What do Cubans stand to lose, and who stands to gain?

In April 2001, World Bank President, James Wolfensohn, was reported to have enthused on the remarkable achievements in health care and education, besting his own organization at its stated aim of improving the lives of the poor. His remarks followed the publication of the Bank's 2001 edition of 'World Development Indicators' (WDI), which showed Cuba as topping virtually all other poor countries in health and education statistics. Jim Lobe, writing for Inter Press Service Finance, quotes Wolfensohn:

"I think Cuba has done -- and everybody would acknowledge -- a great job on education and health," Wolfensohn told reporters at the conclusion of the annual spring meetings of the [World] Bank and the International Monetary Fund (IMF). "I have no hesitation in acknowledging that they've done a good job, and it doesn't embarrass me to do it. ...We just have nothing to do with them in the present sense, and they should be congratulated on what they've done."

Jo Ritzen, the Bank's Vice President for Development Policy was no less outwardly enthusiastic. Lobe quotes him:

"Six for every 1,000 in infant mortality - the same level as Spain - is just unbelievable," according to Ritzen, a former education minister in the Netherlands. "You observe it, and so you see that Cuba has done exceedingly well in the human development area." …

Even in education performance, Cuba's is very much in tune with the developed world, and much higher than schools in, say, Argentina, Brazil, or Chile. …

"Cuba managed to reduce illiteracy from 40% to zero within ten years," said Ritzen. "If Cuba shows that it is possible, it shifts the burden of proof to those who say it's not possible."

From a report prepared by World Bank staff, "The Cuban Education System: Lessons and Dilemmas,"  (World Bank, December 1999), the author writes:

The record of Cuban education is outstanding: universal school enrollment and attendance; nearly universal adult literacy; proportional female representation at all levels, including higher education; a strong scientific training base, particularly in chemistry and medicine; consistent pedagogical quality across widely dispersed  classrooms; equality of basic educational opportunity, even in impoverished areas, both rural and urban.  In a recent regional study of Latin America and the Caribbean, Cuba ranked first in math and science achievement, [UNESCO 1998] at all grade levels, among both males and females. In many ways, Cuba’s schools are the equals of schools in OECD countries, despite the fact that Cuba’s economy is that of a developing country... 

The Cuban case demonstrates that high quality education is not simply a function of national income but of how that income is mobilized. A highly-mobilized people can realize high quality education by ensuring the necessary inputs, paying attention to equity, setting and holding staff to high professional standards, and caring for the social roles of key stakeholders—teachers, community members, children.  (p. 4-5)

Wolfensohn and Ritzen are forced to concede that Cuban socialism has succeeded were their own organization and neoliberal ideology have so manifestly failed elsewhere in Latin America. How do they rationalize this failure? While admitting that the Cuban experience may be "useful" to other developing countries, Ritzen hedges: Cuba's ability to provide so much social support "may not be easy to sustain in the long run". He elaborates:

"It's not so much that the economy may collapse and be unable to support such a system, as it is that any transition after Castro passes from the scene would permit more freedom for people to pursue their desires for a higher standard of living." The trade-off, according to Ritzen, may work against the welfare system that exists now.

"It is a system, which on the one hand, is extremely productive in social areas and which, on the other, does not give people opportunities for more prosperity."

So, already we see the plan is set: One way or another, socialism will pass from the scene and "freedom" will reign--a form of "freedom," however, which is somehow incompatible with the very best health and education system in Latin America! You may wonder who will benefit from these "opportunities for more prosperity?" Apparently not those who would be using public health care and education--average working Cubans! Apparently with all of their newfound "prosperity," they would no longer be able to afford these levels of services! Regrettable perhaps, but that would be the price of "progress" World-Bank-IMF-style in Cuba's newly globalized economy. Let us now see how this works in practice, turning to Nobel Prize winner in economics, and  former World Bank Chief Economist, Joseph Stiglitz.

