Cuba's development priorities in the new landscape

By Elena L. Pasquini 19 February 2016

Students going back home from school at Jabonico, a town in Sancti Spiritus, Cuba. Despite its isolation, Cuba has fought hunger and poverty successfully through its social protection programs, and the middle-income country provides its citizens with high-quality health and education services. Photo by: Carlotta Gaudino

Last month, the United States announced measures to further ease restrictions on Cuba — the latest in a series of amendments implemented since December 2014, when U.S. President Barack Obama and Cuban President Raul Castro divulged plans to resume diplomatic ties.

With Obama revealing Thursday that he is set to visit the Caribbean island nation in March as part of a broader trip to Latin America, is Cuba finally on a steady course away from isolation? What are the impacts for the global development community and how can aid actors ensure that transitioning to a market-based economy will not exacerbate inequality in the country?

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Following the reopening of embassies in Havana and Washington after more than 50 years, Devex traveled to Cuba to gain a better understanding of the challenges the country is facing and the roles development organizations can play in this fast-changing climate.

Despite its isolation, Cuba has fought hunger and poverty successfully through its social protection programs, and the middle-income country provides its citizens with high-quality health and education services. But as the country’s economy opens up, there is a very real risk to this progress if vulnerable populations are not “protected as they’ve been until now,” Laura Melo, World Food Program’s country director in Cuba, told Devex.

Melo explained that aid actors must support the Cuban government’s efforts to update the country’s economic model “without making significant losses in [its] … policies to protect the most vulnerable.” Preventing inequalities seen in other Latin American countries and ensuring that “some of the well-established safety net programs remain relevant and well-targeted” are areas where international cooperation can play a pivotal role, she added.

Key areas for future cooperation

Despite Cuba’s success in fighting hunger, food security remains a major concern in the country’s poorest regions. That is likely to be the key area in which international cooperation is expected to focus in the future, in addition to climate change and disaster risk reduction.

Cuba’s gross domestic product, $77.15 billion in 2013 according to World Bank estimates, does not reflect the realities of a country where the level of development is uneven across provinces, according to William Diaz, director of the department of Cuba’s Ministry of Foreign Trade and Development that deals with multilateral organizations, including United Nations agencies.

Traveling across the country, it’s evident that the standard of living differs sharply between people living in Havana and those in Santiago; for people working in the tourism industry and those who don’t; and for those who get paid in the convertible peso — the currency pegged to the U.S. dollar — and those who gets paid in the lower-value “moneda nacional,” the lower-value Cuban peso.

In every town and city Devex visited, food was in short supply. The variety was limited as well: Staples including rice, beans, tubers, onions, and other poor-quality fruits and vegetables were often all that could be bought in the markets.

José, who attended a three-year university course and now works as a driver in the tourism industry, takes home a decent salary of about 400 Cuban pesos ($40) a month. But whether in the capital city, Havana; the country’s oldest town, Baracoa; or Cuba’s third-largest city, Camagüey, food prices are prohibitive: 100-200 Cuban pesos for a pound of beef, 30 Cuban pesos for half a chicken and 10 Cuban pesos for a liter of milk.

The agricultural sector is struggling due to soil degradation. Farmers lack access to credit and advanced technologies and droughts and climate change are further compounding the situation. Cuba imports more than 70 percent of its food and the poor quality of available supplies has resulted in nutritional problems, including obesity, micronutrient deficiency and anemia.

“People want to leave Cuba just because they are hungry,” said Pedro, a teacher who lives in Camagüey. He is hoping to be selected to participate in a government program that sends skilled workers and professionals (usually doctors) to other countries in Latin America, in exchange for commodities such as oil. Through the program he is hoping to earn about 4,000 Cuban pesos ($150) per month, just enough to move into a bigger house with his elderly mother.

The growing size of the older population is straining the sustainability and effectiveness of the country’s social protection programs. And there’s an urgent need, according to WFP, to craft integrated strategies to address the specific nutritional requirements of the elderly. It is not just about providing food, but implementing “more tailored programs,” Melo said.

While food security is “an absolute priority [of the government] with regard to cooperation,” according to Diaz, addressing it requires a holistic approach. In the U.N.’s 2014-2018 development action framework for Cuba, social services, energy, climate change, resilience and disaster response were outlined as development focus sectors, alongside food security.

Melo explained that Cuba is exposed to natural disasters, such as hurricanes and droughts, that negatively affect its food security. Disaster risk reduction is thus a critical area of support for development and humanitarian organizations, helping to improve the country’s disaster resilience. For its part, WFP is working with local authorities to improve monitoring and drought alert systems as a way to boost disaster resilience and climate change adaptation.

