Cuba Welcomes “Normalization,” But Only on its Own Terms

By Eric Hershberg

Photo Courtesy of Philip Brenner

Photo Courtesy of Philip Brenner

Cuban President Raúl Castro is undoubtedly as serious about normalizing diplomatic ties as President Barack Obama is, but the island’s government arguably faces more pressing challenges than working out the details of a rapprochement with Washington.  Commentators have observed that after the initial euphoria following the December 17 announcement, officials now speak of a long road ahead.  Full normalization, while welcome, is not the foremost concern of Cuban policymakers.  The paramount objective of Cuban authorities is the survival of the revolution and the one-party state that it engendered.  Top diplomats reiterated on January 23, after the first round of talks in Havana, that there will be no concessions to continued American insistence on changes in Cuba’s domestic political arrangements.

Economic revitalization is imperative.  Despite the reforms introduced by Castro, the Cuban economy remains woefully unproductive, incapable of meeting the needs of its citizenry or generating the foreign exchange that any small island developing state requires to import goods that it cannot produce domestically.  Growth rates are anemic, reaching only 1.3 percent in 2014, and independent projections call into question last month’s official announcements predicting 4 percent expansion during 2015.  Agriculture remains stagnant despite reforms aimed at putting fallow lands to productive use, so imports of food account for $2 billion in the extremely tight state budget put forth for 2015.  The severe shortage of cash, moreover, impedes public investment in Cuba’s crumbling infrastructure, which hinders autonomous producers from securing vital inputs for their businesses or distributing what they produce.  Ideally, foreign investment would supply resources where domestic sources cannot, but for the most part this is not happening either.  A 2013 foreign investment law has to date yielded little fresh capital:  European and other investors with experience on the island explain privately that the conditions for conducting business are such that they are reluctant to commit good money after bad.  The new changes in U.S. regulations may produce some increase in investment flows – primarily in the form of remittances from Cuban Americans to families and friends – and thus continue to provide some economic oxygen, but the likely scale of these flows should not be overestimated.  Washington’s new regulations seem likely to continue blocking investments that could increase the Cuban state’s ability to develop the infrastructure necessary to promote economic growth.

Because the intertwined goals of state security and economic revitalization are paramount, Havana’s engagement with the United States will be conditioned on its compatibility with those objectives.  Critics of the American opening who lambast Barack Obama for acceding to a deal with minimal Cuban concessions are right that Havana did not abandon its position that its political system is non-negotiable.  If by joining the rest of the western hemisphere in acknowledging the Cuban state Washington embarks on a path that will fuel economic activity in Cuba, the two countries will proceed, however gradually, away from confrontation.  The trajectory of U.S. relations with China and Vietnam in recent decades offers an instructive precedent for how this can be achieved and be mutually beneficial.  But if the Americans perceive greater engagement with Cuba as a tool for regime change, or strive to limit financial flows exclusively to private actors, their Cuban counterparts naturally will limit the scope of interaction.  A new round of State Department solicitations for bids to conduct democracy promotion activities in Cuba, like the U.S. negotiators’ insistence last week on getting a photo-op with dissidents before heading back to Washington, suggest that this message has yet to be absorbed by American officials.

January 26, 2015

U.S.-Cuba: Rhetoric and Reality

By Fulton Armstrong

Obama speaks to Raul Castro / Official White House Photo by Pete Souza / Public Domain

Obama speaks to Raul Castro / Official White House Photo by Pete Souza / Public Domain

The decision by Presidents Obama and Castro to normalize relations is truly historic – for which they and their advisors deserve enthusiastic applause – even though both leaders’ rhetoric seems intended to suggest that they don’t know how deep the uncharted waters ahead run.  Their statements since last Wednesday sound solicitousness toward their right flanks.  President Obama launched his statement by proclaiming that the United States of America is changing its relationship with “the people of Cuba” and, while conceding that past strategies to “push Cuba toward collapse” have failed, cast his new policy as a better way of helping the Cuban people “enjoy lasting transformation.”  President Castro told the National Assembly this last weekend that he wasn’t jettisoning Cuba’s revolutionary project either.  Cuba is not going to give up, he said, “the ideas for which it has fought for more than a century and for which its people have spilled much blood and gone through the greatest risks.”