In Gregory Palast's article, "IMF's four steps to damnation," in the Observer, April 2001, Stiglitz outlines the standard four-step process of structural "adjustment. (The practice is so widespread in the developing countries and in Latin America in particular, that it seems Cuba, under a capitalist regime, would certainly be the subject of such a process.)

Palast writes:

Each nation's economy is analysed, says Stiglitz [ex-chief economist of the World Bank], then the Bank hands every [government] minister the same four-step programme.

Step One is privatisation. Stiglitz said that rather than objecting to the sell-offs of state industries, some politicians - using the World Bank's demands to silence local critics - happily flogged their electricity and water companies. 'You could see their eyes widen' at the possibility of commissions for shaving a few billion off the sale price...

Under the terms of the Helms-Burton Act--the legislative underpinning of the US embargo--most Cuban state industries and property will already have been turned over to US corporations and citizens, so there may not be much left to privatize. Still, there may be fortunes to be made from the remains by members and friends of the new regime. Palast continues:

After privatisation, Step Two is capital market liberalisation. In theory this allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money often simply flows out.

Stiglitz calls this the 'hot money' cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days. And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%. 'The result was predictable,' said Stiglitz. Higher interest rates demolish property values, savage industrial production and drain national treasuries.

At this point, according to Stiglitz, the IMF drags the gasping nation to Step Three: market-based pricing - a fancy term for raising prices on food, water and cooking gas. This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls 'the IMF riot'.

The IMF riot is painfully predictable. When a nation is, 'down and out, [the IMF] squeezes the last drop of blood out of them. They turn up the heat until, finally, the whole cauldron blows up,' - as when the IMF eliminated food and fuel subsidies for the poor in Indonesia in 1998. Indonesia exploded into riots. There are other examples - the Bolivian riots over water prices last year and, this February, the riots in Ecuador over the rise in cooking gas prices imposed by the World Bank. You'd almost believe the riot was expected….

With heavy state subsidies for all essential goods--everything from housing to cooking oil--Cubans would be in for quite a "shock treatment" indeed. Palast continues:

The IMF riots (and by riots I mean peaceful demonstrations dispersed by bullets, tanks and tear gas) cause new flights of capital and government bankruptcies This economic arson has its bright side--for foreigners, who can then pick off remaining assets at fire sale prices.

A pattern emerges. There are lots of losers but the clear winners seem to be the western banks and US Treasury.

It is no wonder then that the World Bank's Jo Ritzen (see above) is doubtful of Cuba's ability to maintain its exemplary health care and education systems under a capitalist regime. He likes to call it "freedom" and "opportunities for prosperity." It is clear now, for whom.


Cuba's social achievements in health care and education have been lauded, as we have seen above, from the most unlikely quarters--by none other than the ultra-capitalist World Bank! As well, Cuba's economic achievements in agriculture have been recognized by Oxfam America, a US-based, privately funded organization dedicated to alleviating hunger and poverty, world-wide. In its recently published "Cuba: Going Against the Grain," they comment on the recovery of Cuban agriculture since the collapse of the former USSR. They report, "Under the circumstances facing Cuba--the U.S. embargo, loss of trading partners, little international aid, and economic collapse--the agricultural recovery is nothing short of extraordinary." (p. 42) As noted in the executive summary, although some problems in food production remain...

The generalized food crisis [of the early-to-mid 1990's] in Cuba is over. Statistical data, journalist accounts, and extensive field visits confirm that the period of a systemic farming crisis, widespread food shortages and extensive nutritional deficiencies has passed. Farmers are producing more food, the state is importing more food, and the diet of the population has improved.

Among Cuba's most notable achievements in this area, the authors point out that,

Whereas liberalization policies in Latin America and the Caribbean in the 1980s led to greater inequality, land concentration and rural poverty, the Cuban liberalization policies in the 1990s improved food security, strengthened rural livelihood and decentralized landholdings. The Cubans expanded markets and instituted decentralization gradually under government control, with an eye towards protecting the farmers rather than facilitating concentration of wealth....

Unlike the experience in many countries where the introduction of markets, privatization, and decentralization have deepened poverty and dislocation, small farmers and the working class [in Cuba] have benefited from the changes.

