By: Clemént Doleac, Research Associate at the Council on Hemispheric Affairs.

After the collapse of the Union of Soviet Socialist Republics (USSR) in 1990-1991, the Cuban economy has experienced a reduction of its Gross Domestic Product (GDP) by nearly one third. This economic crash brought a lot of difficulties and suffering to the island. The GDP contracted an average of 10 percent each year between 1990 and 1993.[1] This contraction initiated a twenty-year economic era that is called the “Special Period” in Cuba (1990-2010). The economy recovered in 1994, and then returned to a positive development. The average wage in Cuba between 1989 and 2009 rose from 188 to 427 Cuban pesos in value, but in real terms (including inflation) it declined from 188 pesos to 48 pesos.[2]

Since then, the economic situation of Cuba has been unstable and quite weak. However, even without the assistance of the USSR and despite the U.S. embargo on Cuba, which begin partially in 1961, the Castro brothers’ government has survived. Their government proved able to struggle through a depressed economy and the animosity of the U.S. government for half century, exhausting 11 Presidents. After 20 years of the Special Period, the Cuban government chose to begin a vast movement of reforms on the island, leading to a progressive liberalization of society and of the economy.

Economic and Political Liberalization in Cuba:

This movement towards more liberalization in Cuba began with the transition in power between Fidel and his brother Raúl Castro. Fidel Castro himself declared in 2010 that “the Cuban model doesn’t even work for us anymore.”[3] The Huffington Post went as far as to announce proudly in February 2013, “Raúl Castro’s first presidential term was marked by economic reform and political liberalization.”[4] Beginning in 2009, Raúl Castro installed a commission in order to discuss and implement important economic reforms on the island. His objective was to institute an anti-corruption agency and to restructure various ministries such as the Super Ministry for Basic Industry that would be in charge of the Energy and Mining as well as the Sugar Industry. These reforms had been conducted by the Council of State and had already been implemented.[5] These changes were accompanied by other impressive reforms such as a fiscal reform, a credit reform, a migration reform, and a new law for the cooperatives in Cuba.[6]

The Cuban government also voted the legalization of numerous markets through their privatization, such as consumer goods (real estate, used cars, fast food and restaurants) and services such as the transportation sector. Through the Sixth Congress of the Cuban Communist Party (PCC, Partido Comunista Cubano), the Cuban government chose to reduce the importance of the State, allowing privatization of unprofitable public enterprises and authorizing small-scale commerce in Cuba in 178 different economic sectors.[7] Also, the remaining public enterprises would be able to keep half of their after-tax incomes for autonomous spending, which was previously forbidden.[8] Furthermore, Raúl Castro’s government gave autonomy to several public enterprises, which before were under the Ministry’s direct control. Such enterprises included the agricultural trading entity Alimport S.A., the sugar exporter Cubazúcar, and the scrap metal and steel exporter Metalcuba.[9]

The government also announced in July 2013 the layoffs of nearly 500,000 workers in conjunction with the expanding of the private sector. The government revealed plans in 2013 to open 50 percent of Cuban GDP to the private sector during the next five years.[10] In early 2014, the State also privatized thousands of restaurants, which were property of the State; these restaurants have a great importance in the Cuban economy because of tourism.[11]

Also, the Cuban economy is still divided in two currencies. The first one is the Cuban peso (CUP), which is the local currency in which Cubans are paid and with which Cubans pay their expenses. The second is the convertible peso (CUC, convertible in USD), reserved for foreign visitors, but which was theoretically not accessible to Cubans. Since reforms passed under Raul Castro’s government, every Cuban can change their CUP into CUC. Furthermore, the main goal of the authorities is to suppress this currency duality and to make both currencies converge.[12] That means that the Cuban government is renouncing its ability to effectively control every U.S. dollar in the economy.