It’s true that the nature of the relationship is unlikely to change fast, and that neither President can ignore the legal strictures built up during 54 years of tensions.  Obama can’t lift the embargo and permit, for example, tourist travel without Congressional approval.  Cuba’s “Law 88 for the Protection of National Independence and the Economy of Cuba” remains on the books, and Castro’s not about to welcome the U.S. Government’s “democracy promotion” activities soon.  But normalization will significantly reduce both governments’ ability to restrain nongovernmental contacts and will unleash forces that will make the Presidents’ rhetoric look old-fashioned and unnecessary.  Both countries have to learn how to talk to each other, and time-tested people-to-people contacts show that citizens with shared interests are better than governments at learning the language of cooperation and problem-resolution – without ideological agendas.  It stands to reason that pressure will grow on Obama and Castro to pursue concrete interests, especially trade, and to manage their dreams, respectively, of “lasting transformation” and “updated communism.”

No model for this new bilateral dance is perfect.  China and Vietnam show that trade-driven economic change – even with U.S. most-favored-nation status – doesn’t necessarily drive a country to democracy.  An educated and healthy people with strategic needs, the Cubans are prepared to work hard to build their country, but they’re not going to work in factories with anti-suicide nets under the dormitory windows.  That sort of political awareness argues for change, but the Cuban revolution implanted in the Cuban psyche a certain set of values and expectations – ranging from social programs to an almost obsessive sense of dignity – that won’t always coincide with U.S. values.  The Cubans will want to go a la carte with us on political matters, and they, like every country of Asia and Latin America emerging from difficult times, will almost certainly expect us to give them the space to do change their own way.  The United States worked with Mexico under one-party rule for 70 years last century.  If Washington and Havana approach the challenge of building a healthy relationship with respect and open minds, they should able to find a middle ground and grow together a lot faster than that.

December 22, 2014

Cuba: Change in the Wind

Three American University professors recently traveled to Cuba for research and discussions on Cuba’s reform process – called “Updating Socialism” – and the island’s relations with the United States.  Today’s entry looks at the economic changes.

Photo by: Globovisión | Flickr | Creative Commons

Photo by: Globovisión | Flickr | Creative Commons

In offices, shops and on the street in Havana, “change” seems to be one of the most commonly used words.  Billboards proclaim “The changes in Cuba are for more socialism” and “Updating socialism is the answer.”  But the words “reform” and – in some conversations – “privatization” pop up with significant frequency.  Party members previously reluctant to talk about change now speak of introducing “elements of capitalism” to make Cuba a “mixed economy” patterned closely after the “Vietnam model,” with its economic loosening but one-party rule.  Previous reforms have brought better, if sometimes expensive, food to many Cuban dinner tables, but the strong consensus in and outside the party is that a lot more needs to be done.

  • The law-decree on “non-agricultural cooperatives” provides a politically correct way ahead for the formation of small and medium private enterprises.  Cuentapropistas were given a prominent place in the May Day parade, and some are being nominated for office on the Communist Party slate.
  • The government is making another run at tearing down the barriers between hard-currency and peso purchases, with an eye to unifying the currency in the future.  Price tags at at least one major Havana store list prices in both convertible and national currency, at a 23-to-one conversion rate.
  • The law already allows Cubans to hire workers – a right previously given only to the state – and a draft labor law will further legalize private workers’ activities and integrate them into the economy.
  • Some 200-plus state enterprises are being put on a sink-or-swim program in which new management selected by the workers will be given a year to transform the firms into businesses closely resembling private cooperatives.
  • In January, the National Assembly will take up amendments to foreign investment laws.  Under consideration are direct foreign sales to non-state cooperatives and the direct hiring, firing, and paying of Cuban workers by foreign companies.
  • The travel reform law that goes into effect on January 14, ending the necessity for an exit visa and removing restraints on most Cubans from obtaining a passport, will also stimulate interaction with foreign countries.

The macro situation is still a mess, and the reforms have a long way to go to attain even the level of Vietnam’s prosperity.  Cuban stores sell Vietnamese cookies, not vice versa.  As the rhetoric indicates, the government – long expert at managing popular expectations – continues to emphasize continuity as the changes proceed.  But while no one is expecting a fast shift to capitalism, many middle-aged and elderly Cubans have a renewed sense of hope that life ahead will be better, which has political benefits and risks for the government.  One thing for sure is that the socialism that is being “updated” is a far cry from the communism that Cuba attempted in the 60s, 70s and 80s.