U.S.-Cuba: Putting the “Sonic Attacks” Myth behind Us?

by Fulton Armstrong and Philip Brenner*

The U.S. Embassy in Havana, Cuba / Ajay Suresh / Wikimedia Commons / Creative Commons license

The Biden Administration’s recent announcement that it is resuming “limited” consular functions at the U.S. Embassy in Havana suggests that it’s prepared to put the “sonic attacks” meme – President Donald Trump’s stated rationale for closing the Consulate in 2017 – behind it, but Washington still appears unlikely to restart the normalization process. U.S. and Cuban officials met last month for the first time in four years to discuss implementation of a migration accord signed in 1995. Orderly migration is only one among several interests the United States could advance if it were willing to resume discussions with Cuba. But the Biden administration has placed electoral politics ahead of U.S. interests and appears unlikely to do more.

  • A State Department official told reporters that consular officers will process applications from only the Cuban parents of U.S. citizens, and that persons in all other non-emergency categories will still have to go to Guyana or another third country to apply. A few of the vice-consuls reportedly will fill previously permanent slots, but others will be assigned to the Embassy on a temporary basis.
  • When it ceased consular services in 2017, the State Department unilaterally abrogated a bilateral agreement, which enjoyed bipartisan support for two and a half decades, to process visas in a manner that would keep migration legal and safe. Renewing limited services, officials cited the surge in “irregular Cuban migrants” to the United States “via land and maritime routes.” Cubans are the second largest group arriving on the Southwest border – 16,531 in February alone, according to U.S. Customs and Border Protection. The U.S. Coast Guard has interdicted more than 1,000 Cubans in the Florida Strait since October.

The State Department has not publicly reconciled its consular decision with its repeated allegations of a Cuban role in, or at least failure to prevent, the “sonic attacks” that the Trump Administration cited, after months of inaction, as reason for reducing the Embassy. Now referred to as “Havana Syndrome” and “unexplained health incidents” by the Biden Administration, those allegations have never been substantiated.

  • Various reports have seriously challenged the official claims, but the U.S. Government has continued efforts to find scientists who will corroborate them. As early as November 2018, scientists of the prestigious JASON advisory group concluded that the reported sounds “most likely” were caused by Caribbean short-tailed crickets; it found they were “highly unlikely” from ultrasound or microwave equipment as alleged. A half-dozen investigations later, CIA officials last January said that all but two dozen of the 1,000 reported cases could be explained by environmental conditions, undiagnosed medical conditions, or stress rather than a global campaign by a foreign power. (Director of National Intelligence Avril Haines and CIA Director William Burns soon came forward to stress that “while we have reached some significant interim findings, we are not done.”)

The “sonic attacks” in Havana initially took place in late 2016, but the Trump Administration did not mention them in announcing its first round of measures in June 2017 to slow and eventually reverse President Obama’s normalization policies – perhaps because it too didn’t take the allegations seriously. Public complaints by self-identified victims in August 2017 found a receptive audience on Capitol Hill, however, and legislators pressed the Trump Administration to use it as pretext to reduce the U.S. Embassy in Havana (and to force Cuba to cut back its Embassy staff in Washington). The Biden Administration embraced the same rationale three and a half years later, despite overwhelming evidence that the blame on Cuba was misplaced, with literally hundreds of victims from around the world (even in Washington, DC) coming forward with similar claims of unexplained head injuries. The Biden Administration seems now to seek a quiet way back to addressing a migration crisis for which it, like the Trump Administration, has been complicit.

  • The Administration seems to think its policies will help it win hearts and minds in Florida, but its failure to provide leadership on issues like “sonic attacks” is further narrowing its political space. Now it faces challenges not only from the usual characters in Congress who oppose normalization, but also moderates such as Democratic Senators Jeanne Shaheen (New Hampshire) and Mark Warner (Virginia), who cosponsored the “HAVANA Act.” In addition to permanently linking the issue to Havana, the legislation, which Biden signed into law last October, has contributed to a surge in alleged cases of anomalous symptoms by offering compensation to “victims.”
  • Neither does the Administration seem concerned about the implications of its Cuba policies for U.S. interests throughout Latin America – one of the main drivers of President Obama’s pivot on the island in 2014. Mexican President Andrés Manuel López Obrador’s statement this week that he will not attend the Summit of the Americas that Biden is hosting in Los Angeles next month if Cuba is not invited is a blow. Similarly, Ambassador Ronald Sanders of Antigua & Barbuda, widely seen as “dean” of the Caribbean diplomatic corps, declared that Biden’s continued embrace of Trump policies on Cuba and Venezuela “has continued to haunt US‑Caribbean relations.”

May 13, 2022

* Fulton Armstrong directs AULABLOG. Philip Brenner is Emeritus Professor of International Relations and History at American University. His latest books are Cuba Libre: A 500-Year Quest for Independence and Cuba at the Crossroads.

Latin America: Is There a Constructive Side to U.S. Policy?