These reforms are a very substantial move towards the liberalization of the economy in the country and have already had a direct impact in the daily lives of millions of Cuban.[13]

Several great projects led by Raúl Castro serve as examples of this opening. The newly upgraded Port of Mariel in Cuba is without a doubt one of these titanic and promising projects in the country. This port expansion project was supposed to cost nearly $1 billion USD, and it received nearly two-thirds of its financing thanks to Brazilian loans. Additionally, the project was engineered by the conglomerate Odebrecht, also Brazilian.[14] The Port of Mariel is envisioned to be one of the most important industrial ports in the Caribbean and is supposed to be able to handle the post Panamax ships, which are enormous cargo ships expected to pass through the Panama Canal after 2015.[15] This port is going to be managed in the future by PSA International, a Singapore-based international port operator, even if the port is mainly owned by the Cuban military and is state dependent. Furthermore, it will be a free trade zone as well as considered a special development zone that will include a golf course in order to attract the global financial elite.[16] We are very far from the terrific communism dreaded by the White House.[17]

Cuba has now become a “public-private hybrid in which multiple forms of production, property ownership, and investment, in addition to a slimmer welfare state and greater personal freedom, will coexist with military-run state companies in strategic sectors of the economy and continued one-party rule.”[18]

Moreover, the popular input to these reforms has been more important than ever, even if it has always existed.[19] In 2011, during the preparation for the Sixth Congress of the PCC, Raúl Castro’s government led a vast consultation process through a series of popular assemblies across the country to hear citizen proposals and grievances.[20] These assemblies, even if they do not prefigure multiparty elections, are at least a good way to promote public debate and bottom-up participation.[21] The Cuban government still defended one-party rule, but the President ordered high level state officials to make themselves accessible to state press, which is supposed to abandon the half-century of official triumphalism.[22] The Cuban government is also facilitating wider internet connectivity and is willing to relinquish complete control of social media and the internet.[23] Public debates are still limited, and not as free as they could be, but the discussions among the high-ranking Cuban officials, when the doors are closed, are vigorous. These first steps are encouraging, even if a lot remains to be done.[24]

The U.S. Stands Alone Against Cuba:

Since the Cuban Revolution, the White House’s foreign policy towards Cuba, regardless of whether the Democrats or Republicans were in power, has been terrifyingly obtuse, and has not changed in fifty years.[25] Since the creation of the embargo, and the 1962 missile crisis, U.S. policies have not evolved.[26] During more than half a century the main goal of the State Department and the C.I.A, backed by Miami-based right-wing insurgents, has been to overthrow the Castro government by killing the líder máximo, or by promoting revolts and riots in the island.[27] Some of the most memorable attempts at U.S.-sponsored regime change include trying to kill Fidel Castro with poisonous cigars or with an exploding seashell. More recent attempts to incite revolt include utilizing a secret Twitter service as well as a “reckless project” led by the C.I.A and U.S.A.I.D. which attempted to overthrow the Cuban government by financing the hip hop local scene.[28]

The U.S. policy towards Cuba has been based on “predictions that the island would undergo a rapid transformation in the manner of China or Vietnam, let alone the former Soviet bloc”, which “have routinely proved to be bunk”.[29] In 1996, during the Bill Clinton presidency, the Helms-Burton legislation conditioned the removal of the U.S. embargo on multiparty elections in Cuba and the restitution of private property which was nationalized in the 1960s.[30] The U.S. government was still frozen in 1962 and in the Cold War.

But the reality of the situation is that things are changing in Cuba, and the U.S. government cannot afford to continue denying this. Most American citizens are now against the embargo: as reported by the Huffington Post at the beginning of the year, “Nationwide, 56 percent of Americans say they support normalizing relations with Cuba, with the figure jumping to 63 percent for residents of the state of Florida, the poll says. The figure for Latinos nationwide who support a change was also higher than among the general public, at 62 percent.”[31] Even the right wing Cuban-American lobby, based in Miami is seen as obsolete and boring by a new generation of Cuban Americans.[32] Nowadays, “7 in 10 Cuban[-Americans] now favor reestablishing diplomatic relations with Cuba and about half want the U.S. to end the embargo”.[33] The U.S. government and the U.S. congress were standing alone, without their citizenship, in favor of the embargo on Cuba.

