THE CHOSUNILBO
The country is phasing out state-controlled rationing subsidies, allowing private banks and real estate development, and significantly expanding the scale and scope of private enterprises. While maintaining the Communist Party’s one-party political system, Cuba has begun a “market infusion experiment” akin to the Chinese and Vietnamese models, introducing capitalist elements into its economic system.
The Cuban parliament unanimously approved 176 reform measures across 23 sectors on the 18th, aimed at transforming the country’s economic and social structure. The core of the reforms involves loosening state control over production, pricing, and distribution. The government plans to gradually eliminate rationing subsidies, which have provided affordable essential goods since the revolution, and allow market forces to determine food and commodity prices. Private banks will be permitted under state supervision, and private real estate development and the sale of state-owned properties will be promoted. The reforms also include converting state-owned enterprises into commercial companies with shares and equity.
Private businesses with over 100 employees will now be permitted, and entrepreneurs can own multiple companies. The government will reduce its ministries from 27 to 21 units and transfer authority over enterprise approvals, imports/exports, and foreign currency management from the central government to 168 local governments, dismantling the framework of centralized planned economy.
The primary driver of these reforms, seen as Cuba’s most radical shift toward a market economy in its socialist history, is the U.S. embargo. Cuban President Miguel Díaz-Canel stated at a Communist Party meeting, “This discussion arose from the dilemma of how to continue building socialism under the longest blockade in history by the world’s most powerful nation.” The U.S. imposed a full embargo in 1962 in response to Fidel Castro’s nationalization of U.S.-owned assets during the communist revolution. In the 1990s, it pressured third-party companies trading with Cuba. Early this year, the Trump administration cut off energy supplies entirely by imposing secondary sanctions on third countries providing oil to Cuba, exacerbating fuel shortages, nationwide blackouts, and collapses in transportation and healthcare.
However, some argue that the economic crisis cannot be blamed solely on the U.S. President Díaz-Canel acknowledged, “Obstacles are not only external or due to the blockade. Delayed responses, bureaucracy, various regulations, and postponed decisions have long hindered Cuba’s economy.” The Cuban economy relied on Soviet aid until its collapse in 1991, then depended on cheap Venezuelan oil. State enterprises suffered from low productivity, outdated power grids, and inefficient administration. A poorly executed 2021 currency reform caused exchange rate chaos and hyperinflation. According to a 2023 survey by the Madrid-based Cuba Human Rights Observatory, 89% of Cubans live in extreme poverty, and over 1 million people—about 10% of the population—left Cuba between 2022 and 2023.
Despite introducing sweeping market reforms, Cuba insists it will not abandon socialism. President Díaz-Canel emphasized, “We are not abandoning socialism,” and noted that the country studied the reform experiences of China and Vietnam. The goal is to maintain political control under the Communist Party while granting economic autonomy to secure growth. China became the world’s second-largest economy after Deng Xiaoping’s 1978 reforms, and Vietnam succeeded with its 1986 Đổi Mới policy, dismantling agricultural collectivization and attracting foreign investment and export manufacturing.
Yet, critics warn that reforms do not guarantee success. The Soviet Union’s 1980s perestroika (market-oriented reforms) and glasnost (political openness) failed to resolve economic crises, leading to systemic collapse. Cuba faces similar risks: reducing subsidies amid energy and foreign currency shortages could deepen poverty and inequality. It remains unclear whether state-controlled enterprises, dominated by bureaucrats and the military, will genuinely transfer power to the private sector. Reuters described the reforms as “the largest change to Cuba’s socialist model since the revolution” but noted, “The implementation and pace remain uncertain.”
Private businesses with over 100 employees will now be permitted, and entrepreneurs can own multiple companies. The government will reduce its ministries from 27 to 21 units and transfer authority over enterprise approvals, imports/exports, and foreign currency management from the central government to 168 local governments, dismantling the framework of centralized planned economy.
◇‘Cannot blame the U.S. alone’
The primary driver of these reforms, seen as Cuba’s most radical shift toward a market economy in its socialist history, is the U.S. embargo. Cuban President Miguel Díaz-Canel stated at a Communist Party meeting, “This discussion arose from the dilemma of how to continue building socialism under the longest blockade in history by the world’s most powerful nation.” The U.S. imposed a full embargo in 1962 in response to Fidel Castro’s nationalization of U.S.-owned assets during the communist revolution. In the 1990s, it pressured third-party companies trading with Cuba. Early this year, the Trump administration cut off energy supplies entirely by imposing secondary sanctions on third countries providing oil to Cuba, exacerbating fuel shortages, nationwide blackouts, and collapses in transportation and healthcare.
However, some argue that the economic crisis cannot be blamed solely on the U.S. President Díaz-Canel acknowledged, “Obstacles are not only external or due to the blockade. Delayed responses, bureaucracy, various regulations, and postponed decisions have long hindered Cuba’s economy.” The Cuban economy relied on Soviet aid until its collapse in 1991, then depended on cheap Venezuelan oil. State enterprises suffered from low productivity, outdated power grids, and inefficient administration. A poorly executed 2021 currency reform caused exchange rate chaos and hyperinflation. According to a 2023 survey by the Madrid-based Cuba Human Rights Observatory, 89% of Cubans live in extreme poverty, and over 1 million people—about 10% of the population—left Cuba between 2022 and 2023.
◇Chinese/Vietnamese-style? Concerns over repeating Soviet mistakes
Despite introducing sweeping market reforms, Cuba insists it will not abandon socialism. President Díaz-Canel emphasized, “We are not abandoning socialism,” and noted that the country studied the reform experiences of China and Vietnam. The goal is to maintain political control under the Communist Party while granting economic autonomy to secure growth. China became the world’s second-largest economy after Deng Xiaoping’s 1978 reforms, and Vietnam succeeded with its 1986 Đổi Mới policy, dismantling agricultural collectivization and attracting foreign investment and export manufacturing.
Yet, critics warn that reforms do not guarantee success. The Soviet Union’s 1980s perestroika (market-oriented reforms) and glasnost (political openness) failed to resolve economic crises, leading to systemic collapse. Cuba faces similar risks: reducing subsidies amid energy and foreign currency shortages could deepen poverty and inequality. It remains unclear whether state-controlled enterprises, dominated by bureaucrats and the military, will genuinely transfer power to the private sector. Reuters described the reforms as “the largest change to Cuba’s socialist model since the revolution” but noted, “The implementation and pace remain uncertain.”
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