Posted August 1, 2016
The Structural Adjustment Policy of the International Monetary Fund was developed in response to the structural crisis of the capitalist world-economy, and it was defined by defense of the interests of the upper class, the transnational corporations, and the powerful nations, resulting in negative consequences for the poor nations and the lower classes (see “USA & IMF attack the Third World project” 7/29/2016).
Exempt from the maneuvers of the International Monetary Fund by virtue of its revolutionary commitment to true independence, Cuba nonetheless would confront in the 1990s the need for its own structural adjustment plan. The collapse of the Soviet Union and the socialist bloc had created an economic crisis in Cuba, inasmuch as socialist Cuba had developed extensive commercial relations with the socialist world. The impact of the economic crisis on Cuba was much greater than the global impact of the simultaneous world-system crisis, since Cuba’s principal trading partners had disappeared; and Cuba remained ineligible for credits and loans through international finance agencies, as a consequence of the US blockade. In three years, the Gross Domestic Product was reduced by 23%, due principally to the impossibility of importing capital goods and raw materials. The purchasing capacity of the country was reduced from 8 billion dollars to 1.7 billion dollars. The supply of petroleum declined from 13.4 million tons to 3.3 million tons, while national production of petroleum fell 17.8%. As a result, electric energy was reduced to 70% of its 1989 level, and steel production was at 19% of its 1989 level. The sugar cane harvest declined from 7 to 4.3 million tons, and agricultural production and animal husbandry declined by 53%. As a result, consumption declined dramatically, and the people began to live under conditions of extreme scarcity. A good part of the day was spent without electricity. The system of public transportation was drastically reduced, and many people walked or rode bicycles (Arboleya 2008:199-201).
The Cuban plan of structural adjustment plan was formulated by Fidel, now in his sixties, who continued to be everywhere present as the leader of the Cuban revolutionary project. The Cuban adjustment plan demonstrated once again the exemplary character of the Cuban Revolution and its historic leader, for it showed how to adjust to economic crisis in a form that gives priority to the needs of the people.
The Cuban adjustment policies were in important ways different from the structural adjustment policies adopted in Latin America during the same time period (López 1994). First, the Latin American structural adjustment was being imposed by international finance agencies, such as the International Monetary Fund and the World Bank, as a condition for restructuring debts, whereas the Cuban adjustment policies emerged from the Cuban national political process in response to the new international economic and political situation. Cuba had to adjust to new international realities, but it was Cuba herself who was deciding what to do in the new situation; policies were not being imposed by outside agencies. Secondly, whereas the Latin American structural adjustment policies were designed to increase corporate profits in an era of stagnating profits and markets, without regard for the social consequences of the measures; the Cuban adjustment was designed to protect the standard of living of the Cuban masses and to preserve the social and economic gains of the Cuban Revolution, giving priority to the maintenance of the system of health, education and social security. Thirdly, unlike the Latin American structural adjustment, the Cuban adjustment policies were developed in a context of wide citizen participation. There was a “popular consultation” in regard to the measures during 1993 and 1994, involving the mass organizations of workers, peasants, students, , and women as well as neighborhood organizations. The popular consultation gave the people an opportunity to make recommendations, many of which were implemented, as well as to gain a greater understanding of the international and national economic situation and of the necessity for the measures.
The Cuban adjustment plan was oriented toward the diversification of trading and commercial relations, and on the expansion of production in industries with higher wage rates than the classical peripheral exports, such as sugar. Accordingly, Cuba sought to expand investments in certain branches, such as tourism (with foreign and Cuban state capital), the pharmaceutical industry and biotechnology (with Cuban state capital), petroleum (with foreign and Cuban state capital), and nickel (with foreign and Cuban state capital). This expansion included efforts to attract foreign capital, but under conditions of strong regulation by the Cuban government, fundamentally distinct from the privatization of companies and the opening to foreign capital that was occurring throughout the world with the imposition of the neoliberal project. For example, most agreements with foreign hotel companies are joint ventures with the Cuban state, and the foreign firm does not employ the Cuban workers directly. Cuba attracts foreign investment not by selling natural or human resources cheaply, but by providing an educated workforce, political stability and an opportunity for reasonable profitable investment.
Various measures were adopted to improve productive efficiency, including: the decentralization of government-owned enterprises, with many state companies expected to become fully or partially self-financing; the conversion of state enterprises in agricultural production and animal husbandry into cooperatives, along with an expansion of the sale of agricultural products under market conditions; and a significant expansion in the possibilities for self-employment. In addition, a plan for the rationing of electricity and gasoline was implemented.