Moreover, the White House has no allies on the international stage regarding its policy against Cuba. As stated by CNN “over the last two decades, the United Nations General Assembly has voted each year against the embargo, calling on the U.S. to reverse its policy”.[34] In the hemisphere, Washington’s influence is on the decline.[35]

In the Americas, both the hardline leftist governments such as Venezuela, as well as pro-American Latin American governments such as Mexico and Colombia welcomed the announcement of Obama to re-establish diplomatic relations with Cuba, as well as to ease certain restrictions towards Cuba.[36] Colombian President Juan Manuel Santos declared he wanted to see “the dream of having a continent where there is total peace.”[37] Meanwhile Venezuelan president Nicolás Maduro, far from being the stubborn critic of the U.S., declared that “we have to recognize the gesture from President Barack Obama, a courageous and necessary gesture.”[38] As for José Miguel Insulza, the Secretary General of the Organization of American States, he said that the decision was a “great vision on both sides, because this conflict, which has significant negative implications for citizens of both countries, has stagnated politically for too long.”[39]

Similar praises were given on the other side of the Atlantic. The European Union (EU) has been a traditional opponent of the embargo, to the point that it filed a lawsuit against this U.S. policy, challenging the embargo in 1996: nearly 20 years ago.[40] As stated by CNBC, “the EU challenged the embargo in 1996, launching a trade dispute at the World Trade Organization against the U.S. Helms-Burton law, which took aim at non-U.S. companies that did business with Cuba.” After the announcement of President Obama to ease certain restrictions of the embargo and to reestablish the diplomatic relation the EU immediately asked Washington to lift the embargo.[41]

Lifting the Embargo to Stay in the Game

Now that President Obama announced his will to end to the embargo, which he cannot do without the Congress (which will be controlled by the Republicans in 2015), a clear path has been opened towards peace. Without its citizens supporting the embargo, and with no international allies, Washington was alone in its stance against Cuba. Now, the Obama administration is on the right side of history, but further steps have to be made, and the U.S. Congress will hopefully vote to end the embargo. Opposition has come down to (mostly Republican) U.S. senators and representatives, who stands alone in their hypocritical argumentation.

As for Cuba, there is much work to be done. The government will now have to address how to preserve the country’s sovereignty while opening to foreign investment, and how much inequality Cubans will accept in exchange for more economic prosperity. Moreover, human rights and the freedom of speech in Cuba will remain an international concern.

These choices are not going to be solved easily. But the United States can play an important role in it, through bilateral cooperation and dialogue. President Obama announced the U.S. government will be part of the next Summit of the Americas in April 2015, and Cuba will probably attend too. It would be a historical moment if President Obama and President Castro shake hands and discuss a future together.

By: Clemént Doleac, Research Associate at the Council on Hemispheric Affairs.

Please accept this article as a free contribution from COHA, but if re-posting, please afford authorial and institutional attribution. Exclusive rights can be negotiated. For additional news and analysis on Latin America, please go to: LatinNews.com and Rights Action.

Featured image by: Howard Ignatius. “Goodbye Havana”

From: https://www.flickr.com/photos/howardignatius/13647678094/in/photolist-mMZVdJ-mB9mcF-mrqtvD-mpNyMg-mbGmqV-mase7Q-m4FWLb-3WRhL9-hvuzn-nSedc9-mEjXDe-mrskoG-mmDHSg-marFnt-kJtitK-kyJLV8-i9htzX-e3KPRT-9Z6hQg-9Wyhsv-7jXpNH-4eYs38-9sMiV-mAW3Ts-mcqL1f-mbF3Tx-marGU6-jbbrfa-i5cFrh-eNwimz-ew5sSi-ef7Rug-9MbnpV-5gb9rt-myPktC-mcdvJV-maqvDc-kAMi2o-jSCZ6c-irM49K-eSRzuS-dTtH3E-6PL9Hj-6aJg84-athCZ-okJKsM-oBXnzZ-nReHGD-mN1oe8-mD8EdT

[1] International Monetary Fund, HERNANDEZ-CATA Ernesto, “The Fall and Recovery of the Cuban Economy in the 1990s: Mirage or Reality ?” in IMF Working Paper, WP/01/48, on December 2000.

