Cuban Regime Declares "Structural Changes" in Economy While Adhering to Socialist Model

The Cuban regime has once again expressed its intention to implement "structural changes" within the nation's economy, clearly stating these will occur within the confines of the "socialist model." This sentiment was echoed by government-aligned economists during a recent episode of the television program Cuadrando la Caja, where they advocated for reforms, but under strict state control with the Communist Party maintaining absolute governance.

Independent analysts, however, remain skeptical about these proposed transformations. Economist Pedro Monreal criticized the government's narrative, pointing out that the official discourse avoids delving into the severe structural crisis plaguing the country—a crisis born from previous unsuccessful reforms driven by the government itself. "If structural change is being discussed today, it's because the government previously enforced a failed structural change that ended in crisis," he remarked in a series of posts on X (formerly Twitter).

Official Stance: Change Without Regime Shift

During the television broadcast, panelists emphasized that a "structural change" does not necessarily equate to a "regime change," and that socialism should be reinforced rather than replaced. Former Minister of Finance and Prices, José Luis Rodríguez, declared that the current composition of Cuba's economy is unsustainable, with the state sector producing 84% of the GDP, while the private sector, despite its growth, still constitutes a minor portion.

Meanwhile, former spy and economist Ramón Labañino reiterated that the government's aim is to "preserve the socialist model grounded in Marxism and Leninism." Speaking from Spain in October 2024, where one of his daughters was pursuing postgraduate studies, Labañino stated that "the Mipymes in Cuba are meant to strengthen socialism." He also criticized economists advocating for a transition to a more open market system, asserting that such a move would inevitably lead to "concentration of property and wealth, steering us toward capitalism."

Resistance to Fundamental Reforms

In their statements, official economists argued that Cuba's primary economic issue lies in the need to reorganize its productive structure, enhance productivity, and control inflation. However, they avoided addressing key topics such as market freedom, privatization of strategic productive sectors, or unrestricted economic openness.

Monreal pointed out that the program sidestepped fundamental concepts like "productivity" and "income," which are crucial for any genuine economic transformation. He also criticized the dismissal of independent economists as "gurus" while the government continues to propose measures lacking concrete substance.

Previous Reforms and Their Shortcomings

The official rhetoric on "structural changes" comes after several attempts at economic adjustment have exacerbated the country's crisis. The so-called Tarea Ordenamiento in 2021 aimed to unify the currency and restructure salaries and prices, but resulted in hyperinflation and a decline in Cubans' purchasing power.

Efforts to promote micro, small, and medium-sized enterprises (Mipymes) have been contentious, as many view them as a survival tool for the regime by creating a clientelist network of "new economic actors," rather than a genuine shift in the country's productive structure. Reports have indicated how the regime has promoted cooperativism as a solution, yet without granting cooperatives true independence from the state. Simultaneously, it has "experimented" with the state budget, adjusting subsidies and cuts, but lacking a clear strategy to invigorate the economy.

Cuban Economy at a Critical Juncture

The timing of this latest "structural change" couldn't be more critical. Uncontrolled inflation, a food crisis, and the government's inability to attract foreign investment have plunged the economy into a deep stagnation. Promises to "perfect socialism" and make it "more prosperous and sustainable" have been a constant in the discourse of leader Miguel Díaz-Canel, but tangible results have eluded the majority of Cubans, who face increasingly precarious conditions daily.

A Repetitive Cycle of Empty Promises

For decades, the regime has persisted in the notion of "perfecting the socialist model" as the solution to the country's economic woes. Repeatedly, Díaz-Canel has championed plans for "updating" or "rectifying" the model without these leading to actual structural changes. In 2024, he reaffirmed that Cuba would continue "perfecting its socialist economy" without opening the door to reforms allowing private sector autonomy. In 2023, Díaz-Canel acknowledged the economic crisis but dismissed any significant change, reaffirming his commitment to "building socialism" despite his policies' failures.

Over the years, the official rhetoric of the "eternal revolution" advocating "continuity" has been cyclical: an insistence on "perfection" without embracing fundamental reforms. The question now is whether the regime is willing to implement effective changes or if this is another strategy to buy time without addressing the country's structural problems.

Is State Capitalism on the Horizon?

Despite the official rhetoric against capitalism, the economic reforms implemented by the regime might be steering Cuba towards state capitalism—a model where the government retains absolute political control while permitting a market economy with state-regulated features, akin to what has been seen in China or Russia.

This system tends to deepen inequality, as the state remains the primary economic actor but grants privileged spaces to certain business sectors aligned with power. Instead of promoting genuine economic decentralization, there is a risk of consolidating a bureaucratic elite with access to key resources, while the majority of the population remains mired in hardship.

In countries like China and Russia, state capitalism has led to significant social inequalities, structural corruption, and concentration of wealth among groups close to the government. If Cuba follows this path, the result could be an economy with greater injustices than those of liberal capitalist systems, where at least there are mechanisms for competition, economic mobility, and broader distribution of power.

The crucial question is whether the Cuban regime is genuinely prepared to make changes that benefit the entire population, or if its goal is simply to tweak the economy enough to ensure its political survival and absolute control over the country.

Potential Future Scenarios from "Structural Changes" of "Continuity"

Díaz-Canel's economic policy, promoting "structural changes" without altering the political regime, points to a scenario of limited adjustments that fail to address fundamental issues. Rather than a real transformation that allows for a more dynamic and decentralized market, the Cuban model remains trapped in a logic of controlled reforms aimed at easing economic tensions without relinquishing power or changing the state's monopoly over the economy.

This could lead to several potential scenarios:

1. Prolonged Stagnation: Without structural reforms that include greater economic openness, productive decentralization, and genuine autonomy for the private sector, the economic crisis will continue to deepen. Inflation, scarcity, and lack of foreign investment will keep eroding the population's living standards.
2. Increased Dependence on External Allies: Given the current economic model's inability to generate sufficient independent income, the government will continue to rely on financial support from strategic allies like Russia, China, and the BRICS bloc. However, this dependence may not be sustainable in the long term.
3. Half-hearted Reforms That Don't Solve the Crisis: As seen with Mipymes and banking measures, the regime implements limited changes to mitigate economic deterioration, but without allowing real liberalization. These measures may temporarily alleviate some problems but fail to reverse the structural crisis.
4. Greater Control and Repression: To sustain the model without making real economic concessions, the government might resort to increased controls, restrictions, and repression against social discontent, further criminalizing private activity and political opposition.

Ultimately, without a political shift allowing for greater economic flexibility, Cuba will remain in a cycle of recurring crises, with minor openings that fail to generate real and sustainable change.