of the institu- tutions. This is the cultural and theoretical tions and enterprises that are under the direct con- environment of the Grupo Gubernamental para el trol, supervision or influence of the FAR provides Perfeccionamiento Empresarial, the actual guiding and ample evidence on this point: supervisory institution, and the kind of information • Ministry of the Sugar Industry (Division Gener- and knowledge it disseminates. Its ideas are being de- al Ulises Rosales del Toro, former Chief of Staff bated at seminars and in publications of the ANEC of the FAR, and a Politburo member). (Asociacion Nacional de Economistas Cubanos, Na- tional Association of Cuban Economists), within the • Ministry of Fisheries and Merchant Marine Cuban “think tanks” (centros de estudios), the School (Ship Captain/Colonel Orlando Rodríguez Ro- of Economics, and others. Marxism? It is acceptable may, “the youngest colonel in the FAR” in the as part of a certain legacy that it contains and for 1980s, member of the Central Committee). some methodological value. Nationalism? Yes, very much so, and more deeply entrenched. • Ministry of Transport and Ports (Colonel Alvaro Pérez Morales). The other important question concerns leadership. I • Cuban Civil Aviation Corporation, Sociedad am not referring to Fidel Castro, Raúl Castro, and Anónima, CACSA (Division General Rogelio others from the “old guard,” but to the thousands of Acevedo, member of the Central Committee). executives, managers, advisers, counselors, that is, the professional elite. Are they conducting this process • National Institute of State Reserves (Brigadier with the old manuals from the Soviet Union? Hun- General Moisés Sio Wong). dreds and thousands of them have been retrained and • Plan Turquino-Manatí, a huge developmental retooled in many of the best universities and eco- plan covering some 20 municipalities, approxi- nomic institutions of the Western Hemisphere, the mately 20 percent of the Cuban territory, in the European Union, and Japan over the last 10 years. Cuban mountain ranges and the Ciénaga de Za- Knowledge, culture, values, attitudes, even the cur- pata, where a large portion of the Ejército Juvenil rent operational language, have changed consider- del Trabajo is concentrated. ably. They speak in terms of markets, of costs and benefits, of statistics and prices, of mathematical • Banca Metropolitana (Metropolitan Bank), a modeling and financial engineering, and even of banking institution created 5 years ago. stock markets. These professionals are the real leader- ship of the perfeccionamiento. • Habanos S.A., an enterprise in charge of interna- tional marketing of Cuban tobacco/cigars/ciga- Allow me to use a metaphor : When Zhou and Deng rettes. When created in the early 1990s, headed were fighting against Mao and his supporters, where by Colonel Linares from the FAR; due to was Zhou Rongji? When the Four Modernizations Linares’ health problems, Colonel Oscar Basulto were proclaimed in China, there were all sorts of ob- took over. jections, but nevertheless they cleared the way and • Gaviota S.A., Cuba’s fastest growing tourist en- helped history evolve. Where was Zhou Rongji if not terprise since 1992 in association with Spanish, somewhere along the line? This sense of history German, French, and Jamaican capital. One of might help to understand the current dynamics of FAR’s “pet” projects. the Cuban experience beyond any other wishful thinking in terms of transition scenarios, at least for • Grupo de Electrónica de Cuba, formally a part of the foreseeable future. the Ministry of Steel, Mechanical Industry, and