[2] LAMBERT Renaud, “Ainsi vivent les Cubains” in Le Monde Diplomatique, on April 2011. Consulted on http://www.monde-diplomatique.fr/2011/04/LAMBERT/20364 on December 19, 2014.

[3] SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[4] LOPEZ LEVY Arturo, “Cuba Under Raul Castro: Economic Reform as Priority? » in The Huffington Post, on February 25, 2013. Consulted on http://www.huffingtonpost.com/arturo-lopez-levy/cuba-under-raul-castro_b_2754397.html on December 19, 2014.

[5] SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[6] LOPEZ LEVY Arturo, “Cuba Under Raul Castro: Economic Reform as Priority? » in The Huffington Post, on February 25, 2013. Consulted on http://www.huffingtonpost.com/arturo-lopez-levy/cuba-under-raul-castro_b_2754397.html on December 19, 2014.

[7] REUTERS, “Cuba permitirá privatizar o liquidar empresas estatales deficitarias” in El Mundo, on May 09, 2011. Consulted on http://www.elmundo.es/america/2011/05/09/cuba/1304960216.html on December 19, 2014 ; EFE, “Cuba permitirá pequeños negocios privados en 178 actividades económicas » in El Mundo, on September 24, 2010. Consulted on http://www.elmundo.es/america/2010/09/24/cuba/1285344654.html on December 19, 2014.

[8] FANGMANN Alexander, “Cuban government announces acceleration of privatization and austerity measures” in WSWS, on July 30, 2013. Consulted on http://www.wsws.org/en/articles/2013/07/30/cuba-j30.html on December 19, 2014.

[9] Ibid.

[10] SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[11] Europa Press “Cuba plantea la progresiva privatizacion de miles de restaurantes estatales” in Europa Press, on September 19, 2014. Consulted on http://www.europapress.es/internacional/noticia-cuba-plantea-progresiva-privatizacion-miles-restaurantes-estatales-20140919183211.html on December 19, 2014.

[12] LAMBERT Renaud, “Ainsi vivent les Cubains” in Le Monde Diplomatique, on April 2011. Consulted on http://www.monde-diplomatique.fr/2011/04/LAMBERT/20364 on December 19, 2014. ; “Cuba to scrap two-currency system in latest reform”. BBC News. October 22, 2013. Retrieved October 22, 2013.

[13] LOPEZ LEVY Arturo, “Cuba Under Raul Castro: Economic Reform as Priority? » in The Huffington Post, on February 25, 2013. Consulted on http://www.huffingtonpost.com/arturo-lopez-levy/cuba-under-raul-castro_b_2754397.html on December 19, 2014.

[14] SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[15] MUSSEAU Francois, Tailbacks in Panama” in Le Monde Diplomatique on September 2014. Consulted on http://mondediplo.com/2014/09/09panama on December 19, 2014

[16] SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[17] Ibid.

[18] SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[19] LAMRANI Salim, “Cuba, the Media, and the Challenge of Impartiality”; foreword by Eduardo Galeano, translated by Larry Oberg ; SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[20] SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[21] Ibid.

[22] Ibid.

[23] LAMRANI Salim, “Cuba, the Media, and the Challenge of Impartiality”; foreword by Eduardo Galeano, translated by Larry Oberg ; SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[24] SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[25] CASTENEDA Jorge G., The life and death of Che Guevara, Compañero, Random House Inc., 1998.; GILLUM Jack, BUTLER Desmond, “Castro survived odd, often inept, US schemes” in Big Story, on December 17, 2014. Consulted on http://bigstory.ap.org/article/4ff07787ff8c45f4ba2a1d7d1e5644c6/castro-survived-odd-often-inept-us-schemes on December 19, 2014.

[26] ALLISON Graham, “Conceptual models and the Cuban Missile Crisis”, American Political Science Review, 1969 63: 689-718.

