A Heritage Foundation Report entitled the 2015 Index of Economic Freedom for Cuba published in partnership with the Wall Street Journal is revealing. The report reflects some progress but still paints a bleak picture for private sector and individual economic freedoms. In analysis, each nation is ranked according to a number of criteria.
When the formula is applied to Cuba, the country rates a 29.6 Freedom Score, “significantly lower than the regional average.” Yet, the score marks a 0.9 percent improvement over last year. Although the Raul Castro regime has improved Cuba’s entrepreneurial environment, the climate remains more restricted than other economies in the region and around the world. Government controls the country’s assets with an iron grip and has only given token expansion to the private sector because government has failed. While the Castro government talks a good game, the country is in desperate economic shape.
Most recent freedoms primarily serve to effectively reduce government payrolls. The Heritage Foundation indicates that government continues to “interfere with economic activity” and at the same time maintains “pervasive price controls.” Average monthly income in Cuba does not exceed $30.00 and, despite free education and health care, most families cannot support their families. Food stipends feed a typical family for about two weeks every month.
One of Cuba’s biggest challenges is that in spite of membership in the World Trade Organization, the country and economy is isolated from international markets. Only the state, whose credibility is unreliable, can participate in “international trade and investment.” To protect its interests, government “suppresses entrepreneurial activity and production.” Most businesses have no access to credit and Cuba’s own international credit rating is critically weak.
Venezuela’s Struggles Threaten all Cubans
Venezuela’s economic struggles pose a serious threat to Cuba’s economy as well as to the state and private sector. The economy relies on “external assistance from Venezuela and remittances from Cuban émigrés and a captive labor force,” a term that has been described more derogatorily in the past, to survive.
Cuba has received substantial oil subsidies from Venezuela under an arrangement between Fidel Castro and Hugo Chavez. Under the “Bolivarian” regime led by President Nicolas Maduro, the Venezuelan economy teeters on the brink. Opposition forces and most civilians have begun to question the country’s subsidies to a failing regime in another land.
Were Venezuela to pull back its support, Cuba would be faced with the biggest an economic disaster in its history. Herein rests the real reason for Cuba’s desire and need to boost tourism and trade with the US has shown concessions and progress. Unfortunately, the Cuban people have not benefitted yet and until state policies change the future of economic freedoms remains in state hands.
Charts of the Ten Economic Freedoms from the 2015 Index of Economic Freedoms is below.