By Fulton Armstrong

President Joe Biden, National Security Adviser Jake Sullivan and NSC Senior Director for the Western Hemisphere Juan Gonzalez gathered at the President's desk in the Oval Office.
President Joe Biden, joined by National Security Adviser Jake Sullivan and NSC Senior Director for the Western Hemisphere Juan Gonzalez, talks on the phone with Jeff Zients on Wednesday, April 21, 2021, in the Oval Office of the White House / Adam Schultz / The White House / Flickr / Creative Commons License.

While many of the Biden Administration’s policies in Latin America – particularly toward Cuba, Venezuela, and China’s activities – remain largely the same as during the Trump era, some of its actions and statements suggest more nuanced approaches on other regional issues. 

  • National Security Council senior director for the Western Hemisphere, Juan Gonzalez, has been the point person for maintaining the hard line on Venezuela and Cuba. In early March, he met in Caracas with President Nicolás Maduro, who later said, “we’ve agreed to work on an agenda going forward,” but the Administration vehemently denied this and has continued to maintain that opposition leader Juan Guaidó is President of Venezuela. In Cuba, according to various sources, Gonzalez last year vetoed a promised plan for reversing a Trump halt to the flow of remittances to the island. He recently stated that new U.S. sanctions against Russia were also intended “by design” to put pressure on Cuba, Venezuela, and Nicaragua.

At Congressional hearings in February and March, other senior officials have laid out various Administration priorities.

  • Commander of the U.S. Southern Command, General Laura Richardson, testified that the hemisphere is “under assault from a host of cross-cutting, transboundary challenges that directly threaten our own homeland.” In addition to helping the region with COVID-19 and the “climate crisis,” she said U.S. policy is to counter China’s “relentless march” to expand its influence in the region and its “challenges [to] U.S. influence.” She also pledged to combat transnational criminal organizations, which “operate nearly uncontested and blaze a trail of corruption and violence that create conditions that allow the PRC and Russia to exploit, threaten citizen security, and undermine public confidence in government institutions.” She said her command is “putting integrated deterrence into action.” 
  • In testimony in February, Assistant Secretary of State for the Western Hemisphere, Brian Nichols, praised President Biden’s recent “Summit for Democracy” and acknowledged that “too many ordinary citizens have seen their governments fail to meet their aspirations for a better future.” He also said the Administration’s “Build Back Better World” initiative, including investments that respond to partners’ infrastructure needs, will counter China’s “Belt and Road Initiative” and “will help demonstrate that democracies can deliver for their people.” His counterpart in the Bureau of International Narcotics and Law Enforcement Affairs, Todd Robinson, stressed rule of law programs under the “Root Causes Strategy,” although he noted that “in some cases,” governments lack the political will to tackle the corruption that is a root cause of their nation’s problems.
  • USAID Assistant Administrator responsible for Latin America, Marcela Escobari, testified that her priority is mitigating the harm caused by COVID-19 and climate change. While criticizing the state of democracy and human rights in “extreme cases” like Venezuela, Cuba, and Nicaragua, she expressed concern about “democratic backsliding” elsewhere, noting that “even in more established democracies, authoritarian tendencies have emerged.” 

The Administration has not articulated how some of its steps diverge from the aggressive and transactional approaches that characterized the Trump Administration’s engagement with the region. The White House pressed the International Monetary Fund (IMF) hard to reach an accommodation with Argentina, whose government Trump kept at arm’s length, and helped it avoid default on its 2018 stand-by loan. Vice President Harris has given strong support to Honduran President Xiomara Castro since her inauguration in January – and probably contributed to Washington’s decision to request the extradition on drug charges of her predecessor, Trump ally Juan Orlando Hernández. In their Congressional testimony, current officials have repeatedly made nuanced remarks about the perceptions and reality of homegrown challenges in Latin America. Their emphasis on corruption and lack of will to address those scourges suggests awareness that not all is well, even in those countries that Washington embraces as democracies. After a slow initial response, the Administration has been generous in providing support for vaccine availability and for the capacity of public health systems to effectively respond to the COVID‑19 pandemic.

  • These factors suggest that while tired regime-change policies on Cuba and Venezuela and “integrated deterrence” against China and drug cartels may remain central to Washington’s approach to hemispheric affairs, there is awareness as well of how deeper cooperation with the region could simultaneously promote both U.S. and Latin American interests. The upcoming Summit of the Americas in Los Angeles may be the Administration’s best chance to seek meaningful common ground around the imperative of strengthening democratic governance, a challenge which Washington’s leadership now perceives as one that it shares with virtually all of its Latin American counterparts. 

March 31, 2022

How Is the Crisis in Ukraine Like the Cuban Missile Crisis?

By William M. LeoGrande*

President John F. Kennedy and Soviet General Secretary Nikita Khrushchev/ U.S. Department of State & Kennedy Presidential Library/ Flickr/ Creative Commons License

When Russian Deputy Foreign Minister Sergei Ryabkov warned that the standoff between Moscow and Washington over Ukraine could trigger a crisis akin to the Cuban Missile Crisis, he wasn’t just referring to the danger of nuclear war, narrowly averted. He was also reminding Washington that Russia is not the only great power jealous of its sphere of influence. Russia has its “near abroad,” and the United States has its “own backyard” as defined in the 1823 Monroe Doctrine warning European powers to stay on their own side of the Atlantic. 

