Reform under siege: making sense of Cuba’s new economic measures – by Carlos Martinez
This month Cuba announced the most far-reaching changes to its economic model in more than 60 years. Approved by an Extraordinary Plenum of the Central Committee of the Communist Party of Cuba and passed unanimously by the National Assembly, the programme runs to 23 strategic axes and 176 concrete measures. Predictably, much of the Western press (along with a substantial portion of the Western left) has rushed to interpret it as the moment the blockade finally broke the Revolution, as proof that Havana has at last been forced onto the capitalist road.
Such a reading misunderstands both the content of the measures and the history that has produced them. The reforms are better understood as Cuba’s attempt to do what several other besieged socialist projects have had to do: to defend itself by developing its productive forces, on its own terms, under conditions not of its choosing. As the Cuba specialist Isaac Saney puts it, the measures, “far from representing a retreat”, in fact constitute “a strategic effort to preserve and deepen the social gains of the Revolution in the face of relentless external pressure and unprecedented economic challenges”.
What the reforms actually do
Under the new package of reforms, Cuba will scrap the long-standing requirement that foreign investors partner with a state-owned company. It will authorise large private firms, permit private banks to operate, allow private real estate development, and open the door to domestic and foreign investors acquiring stakes in state enterprises.
Cubans living abroad will be actively encouraged to invest, donate, import technology and build businesses at home. State-owned enterprises – which remain the principal pillar of the economy – will be granted far greater autonomy over investment, hiring, pricing and financial management, while municipal governments will gain expanded powers to pursue local development. Wage ceilings that have led significant numbers of skilled professionals to leave the country are to be lifted.
Agriculture, where the current crisis bites hardest, receives particular attention. Idle land will be handed to those willing to farm it, with usufruct arrangements expanded and producers given better access to imported seed, equipment and fertiliser, along with the right to participate directly in exports.
Crucially, land remains nationally owned: what is being widened is the right to use and invest in it, not the right to accumulate it.
The financial sector is to be opened to greater private and foreign participation under state regulation; the energy sector is reoriented sharply towards renewables; and digital technologies, software and artificial intelligence are to be applied across agriculture, healthcare, logistics, tourism and trade.
The animating idea is captured in a phrase President Miguel Díaz-Canel used: the need to “unleash productive forces” by replacing prohibition with regulation. Cuba, he argued, needs “more production instead of more restriction”. On the food question he was blunter still: “There is no sovereignty with an empty plate”. And on the urgency of acting: “Cuba does not need more delays; it needs solutions”. “Without wealth,’ he said, “there is nothing to distribute; we would be speaking of social justice in the abstract. Social justice as conceived by the revolution – with its humanistic mission to help the most disadvantaged, generally through free welfare programmes and projects – does not cost the people anything, but it does cost the state. And to carry it out, to deepen it, to sustain it, and to maintain it, the state needs wealth – and we must produce that wealth ourselves. If there is no wealth, there is no social justice, and everything else is a fairy tale”.
A state of siege
None of this can be understood apart from the extraordinary pressure now bearing down on the island. Cuba is not reforming from a position of comfort; it is reforming under the most comprehensive economic siege in modern history. The US blockade, 64 years old and counting, has been escalated to unprecedented levels under the second Trump administration and Secretary of State Marco Rubio. Fuel imports have been choked off – only a single Russian oil tanker has docked since the start of the year – and blackouts of up to twenty hours a day have crippled transport, hospitals, schools and water supply. Food, medicine and spare parts are all being squeezed by a sanctions regime explicitly designed to manufacture hunger and discontent.
Díaz-Canel did not mince words about the source of the crisis, describing it as “the cruelest, genocidal, and prolonged economic, financial, energy, and commercial blockade exercised by the most powerful nation in the world”.
On top of the blockade have come the lasting effects of Covid, which gutted the tourism sector that had been one of Cuba’s most important earners of hard currency; the strangulation of regional allies, above all the cutting-off of Venezuelan oil; and open threats of military action, with Washington declining to rule out the use of force and Trump musing publicly about a “friendly takeover” of the island.
The parallel with the 1990s is instructive. When the Soviet Union collapsed, Cuba lost the bulk of its trade almost overnight and entered the ‘Special Period’, a brutal contraction it survived in part by opening selected sectors to foreign capital and building a tourism industry from scratch. Fidel Castro was always explicit that those openings were dictated by necessity, not by any softening of socialist conviction.
What Cuba now faces amounts to a new Special Period – with the cruel difference that the tourism escape valve which helped the country through the last one is, this time, largely closed off by the energy crisis and US hostility. The reforms are a response to that emergency.
Not privatisation, and not the Soviet road
Privatisation, properly understood, means the transfer of public assets and economic power into private hands. That is not what is on offer here. Cuba is not selling off its national industries wholesale, dismantling public ownership or surrendering strategic sectors to foreign corporations. Foreign capital is being invited to participate in development under Cuban rules and Cuban sovereignty, while the commanding heights of the economy – and political power itself – remain socialised.
Generalised subsidies that benefit the relatively affluent and poor alike are to be replaced by assistance targeted at the vulnerable, but the state’s responsibility for healthcare, education, social security and welfare is unchanged.
As the leadership frames it, the reforms are intended to strengthen socialism, expand social justice, generate economic wealth and ensure a more equitable distribution of resources – to generate the means of sustaining Cuba’s social commitments, not to abandon them.
The most serious objection from the left is that measures of this kind breed a class with interests of its own. Private banks, a property market, large firms and remittance-funded investment do create a propertied stratum, and in the Cuban case that stratum tends to form along the existing fault lines of access to hard currency and family abroad – fault lines that are, notoriously, also racial ones. Lifting wage ceilings and replacing universal subsidies with targeted assistance will widen differentials further.
