Allowing Cubans to buy and sell their homes will not usher in democracy overnight. But a new law announced last week by Cuba's communist government marks another positive shift for the island's 11 million people and its relationship with the United States. • The government of dictator Raul Castro announced that as of this month, Cuban citizens and permanent residents will be allowed to buy and sell real estate. Buyers can own up to two homes — a permanent residence and a vacation property. Sales and trades will not be subject to government approval. And the law creates an opening for more indirect foreign investment in Cuba's emerging tourist trade.
The rule changes are the most far-reaching market reforms since Fidel Castro took power in 1959. After the revolution, Cubans were allowed to remain in the homes they occupied. While the government barred the sale of property, it allowed for the trading of homes through a complicated bartering system.
By creating a private market for housing, Cubans will have the opportunity to build wealth and address the serious housing squeeze that can force several generations of the same family to live together. And removing the government's role in bartering the housing trade should clean up a corrupt state bureaucracy.
The new rules are unclear about the fate of private property confiscated by the communist government. And the changes are relaxed enough that — taken together with President Barack Obama's decision in 2009 to free up remittances to the island — Cuban emigres overseas could play a major, behind-the-scenes role in shaping the island's new economics. Cuba's government, in other words, has freed up the pent-up demand for housing and other freedoms at the same time that Cuban-Americans and other Westerners are filling the void for cash and investment. The details and the implementation of the new law are important. Yet the Castro government has already unleashed a basic human desire for upward mobility and self-determination.
But the biggest impact — at least in the short term for cash-strapped Cubans — will be psychological. Castro has already paved the way to cut the government payroll and to enable Cubans to go into business for themselves. Allowing property to change hands marks the most ambitious reform yet — one fraught with both promise and peril. The United States can help during this transition by continuing to move toward normalizing relations. America's security interests are served by having Cuba turn to the ideals of the free market and democracy.