Hugo Pons: “Venezuela’s economy has not saved it”

Talking to a Cuban economist, in this case Dr. Hugo Pons, is no longer talking about the US blockade, which is also (“a blockade that manifests itself in terms of economic warfare, which transcends bilateral relations and becomes an instrument multilateral “, as some large Spanish companies know), but to speak of” changes and transformations “, of” raising the level of efficiency of the business system “. Pons, vice president of the Association of Economists and advisor to the State Council, among other organizations, explained in Barcelona the economic “guidelines” that emerged from the Communist Party Congress in 2010, which are summarized in 55 objectives. Under the first, which is to preserve socialism, there are novelties.

What are the new guidelines of the Cuban economy?

They went from 291 to 313. Its launch and discussion had the participation of more than three million opinions, throughout the country, from the neighborhoods to the Congress.

The Congress of the Communist Party of 2010?
Yes. What happens is that the guidelines were discussed before. And that gives it a different connotation: it is no longer that the party made the guidelines and discussed them with the population but that it collected a series of studies that were done previously and were elaborated as indications of economic policy essentially, institutional policy, public politics. 60% of the guidelines were modified collecting the popular feeling and the criteria of the people. And from there a process of the application takes place, and that process advances, starting with concrete exercises and experiments.

The great experiment consists of the transfer of a very important workforce from the public sector to a new private sector …
Those small businesses, on the basis of self-employment, truly discharge public spending. And people are assuming it. At the moment there are around 400,000 people. Maybe, as a trend, in a couple of years, it could reach a million people.

What corresponds to the liquidation of half a million public jobs

In part, because it has opened the possibility that professionals, who were a bit limited in terms of doing a particular job, can do it. There are those who carry out an activity and do the other … This is even linked to the situation in terms of demographics in Cuba, and life expectancy, and 18.4% in conditions of older adults. This has an impact on the labor context, and in a couple, three or four years it becomes a necessity to preserve that workforce. Self-employment is not something completely new either. It never completely disappeared in the country. It grew in the early nineties as a result of the demise of the socialist camp and the emergence of the special period in Cuba, was at the height of 50,000 self-employed workers. Measures of this type were applied as, say, financing so that people who had to leave their jobs for a reordering received 60% of the salary during a period of time and found another activity. Some 70 economic activities were authorized through licenses. Where is the change in the current conditions? The activities in which you can work on your own have grown to 181. On the other hand, this type of activity is encouraged even by the tax policy; There is no tax policy that seeks to stop this process. Quite the opposite: so much so that for several years it is not necessary to pay taxes.

How many years?
The first five is not paid for the first five workers who are hired. There we are talking about a small business projection. But it is important to be clear that the fundamental weight of economic activity does not pass to that sector. It remains of a state nature. There is an idea that arises, that 45% of GDP in 2015 or 2016 is generated from new forms of management, but it is not only through self-employment but through new forms such as the cooperative, for example. Self-employment also has an important effect from the point of view of social benefit, which advances in terms of discharging to the State a public expenditure that will strengthen actions from the social point of view through investment. And that contributes to raising the levels of quality of life of the population because certain services that are in the hands of that private worker are not provided by the State or cannot be provided under the same conditions. And it is combined with the possibility, for example, of renting and buying and selling homes.

How does that small entrepreneur to finance himself

The banks. A new credit and loan policy- check this link right here now Chiuderemorini … All this also responds to a process of experimentation. Progress will be made to the extent that the conditions are created so that the bank can also fulfill its role. And in that sense, a reorganization of the banking sector, because it also needs its guarantees., And one of the lines in which it works with greater force is precisely from the bank, in order to ensure the risks … The bank resizes its interest rates and it has offers of interest rate that has been bringing as consequence the increase of deposits in the current account. Therefore, there is a phenomenon in a savings account.

