A helping U.S. hand to Cuba’s market reform?
– Boston University Professor Susan Eckstein is author of “The Immigrant Divide: How Cuban Americans Changed the U.S. and Their Homeland” and “Cuba under Castro,” and past president of the Latin American Studies Association. The views expressed are her own. –
Raul Castro announced that 10 percent of Cuba’s state employees, half a million people, will be dismissed from their public sector jobs and free to pursue work in the private sector. The near-fiscally bankrupt state no longer can afford to pay inefficient workers. But the Cuban leadership remains a reluctant reformer. We Americans have a vested interest in facilitating a deeper market transition 90 miles off shore.
This is not the first time Cuba under the Castro brothers has launched market reforms, having introduced minor openings over the years. After paying nearly all workers equally and distributing most goods equitably through a ration system in the ‘60s, it began to tie earnings to work performance, expand private economic opportunities in agriculture and the service sector, and allow goods to be sold off the ration system on an ability to pay basis. It has also permitted private foreign investment since the ‘90s. But measures introduced during economic troubles proved too meager to fuel significant economic growth and many were reversed when priorities shifted.
While head of state, Fidel made the decision to follow neither the Soviet nor the Chinese examples of reform. He considered the Soviet model — in which glasnost (political reform) preceded perestroika (economic reform) — an invitation for political suicide. While the U.S. applauded Soviet changes, the political opening drove Gorbachev from power, leaving the Soviet Union to join the dustbin of history. And when Fidel went very publicly to China to learn about capitalism, he didn’t like what he saw — rising inequality and materialism, antithetical to the egalitarian and non-materialistic precepts of the Cuban revolution.
If times have changed and continued commitment to socialist precepts are a luxury the Cuban government no longer can afford, how likely is a full market transition? Private sector jobs require private investment. Earning only about $20 a month on average, ordinary Cubans cannot be the main source of capital. The government might provide some financing, but it plans to slim down state employment precisely because it lacks the fiscal resources to keep the economy afloat.
The Cuban-American community and the U.S. government might be sources of capital, but this will require both to break with their policies of the past, just as the Cuban government now plans to break with its past. Unlike overseas Chinese who played a key role in the “Chinese miracle” by convincing officials to reform the economy and by investing large amounts of money in their homeland, the more than half a million Cubans who fled the revolution in their country in the first decade of Castro’s rule took a different path. They determinedly sought to bring Castro’s government to heel, partly through economic strangulation. Although many shared in the American Dream, they resisted sending money home. Instead, they used their emergent political clout in the U.S., their votes, and a political action committee they formed to pressure Washington to maintain a virtual Berlin Wall across the Florida Straits.
Because of immigrant political influence, the U.S. government maintains an embargo on U.S.-Cuba trade and investment, though it has opened up economic relations with China and even Vietnam with which it fought a major war. The most recent Cuban immigrants send remittances to family they left behind to help them cope with the economic crisis they are experiencing. They may be a source of funds for the private economic activity Raul will now allow. But as struggling newcomers to the U.S. they have little money to spare and share. Although they favor improved U.S.-Cuba relations, many are not yet U.S. citizens and have no PAC of their own — and thus have little influence over U.S. Cuba policy, despite being a force for change.
A change of course in Cuba and Venezuela?
The following are excerpts from STRATFOR’s geopolitical weekly column by George Friedman, chief executive officer of STRATFOR, a global intelligence company. He is the author of numerous books and articles on international affairs, warfare and intelligence. His most recent book is “The Next 100 Years: A Forecast for the 21st Century.” The opinions expressed are the author’s own.
Strange statements are emerging from Cuba these days, with Fidel Castro reportedly saying that “the Cuban model doesn’t even work for us anymore.” There is little hiding that Cuba’s socialist economy has run out of steam. More interesting is what Cuba is prepared to do about it.
For decades, Fidel has maintained power by monopolizing the island’s sources of wealth. The Cuban leadership has controlled social welfare, using that power to secure loyalty and neutralize dissent. But that control has come at a cost: For the revolution to survive, Cuba must have sufficient private investment under state control. That private investment has not been forthcoming.