437 Cuba in Transition · ASCE 2000

Electronics, known as SIME, but very much au- mains to be seen if Colás’ replacement was rou- tonomous under the direction of Comandante de tine or a move to involve more civilians at high la Revolución Ramiro Valdés Menéndez, a former levels. In any case, FAR influence over Commu- Politburo/Central Committee member and nications and IT is considered to be high. former Minister of the Interior. The backbone of • Citrus, both agriculture and industrial process- this Grupo is COPEXTEL, specialized in tele- ing, an important sector of the economy con- com. trolled by the military with Israeli enterprise BM • CIMEX, the First Cuban corporation to operate Group. as a Sociedad Anónima. Created in 1979 under • Export-Processing Zones (EPZ)-Free Trade the control of the Ministry of Interior to engage Zones (FTZ), under CIMEX (HAVANA IN in foreign trade of goods and services through 17 BOND, in the Berroa Valley, in the outskirts of holding companies under its control; since 1989 the capital city of Havana) and ALMACENES under FAR jurisdiction. UNIVERSALES S.A. in El Chico (outskirts of • CUBANACAN, established in the early 1980s Havana), and the city ports of Mariel and Cien- following the same pattern as CIMEX; currently fuegos. has 10 companies focused on tourism and works • The State Commission for Perfeccionamiento very closely with CIMEX. Empresarial, where Colonel Pérez Betancourt • TECNOTEC, an importer/exporter of high tech plays a key role. for civilian and military purposes. • Ideological Department of the Central Commit- • GeoCuba Entrepreneurial Group, which deals tee, Colonel Rolando Alfonso Borges, former with policies and transactions connected with second-in-command of the Central Political Di- land concessions/leasing, related to mining, tour- rectorate at the General Staff. ism, agriculture and real estate. By every possible standard, this is well beyond the • Industrial Military Union, consisting of 12 ma- “lion’s share” of the nation’s economy. But it is not jor industries/services and 16 factories and bases only this apparently disproportionate share that is throughout the country encompasing 230 facili- relevant in understanding the FAR’s place and role in ties. Now closely associated with the most pros- mastering reforms. Their role in the policymaking perous emergent sectors of the state economy. process is not simply determined — and wrongly Headed by Colonel Luis Bernal León. perceived — by how many high-ranking officers we find in the Central Committee and even in the Polit- • Ministry of Information Technology and Com- buro (compared with earlier years, they have reached munications. For more than 20 years it was in today their lowest level of numerical representation), the hands of the FAR. Under Brigadier General but by the overwhelming centrality of the FAR in ev- Silvano Colás, the Ministry was refurbished in ery single area of policymaking. We may wrongly the mid 1990s and ETECSA — an important perceive the Politburo as the only source of policy- joint venture with Italian corporation STET — making or look at the Council of Ministers as anoth- was founded. Recently, General Colás returned er major source, but the truth is that frequent policy to the FAR and a famous civilian technocrat, En- designs and recommendations can play a more influ- gineer Ignacio González Planas, the man who ential and decisive role than those coming from other “rescued” SIME in the 1990s, was appointed quarters in the Party or the Government. Minister. Moreover, all information technology functions were transferred from SIME to a newly A similar pattern is connected with the Consejos de redesigned ministry under the name of Commu- Defensa of the three armies, whose deliberations, nications and Information Technology. It re- concerns, and suggestions are extremely important.

438 FAR: Mastering Reforms

Research and analyses conducted by the National PERFECCIONAMIENTO... Defense College in the 1990s are similarly important WHAT IS IT ALL ABOUT? compared with other research centers. Looking at Perfeccionamiento is the closest approximation to a names, Julio Casas Regueiro, Leonardo Andollo, Luis capitalist-type of organization within the current Pérez Róspide, Armando Pérez Betancourt or Eladio conflicting trends and pace of reforms in Cuba. It Fernández Cívico (all of them key players from the brings down the old bureaucratic, rigidly centralized FAR) are more crucial today to real policymaking in and chaotic system and all of its foundations, with Cuba than many civilian ministers or brilliant civil- the sole exception of the state nature of property. But ian economists like Pedro Monreal, Julio Carranza, even the latter is being actually and potentially un- Osvaldo Martínez or even José Luis Rodríguez. dermined and diluted to varying degrees by legal re- definitions like corporations, entrepreneurial holding Should perfeccionamiento be perceived as a process of companies, sociedades anónimas (share companies), militarization, as was the failed experience of the late and even sociedades mercantiles de carácter privado, 1960s? Not at all. They are not militarizing the sec- propiedad del Estado cubano, as well as different tors and institutions to which they have expanded. forms of association with foreign companies in Cuba and abroad. It may be considered and discussed as a They do not uphold a command economy — quite peculiar experience of privatizing the Cuban state. the opposite. It is not the regimentation of indus- tries, services or agriculture, without an economic ra- An interesting perspective on this issue is provided by tionale. On the contrary, their language and tools are the prestigious IRELA (Instituto de Relaciones Euro- not those of manu militari or extra-economic coer- peo-Latinoamericanas), an institution actively sup- cion, but of costs and benefits and direct incentives, ported by the European Union, in a document issued of eliminating subsidies and implementing massive in 1999: lay-offs when necessary, of strict and transparent ac- Aunque no se autorizara la creación de empresas pri- countability, of responding to market demands and vadas (referring to the V Congress of the Cuban meeting each client’s needs. It is by no means giving Communist Party), éstas podrían emerger a largo pla- orders or resorting to direct pressures of any kind but zo como resultado del proyecto de “perfeccionamien- responding to financial principles and updated tech- to empresarial”: en agosto de 1998 se eligieron 103 nology. empresas para imponer un nuevo modelo piloto de gestión descentralizada orientado hacia la economía This is not Prussian militarization, Russian war com- de mercado. Durante 1999 se incluirán otras 700 em- munism, a Pol Pot-type design or the rigid schemes of presas en el experimento. Según esta reforma, la direc- ción de las empresas tiene un mayor nivel de indepen- the Burmese military. These are not the whims and dencia, ya no rinden cuentas ante los Ministerios, no improvisations of Fidel Castro as in the past. This is a producen según un plan quinquenal, ofrecen incenti- political elite, with or without a uniform, highly uni- vos laborales y funcionan bajo los criterios de la fied, fighting for its survival, recovery, and continu- economía de mercado (se permite la bancarrota). Seg- ity. It is not a segment of society or the state known ún algunos expertos cubanos, si la reforma se lleva a as “the military,” isolated in its drills and barracks. It cabo en estos términos, surgirán a largo plazo empre- 1 is a group learning to master new systems and spaces sas privadas de facto. in which they can insert themselves once they retire, The implementation of perfeccionamiento is not a and that will meet as well the expectations of the gen- bureaucratic decision by which certain enterprises erations and segments of the population that are still join the process: there is no jumping on the band- loyal to the existing power structure. wagon or being a free-rider. Every enterprise must