None of this should be waved away; it is the real cost of the policy, and the Special Period showed how quickly such inequalities can harden. The wager the leadership is making is that these pressures are governable so long as the state retains the banking system, the commanding heights and the power to tax, regulate and redistribute – that an emergent bourgeoisie can be made a junior and dependent partner rather than a rising rival, as it was in China and as it was not in the late USSR.
The deeper point is that there is more than one way to introduce markets and foreign investment into a socialist economy, and the difference between them is the difference between life and death for the project. The Soviet reforms of the Gorbachev era hurriedly privatised key sectors of the economy and dismantled the planning agencies overnight. Poorly thought-through reforms were combined with a process of political ‘liberalisation’ that essentially transferred political power from the working class to a nascent capitalist class.
The result was chaos, collapse and the looting of an entire society – the Yeltsin years, in which every public asset was carved up by a new oligarchy.
Studying China for decades
China’s approach to reforms has been fundamentally different from that taken by the Soviet Union. It relaxed restrictions on private capital while keeping the commanding heights in public hands; retained and improved its planning system; and above all never put political power up for grabs. The Party remained firmly in command. That is why one experiment ended in catastrophe and the other in an extraordinary economic success and improvement in the living standards of hundreds of millions of people.
This is a logic with deep roots in the socialist tradition. It descends directly from Lenin’s New Economic Policy of 1921, which used markets and private initiative to revive a war-shattered economy while the Bolsheviks kept hold of state power and the heights of industry. “We must not be afraid of the growth of the petty bourgeoisie and small capital”, Lenin argued. “What we must fear is protracted starvation, want and food shortage”.
Much of the disappointment now voiced on the left at Cuba’s reforms judges a blockaded island against an ideal it has never been free to pursue.
Cuba’s turn towards this model is the culmination of a debate that has run inside the Cuban Communist Party for thirty years. Since the 1990s Cuban scholars have studied the Chinese experience for lessons on how to integrate markets and private capital into a planned economy without losing political control. Under Raúl Castro’s presidency, small private businesses and non-agricultural cooperatives were encouraged and flourished; during the Obama-era thaw, with the blockade partially eased, Cuba posted some of the highest growth rates in the region. In 2013 it opened the Mariel Special Economic Zone, drawing in Brazilian, Chinese, Vietnamese, Spanish, Russian and other capital, on the explicit logic that economic opening up is best tested in a controlled local environment before being extended nationally – exactly the experimental, “cross the river by feeling the stones” method that characterised China’s own reforms.
What is happening now is the expansion of that experiment to a national scale. Díaz-Canel has been candid that the measures draw directly on the Chinese and Vietnamese models, while Raúl Guillermo Rodríguez Castro – a Cuban security official and grandson of Raúl Castro – described the plan as a “very Cuban” path to development.
President Díaz-Canel has been willing to name the internal problem as well as the external one, pointing to “obstacles that don’t come from outside, nor the blockade” – the “slowness, bureaucracy and norms that impede those who want to produce.” This is not the first time Cuba has tried to reform, and previous attempts have often foundered on bureaucratic inertia and excessive institutional caution. Much of the new package is an attempt to break that logjam. As Díaz-Canel acknowledged, some of the measures “will not have absolute consensus, but cannot be postponed”.
The decisive question is: who holds political power? There is no sign whatsoever that the leadership of the Cuban Communist Party – the ultimate guarantor of the socialist system – is to be weakened or delegitimised. So long as that holds, Cuba is travelling the road of China’s reform and opening up, not the Soviet road of perestroika and glasnost. What we see is a ruling Communist Party making, under enormous duress, reforms it has been preparing for over a decade.
Energy, China and the limits of the siege
The reforms also point towards Cuba’s most promising escape route from the blockade. The heaviest weapon in Washington’s arsenal is energy, and the most effective answer is to stop being reliant on imported fuel. This is where the renewables drive – import duties on solar technology, batteries and electric vehicles eliminated, foreign investment courted, charging infrastructure expanded – meets Chinese solidarity. China is financing 92 solar parks across the island, projected to cover roughly half of Cuba’s daytime electricity demand by 2028, and Cuba has already tripled its solar generation to around a fifth of supply in a single year. Every kilowatt generated from the sun is a kilowatt the blockade cannot touch. In this sense the energy transition is not merely an environmental project but an instrument of anti-imperialist resistance – and China, already Cuba’s largest energy and infrastructure partner and a major supplier of food and medicine, is central to it.
A symbolic victory for Trump?
There is a geopolitical dimension to the reforms: they can be presented by the Trump administration as a victory – proof that “maximum pressure” forced Havana to open its economy. For a regime that consistently values the appearance of winning over the substance of it, that symbolism has real value: it offers Trump a face-saving ‘win’ that might let him avoid any military operation, an act that would be staggeringly unpopular both domestically and internationally.
For Cuba, the stakes could hardly be higher. The Revolution still delivers a life expectancy and infant mortality rate better than the United States’, literacy above 99 percent, and more doctors sent abroad than the WHO, UNICEF and Médecins Sans Frontières combined. The alternative Washington offers is not a consumer democracy but the return of the pre-revolutionary order – the Cuba of Batista, a playground for foreign capital and a colony in all but name.
The reforms unquestionably carry risks, and their success will depend on implementation, on Chinese and other international solidarity. But they should be understood not as the abandonment of the socialist project but as its preservation. As Díaz-Canel told the Cuban people: “We are not going to come together only to resist. We are going to come together to create. To produce. To decide. To oversee. To prosper, and to transform.”