[27] LAMRANI Salim, “Cuba, the Media, and the Challenge of Impartiality”; foreword by Eduardo Galeano, translated by Larry Oberg ; CASTENEDA Jorge G., The life and death of Che Guevara, Compañero, Random House Inc., 1998.; GILLUM Jack, BUTLER Desmond, “Castro survived odd, often inept, US schemes” in Big Story, on December 17, 2014. Consulted on http://bigstory.ap.org/article/4ff07787ff8c45f4ba2a1d7d1e5644c6/castro-survived-odd-often-inept-us-schemes on December 19, 2014.

[28] LEOGRANDE William M., « Washington’s Secret ‘Cuba Twitter’ Program Is the Same Old Policy of Regime Change » in The Nation, on April 23, 2014. Consulted on http://www.thenation.com/article/179510/washingtons-secret-cuba-twitter-program-same-old-policy-regime-change on December 17, 2014. ; BUTLER Desmond, WIDES-MUNOZ Laura, RODRIGUEZ Andread and Associated Pres, “Senator: USAID’s Cuba hip-hop project ‘reckless’ » in Daily Democrat, on December 11, 2014. Consulted on http://www.dailydemocrat.com/ci_27118597/senator-usaids-cuba-hip-hop-project-reckless on December 17, 2014

[29] SWEIG E. Julia and ROCKFELLER David, and BUSTAMANTE Michael, « Cuba after communism:The Economic Reforms That Are Transforming the Island » in Council on Foreign Relations, on July/August 2013. Consulted on http://www.cfr.org/cuba/cuba-after-communism/p30991 on December 19, 2014.

[30] Ibid.

[31] PLANAS Roqué, “Poll Reveals That Most Americans Don’t Support Cuban Embargo” in The Huffington Post, on February 11, 2014. Consulted on http://www.huffingtonpost.com/2014/02/11/cuba-embargo-poll_n_4769455.html

[32] LEMOINE Maurice “Miami se lasse de l’extrême droite cubaine” on Le Monde Diplomatique, on April 2008. Consulted http://www.monde-diplomatique.fr/2008/04/LEMOINE/15784 on December 19, 2014.

[33] DIAMOND Jeremy, “9 questions you were embarrassed to ask about the Cuban embargo” on CNN on December 17, 2014. Consulted on http://www.cnn.com/2014/12/17/politics/cuban-embargo-questions-answers/ on December 19, 2014.

[34] TeleSur “UN General Assembly Likely to Vote in Favour of Lifting Cuba Embargo, Again” in TeleSur, on October 21, 2014. Consulted on http://www.telesurtv.net/english/news/UN-General-Assembly-Likely-to-Vote-in-Favour-of-Lifting-Cuba-Embargo-Again-20141021-0021.html on December 19, 2014 ; DIAMOND Jeremy, “9 questions you were embarrassed to ask about the Cuban embargo” on CNN on December 17, 2014. Consulted on http://www.cnn.com/2014/12/17/politics/cuban-embargo-questions-answers/ on December 19, 2014.

[35] DOLEAC Clément, “Are the Organization of American States’ Imperialist Roots too deep to Extirpate Today?” in Council on Hemispheric Affairs, on December 04, 2014. Consulted on https://www.coha.org/are-the-organization-of-american-states-imperialist-roots-too-deep-to-extirpate-with-today/ on December 19, 2014.

[36] DIAMOND Jeremy, “9 questions you were embarrassed to ask about the Cuban embargo” on CNN on December 17, 2014. Consulted on http://www.cnn.com/2014/12/17/politics/cuban-embargo-questions-answers/ on December 19, 2014.

[37] PARTLOW Joshua, MARTINEZ Gabriela, “Latin Americans praise Obama easing Cuba embargo; Colombia rebels set cease-fire “ in the Washingt Post. Consulted on http://www.washingtonpost.com/world/the_americas/latin-americans-praise-obama-easing-cuba-embargo-colombia-rebels-set-cease-fire/2014/12/17/cbccbdd6-8607-11e4-abcf-5a3d7b3b20b8_story.html on December 19, 2014.

[38] Ibid.

[39] Ibid.

[40] MILES Tom, Reuters, “EU wants US embargo of Cuba to end but accepts will take time” in CNBC on December 18, 2014. Consulted on http://www.cnbc.com/id/102281443 on December 19, 2014.

[41] Ibid.