1. IRELA, 40 años de revolución en Cuba: ¿Transición hacia dónde?, Dossier 68, Madrid, Mayo 1999, p. 23.

439 Cuba in Transition · ASCE 2000 start by doing away with their old foundations miento, meaning essentially the downsizing of big en- among them: centralization, central budgeting, pro- terprises and factories (those with more than 500, duction plans that totally disregard costs, planning 1000 or even 3000-4000 workers. This gigantismo — based on material balances rather than on costs, lack as it has been described — is being tackled by a pro- of internal accounting systems and accounts payable cess of redimensionamiento which entails downsizing and receivable systems, reliable statistics, inflated into small units, with less than 300 to 500 workers, payrolls, huge inventories, subsidies, low levels of and redefining productive profiles. It is believed that productivity, producing on the basis of a plan and rationalization, technological upgrading, invest- not taking into consideration the specific needs of ment, control, and efficiency can flow more smooth- clients, low quality standards. Making this dramatic ly through the smaller enterprises. change is step one, the so-called diagnosis stage. Competitiveness is another key element. Govern- Those who fail step one are in serious trouble and, ment officials have stated clearly that there will be no eventually, will be out of the game. protection given to Cuban products sold in the mer- It is only after successfully negotiating step one that cado en frontera (the dollar market in Cuba). Domes- enterprises will be evaluated to determine if they tic producers of sea food, beverages, citrus, steel, ce- qualify to be admitted into perfeccionamiento. Once ment, biotech products, pharmaceuticals, medical inside the system, they will have to meet a number of services, tourism, software, appliances, and others, additional requirements to be granted the full bene- will survive, compete, and succeed only on the basis fits of achieving, and remaining within, perfecciona- of their costs, quality standards, and competitiveness miento, meaning that they have reached full decen- vis-à-vis foreign products and services. Cuban electric tralization and autonomy in every aspect; that they fans competing en frontera with similar products are on their own; that the whole production process from Japan, Korea or China or Cuban sea food com- of production will be placed entirely in their hands, peting in the EU markets, they have to meet the in- from their supplies of raw materials down to the op- ternational standards without any protectionist inter- eration of their accounts in pesos and hard currency, ference, including subsidies. their loans and payments; that they will be able to de- Perfeccionamiento is not an isolated policy in the in- fine or change production lines, upgrade technology dustrial sector; it potentially encompasses the entire and research, increase quality, productivity, and economy, including services (tourism, banking, com- competetiveness, become profitable and make mon- merce), agriculture, and research, scientific and tech- ey; that they will be able to conduct their businesses nological activities. Step by step, in a very cautious with foreign partners in the country and abroad, go- way, some times in virtual slow motion reflecting the ing into the Internet with their websites, and distrib- contradictions at the leadership level, the pieces of ute incentives and other social benefits. the puzzle begin to fit. Cuba’s reinsertion into West- For those not meeting the standards, the ultimate ern markets; the reform of the banking system; the outcome will be closing down. This is a course of ac- new investment law; the free zones; and a whole new tion that has been gaining momentum lately as sever- body of legislation, principles, norms, and rules. al key government officials have raised, repeatedly, These innovations are intended to reshape or shape the possibility of closing down industries, including a the system to allow perfeccionamiento to work effec- considerable number of sugar mills, if they do not tively. meet standards within two-years time at the most, ar- PRELIMINARY CONCLUSIONS guing that those not meeting the standards cannot go On a national scale, we can argue that the perfeccio- living at the expense of others’ achievements and fi- namiento is still a very recent experience (excluding nancial viability. their 12 years of isolation within the military), being Another important step being sought by perfecciona- implemented for less than two years and only five en- miento is what has been described as redimensiona- terprises have completed the process. In many ways

440 FAR: Mastering Reforms much of its development and long-term consequenc- Is perfeccionamiento working? It seems to be working es remain to be seen. Objections? Yes, many. Con- pretty well so far given the Cuban context. Perfeccio- flicts and contradictions over its implementation? namiento is not something cosmetic or superficial. It Millions of them, of course. Just one example: Let us is irreversible and it is not just a temporary thing. all be aware that every step forward for perfecciona- Will it deepen its scope? It is something unavoidable miento will mean — as it has been proven already — and it will be looked upon in the future as one of the tens of thousands of lay-offs and redundant workers turning points of the . Further- that take time to relocate and readjust. Will the gov- more, my preliminary assessment suggests that it will ernment risk it? It seems it is willing to do so, even in have an impact over the next 10-20 years in trans- the sugar industry, where only the fittest will survive. forming the Cuban polity and in shaping a very dif- ferent transition, with very different outcomes, than those expected or suggested by many experts.

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