Sixty years ago this October, the Soviet Union projected its military power into the Western Hemisphere by placing missiles with nuclear warheads in Cuba. Soviet Premier Nikita Khrushchev’s principal purpose, we know now, was to protect Cuba from another U.S. invasion. (The Bay of Pigs invasion had failed the year before, and Washington had plans for an encore using U.S. troops.) 

To President John F. Kennedy, this intrusion into the U.S. sphere of influence was intolerable, not just because it posed a military threat, but because a U.S. failure to defend its own neighborhood would throw Washington’s credibility into doubt. To Kennedy, it was worth risking thermonuclear war to repel the Soviet incursion. Had Khrushchev not backed down, agreeing to withdraw the missiles, the United States was ready to launch a full-scale invasion of Cuba.

To this day, the United States has not accepted the idea that a hostile government allied with a rival superpower should be allowed to exist just 90 miles off the coast of Florida. This year marks not only the 60th anniversary of the Missile Crisis, but also the 60th anniversary of the U.S. economic embargo against Cuba designed to overthrow the Cuban government and replace it with one more to Washington’s liking. As Donald Trump’s national security adviser, John Bolton, candidly proclaimed, “The Monroe Doctrine is alive and well.” 

The Biden administration, however, appears not to recognize its own great power conceits. “We can’t go back to a world of spheres of influence,” Secretary of State Antony Blinken told CNN, chastising Russia for its attempts to exert influence over former Soviet states. “We’re not going back to that.” He apparently had not read the U.S. Southern Command’s annual Posture Statements for the past decade, each of which defines the growing influence of Russia, China, and Iran as one of the principal threats the United States faces in the Western Hemisphere. The 2021 version elevates these interlopers to a collective proper noun: External State Actors (ESAs) – external to the U.S. sphere of influence.

When Russian diplomat Sergei Ryabkov suggested that Russia might enhance its military posture in Cuba and Venezuela in response to the U.S. build-up in Eastern Europe, the U.S. warning was unequivocal. Any Russian attempt to deploy missiles in Latin America would be an “aggressive action,” declared United Nations Ambassador Linda Thomas-Greenfield, and would be met with a “strong response.”  “If Russia were to move in that direction,” said National Security Adviser Jake Sullivan, “we would deal with it decisively.” 

Biden’s officials seem not to grasp the irony of defending a U.S. sphere of influence while condemning Russia’s claims to its own. Not much has changed in the 60 years since the Missile Crisis, when Soviet missiles in Cuba were, by definition, “offensive” weapons, whereas U.S. missiles in Turkey were merely “defensive.”

If President Joe Biden is serious about replacing spheres of influence with what Secretary Blinken called a “rules based international order” in which small states can decide their own future free of great power coercion, Biden can start in his own backyard. Washington’s policy of regime change toward Cuba, based on economic coercion and subversion – a policy Biden inherited from Donald Trump and continues unchanged – has not worked for more than 60 years. Replacing it with a policy of engagement and coexistence would set a good example for President Putin in his near abroad.

February 1, 2022

* William M. LeoGrande is Professor of Government at American University and co-author with Peter Kornbluh of Back Channel to Cuba: The Hidden History of Negotiations between Washington and Havana (University of North Carolina Press, 2015).

Cuba: Communists Convene

By William M. LeoGrande*

(From left to right) Miguel Díaz-Canel, Homero Acosta, Salvador Valdés, Ramiro Valdés, and Roberto Morales Ojeda/ Cubadebate/ Flickr/ Creative Commons License

The Cuban Communist Party (PCC) will convene its Eighth Congress on April 16‑19 to choose new leadership and assess policies intended to address longstanding economic and political challenges – with no indication of bold new departures. After all, Raúl Castro’s heir apparent as party leader, Miguel Díaz-Canel, has adopted as his favorite hashtag #SomosContinuidad. The meeting will have three major agenda items: selection of a new First Secretary to replace 89-year-old Raúl Castro and – perhaps – the replacement of other elderly party leaders; an assessment of progress implementing economic policies adopted at the Sixth Congress in 2011; and a review of the party’s political work, as mandated by the First National Party Conference in January 2012.

  • The Cuban leadership is undergoing a generational transition from “los históricos,” who founded the revolutionary regime, to a new generation born after 1959. Castro has affirmed his intention to step down as First Secretary in favor of Díaz-Canel, who succeeded him as President in 2018. However, Castro has not publicly ruled out remaining a member of the Political Bureau, and neither have the four other veterans of the struggle against Batista on the 17-member body – including reputed conservatives Second Secretary José Machado Ventura and Ramiro Valdés. The generational transition will not be complete until they depart; it’s hard to imagine Díaz-Canel would truly be in charge if he is still surrounded by these powerful old-timers.

Pummeled by President Trump’s tightened sanctions and the COVID-19 pandemic that closed the tourist industry, Cuba is suffering the worst economic crisis since the “Special Period” of the 1990s after the Soviet Union collapsed. The central theme of the Party Congress will be an exhortation to the party faithful to go full speed ahead on economic reforms, overcoming the bureaucratic resistance that has impeded them until recently.

