Cuba sans Castro

The 605-member National Assembly, Cuba's legislature, met on Wednesday and received nominations from the National Candidacy Commission for the Council of State, with Díaz-Canel's name being the only one put forward for the position of President. Along with him are the first black Cuban nominated as first vice-president, Salvador Valdés, as well as three women Vice-Presidents.

Born after the revolution, Díaz-Canel represents the ascension to leadership of a new generation that cut its teeth in public service in the closing days of the Cold War and during the "Special Period" of economic hardship following the fall of the Soviet Union in the 1990s.

Born as the son of a stay-at-home mother and a mechanical plant worker in Placeta in 1960, he was educated as an electronics engineer and went on to serve in the armed forces, participating in a mission in Nicaragua in 1987. Returning to Cuba, he worked for many years in the leadership of the Union of Young Communists (UJC), rising through the ranks to become the head of the provincial Communist Party Committee in Villa Clara province by 1994. While there, he gained a reputation among the residents as a modest-living public servant dedicated to improving services, even at a time when state coffers were dry.

In 2003, he was elected to the party's Political Bureau and moved to head the party organisation in the Holguín province. By May 2009, Díaz-Canel was tapped by the government to serve as the minister of higher education and eventually as vice-president in 2012. The handover of responsibilities from Raúl Castro, who assumed the powers of the presidency when Fidel Castro stepped down due to illness in July 2006, comes at a time of transition for Cuba and its revolution.

More than a quarter-century after the destruction of its main trading partners in the socialist bloc of Eastern Europe, Cuba is in the early stages of a major rethink of its economic model. For decades, the country had pursued the centrally planned economy that was the hallmark of the Soviet brand of socialism. But for nearly ten years, Cuba has been inching toward a reorientation of its notion of what socialism can and should look like—away from what was learned from the USSR and toward what might be gleaned from the examples of China and Vietnam. In those countries, a good thirty to forty years have gone into pursuing a market-based model of socialism, where total state ownership of all economic sectors has given way to multiple forms of ownership. Egalitarian wages have been supplanted by pay based on contribution and skill, and bureaucratically determined production goals to supply and demand.

Cuba's Communist Party first broached the possibility of moving in the direction of a socialist market economy at its sixth congress in 2011 and more forcefully so at the seventh in 2016. Raúl Castro's report to that meeting, delivered on his behalf by Díaz-Canel, assured party members that "the introduction of the rules of supply and demand is not at odds with the principle of planning." He said that "both concepts can coexist and complement each other…as has been successfully shown by China…and Vietnam."

The report approved by delegates went on to declare that the party continued to "aspire to greater efficiency and quality in state sector production," but it also favoured the success of "non-state forms of management—the private and cooperative sectors.

In the state-owned sector—the bulwark of the traditional socialist economy—the government is now seven years into a major reorganisation effort. State-owned companies, which still account for approximately 70 per cent of Cuba's economic output, previously followed production quotas and price directives handed down from central government ministries. But, now, they are being given increasing autonomy and pushed to be more independent, operating on a profit-loss basis. The state says that it intends to continue to move toward a relationship with companies based on regulation and taxation rather than direct management. The Communist Party has clarified that it still affirms to "the socialist principle of predominance of the ownership of all the people over the basic means of production," while relieving the state "of activities not decisive to the development of the nation."

Among the other major challenges that the party leadership has highlighted is the need to eliminate the country's disruptive dual currency system, in which different conversion rates prevail within state and private sector firms and for salaries. The party argues that getting rid of it is essential to overcome the productivity problems associated with egalitarian wage systems. With only tiny differentials according to qualification or responsibility, the pay system "generated an unmotivated workforce…and discouraged employees from seeking out positions of greater responsibility." Raúl Castro has said compensating workers in a fairer manner, reflecting "quantity, quality, and complexity," will make it possible to stick to the socialist principle of "From each according to their ability, to each according to their work."

The path ahead for the Cuban economy will not be easy, especially as the US blockade on the island is being intensified through a diplomatic squeeze by Trump, reversing the openings made by the Obama administration. And Cuba's allies in Latin America, especially Venezuela, are on the defensive and not as able to assist the island as they were in recent years. The country continues to develop its highly successful pharmaceutical research and is expanding the tourism industry, a major source of cash. But diversification of the economy is an overriding priority for the government, as it seeks to never be put in a position of dependence on one or only a few commodities, such as sugar and tobacco.

And the growing expectations of Cuban citizens, accustomed to rationed goods and slow economic growth for decades, are also adding pressure to the state. Though eager to preserve the gains of socialism—such as world-class health care and free education—the public also has shown a desire for more and better consumer goods, services, and technology. "Society is demanding more," as Díaz-Canel has said.

As the public force behind the reforms, Raúl Castro is handing off leadership of the state, but he will remain, for now, as First Secretary of the Communist Party. With a pledge of ideological continuity on the part of Díaz-Canel and the generation moving up with him, the real question at the current time is whether younger blood at the top will be able to more forcefully push the reform agenda within the framework of the Socialist system.