Congress of Cuban Communist Party is over. It marked a
milestone in transformation process Cuba lives now. In few words of opening-speech
the Cuban President Raul Castro stated clearly the new economic and political
model Cuba aims to establish.

Raul Castro’s speech was transcendental. It showed a breaking
with the old soviet model, characterized by whole state-owned property and centralized
planned economy. His statement that market economy and planning can in fact
coexist is deciding to understand the next steps and measures Cuba will take in
the future. It is the same reform that China and Viet Nam are doing now but
with a different name, stated Cuban President.

Cuban transformation lies on the economic opening to foreign
investment and promoting the development of private sector which has a huge
stake in the success of economic reform. It foresees medium-term private small
and middle enterprises will have a ca. 70 percent share of BIP. Private small firms
are very dynamic and can take over a wide-range of production and services more
efficient than the state-owned firms. Thus state can liberalizes many economic
activities it monopolizes today and concentrate on the most important sectors,
such as energy and mines.

The official acknowledgment there is no contradiction between
socialism and private property significates the overstepping of an old
ideological taboo. It means Cuba tries to build
a new socialist model similar to European welfare state combining advantages
from market economy with social security, i.e. free medical and educational
services, what very valuable is for Cubans. This emphasis on social aspects marks a huge
difference with the Asian models.

Moreover Cuban President is aware there are today many
legal obstructions that hinder the development of private sector on Cuba. He recognized
the existence in fact of small and middle sized private enterprises that
operate as sole-proprietorship. The non-acceptance of the limited liability
principle for Cuban private entrepreneurs creates a real economic distortion.
It’s the main cause of fiscal evasion.

The official acknowledgment of small and middle private
enterprises with limited liability will have many legal consequences. The first
and most important one, it opens the possibility Cubans may now actively
participate as partner in foreign investment projects. It would accelerate the rhythm of foreign
investment and open a new channel for that.

On the other hand are the state-owned enterprises. Cuban
President recognized state firms can’t reach so far high efficiency and
productivity levels compared to private enterprises. Cuba aims to support its economic development
on big strong state-owned enterprises, similar to China. To that it’s necessary
firstly to transform the economic structure of state-owned enterprises. I talk
about modernize internal labor and economic relations building new corporate
relations. Shareholding system would be a valuable option.

Cuban
reform process goes on unstoppably. The velocity of change depend, among other
factors, on the reaching the political consensus for setting-up new measures.
The way to a socialist market economy is already defined.