A new law governing the buying and selling of real estate in Cuba certainly could change the lives of many of the island's citizens and permanent residents. Whether or not the new rule, announced late last week and scheduled to take effect Thursday, is a major or minor step in the island nation's transition from socialism to capitalism remains to be seen.
The new regulation, given Cuba's recent history, is far-reaching. For the first time since the early days following the successful Fidel Castro-led revolution, Cubans will be able to buy and sell real estate on the open market. That means Cubans are ostensibly free to move when and where they want, assuming they can pay the price. That price will be determined by buyers and sellers, rather than the state. That's a major change that promotes mobility in a nation where freedom of movement was strictly controlled by a thicket of government rules and regulations.
In addition, the law allows the transfer of property to relatives, legalizes ownership of two homes (a primary residence as well as a vacation home) and ends the onerous requirement that those leaving the country forfeit their property. All that suggests major reform in the real estate market, always a key component of an open economy.
There are some sections of the new law, though, that indicate that while the Cuban government is willing to make significant changes to real estate law, it is not willing -- yet -- to totally surrender to the forces of a free market economy. Thus, the law contains a residency requirement that effectively bars anyone outside the country -- including the large exile community in the United States, -- from owning property. There's also a requirement that all real estate financing be handled by the state-run central bank. There is at least one significant omission in the law as well.
It says nothing at all about the properties with an estimated value in the tens of billions of dollars that were confiscated by the state over the year's of Fidel Castro's rule. Many of the owners of the seized property fled to the United States and they, or their descendants, have long-standing claims for restitution in various legal jurisdictions.
It's unlikely the property will be returned to the claimants, but there is always hope of monetary compensation. That's usually been the verdict in similar cases of seized property around the world. At the moment, though, there's small chance of that happening. Cuba has always refused to address restitution claims. Even if it were willing to do so now, it probably does not have the funds to pay the claims.
The relaxation of the real estate laws is another chapter in the slow loosening of economic controls in Cuba. Previously, Raul Castro has allowed some citizens to operate businesses and provide services on the free market rather than through the government. He also eased other rules regarding sales and rentals of rooms and cars. That might not seem like much in a Western-style economy, but they are notable steps in Cuba.
Even with the reforms announced by Raul Castro, socialism remains ever-present in Cuba. Most Cubans still work for the state for a minimal wage in return for mostly free housing, transportation, health care, education and food. Still, the new real estate law is small step towards capitalism, long a goal of U.S. diplomacy. As such, it should be acknowledged as a positive act from a government that only rarely has made such gestures in the past.