Cuban adjustment policies adopted during what Cuba calls the “Special Period” enabled the country to emerge from the depths of the crisis in 1993 to a level of recovery by 2001. Beginning in 1994, there was a steady growth in the gross domestic product. Hamilton observes: “The net economic effect of the changes introduced during the Special Period was positive. The economy was saved from collapse and after 1995 began to show significant rates of growth—0.7 percent, 2.5 percent, and 7.8 percent in 1994, 1995, and 1996, respectively, compared with an average annual rate of growth of 4.3 percent from 1959 to 1989 and a 3.5 percent average for Latin America and the Caribbean in the mid-1990s. Expansion has continued, with growth in GDP of 2.5 percent in 1997, 1.2 percent in 1998, and 6.2 percent in 1999” (2002:24). The recovery largely was stimulated by growth in tourism, biotechnology, and mining.
Tourism has become the principal industry of the country. During the 1990s, it grew at a rate of 18% per year, increasing from 340,000 tourists in 1989 to 1,774,000 in 2000, reaching 2 million tourists annually in 2007. The hotel capacity on the island increased threefold from 1989 to 2007 (Arboleya 2008:204). Hotel capacity continues to expand, supplemented by the incorporation of private rental rooms. The number of annual tourists in Cuba now surpasses three million.
During the Special Period, there were significant investments in the biopharmaceutical industry, with the intention of developing high-technology exports that commands high prices in the world economy, as Fidel had proposed in the debates in the Non-Aligned Movement in the early 1980s. Cuban scientific research centers have developed fifty products and services that have received international patents, including a Hepatitis B vaccine. These centers have begun to sell these products and services in the international market, although there are obstacles due to the US blockade as well as monopolization of the market by the large pharmaceutical corporations (Arboleya 2008:205).
Petroleum production increased six fold from 1991 to 2001, and Cuba now produces enough petroleum to be self-sufficient in the generation of electricity (Arboleya 2008:205). Joint ventures in the nickel industry brought its production to a record level by 2001. Cuba is the sixth largest producer of nickel in the world, and it has the largest nickel reserves in the world (Arboleya 2008:205).
During the Special Period, the system of health and education developed prior to 1989 was in essence preserved (Arboleya 2008:206). After 1998, Cuba began to expand its international medical missions in the countries of the Third World, and in 2001, there began a project to reconstruct school buildings and reduce class sizes as well as the development of municipal universities in a project for the “universalization of education.”
As a result of the willingness to sacrifice on the part of the Cuban people, the Cuban Revolution survived. There has been some degree of erosion of socialist values as a result of the dynamics of the Special Period, but the popular commitment to the Cuban revolutionary process remains strong, and the Cuban political process continues to be characterized by extremely high levels of mass participation and legitimacy. As Arboleya writes: “Few imagined [in 1994] that Cuba would be capable of overcoming this crisis. Even a good part of the international Left predicted the anticipated internment of the Cuban Revolution. . . . The overcoming of the crisis to the present level constitutes a fact explainable only on the basis of the cohesion created by the Revolution and the virtues of the socialist distributive system. There were great shortages, but not starvation; unemployment, but not alienation; there were tensions, but not uprisings, much less generalized repression, as would have been normal in the rest of the world. In the worst moments, the health system was maintained and the schools continued functioning with used books, paper, and pencils” (Arboleya 2008:201-2, 206).
Arboleya maintains the Cuban Revolution today possesses legitimacy and popular support as a consequence of the fidelity of the revolution to the interests of the popular classes that are its social base, and as a result of its defense of the sovereignty of the nation, consistent with the nationalism and anti-imperialism that have been central to the Cuban Revolution since the days of José Martí. And the popular support of the Cuban Revolution has given it legitimacy before international public opinion (2008:209-10).
The Cuban structural adjustment plan stands in sharp contrast to that imposed by the International Monetary Fund and the global powers. On the one hand, the Cuban plan is more moral, for it is based on the universal human values proclaimed by humanity, such as the rights of nations to sovereignty, and the rights of all citizens to education, health care, and meaningful political participation. But the Cuban structural adjustment policy is also more politically intelligent and economically effective: Cuba is recovering, but the world-system falls deeper into crisis, each day increasingly demonstrating its unsustainability.
The Cuban adjustments during the 1990s is yet one more example of the exceptional capacities of the historic leader of the Cuban Revolution, who will soon celebrate the ninetieth anniversary of his birth, an event which is widely anticipated in Cuba and Latin America.
The Structural Adjustment Policy of the International Monetary Fund was developed in response to the structural crisis of the capitalist world-economy, and it was defined by defense of the interests of the upper class, the transnational corporations, and the powerful nations, resulting in negative consequences for the poor nations and the lower classes (see “USA & IMF attack the Third World project” 7/29/2016).
