David Jessop, Contributor

Cuba's economy is in a bad way. There is a widespread sense of social discontent and a deep concern among many groups in society, including some of those who are committed to Cuba's communist system.

In order to address this crisis, in a system long overdue for adjustment, government has recognised that reform is necessary, has announced that there will be significant changes in its social and economic model, and is to introduce changes that eventually will usher in a new generation of leadership, management, and direction.

In early November, President Castro announced that next April, Cuba's first Communist Party Congress since 1997 would take place.

Then, and more specifically, the discussions in the run-up to the event, the focus will be on a 32-page document that in the last weeks has been widely distributed throughout the country entitled 'Draft Economic and Social Policy Guideline'.

Then, at an as-yet-to-be-determined date in 2011, after the congress, the first national conference of the Cuban Communist Party will take place.

This will deal with what are described as "other matters of an internal nature that are not discussed at the congress and which also need to be improved in the light of the experience of these last 50 years".

This is believed to mean the election of new governing bodies, including the Central Committee and the Politburo, in preparation for eventual generational change in the Cuban leadership.

The Communist Party conference had initially been planned to take place before the sixth congress, but the meetings have been switched around to first agree the discussion document about the economy.

President Castro had postponed plans to hold the sixth congress last year, saying at the time that "given the nature of life", the next congress was likely to be "the last led by the revolution's historic leadership".

Clear direction

It is probable that former president, Fidel Castro, will chair both meetings as first secretary of the Cuban Communist Party to give authority to their outcomes.

The 291 proposals contained in the draft economic and social guidelines document make clear the direction in which the leadership and the Cuban Communist Party believe that Cuba should be heading.

It summarises the steps required to overcome the principal problems of the economy. These include putting into production unused lands, raising agricultural yields, investing in infrastructure, reducing the state labour force, raising productivity, boosting exports, and decentralising regional development.

In the social arena, the document reiterates previously stated commitments to be less paternalistic and calls for "an orderly elimination" of the ration book, which at present enables all Cubans to obtain food at subsidised prices.

The plan makes clear that the future approach will be based on "the principle that only socialism can overcome difficulties and preserve the gains of the revolution, and that in the updating of the economic model, planning will be paramount, not the market". However, it also states that for Cuba, "socialism is equality of rights and equality of opportunity for all citizens, not egalitarianism".

The document proposes that socialist state enterprises would remain the main model in the economy, but that recognition and encouragement must be given to "mixed capital companies, cooperatives, farmers with the right to use idle land, rented property landlords, self-employed workers, and other forms that contribute to raise the efficiency of social labour". In doing so, it makes clear, however, that "the concentration of property by businesses and individuals will not be permitted".

It emphasises that planning will focus on regulating and taxing state businesses rather than administering them. It also proposes to continue to encourage foreign investment; to increase the price of subsidised utilities; to guarantee free health care, education, and social security; to introduce an equitable tax system; to develop a more efficient inter-bank market; to regulate interest rates; and to study the creation of personal savings accounts and personal loans for people to use to buy goods and services.

It also proposes special economic zones to promote exports, import substitution, and high-technology projects.

It commits government to monetary unification through the elimination of the dual-currency.

In short, it envisages a decentralised socialist-oriented state which seeks to give greater economic freedom of opportunity to individuals, but within fixed social parameters. As such, it proposes a system that is uniquely Cuban, while owing something intellectually to the experience of Vietnam and China.

A mass consultation process is now under way, but the document, far from being easily accepted, may well be contentious.

It is already clear that some conservatives in the trade-union movement and in the communist party are uncomfortable with what is being proposed.

President Castro, however, could not have been more direct when on October 31 he told leaders of the Cuban Workers' Confederation that Cuba "will face ruin" unless Cubans accept the need for economic reform.

Over the coming months, the nature of the future Cuban leadership may also become clearer. The probability is that a younger generation from the Cuban military, and those who are associated with it and Cuban military-run enterprises will come to have still more influence in the leadership and over the economy, and will take forward the policy guideline recommendations on efficiency and management.

But only time will tell whether all of this will be enough to turn the Cuban economy around; whether workers will find enough incentive in self-employment to abandon years of low productivity; and whether the social benefits and economic inefficiencies that come from an economic model not driven by the market will be enough to enable Cuba to prosper.

David Jessop is director of the Caribbean Council.david.jessop@caribbean-council.org