C O N F I D E N T I A L HAVANA 000593

SIPDIS

E.O. 12958: DECL: 07/22/2013
TAGS: PGOV EAGR ECON
SUBJECT: LAND DISTRIBUTION PROPOSAL NOT QUITE ENOUGH

Classified By: COM Jonathan Farrar for reasons 1.4 (b) and (d)


1. (C) International press has focused attention on Raul
Castro's announcement of Decree-law 259, which allows land to
be granted to individuals and corporations "en usufructo,"
meaning that the state retains ultimate control as landlord,
but those who receive and work the land can profit from the
sale of its produce. The move is being touted as a
significant step forward. In one sense it is. The very fact
that the GOC is recognizing that land tenure is a key
component in increasing agricultural productivity is
important. However, Decree-law 259 comes with quite a bit of
small print that makes it less attractive as a reform than it
could be. More regulations governing the operation of
Decree-law 259 will be forthcoming in August in something
akin to implementing legislation, but it is not clear that
these will be an improvement.


2. (C) Perhaps most importantly within the context of
Decree-law 259 itself, the concept of "en usufructo" does not
allow for actual ownership. Also, the law is biased towards
use by the large state enterprises and collective farms,
which made the agricultural sector such a mess in the first
place. Individuals are to be granted use of the land for ten
years with the possibility of an additional ten years, while
corporations are granted use for 25 years with the
possibility of an additional 25 years.


3. (C) Another provision states, somewhat ambiguously, that
the land should be used to produce the same crop/livestock as
it always had, thus preventing the "owner" from deciding on
the best use of the land. The uncertainty created by this
ambiguity may discourage individuals from stepping forward.
Individuals, but not corporations, also can lose their use of
the land if they do not fulfill production contracts with the
state. The Decree-law does not address prices, which may be
discussed in August, but if prices continue to be set by the
state, which is entirely possible, it will be another
disincentive to work the land.


4. (C) The size of the parcels to be transferred will not be
large. A maximum of 13.42 ha (33.16 acres) can be
transferred to an individual or entity that is not already an
owner or tenant of land, and a maximum of 40.26 ha (99.49
acres) can be transferred to an individual or entity that
already is working some land.


5. (C) One point made emphatically by Raul Castro in his
July 11 speech to the National Assembly (septel) is that
Cubans are going to have to learn to pay taxes. Decree-law
259 provides for taxation of the owners/tenant of productive
agricultural land. The purpose of the taxes is to pay for
the material, equipment and fertilizers, etc, that the
government will provide to the users of vacant land to bring
it back into production. While this seems logical enough, it
may be painful for Cubans who have grown accustomed to the
state providing for needs without resort to explicit taxes.


6. (C) COMMENT: As one local opposition commentator has
said, the main characteristic of Decree-law 259 is that it
maintains the absolute control of the state in the
agricultural sector. While the concept of land reform is
indeed critical to returning Cuba to a state of agricultural
self-sufficiency (fully 50% of formerly cultivated lands are
now abandoned), it cannot be accomplished unless the GOC
becomes willing to break out of the revolutionary strictures
that created the current disaster in the first place.
Decree-law 259 shows it is not there yet.




FARRAR