Exempt from the maneuvers of the International Monetary Fund by virtue of its revolutionary commitment to true independence, Cuba nonetheless would confront in the 1990s the need for its own structural adjustment plan. The collapse of the Soviet Union and the socialist bloc had created an economic crisis in Cuba, inasmuch as socialist Cuba had developed extensive commercial relations with the socialist world. The impact of the economic crisis on Cuba was much greater than the global impact of the simultaneous world-system crisis, since Cuba’s principal trading partners had disappeared; and Cuba remained ineligible for credits and loans through international finance agencies, as a consequence of the US blockade. In three years, the Gross Domestic Product was reduced by 23%, due principally to the impossibility of importing capital goods and raw materials. The purchasing capacity of the country was reduced from 8 billion dollars to 1.7 billion dollars. The supply of petroleum declined from 13.4 million tons to 3.3 million tons, while national production of petroleum fell 17.8%. As a result, electric energy was reduced to 70% of its 1989 level, and steel production was at 19% of its 1989 level. The sugar cane harvest declined from 7 to 4.3 million tons, and agricultural production and animal husbandry declined by 53%. As a result, consumption declined dramatically, and the people began to live under conditions of extreme scarcity. A good part of the day was spent without electricity. The system of public transportation was drastically reduced, and many people walked or rode bicycles (Arboleya 2008:199-201).
The Cuban plan of structural adjustment plan was formulated by Fidel, now in his sixties, who continued to be everywhere present as the leader of the Cuban revolutionary project. The Cuban adjustment plan demonstrated once again the exemplary character of the Cuban Revolution and its historic leader, for it showed how to adjust to economic crisis in a form that gives priority to the needs of the people.
The Cuban adjustment policies were in important ways different from the structural adjustment policies adopted in Latin America during the same time period (López 1994). First, the Latin American structural adjustment was being imposed by international finance agencies, such as the International Monetary Fund and the World Bank, as a condition for restructuring debts, whereas the Cuban adjustment policies emerged from the Cuban national political process in response to the new international economic and political situation. Cuba had to adjust to new international realities, but it was Cuba herself who was deciding what to do in the new situation; policies were not being imposed by outside agencies. Secondly, whereas the Latin American structural adjustment policies were designed to increase corporate profits in an era of stagnating profits and markets, without regard for the social consequences of the measures; the Cuban adjustment was designed to protect the standard of living of the Cuban masses and to preserve the social and economic gains of the Cuban Revolution, giving priority to the maintenance of the system of health, education and social security. Thirdly, unlike the Latin American structural adjustment, the Cuban adjustment policies were developed in a context of wide citizen participation. There was a “popular consultation” in regard to the measures during 1993 and 1994, involving the mass organizations of workers, peasants, students, , and women as well as neighborhood organizations. The popular consultation gave the people an opportunity to make recommendations, many of which were implemented, as well as to gain a greater understanding of the international and national economic situation and of the necessity for the measures.
The Cuban adjustment plan was oriented toward the diversification of trading and commercial relations, and on the expansion of production in industries with higher wage rates than the classical peripheral exports, such as sugar. Accordingly, Cuba sought to expand investments in certain branches, such as tourism (with foreign and Cuban state capital), the pharmaceutical industry and biotechnology (with Cuban state capital), petroleum (with foreign and Cuban state capital), and nickel (with foreign and Cuban state capital). This expansion included efforts to attract foreign capital, but under conditions of strong regulation by the Cuban government, fundamentally distinct from the privatization of companies and the opening to foreign capital that was occurring throughout the world with the imposition of the neoliberal project. For example, most agreements with foreign hotel companies are joint ventures with the Cuban state, and the foreign firm does not employ the Cuban workers directly. Cuba attracts foreign investment not by selling natural or human resources cheaply, but by providing an educated workforce, political stability and an opportunity for reasonable profitable investment.
Various measures were adopted to improve productive efficiency, including: the decentralization of government-owned enterprises, with many state companies expected to become fully or partially self-financing; the conversion of state enterprises in agricultural production and animal husbandry into cooperatives, along with an expansion of the sale of agricultural products under market conditions; and a significant expansion in the possibilities for self-employment. In addition, a plan for the rationing of electricity and gasoline was implemented.
Cuban adjustment policies adopted during what Cuba calls the “Special Period” enabled the country to emerge from the depths of the crisis in 1993 to a level of recovery by 2001. Beginning in 1994, there was a steady growth in the gross domestic product. Hamilton observes: “The net economic effect of the changes introduced during the Special Period was positive. The economy was saved from collapse and after 1995 began to show significant rates of growth—0.7 percent, 2.5 percent, and 7.8 percent in 1994, 1995, and 1996, respectively, compared with an average annual rate of growth of 4.3 percent from 1959 to 1989 and a 3.5 percent average for Latin America and the Caribbean in the mid-1990s. Expansion has continued, with growth in GDP of 2.5 percent in 1997, 1.2 percent in 1998, and 6.2 percent in 1999” (2002:24). The recovery largely was stimulated by growth in tourism, biotechnology, and mining.