  • When Raúl Castro introduced the reforms in 2011, he said it would take a decade to put them in place. Ten years later, they are far from finished, although the pace of reform has accelerated over the past nine months. The number of permitted private-sector occupations has increased from just over a hundred to more than 2,000. The dual currency and exchange rate system that created crippling distortions in the economy has been scrapped. And state enterprises have been put on notice that they have 12 months to become profitable or close their doors. In the short term, however, the economy remains hobbled by inefficiencies and unable to satisfy many basic needs.

The Congress will also review the party’s “political work” the task of building public support for the government. In 2012, Raúl Castro criticized the party’s poor performance. Endless meetings degenerated into “formalism,” in which no real criticism was ever voiced and little was accomplished, thereby “spreading dissatisfaction and apathy” among the membership. These failings weakened the party’s ties to the broader public, for whom it seemed remote and inaccessible. Another indicator of the party’s tenuous standing was an 18 percent decline in membership from 2011 to 2016 – the first decline since the party was founded in 1965.

Cuba’s party congresses always convene on the anniversary of the Bay of Pigs invasion – 60 years ago this April –  to commemorate Cuba’s successful defeat of Washington’s imperial designs. The focus of the upcoming Congress, however, will be on how the party can steer its way past the shoals of Cuba’s internal challenges and “update” its economic model of socialism through reforms that it nominally embraced years ago but has failed to fully carry out. With popular discontent at a peak because of the desperate economic situation and with critics mobilizing through social media to challenge state policy, the party has its work cut out for it.

April 5, 2021

* William M. LeoGrande is Professor of Government at American University. 

Cuba: Private Sector Gets a (Tentative) Boost

By Ricardo Torres*

Morning Street Market in Trinidad, Cuba/ Bud Ellison/ Flickr/ Creative Commons License

The Cuban government has announced measures that represent a significant shift in its treatment of the private sector, but the reforms will not have the desired impact without supporting legislation and other steps. In one of its more important announcements on reform, authorities abandoned their focus on listing permitted categories of work, and instead issued a list of prohibited activities – leaving open the rest of the economy for private individuals.

  • On February 11, the Labor Ministry issued for public discussion a list of 124 activities, based on an international classification of job categories, that will remain off-limits for cuentapropismo (self-employment). Among the most prominent professions that will remain under state control are journalists, lawyers, accountants, architects, and engineers – as well as some positions in the value chain in tourism.
  • The reasons for these restrictions range from political and social sensitivity; poor coordination and improvisation among various agencies that were working on the initial drafting of the list; and the protection of the narrow interests of various industries, such as in some parts of tourism.

The benefit of these prohibitions is questionable from the perspective of national economic development. The Cuban economy appears likely to continue shifting toward specialization in services, but the next stage in that process will require expansion into areas that are more complex, more deeply integrated into the productive system, and more focused on foreign markets. This stage will require the skills of Cuban professionals, many of whom today, seeing few good prospects at home, are leaving the country frustrated in search of opportunities to use their talents and build a good life for themselves elsewhere. For a country with a demographic profile that’s already adverse, the brain drain will be even more damaging.

  • The International Labor Organization (ILO) reports that, in medium- and high-income countries, companies with up to nine workers represent 32‑38 percent of all employed persons, while another 42 percent work in entities that have between 10 and 49 employees. Cuban labor, in sharp contrast, is divided into state enterprises (with an average of 800 workers); agricultural cooperatives (94 workers); urban cooperatives (typically 39 workers); and cuentapropistas working alone or with one partner. This labor structure is simply not adequate for future needs.

The new measures raise other questions about the objectives of the reforms. Of the 600,000-plus cuentapropistas, some 100,000 are de facto companies – without full legal personality and its protections. Cuba lacks a solid framework for the development of the private sector. Consideration of the small and medium enterprise law promised by the government years ago is still in limbo, with no clear date. Cuban law also does not clearly distinguish between subsistence production and dynamic undertakings, nor between owners and workers. It does not establish the formal channels necessary for communication with the sector, nor how to apply laws dealing with social rights, environmental protection, and similar requirements. There is also no sign of specific legislation permitting work by truly independent workers and cooperatives.

The challenge ahead lies in the fact that the political documents for these and other reforms over the years – such as Conceptualización (during the 7th Party Congress in 2017) and “Plan 2030” present only a narrow, schematic concept of private-sector development. The omissions and ambiguities in them are huge. Without effective follow-up, the full intent of even these new steps will not be realized – and progress will yet again be delayed. A holistic vision of reform and its objectives is necessary now more than ever. No one knows, however, if the Cuban leadership has the appetite and political space within the party and government bureaucracy to make it happen.

March 15, 2021

* Ricardo Torres is a Professor at El Centro de Estudios de la Economía Cubana at the University of Havana and a former CLALS Research Fellow.

Cuba: Pursuing Halfway Economic Reforms

By Ricardo Torres*

A sample of the 10 or 20 staples available in a “Bodega” depending on the weekday in Havana, Cuba./ Jorge Royan/ Wikimedia Commons/ Creative Commons License

The Cuban government is once again introducing only partial economic reforms – while preparing for the total reform of the monetary system – but its fear of the impact of these and other changes continues to prompt a rhythm of transformation that can actually worsen the contradictions that plague the economy.