How much is the interest

I do not handle it by heart, but it’s around 2.5%. It is not yet an interest rate with a high level of stimulus. This relationship between supply and demand will have to be perfect. The banking process will continue to be adjusted to the same extent that a series of actions are applied to monetary policy, financial policy, the pricing system …

I imagine that for a Cuban, what is complicated is going to be having to pay taxes one day.
Well, for the average Cuban it was. It is not anymore. Between 1992 and 1994, one of the actions that took place in Cuba was the expansion of the workers’ parliaments, at the start of the special period. Among other things that had to be done at that time was to win the contest of the whole world before what was coming on us. And parliaments are created in which a good number of decisions, laws were discussed … As part of this, the recovery, after many years, of the tax as a process of increasing the national budget was discussed. And I remember that we all agreed that this would apply. One of the forms of the tax was the personal tax. It was discussed and approved. For the average Cuban in practical terms, it is not news that it is applied at certain times; however, for the Government, and taking into account the popular criteria, it is not the moment that still needs to be applied immediately. But it will come to be applied. What’s going on? That is not the most important element at this time. However, its operation is known. Every Friday on TV there is a space to consult about the tax system, and it is possible to access an email account of the tax office to which one can go. Therefore, people have more information on this topic, which is among the 55 objectives that characterize the guidelines. Three of them are dedicated to raising the levels of communication and information. It can still be more effective.

… Which leads us to think that in the end, it is about problems of communication, of the organization.
Look, it’s the first time they ask me that. It is the first time I talk to someone who analyzes the cause or process from that perspective. I think so! Or other aspects also influence. For example, the entire Cuban institutional structure until the beginning of the special period was structured in correspondence with having been inserted in an international community that complied with the objectives and characteristics of the Cuban economic system. In the system of direction and planning of the economy, in the years 1975-1976, a design was introduced. In its application, there were difficulties and deficiencies that were conditioning factors, and towards 1986-1989 it was analyzed that they were determined by the impact of copying certain instruments and forms of management and not adapting them to the particularities of Cuba. To that, Fidel called it “copismo”. Copy mechanically and apply. And there is a disruption between what was thought to be done and the instruments and forms. The special period arises, and the floor on which these institutions were structured and that task that was being reanalyzed to be applied according to our characteristics, breaks down … Therefore, there was no choice but to go to a survival strategy. Now I believe that it is in a position to recover those changes that began to be thought, incorporating the experience of twenty years without multilateral financing, with an increase of the blockade consolidating as an economic war action, with a number of extraordinary limitations … In 1996 a process of economic growth began that still remains, regardless of higher or lower rates, but GDP has continued to grow, and now it is in a position to take all that experience, through the guidelines and apply them. That’s why I talk about experimentation, unlike before.

With regard to “copyism”, the idea that you are basically interested is in adapting the Chinese model.
No. The Chinese are Chinese. That is an old story. We have studied these experiences, and they are in function of raising the quality of life of the people. But in real terms, the difference is in the results. We apply a tax policy but what we do next with taxes according to the welfare of society is different from what others do. It does not benefit specific layers but society as a whole. The Chinese are already going through the third modification of the structures and operation of their business system; in our case, after so many years, this may be truly the first time, the deepest. And we are doing it based on our own experience.

I pose another topic. The Cuban economy was saved by Venezuela

Ah, Petrocaribe, the ALBA …! It is not like that, I think. The question that should be asked is the following, and perhaps I am a bit crude: since when does that framework of trade relations between Venezuela and Cuba exist? For fourteen years. The Cuban economy fell 34.7% between 1993 and 1994. The Cuban industrial product had fallen in 1993, among other things by a reduction of more than 50% of the Soviet oil supply. The economy began to grow after 96, 0.7%, and since then it continued to grow until 2000-2001. The first commercial partner of Cuba in that period was Canada. And the economy grew thanks to economic, commercial relations, with Canada. And nobody said that Cuba’s economy depended on Canada. Why do they say that Cuba’s economy depends on Venezuela and nobody said it depended on Canada?

Well, but you receive Venezuelan oil at a preferential price.

It is true that there are commercial relations between Cuba and Venezuela. But they are mutually beneficial. There are no relations of subordination. In the generation of electricity in Cuba, which was extraordinarily dependent for years, a high degree of independence has been achieved by generating electricity on the basis of the combined cycle of oil and gas. But the development of gas in Cuba we are doing with Canadians, not with Venezuelans. Apparently, there is a current of propaganda that tries to condition Cuba to the development of Venezuela to ignore the real Cuban capacity to develop.

