The Americas | Farewell at last

Cuba bids goodbye to the revolutionary generation

There will be a new face at the top this month. At first, little else will change

|HAVANA
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RAFAEL is about to finish his degree at Havana University, but his mind is elsewhere. The finance and economics he is learning are “what they use here in Cuba”, he explains, ie, not much use anywhere else. Cuba’s socialist government pays for his education but the stipend for living expenses is just $4 a month, enough for ten meals at the university canteen. Additional lunch money comes from his siblings, who live abroad. Rafael (not his real name) wants to go, too. He is looking for scholarships to get a master’s degree in Europe. If he finds one, he plans to stay abroad, where he can earn real money.

Rafael is among the many young Cubans who respond to their crimped prospects not by agitating against the system but by plotting to escape it. He does not oppose Cuba’s communist regime, nor does he take much interest in it. So he is unexcited by a power shift that will make headlines around the world. On April 19th Raúl Castro (pictured left) plans to step down as president, bringing to an end nearly 60 years of rule by the family that led the country’s revolution. Rafael thinks it is time for Mr Castro to go. But “it doesn’t matter to me.”

It will matter to most of Cuba’s 11m people, who have no easy way off the island. In a country where transfers of power are rare, the one about to occur is momentous. Mr Castro, who is 86, is expected to hand power to the “first” vice-president, Miguel Díaz-Canel. He had not been born when Raúl’s brother, Fidel Castro (pictured right), toppled the American-backed dictatorship of Fulgencio Batista in 1959. The post-revolutionary generation will bring a change in style and raise Cubans’ expectations of their government. It is unclear whether the new leaders will meet them.

Cuba neolibre?

Mr Díaz-Canel, an engineer by training, has acquired a reputation for modesty during his quiet three-decade ascent through government and the Communist Party. As a leader in his home province of Villa Clara, in central Cuba, he rode around on a bicycle rather than in an official car. At the (one-party) parliamentary elections last month, he queued up with other voters and chatted to the press (Mr Castro zipped in and out of his polling station).

Mr Díaz-Canel has sometimes seemed more liberal than other apparatchiks. He backed gay rights before it was fashionable. In 2013 he calmed a furore caused by the censorship of some student bloggers who were critical of the government. He met the students in front of the press and said that in the internet age “banning something is almost a delusion.”

His elevation to the presidency will be part of a broader generational change. Several octogenarian conservatives, such as José Ramón Machado Ventura and Ramiro Valdés, will probably leave the council of state, a body with lawmaking powers. Mr Díaz-Canel is expected to replace government ministers with his own people.

But substantive change, if it happens, will not be abrupt. Although la generación histórica will no longer run the government day to day, it will still be influential. Until 2021 Mr Castro is expected to remain head of the Politburo, which controls the Communist Party and thus the overall direction of policy. Mr Ventura will remain second-in-command. Mr Díaz-Canel will be only the third most powerful member.

He may not be the reformer some Cubans are hoping for. In a speech to a private Communist Party meeting, a video of which was leaked last August, he vowed to shut down critical media and boasted of his efforts to throttle civil society. He called the loosening of the American embargo on Cuba by President Barack Obama starting in 2015 an attempt to destroy the revolution. Mr Díaz-Canel was shoring up his flank to ensure his promotion to the presidency, says William LeoGrande, of American University in Washington, DC. Others see the speech as evidence that Mr Díaz-Canel will be no friendlier to critics of the regime or to the United States than the Castros were. No one expects him to allow opposition parties or to free the press.

A more plausible hope is that Mr Díaz-Canel will follow the example of communist parties in China and Vietnam, which opened up markets and allowed citizens to enrich themselves while maintaining political control. But even this may not happen. Attractive as the prospect might sound, Cuban politicians fear it would turn their country into a sweatshop making cheap goods for rich Americans. Socialism, political scientists point out, was less entrenched in Vietnam than it is in Cuba.

But Mr Díaz-Canel cannot avoid economic reform of some kind. The economy is in terrible shape and getting worse. Venezuela, whose like-minded regime has provided aid in the form of subsidised oil, is in economic crisis and sending less of it. The fall in trade between the countries, from $8.5bn in 2012 to $2.2bn in 2016, caused Cuba’s first recession since the collapse of the Soviet Union, its benefactor during the cold war. Cuba’s budget deficit reached 12% of GDP last year, in part because the government had to clean up after Hurricane Irma, which struck last September.

State-controlled farms and factories are incapable of producing the goods Cubans demand, and a lack of foreign exchange makes it hard to pay for imports (see chart). Shortages, of everything from tampons to salt and sometimes electricity, are a plague. This is straining a 60-year-old covenant, under which the regime provides security, free public services and a tolerable standard of living in return for its people’s quiescence.

If Mr Díaz-Canel is to maintain it, he will not be able to avoid reforming the absurd system of twin currencies and multiple exchange rates. It distorts price signals, stunts productivity growth and keeps Cubans poor. The convertible peso (CUC), used by tourists and some state-owned enterprises for some purposes, is pegged to the dollar at 1:1. Most wages are paid in Cuban pesos (CUP), which ordinary folk can exchange for dollars at a rate of 24:1. At that rate, the typical government salary is worth $25 a month. There are six other official exchange rates between the two currencies, depending on what sort of organisation is doing the exchanging. For most state enterprises the rate is 1:1, which preposterously overvalues the CUP. Thus, some state firms get vast handouts which make them look productive when in fact they destroy value. In December Mr Castro said that currency reform “cannot be delayed any longer”.

But change will be painful. If the currency were suddenly unified and allowed to float, more than half of state-owned firms could go bust, putting hundreds of thousands of Cubans out of work. Members of the regime do not agree on whether the bigger risk is reforming too slowly or too fast. According to foreign diplomats, the government is talking informally to the German government, which has experience in unifying currencies.

Without the Castros’ revolutionary mystique, Mr Díaz-Canel’s performance will be judged more exactingly. That both makes economic reforms more urgent, and the short-term pain they will cause more dangerous to the regime. The new president may seek to boost his popularity before administering any economic shocks—by expanding internet access, for example. The government is planning a series of constitutional changes. These are thought to include cutting the number of seats in the National Assembly (from 605) and the number of vice-presidents (from six). The post of prime minister may be reintroduced. There is talk of recognising the right to self-employment in the constitution, a sop to the 580,000 people who work in trades opened up to entrepreneurs by the government. Cubans would vote on the changes in a referendum, giving Mr Díaz-Canel a measure of legitimacy.

But Cuba’s increasingly disenchanted people care more about economic results than constitutional tweaks. If Mr Díaz-Canel can deliver those, Rafael and youngsters like him might not dream of exile.

This article appeared in the The Americas section of the print edition under the headline "Farewell at last"

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