  • Officials last July announced a strategy to deal with the current crisis, including reform measures that had long been postponed as well as new initiatives. Since then, the government has authorized the private sector to carry out certain foreign trade operations; introduced 15 adjustments to rules governing state enterprises; loosened regulations governing the distribution of agricultural products to incorporate new actors; and announced that currency reform was imminent. These steps all were taken in the context of deepening shortages and expansion of the use of the dollar in retail sales.
  • COVID‑19 and other exogenous factors have further fueled the deterioration of the Cuban economy, magnifying the need for reforms, but implementation of promised measures has fallen short of expectations, and the structural measures needed to lift the economy from its decades-long lethargy remain undone. Deeper changes, such as the flexibilization of cuentapropismo (self-employment) and approval of private small and medium enterprises remain mired in technicalities and interminable bureaucratic delays.

Overhaul of the monetary system is, without doubt, the measure of greatest potential impact in the short term – and the most complex. Cuban authorities grasp that it is an essential step needed to maximize the power of other changes, but – from a purely technical perspective – Cuba has a lot of work to do before monetary reform will work. After postponing this major change for two decades, only a minimum of the right conditions have been met.

  • When it takes the plunge, the government’s continued control over the productive sectors and distribution of most essential products will give it some ability to control inflation. But it won’t be able to ignore the real costs. People without stable incomes will face the most severe adjustment as higher prices and more widespread shortages will deepen economic uncertainty. That will be a challenge for a government that already faces political discontent, as exemplified by the recent protest in front of the Ministry of Culture. The emphasis on a careful communications strategy regarding impending economic changes is prudent, but delaying implementation of reforms once announced only worsens things. Indeed, as a direct result of perceptions mismanagement, prices are already going up, even before the monetary reform takes off. Lacking the appropriate instruments to manage inflation, authorities are responding by capping prices, which in turn exacerbates scarcity and threatens a vicious cycle.

As always, the Cuban government is giving priority to caution and stability over bold options – working hard to project legitimacy and self-confidence at home and internationally. Lacking direct external support, such as from the international financial institutions, Cuba has few options for reviving its moribund economy without radical changes. It is well established that partial reforms in centrally planned economies only lead to stagnation, external imbalances, and deterioration of macroeconomic indicators. Cuba suffers from all of these at this moment. But less ambitious and carefully managed reform reduces the risks of losing control, of fueling instability, and of diminishing the government’s ability to deal with the certain unforeseen consequences of the changes.

  • U.S. policies have steadily hardened in recent years, feeding Cuban policymakers’ perception of operating under a state of siege and giving them an excuse to divert attention from internal shortcomings while delegitimizing groups that demand political change. The U.S. pressure also harms the private sector, which is very dependent on foreign clients. The cuentapropistas and entrepreneurs can play a central role in the event of serious economic restructuring by creating jobs and forming a new productive fabric that is necessary for the future. Instead of accompanying these private players on their journey toward a potentially genuine transformation, Washington has taken its cue from immigrants of Cuban origin in suffocating the private alternative as well as the state-dominated economy.

December 9, 2020

*Ricardo Torres is a Professor at the Centro de Estudios de la Economía Cubana at the University of Havana and a former CLALS Research Fellow.

Cuba: Getting Serious about Reform?

By Ricardo Torres*

Miguel Diaz Canel_Cuba

Cuban President, Miguel Díaz-Canel Bermúdez/ Cubadebate/ Flickr/ Creative Commons License (not modified)

The economic reform proposals that the Cuban government announced on July 16 sound promising, but they feel very similar to past efforts, and authorities have yet to demonstrate commitment to implement them in a manner that matches today’s serious global and national conditions. The measures come at a time that Cuba is experiencing its worst economic crisis in 30 years. According to the Economic Commission for Latin America and the Caribbean (CEPAL), the country’s imports fell 41 percent in the first five months of 2020 – more than any other country in the region except Venezuela. The commission predicts the island’s gross domestic product will decline 8 percent this year – a conservative estimate in view of its dependence on tourism, remittances (almost all from the United States), and distant trading partners.

  • The announced measures are too general to permit a detailed analysis of their potential impact, but a substantial number of them represent a more flexible interpretation of policies agreed upon during the Seventh Party Congress in 2016. They feature a 180-degree shift of focus on the private sector and cooperatives, which just two years ago the government was taking steps to severely limit. The greater use of the U.S. dollar – an inevitable consequence of the severe balance-of-payments crisis – is also noteworthy.

The political and economic moment calls for measures that are bold enough to change expectations – reduced because of past non-performance – and produce real results. After years of false starts, the government’s willingness to make the reforms a reality remains in question. The biggest doubts deal with how far the authorities will go toward restructuring state enterprises – an unavoidable step for any true transformation. The government faces five immediate challenges to managing the current crisis and ensuring a positive impact from the package of reforms.