Donors in the ‘starting blocks’

While Cuba has pressing development needs, it does not have an environment conducive to attracting donor funds to address its challenges — at least not yet, according to Theodor Friedrich, the U.N. Food and Agriculture Organization’s representative in Cuba. But “everyone is in the starting blocks and getting ready,” he said.

“Europe is changing policy, Germany is changing policy,” Friedrich said. “You see a certain expectation that donor money will come, adding that the FAO is attempting to increase its project portfolio and to localize donor funds, despite competition for scarce resources among development actors.

The European Union, which is negotiating a new political dialogue and cooperation agreement with Havana and is about to revise its partnership with the African, Caribbean and Pacific Group of States, has been focusing on agriculture and the environment since 2008.

“The resources of the cooperation are small [and] scarce, so we have to focus to try to use the money as best we can in order to be catalytic,” Ana Guallarte Alias, an attaché at the European Union delegation in Cuba, told Devex.

Cuba’s changing context will be taken into consideration, but for the period 2014-2020, the EU will continue to focus on food security, sustainable agriculture, the environment and climate change.

“We [will] focus on renewable energy and water [too],” she added.

William Diaz, director of the department of Cuba’s Ministry of Foreign Trade and Development. Photo by: Carlotta Gaudino

What role for development organizations?

For the Cuban government, international cooperation is a “complement to the country’s development effort” and should be aligned with the development strategy outlined in its economic and social policy, Cuban ministry official Diaz told Devex, adding that such cooperation should not only comprise technical and financial assistance, but also knowledge sharing and capacity building.

“We are engaged in a process of actualization of our economic model and this actualization doesn’t come from nothing. It comes from being aware of other experiences,” Diaz said.

Since 2008, the EU has been trying to convince Havana of the strategic potential of development cooperation beyond the official investment plan. Cuba needs investment capital, but according to Guallarte Alias even a project of 7 million euros ($7.7 million) can be used to create synergies, bring together people and institutions with their own funds and resources, leverage more money, and demonstrate greater impact.

Despite the challenges, there are advantages to working in Cuba.

“It is a very interesting country to work in because it is kind of unique ... the system, the whole model they are trying to put in place … a new Cuban model where they can keep their social protection level within a more market economy, and keeping the central planning,” Guallarte Alias said.

Local counterparts also have highly qualified and competent staff, according to the practitioners Devex spoke to.

“Education levels are very high and the people … are innovative,” Guallarte Alias said. The high level of ownership is also a big plus. Indeed, development projects often only take place after the government has thoroughly evaluated and decided that it wants the program. “They committed themselves, they allocated human resources … there’s a real ownership,” she said.

For WFP, working on the ground in Cuba allows it to show how the role of development organizations in middle-income countries can go beyond food security and zero hunger.

“We can really introduce some changes ... to demonstrate how certain models can work and can be taken to scale by the government itself,” Melo said.

With the U.S. embargo still currently in place, however, project implementation remains complex and expensive. “We need to do wonders and it costs us a lot,” Diaz said. “[The] majority of goods are bought in very far away markets in Europe and Asia, and that’s makes them more expensive.”

Some companies that do business with WFP, including IT equipment providers, cannot supply to Cuba. In addition, development organizations face banking problems and restrictions on financial movements and staff travel. In most cases, WFP resorts to procuring from companies that are “not so dependent” on the U.S. market, said Melo, which “adds time and costs.”

How to engage

Working in Cuba requires, first of all, the ability to effectively liaise with the government. Until now the EU, which funds Cuba through its Development Cooperation Instrument, has implemented programs — which Melo explained are normally relatively large because “we cannot finance small initiatives” — through the U.N. or member state development agencies.

National and international nongovernmental organizations support the government in the implementation of development programs. Those NGOs interested in taking part in EU exchange of expertise projects, for instance, should contact the implementing agencies for the programs already in place.

However, the most important thing is to continue to talk to in-country counterparts and build a direct relationship with the government. The Ministry of Foreign Trade and Investment is in charge with the establishment of partnerships with NGOs. However, the first step to entering the Cuban market is to contact the Cuban embassy in the country where the NGO is headquartered, to explain potential projects and ways of collaborating, and to show interest in taking part in the programs implemented by the Cuban authorities.

The right project is the one that fits with the needs of a country that is updating its economic model. It's a challenge, but “this is really the time to act,” said Melo.

And networking is key, explained Diaz, because there are no formal procedures and “there are no requirements … It depends [only] on the project.”

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About the author

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Elena L. Pasquini@elenapasquini

Elena Pasquini covers the development work of the European Union as well as various U.N. food and agricultural agencies for Devex News. Based in Rome, she also reports on Italy's aid reforms and attends the European Development Days and other events across Europe. She has interviewed top international development officials, including European Commissioner for Development Andris Piebalgs. Elena has contributed to Italian and international magazines, newspapers and news portals since 1995.


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