RAUL TALKS TOUGH ON THE ECONOMY BUT PROPOSES NO

C O N F I D E N T I A L SECTION 01 OF 02 HAVANA 000592 SIPDIS E.O. 12958: DECL: 07/22/2013 TAGS: PGOV PREL EAGR ECON CU SUBJECT: RAUL TALKS TOUGH ON THE ECONOMY BUT PROPOSES NO SOLUTIONS Classified By: COM Jonathan Farrar for reasons 1.4 (b) and (d) ¶1. (C) The series of "reforms" that were made public in the spring not only generated expectations that real change could be in the offing, but created an atmosphere of anticipation in CUBA each time that a major public figure speaks or a formal event takes place. So far, however, nothing especially new has appeared (see septel for greater detail on land reform announcement). The latest round of speculation was generated by the semi-annual meeting of the National Assembly on July 11, and the closing speech given by President Raul Castro. The impact of rising world food prices of late, and therefore the price and availability of such Cuban staples as rice and salt, contributed to a sense that Raul would have to say something. ¶2. (C) In the end, he did say something, but it was not what had been hoped. Instead of proposing any bold steps that might help the Cuban economy cope, Raul devoted about a quarter of his time to discussing a proposal to increase the retirement age from 60 to 65 in men and 55 to 60 for women. A complete pension package, including the increase in retirement age, will be circulated for "discussion" before being placed before the December session of the National Assembly for approval. Raul stressed that it will be important that Cubans, via their mass organizations, provide their input to drafting the final law. Raul made it clear that, with the population aging and government revenue weak, a revision of the existing pension system is critical. ¶3. (C) In his one and only applause line, at least until the Assembly mistakenly thought he had concluded, Raul announced a decree-law (No. 260) that allows retired teachers to be invited to return to teaching and receive regular full pay in addition to the pensions they already receive. Since the teacher pensions average about 180 Cuban pesos per month (a little more than USD 7.00),most teachers, and indeed most Cubans who receive a pension, have to continue working at something or move in with family members in order to survive. Therefore, this proposal seemed likely to generate some positive response. However, teacher salaries are also very low, and the conditions of work such that there is currently a deficit of 8000 teachers throughout the island according to GOC information. As a result, the proposal may not generate the number of teachers desired, but could cause further unrest among existing teachers who would not have access to additional pay and benefits. ¶4. (C) Raul also announced a decree-law (No. 259) to turn state lands over to individuals or corporations (in CUBA this means state companies and collective farms) "en usufructo," meaning that the state retains title, but the individual or corporation can work the land as they wish. However, the decree includes several conditions that will make it less attractive than it sounded in its base announcement (septel). ¶5. (C) Much of the speech was devoted to a discussion of the economic problems CUBA faces as world petroleum and food prices increase. The discussion was frank, noting too that Cuba was in the difficult situation of having the income of a developing country and the demographics of a developed country. Raul complained that, not only was the productive workforce shrinking because of an aging population, but there are serious shortages in key jobs such as construction and police in the Havana area. To stunned silence he announced that Cubans are going to have to get used to paying taxes and receiving fewer subsidies. He also noted that while "socialism means social justice and equality, (it means) equality of rights and opportunities, not salaries." The U.S. was mentioned only in passing, and then only in a pro-forma attack that seemed to have been stuck in almost as an afterthought. ¶6. (C) COMMENT: While many Cubans we have talked to expressed frustration that Raul announced no meaningful reforms, they also acknowledged that there was a notable change in style from the Fidel era. Raul spoke for almost two hours--long for him--but not nearly as long as Fidel used to. Moreover, Fidel would likely have devoted the vast majority of his time to long-winded attacks on the U.S. and grandiose schemes for extending the revolution to other parts of the world as a bulwark against the designs of "the empire." Raul focused almost exclusively on domestic issues. He did not offer any real concrete solutions, but he spoke quite candidly about the failings of the system, and the need for Cubans to take responsibility for improving things. In a HAVANA 00000592 002 OF 002 sense, this speech was more of a warning to the Cuban people that the good times--such as they were--are over and they must be prepared to work much harder to manage their way ahead. The traditional revolution day speech on July 26 is often used to launch new initiatives. Indeed, Raul's remarks a year ago about the need to better the delivery of milk were held up as a goal for months after. If the National Assembly speech was any indication, this years' July 26th address from Raul will focus further on the need for Cubans to buckle down and work toward internal solutions rather than providing a bill of particulars against outside forces like the US, or a list of grand accomplishments. As such, it may be a more honest assessment, but will be unlikely to inspire confidence in a people who don't need to be told how bad things are. FARRAR