  • Convincing domestic and foreign public opinion that this time reform is for real and will be sufficient and permanent. Decisions over the past four years have been erratic, undermining the conceptualización that then-President Raúl Castro announced in 2016 as an “updating” of “the theoretical bases and essential characteristics of the economic and social model.”
  • Creating and consolidating new, agile, and effective mechanisms for decision-making. The country lacks a system for guaranteeing that the best ideas for transformation reach the highest levels of government, are examined, and are adopted in a timely fashion. Ensuring that bureaucrats do not distort the policies is also essential.
  • Avoiding the hidden traps of some measures that have already been tried, which will remind Cubans of the worst moments of the Special Period in the 1990s. The dollarization scheme implemented back then, for example, was complicated by rule changes the government made midstream. Authorities also rejected the necessary restructuring of the enterprise system and public sector. Cuba survived – collapse was avoided – but emerged without a sustainable economic model. Genuine development was not achievable.
  • Achieving a critical mass of changes that become self-reinforcing and overcome trenchant ideological resistance and create enough momentum to refloat the economy. In the 1990s, Cuba benefited from a world economy that was growing – radically different from today. The current situation requires much greater internal efforts.
  • Adding social justice as a priority in the reform package. Although a central talking point in official discourse, it is either totally missing from the new strategy or implemented in ways that are not relevant to the new social structure of the island. Cuba needs a debate about modern social policies to address its multidimensional inequalities.

So far, the big winners in this new scenario are the private sector and cooperatives as well as people who have access to U.S. dollars. But the entrepreneurs face obstacles, such as the requirement that they use government-controlled enterprises in all foreign trade. The idea that the state intends to create its own micro, small, and medium enterprises also detracts from the reform message.

  • Expanded dollarization will further segment the productive sectors, but this time it probably will allow producers to purchase capital goods – an essential step in any process of stimulating production over the long term. The potential impact will be greater if combined with the promised, but often delayed, move toward a sustainable monetary and exchange scheme. The big question remains, however, if the government is serious about making it happen this time.

August 17, 2020

*Ricardo Torres is a Professor at the Centro de Estudios de la Economía Cubana at the University of Havana and a former CLALS Research Fellow.

Cuba: Dealing with the Global Pandemic

By Ricardo Torres*

Cuban nurses carrying the Cuban flag

COVID-19 Response: Over 100 Cuban Nurses Arrive Barbados / Flickr / Public Domain

Cuba faces a “perfect storm” – a global health crisis – that poses the latest in a long list of challenges to its government, but a systematic destabilization of the country is highly unlikely, if not remote, for now. The COVID‑19 pandemic has caused an unprecedented disruption to the world economy, the devastating effects of which no country has escaped. The Cuban economy is critically dependent on tourism and remittances, two areas that have been deeply affected. Those countries from which visitors and cash flow to Cuba are greatest – the United States, Canada, Western Europe, and China – have been hit hard.

  • The shock is compounded by a drop in Cuba’s average annual growth from 2.7 percent in 2010‑15 to 1.4 percent in 2016‑19. The causes of that decline include the economic crisis in Venezuela; the cancellation of medical services agreements in Bolivia, Brazil, and Ecuador; the end of the international tourism bonanza; and the effect of new U.S. sanctions. Washington’s actions have complicated trade, foreign investment, and travel. The measures have limited remittances, reduced Cuba’s ability to import fuel, and clamped down on foreign firms operating in Cuba, such as through the first application of Title III of the “Helms-Burton Act.”
  • Another factor has been the disappointing results of Cuba’s internal economic reform, which has been wrapped up in political contradictions and a lack of clarity of its objectives. One costly flaw in these circumstances has been the government’s inability to stimulate industries that provide essential products, particularly food. Combined with the international challenges, including fresh, tough sanctions by the United States, this problem has contributed to a situation in which the Cuban people face growing shortages of all kinds of products, including food, medicines, and fuel.

The government’s response to COVID‑19 has evolved from caution to the gradual imposition of increasingly radical measures.

  • In mounting a medical response, the centralization and verticality of the Cuban model allows authorities to adapt plans and resources in the face of new priorities. The Cuban health system, for example, is known for its national coverage and access to resources (including 848 doctors and 5.5 beds per 100,000 inhabitants), and it has experience dealing with epidemics. Decisions have been taken around the concept of epidemiological vigilance, including closing the borders on April 2 and bolstering research, although the inability to carry out massive testing has been a weakness. The government has also guaranteed workers’ income and employment, except for parts of the private sector and informal economy, and expanded food-rationing to a broader list of products.

The economic impact in the medium term should not be underestimated. GDP growth will enter negative territory. Financial problems will surely deepen. Shortages of an array of basic necessities are going to worsen. Restructuring of foreign debt is necessary.

  • Internally, Cuban policymakers are going to have to take into consideration the new socioeconomic structure of the country and the need to focus support where it’s needed most. The crisis provides a good opportunity to give substance to longstanding rhetoric about improving agricultural production. Greater flexibility in regulating private businesses is also an obvious policy option. Accelerating and broadening digital access throughout society should also be a priority under the wisdom of “not putting off till tomorrow what can be done today.”

