The majority of the developed world has begun considering "freedom" as an undeniable right and reality. The word "freedom" has become an ideal, a mantra, a venerated deity of sorts. Although developing countries, too, have to suffer blatant disregards to human rights and freedoms that are ingrained in their founding documents, the freedom violations seen in Third World countries during extended periods of time have not been given enough gravity in the eyes of the media. Although it seems impossible to measure such an intangible concept as freedom, the Indicator of Economic Freedom is a system of measurement used to understand the extent of economic strength in countries around the world. This unit of measurement uses 12 different topics that can be summarized by four subtopics to define economic freedom. The first is Rule of Law, which encompasses “property rights, government integrity, [and] judicial effectiveness. Second is government size, characterized by “government spending, tax burden, [and] fiscal health.” Then, there is Regulatory Efficiency, namely “business freedom, labor freedom, [and] monetary freedom.” The fourth subtopic is Open Markets, defined by “trade freedom, investment freedom, [and] financial freedom.” These four ideas come together to give a general overview of each country’s freedom, which helps understand not only the governmental situation, but also the rights citizens enjoy or lack. The index is measured on a scale from 1-100, and as of January 2020, Singapore was categorized as the most free country with an index of 89.4, and North Korea being the least free with 4.2. Not far from the end, out of 180 ranked countries, Cuba is in 178th place with an index of Economic Freedom of 26.9.
The history behind Cuba’s failed economy is extensive and full of intricacies, but many economists and historians agree that one of the causing principles of economic weakness was the country’s full dependency on foreign powers. During the colonial era, Cuba depended on Spain and its slavery dependent system. Then, after the Cuban Independence relations with the United States strengthened, followed by the Cuban revolution in which the country was completely consumed by communist ideologies. They shifted their allegiance to the Soviet Union, and from then on completely depended on funding, exports, imports, and the overall relationship with the USSR. According to ASCE Cuba, the economic situation in Cuba during the late 80s was due mostly due to Soviet support, as the USSR purchased 85% of the countries exports. The Soviet Union collapsed in 1991, and almost immediately the Cuban economy started contracting. It is estimated that the country’s GDP shrank around 35% from 1989 and 1993. This period of economic crises was dubbed the “Special Period”. Desperate to recover normalcy, on July 26th 1993, Fidel Castro announced economic reforms that included the legalization of possessing foreign currency and allowing a dual economy that would allow the country to receive investment from international entities. This measure came was a double-edged sword, as it resulted in increased foreign investment and more flexibility for different economic sectors to recover using the availability of international currencies, but it also led to “regressive income distribution”. The economy became quite volatile, seeing improvements in certain sectors, while others perished. Nevertheless, the GDP in 1994 gave an unsuspected turn with an increase of 0.7%. Although extremely limited, the GDP continued to see improvements during the following years, even reaching an increase of 4.7% in 2009. The “Special Period” lasted all throughout the 1990s, and although it did end with economic growth, it also planted the seeds for problems that continue to plague the country today such as poor public health services, low numbers of enrollment into higher education institutes, and an overall deterioration in living conditions. There were speculations amongst developing countries that Cuba was about to be forced to put an end to their socialist regime in order to truly impulse their economy and reach stability. Nevertheless, Cuba found a new ally which revitalized the communist system and strengthened their grip over the country. With the rise of Hugo Chavez to power, Fidel Castro and his administration were able to assert their power over Venezuela, then extremely rich with natural resources, namely oil. The support they once had from Spain, the United States, and the Soviet Union, now came from Venezuela, not only helping strengthen the government, but also expanding the communist ideologies into South America. Fidel Castro made Hugo Chavez his puppet in Venezuela, leading to years of instability, violence, and economic depression, which are ongoing.
Cuba adopted a closed system, completely aligned with communist ideals, in which the government controls everything leading to its intrinsic isolation from foreign support and investment. Furthermore, the aversion against private property has led to the decreased quality of life for the average individual, similar to what is currently happening in Venezuela. It is arguable that this attitude towards private property is one of the most significant factors in contributing to its economic instability. Nevertheless, on February 7th, 2021 the Cuban announced that it will begin to open its economy to private businesses. This is a significant step in integrating itself into the highly modern and globalized economy, and will hopefully aid them in leaving behind the antiquated and dangerous communist ideals with it. The reforms come after the country’s suffered fight against the COVID-19 pandemic, given that in 2020, the economy was said to shrink 11%. Houses were in tatters, people scavenged for food, and prices continued to go up while citizens had no way to pay for them. The government is said to have a consistent food stamp system, but the BBC reports that they have nonetheless been facing extreme “shortages of basic goods.” Before this new legislation was announced, the list of authorized private activities extended to around 127, but labor Minister Marta Elena Feito confirmed that this would expand and become around 2,000. Reforms carried out in 2010 allowed Cubans to work as “self -employed people” in the private sector, but this was limited to the 127 sectors allowed by the government. According to France 24, there are around 600,000 Cubans working in the private sector in areas such as gastronomy, transportation, and tourist-centric businesses, but because of the pandemic and the sanctions imposed by the Trump administration, the few who were able to participate in the private sector of the economy were forced to suspend their license. Said legislatures created by the US Government restricted access to Cuba for Americans in an attempt to “keep U.S. dollars out of the hands of the communist government”, as stated by Time Magazine. Tourism, being one of the few private businesses allowed, seemed to keep the Cuban economy afloat. However, with the changes, experts hope that the drastic reforms will aid in the recovery of the economy and incentivize activity and expand the private sector.
Although this is a huge step forward, experts continue to warn that this is not the end of the communist system, nor is it the solution to the country’s economic problems. A pro-reformist economist at the University of Havana’s Center for the Study of Cuban Economy, Ricardo Torres has led discussions in order to clarify how these reforms will truly impact Cuba. He explains that “the private sector won’t become the majority [of economic activity] at least in the medium term” meaning that for true change to take place, further reforms will be needed. Allowing private entities to operate will shrink— though not erase— the government’s the totalitarian grip upon the nation, while also opening up more job opportunities to self-employed people. For example, sectors of the economy that previously only employed government employees like technical services, engineering, and economics, are expected to offer opportunities for people outside direct government influence. However, Pedro Monreal, a Cuban economist, outlines reforms that should be enacted in order to see true and radical change, such as “reduce[ing] the weight of the state in GDP” Unfortunately, the process for these decisions to take place span years and are not entirely efficient. It is said that this reform has been in the planning stages since 2016 and are only now being implemented. Because of this many are doubtful that Cuba will experience more changes in the near future, but hope and optimism are the prevalent emotions and reactions towards this new legislature, as small steps are better than no steps at all.
Written By: Carolina Mejia Rodriguez
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