As an aside, the report notes that, "Even before the revolution, Cuba imported large amounts of food--about one-third of its food supplies." As noted in a 1983 OAS report on the progress made by the Revolution in the area of alleviating malnutritition:

Over two-thirds of wages were spent on food. In 1956, a family of 6 persons could spend only 17 cents per person on food.  It is not surprising that malnutrition was widespread (60% in rural areas) and that the average weight of the agricultural worker was 16 lbs. below the theoretical average and that his height was less than the Cuban average....

Foreign observers agree on the progress made in lowering the incidence of malnutrition in Cuba. [Citing studies dated in the early 1980's...] It has been stated that "given the equity imposed by wage policy and the rationing of food, there is no reason to doubt the affirmation of the government that malnutrition in Cuba has fallen from a pre-revolutionary level of 40% to a current level of less than 5%."... 

On the experience of various countries in Latin America under the tutelage of the IMF and World Bank, the Oxfam report (p. 39) points out:

...Beginning in 1973 with Chile and Uruguay and then throughout the region following the debt crisis of 1982, governments adopted free market trade policies--in part as a response to pressure from the IMF and World Bank for structural adjustment. The formula, known as the "Washington Consensus," led to "the removal or trade barriers and impediments to foreign investment, increased foreign investment, financial liberalization, privatization, deregulation, and reforms of the tax system."

Throughout the region, agriculture output rose in the 1990's (after stagnation in the 1980's), but its impact was uneven. This growth was led by export-oriented enterprises with access to foreign capital, markets, and leading technology, while small and medium size national producers suffered. Increased imports of food commodities have lowered prices, benefiting consumers but negatively affecting food producers.

In Latin America, small farmers have lost their land, rural poverty and unemployment have increased and inequality has grown. In Brazil, for example, a million farmers lost their land between 1985 and 1996, and real wages in agriculture in Mexico dropped by 63% from 1982 to 1991....

This, it contrasts to the case of Cuba (p. 39):

In Cuba, the economic crisis did not cause serious dislocation in the rural sector. No Cuban farmer has lost land through the crisis; in fact, the opposite occurred, as 25,961 new farmers with government-leased land (rent-free) ANAP [the national organization of small farmers] in the 1990's. Markets have not squeezed the farmer; instead, farmers have profits and produced more for the market while filling their quotas for state food distribution. While cooperatives are pressed to become more independent financially solvent, government support for farmers continues in practically all areas--except for provision of imported agricultural supplies-albeit on a reduced scale. The government provides free agricultural extension [training], crop insurance, guaranteed markets, and subsidies on what little inputs it can provide (although government subsidies have dropped each year since 1994). In addition, the government has carefully used food imports to complement, not substitute, for domestic production.

These policies have promoted rural employment and encouraged rural livelihood so that rural youth can choose to invest their education and aspirations in rural life, rather than try their luck in the cities. The combination of state control and calibrated reforms has increased production, but not a the cost of wealth for a few and misery for the majority....

On the opening of domestic markets to cheap food imports--as is usually mandated by IMF/World Bank structural "adjustment" plans--the Oxfam report (p. 40) notes that:

Too often cheap food imports (or donated food aid) have undermined local markets in Latin America and bankrupted small producers incapable of competing with international agriculture business. Cheap food imports also build a consumer appetite for foreign goods and further erode food security by taking production and resources out of [local] hands.

The Cuban state, on the other hand, Oxfam reports:

...limits the competition between cheap imported food and domestic production. Cuba chiefly imports food that it does not produce locally or cannot produce in sufficient quantities.

So, not only would the social achievements of Revolution not be sustainable under a capitalist regime in Cuba--this by the admission of a top World Bank official!--but so too, it seems, would the long term, economic viability of the rural working class be compromised, with all the dire social consequences that we see in the rest of Latin America today. Under such a regime, there would be "freedom" and "opportunities for prosperity" for the few--the well-connected cronies and friends of the new regime--and misery for the vast majority.

 

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