Tourism has become the principal industry of the country. During the 1990s, it grew at a rate of 18% per year, increasing from 340,000 tourists in 1989 to 1,774,000 in 2000, reaching 2 million tourists annually in 2007. The hotel capacity on the island increased threefold from 1989 to 2007 (Arboleya 2008:204). Hotel capacity continues to expand, supplemented by the incorporation of private rental rooms. The number of annual tourists in Cuba now surpasses three million.
During the Special Period, there were significant investments in the biopharmaceutical industry, with the intention of developing high-technology exports that commands high prices in the world economy, as Fidel had proposed in the debates in the Non-Aligned Movement in the early 1980s. Cuban scientific research centers have developed fifty products and services that have received international patents, including a Hepatitis B vaccine. These centers have begun to sell these products and services in the international market, although there are obstacles due to the US blockade as well as monopolization of the market by the large pharmaceutical corporations (Arboleya 2008:205).
Petroleum production increased six fold from 1991 to 2001, and Cuba now produces enough petroleum to be self-sufficient in the generation of electricity (Arboleya 2008:205). Joint ventures in the nickel industry brought its production to a record level by 2001. Cuba is the sixth largest producer of nickel in the world, and it has the largest nickel reserves in the world (Arboleya 2008:205).
During the Special Period, the system of health and education developed prior to 1989 was in essence preserved (Arboleya 2008:206). After 1998, Cuba began to expand its international medical missions in the countries of the Third World, and in 2001, there began a project to reconstruct school buildings and reduce class sizes as well as the development of municipal universities in a project for the “universalization of education.”
As a result of the willingness to sacrifice on the part of the Cuban people, the Cuban Revolution survived. There has been some degree of erosion of socialist values as a result of the dynamics of the Special Period, but the popular commitment to the Cuban revolutionary process remains strong, and the Cuban political process continues to be characterized by extremely high levels of mass participation and legitimacy. As Arboleya writes: “Few imagined [in 1994] that Cuba would be capable of overcoming this crisis. Even a good part of the international Left predicted the anticipated internment of the Cuban Revolution. . . . The overcoming of the crisis to the present level constitutes a fact explainable only on the basis of the cohesion created by the Revolution and the virtues of the socialist distributive system. There were great shortages, but not starvation; unemployment, but not alienation; there were tensions, but not uprisings, much less generalized repression, as would have been normal in the rest of the world. In the worst moments, the health system was maintained and the schools continued functioning with used books, paper, and pencils” (Arboleya 2008:201-2, 206).
Arboleya maintains the Cuban Revolution today possesses legitimacy and popular support as a consequence of the fidelity of the revolution to the interests of the popular classes that are its social base, and as a result of its defense of the sovereignty of the nation, consistent with the nationalism and anti-imperialism that have been central to the Cuban Revolution since the days of José Martí. And the popular support of the Cuban Revolution has given it legitimacy before international public opinion (2008:209-10).
The Cuban structural adjustment plan stands in sharp contrast to that imposed by the International Monetary Fund and the global powers. On the one hand, the Cuban plan is more moral, for it is based on the universal human values proclaimed by humanity, such as the rights of nations to sovereignty, and the rights of all citizens to education, health care, and meaningful political participation. But the Cuban structural adjustment policy is also more politically intelligent and economically effective: Cuba is recovering, but the world-system falls deeper into crisis, each day increasingly demonstrating its unsustainability.
The Cuban adjustments during the 1990s is yet one more example of the exceptional capacities of the historic leader of the Cuban Revolution, who will soon celebrate the ninetieth anniversary of his birth, an event which is widely anticipated in Cuba and Latin America.
References
Arboleya, Jesús. 2008. La Revolución del Otro Mundo: Un análisis histórico de la Revolución Cubana. La Habana: Editorial de Ciencias Sociales.
Hamilton, Douglas. 2002. “Whither Cuban Socialism? The Changing Political Economy of the Cuban Revolution,” Latin American Perspectives (Issue 124, Vol.29 No.3, May, Pp. 18-39).
López, Delia Luisa. 1994. “Crisis Económica, Ajustes y Democracia en Cuba,” FLACSO Documentos de Trabajo III
Key words: Cuba, Special Period, Structural Adjustment Policy (SAP)
Arboleya, Jesús. 2008. La Revolución del Otro Mundo: Un análisis histórico de la Revolución Cubana. La Habana: Editorial de Ciencias Sociales.
Hamilton, Douglas. 2002. “Whither Cuban Socialism? The Changing Political Economy of the Cuban Revolution,” Latin American Perspectives (Issue 124, Vol.29 No.3, May, Pp. 18-39).
López, Delia Luisa. 1994. “Crisis Económica, Ajustes y Democracia en Cuba,” FLACSO Documentos de Trabajo III
Key words: Cuba, Special Period, Structural Adjustment Policy (SAP)
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