Spotlight on Geopolitics

After the 1956 upheavals in Hungary, a joint KGB-Hungarian Communist Party plan was put into effect, aimed at making communism more palatable for the population. The plan consisted in allowing small farmers, tradespeople and unrepentant bourgeois elements to start their own small businesses. Hungarian communist-style consumerism was subsequently fueled with loans obtained abroad and the country became a showcase of prosperity within the greyish and economically backward Soviet bloc.

Confronted with a harsh economic crisis of its own and with the US embargo, the Cuban government has recently decided to solve some of its problems by offering permits to operate their own businesses to some 500,000 state employees who will be hit by an intended downsizing of the state sector. This Cuban version of “goulash communism” is regarded as positive by many entrepreneur wannabees, who are currently making only around 20 euros a month in wages (source: Courrier International).

Like Hungary in the ’60’s, the Cuban government hopes not only to streamline the state sector by letting go half a million employees, but also to infuse its moribund economy with some much-needed dynamism. If everything goes according to plan, Cuban consumers will benefit from more and better products and services, ranging from clothes, furniture, to bars, plumbing, hairdressing and IT services. The lack of alternative wholesalers to supply the small businesses with raw materials is expected to bolster an already-flourishing black market, an occurrence that should be dealt with next by the Cuban government, if this experiment is to bring the expected results.

The stop-gap entrepreneurial drive forced upon the Cuban government by the country’s dire economic circumstances is the first step on a long and rocky road towards dismantling its state-run economy and replacing it with a more functional, market-oriented version. The European Union and its member states could back these efforts with expertise, professional advice and by encouraging more tourists to take trips to the island.

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