But what would happen to this relationship if Nicolás Maduro had lost the elections?
The best thing that could have happened is that it did not happen, to be totally frank. But I do not think that would have led Cuba to a new special period as they said. Because the level of dependence that we had with the economy of the socialist camp was more than 80%, and 75% only with the USSR.

And now with Venezuela, it is 40%.
With Venezuela, it is lower than 40% in real terms but also supported by other mutual benefits. Because you can not only measure relations with Venezuela but with Latin America, because the world has also changed; it is with Venezuela, with Ecuador, with Argentina, Uruguay, Mexico, Guatemala, Honduras, even with El Salvador, Nicaragua, Panama. Because the relationships are different. Because in the world, as Correa rightly says, there is a change of time. The context is different. I do not know if anyone would have entertained in looking at the effect on Venezuelan society of the service that Cuba provides only through medical attention.

I think it’s well known.
And in terms of the future, that is something that stays. Therefore, we are talking about mutually beneficial relationships. Of course, there could be a government in Venezuela that broke those relationships … Well, that may be, but when you listen to the people of Venezuela they know what they are talking about.

Yes, it’s okay … There you have to analyze. It would be worthwhile to see the productive structure of Venezuela in 1990, 1995. And the structure under current conditions, in a country that depended only on crude oil, which supplied 4% of the US oil demand. and that it passed through Trinidad and Tobago to be refined in a function of US interests, while the rest of the economic activity was conditioned by imports, with a very high dependence on food imports. And today it is not like that; It has been changing based on an inward development. And there he has the social pact too.

We are talking about milk, for example.
We are talking about milk, for example. Yes, well, there are also limitations on the part of the private sector, whether it matters or not, whether it produces or not. Venezuela is not a country whose economy operates on a kind basis, neither financial nor managerial by the private sector. Therefore, shortages are also created and managed … This is how it works. And Venezuela is the object of a campaign of political propaganda, media. Those figures are created. At certain times there is a lack of milk; at other times, of other products. There are delays in the importation processes from the private sector itself. There are issues that undoubtedly respond to actions aimed at creating difficulties, I believe that too. There are interests behind. But what is undeniable is that from Chavez, from Chávez until now, as the same honest Venezuelans say, no government has done so much for this people. How many years did capitalism need to develop? So, why do progressive regimes devalue them because they’ve been twenty, thirty, forty, fifty, trying to achieve progress? Can not be. It takes years.

But does capitalism end or does it end

Someone with a high academic recognition said that the problem of capitalism is that socialism will undoubtedly emerge: the mission is to delay it as much as possible. When you analyze what is happening in the world, more and more you have to resort, from the capital to more participatory processes. Recurrence of these increasingly participatory processes, of more people in the decision-making of public policy, is a need of the system … But if the results are not achieved, if it is still a cyclical process, at the end of the road What people think is that you have to change the system. Is it not true? It is a system that, because it finds no solution between that minority that governs and distributes, and those that require and need, motivates in itself the search for another solution. That is why the failure of neoliberalism as a process, regardless of the progress that some had, can not be denied.

I would say, for example, the different projection between

the International Monetary Fund (IMF) and the World Bank, to show the adjustment processes of the IMF, those that at the end of the road everyone knows them … Look, Cuba’s guidelines are based on number one, which is to preserve socialism. And preserve it on the basis and raised in this way: a sustainable socialism, its own and, as is logical, autonomous and for the benefit of Cuban society. Because we do not see another solution. At no time do the measures that are being applied imply an involution. On the contrary, the confirmation that the solution for Cuba is socialism, and socialism on the basis of own resources and own conditions, own characteristics, taking the experiences of the rest of the world to the extent that they are useful for us to develop our own society. And that is what popular consensus has. In 2000 more than 90% of the people voted in a referendum in favor of building socialism and in function and with the criteria of the guidelines that were proposed and approved in the party Congress and then in the People’s Power Assembly. There is an expression of Comrade Fidel from many years ago: if socialism is our dream, why do not they let us do it?