The Cuban Government is not presiding over a terminal crisis, however. Even considering the system’s weaknesses before the pandemic, this perfect storm is not its responsibility. For the medical challenge, Cuba is prepared and probably will overcome some of the criticisms made abroad about its medical missions, as brigades of Cuban doctors deploy to 19 countries. The country’s biotechnology industry also stands to make advances. It’s too early to say whether Cuba will be able to profit from these opportunities, but Havana may benefit from its willingness and ability to be a responsible international partner.

  • Washington’s policies also put it in sharp contrast with China, which continues to provide help during these difficult times. If the pandemic has made anything clear in Cubans’ minds, it’s that the United States is disqualifying itself as a positive force for change on the island.

April 17, 2020

*Ricardo Torres is a professor at the Centro de Estudios de la Economía Cubana at the University of Havana and a former CLALS Research Fellow.

 

Cuba: Facing a Tough New Year

By Eric Hershberg, William M. LeoGrande, and Max Paul Friedman*

Intensified U.S. sanctions and the crisis in Venezuela are forcing renewed belt-tightening in Cuba and hindering the government’s ability to undertake even its modest economic reform agenda, but the country is not entering a new “special period” and significant instability does not appear likely in 2020 despite some increased social tensions. The big losers from U.S. sanctions are the small private-sector businesses — B&Bs, restaurants, and entrepreneurs — providing services to U.S. visitors, an estimated 638,000 a year before the Trump Administration clamped down over the course of 2019. But the government has also been forced to make major cutbacks.

  • To cope with fuel shortages caused by U.S. sanctions against oil companies shipping Venezuelan oil to Cuba, the government reduced production in many factories to maintain energy supplies to consumers and avoid overly straining the power grid. Public transportation also faced drastic cuts, largely because of a lack of diesel fuel needed to distribute gasoline. Only some of the affected bus routes have since been restored.
  • Shortages of an array of necessities — from bread, coffee, meat, and many basic medicines to all energy products — have been severe and show no sign of abating as the economy sputters. Domestic demand for products that Cuba can produce, including electric bicycles and appliances, is strong, but financing is too tight. The government is phasing out the convertible peso (CUC) that it artificially pegged to the dollar and is establishing new hard-currency stores to capture dollars now flowing abroad as Cubans buy both consumer goods and inputs for domestic private enterprises in Panama and elsewhere at the rate of $25 million per month — hard currency the government desperately needs. Those dollars the government captures will supposedly be made available for domestic producers to import essential inputs. Cubans expect the CUC to become worthless paper sooner as some vendors now accept only foreign currency, and the street value of a dollar is now more than 1.15 CUC (compared to the official rate of 0.87 CUC).

One leading economist deemed 2019 to have been the worst year since 1993 — with growth essentially flat — and said the forecast for 2020 looks no better. State-owned enterprises are failing to perform efficiently despite years of rhetoric about rationalization and improvements. Foreign purchases, long hindered by a lack of hard currency, have been made even harder by the U.S. sanctions, as suppliers increasingly fear Washington’s scrutiny. The government has not responded to growing pressures by accelerating the sorts of meaningful reforms that have long been needed to increase production and efficiency.

  • Its strategy focuses on import substitution, according to a senior economic official, to reduce the need for hard currency by producing more consumer goods and inputs domestically. The tourism sector has boomed over the past decade, but more than half the hard currency revenue it generates goes to imported inputs. Cuba spends some $2 billion importing food while more than half its arable land lies fallow.
  • Financing investment needed to make import substitution a viable strategy is difficult. Cuban government officials speak of doubling domestic investment, now only 11-12 percent of GDP, but without increasing indebtedness — a huge task for such an inefficient economy. In addition to encouraging tourism enterprises to substitute local for imported inputs, the government hopes to improve conditions during 2020 by implementing a decades-old proposal to establish a closed dollar-based system in which companies retain a portion of revenues to finance investment and imports.
  • Foreign direct investment is the other potential but a largely elusive source for capital. Government fact sheets continue to emphasize the importance of the Mariel Special Export Zone, which has some 50 promised users, $2.5 billion in promised activity, and 7,000 promised jobs. Actual activity in the Zone, however, falls far short of that. The Trump administration’s activation of Title III of the Cuban Liberty and Democratic Solidarity Act (“Helms-Burton”), which allows the previous owners of property expropriated after the 1959 revolution to sue anyone benefiting from it, has made new investors hesitant.

While the economic outlook looks difficult indeed, there are few signs that the government is anxious about social frustrations and tensions becoming a serious challenge, much less an existential threat. The government continues to resist obvious (and relatively easy) reforms, such as allowing cuentapropistas licenses for multiple lines of business. Allowing the CUC to disappear gradually may be a precursor to addressing the years-old distortions caused by the country’s multiple currencies and exchange rates, but there’s still no sign that the government is ready to implement a unified peso. Havana apparently calculates that the country is hardly the pressure-cooker that U.S. policy aims to create by, as U.S. Secretary of State Pompeo reportedly told EU diplomats recently, “starving” the population so as to bring about a regime collapse.

  • Young independent journalists say that public organizing via social media is at times successfully pressing the government, which they deem largely ignorant of popular concerns, to revoke unpopular measures. Yet growing access to the internet may also serve to distract youth from more threatening forms of organizing. Giving people a sense of input on issues like the arts, animal rights, and sexual identity that do not threaten core government policies and processes is probably taking an edge off discontent.
  • The new year is likely to be difficult, particularly as the Venezuela crisis drags on, but, as observers say, “Cuba does ‘bad’ pretty well.” Hope is never a plan, but virtually everyone in Havana expresses hope that U.S. elections in November might bring back a pro-engagement U.S. policy that helps grow Cuba’s private sector and relieving pressure on sources of financing for Cuba to move ahead with its modest reform strategy.

January 7, 2020

*AU Professors Hershberg, LeoGrande, and Friedman traveled to Cuba in December.

U.S.- Latin America: Policy Shifts Ahead?

By Fulton Armstrong

Former White House National Security Adviser John Bolton speaks to reporters on events occurring in Venezuela Tuesday, April 30, 2019, outside the West Wing entrance of the White House.

Former National Security Advisor John Bolton speaks to reporters on Venezuela in April 2019/ Tia Dufour/ White House/ Wikimedia Commons

The sudden departure of President Trump’s outspoken national security advisor, John Bolton, is unlikely to result in changes in U.S. policy objectives in Latin America but could lead to the same sort of swings in tactics – harder or softer – that characterize other U.S. policies around the world. The continued weakness of the State Department’s input, aggravated by erratic staffing in its Latin America offices, further suggests that it will not play a balancing role.

Trump and Bolton’s statements over their 17 months together indicated no disagreement on objectives and tactics in Latin America, including immigration, close relations with Brazilian President Bolsonaro, efforts to rescue the Argentine economy, and Venezuela. They had identical positions on the waves of sanctions against Venezuela, U.S. commitment to remove President Nicolás Maduro, and unstinting support for National Assembly President Juan Guaidó’s claim to the Presidency, including backing Guaidó’s flopped coup in April. They both also explicitly linked taking down Maduro with achieving regime change in Cuba.

  • Trump and U.S. Senator Marco Rubio, widely seen as his top referent on Latin America and related political matters, are trying to signal that after Bolton’s departure the Administration is going to turn up the heat on Venezuela and Cuba. In apparently coordinated tweets between them, Trump said, “In fact, my views on Venezuela, and especially Cuba, were far stronger than those of John Bolton. He was holding me back!” This complements rumors that Trump has been frustrated that Bolton’s strategy in Venezuela, particularly the fact that Maduro supporters had tricked him into false confidence in Guaidó’s failed coup, has not removed Maduro from office. (It is unclear if one of his concerns is that U.S. sanctions are worsening the refugee flow challenging neighboring countries.)

Most Washington-based observers believe, however, that Latin America is the least important of the five issues that, according to press, caused friction between Trump and Bolton. The President’s personal involvement has been much greater with North Korean leader Kim Jong Un, in efforts to achieve regime change in Iran, in talks with the Taliban for withdrawal of U.S. troops from Afghanistan, and in maintaining good relations with Moscow despite the complex situation in Ukraine.

  • Trump has appeared to lack deep interest in Latin America policy and sees it as primarily a domestic political tool for consolidating his base – among anti-Maduro and anti-Cuba voters in Florida, an important state in his re-election calculus, and among supporters for his wall on the Mexico border and other anti-migration measures. Long ago he essentially handed the Venezuela and Cuba issues over to Senator Rubio, and the National Security Council brought a Rubio ally, lobbyist, and blogger, Mauricio Claver-Carone, to the White House to work the issue. They appointed Elliot Abrams, despite baggage from the Iran-Contra era and the Bush-Cheney Administration, to handle diplomatic operations on Venezuela for them.
  • By all appearances, Secretary of State Michael Pompeo has subordinated his own Latin America team to the White House operators, essentially stifling a traditionally important voice at the policy table. When Assistant Secretary Kimberly Breier resigned last month, only nine months after being confirmed by the U.S. Senate, she said it was to spend more time with her family, but her bureau’s marginalization left questions about her policy impact. Her acting successor, veteran State Department lawyer Michael Kozak, who has spent much of the last 10 years managing “democracy promotion” programs in Latin America and elsewhere, is not likely to challenge Rubio and Claver-Carone unless Pompeo takes the lead, which he shows no sign of doing.

The new national security advisor will have more urgent problems to deal with than wrestling with Rubio, Claver-Carone, and their allies. Indeed, Trump may even give them a green light to escalate provocations even further. For example, Administration allegations that Colombian guerrillas and narcotics-traffickers receive crucial aid from Caracas – buttressed by invocation of the Rio Treaty last week – are logical ways of laying the political groundwork for some sort of military action, perhaps jointly with Colombia, against alleged camps in hopes that the Venezuelan military finally tells Maduro that it’s time to go. 

  • President Trump’s trademark approach to thorny problems has been unpredictability and experimentation with wide-ranging alternatives, including face-to-face negotiations and deal-making with opponents that pose much tougher challenges to U.S. interests than do Venezuela and Cuba. Such flexibility notwithstanding, with the U.S. elections just 14 months off, Trump’s electoral calculus strongly suggests he’s going to stay the course with policies toward Latin America that he’s told are popular in South Florida.

September 17, 2019