So while Fidel has been busy making statements, his brother and successor, Raul, has been fleshing out a new economic strategy. This will see 500,000 workers, or 10 percent of the island’s workforce, laid off in a bid to develop private cooperatives to lessen the state’s burden.
The feasibility of the proposed reforms is not as interesting as the message of reconciliation embedded in the plan. Alongside talk of Raul’s reforms, Cuba has been making apparent political gestures to Washington. But these gestures are unlikely to capture Washington’s attention, so Cuba will need something more — and Venezuela could fit the bill.
Cuba and Venezuela face similar geographic constraints. Both are relatively small countries with long coastlines and primarily resource-extractive economies. Both lack options in their immediate neighborhood for meaningful economic integration except with the dominant Atlantic power, the United States. This essentially leaves Cuba and Venezuela two options — align with the United States or align with a stronger U.S. adversary.
Historically, both Cuba and Venezuela have swung between these two options. For most of the past decade, however, Cuba and Venezuela have found themselves in adversarial relationships with the United States but without strong allies to fend off the United States. As a result, Cuba and Venezuela have drawn closer to each other.
Cuba and twisted logic, double standards
It is time for the United States to stop trading with China and ban Americans from travelling there. Why? Look at the U.S. Department of State’s most recent annual report on human rights around the world.
“The (Chinese) government’s human rights record remained poor and worsened in some areas,” the report notes. “Tens of thousands of political prisoners remained incarcerated (in 2009).”
U.S. relations with Egypt should also be frozen, because “the government’s respect for human rights remained poor, and serious abuses continued in many areas…Security forces used unwarranted lethal force and tortured and abused prisoners and detainees, in most cases with impunity.”
No American politician would consider sanctions on China, the U.S.’s second largest trade partner, or Egypt, one of its closest allies in the Arab world. They should, if they followed the logic that has underpinned five decades of a trade embargo on Cuba and a ban on travel to the island for most Americans.
Proponents of maintaining the sanctions routinely cite the State Department’s human rights reports on Cuba. The most recent, for 2009, lists 194 political prisoners and criticizes “harsh and life-threatening” prison conditions.
For decades, the U.S. case has been that the embargo must remain in place as long as Cuba doesn’t have democratically-elected leaders, holds political prisoners and violates human rights. By that token, a long list of countries in addition to China and Egypt should be subject to American sanctions. Cuba has long been treated as a special case.
U.S. policy on Cuba has become subject of debate again after the release of seven imprisoned dissidents in July under an agreement between Cuba’s Roman Catholic church and the communist government led by Raul Castro, who took over from his ailing brother Fidel in 2008. Another 45 dissidents are due to be freed over the next few months.
Yes, this is a very antiquated policy. Reason Cuba is a small Caribbean mostly Afrolatino/ Spanish mulatto country that has little to offer the U.S.in the eyes of the public. China on the other hand, we have sold ourselves to. They own a great deal of our debt due to the financial crisis we’ve put ourselves into years ago, which in turns allows them to flood our Country at will with often times cheap and inferior goods. Im of Cuban decent and I can assure you, most generations of Cubans, except the older ones 55yrs and up, think this Embargo is biased and a waste of time. Moreover, with natural resources, tourism, culture, and strategic geographic positioning there, a partnership with Cuba in the 21st Century makes good “Cents” for all parties.
from The Great Debate UK:
A bet against Castro’s immortality
-- Neil Collins is a Reuters columnist. The opinions expressed are his own --
LONDON, April 23 (Reuters) - "Practically everyone who follows Latin American events agrees that Castro's end is near." Thus one Laurence W Tuller, writing in 1994 in his manual on high-risk, high-reward investing. Defaulted Cuban government bonds had jumped on hopes of a settlement to allow the country back into the international capital markets. Today, former leader Fidel Castro's end is 15 years nearer, but he's still there, albeit in semi-retirement, and holders of these pre-Castro bonds with a face value of around $200 billion are still waiting. Castro's regime kept good records, but have paid no interest, and ignored redemption dates since his revolution half a century ago. Few Americans can remember why their administration has been so beastly to Cuba for so long. Those who can mostly live in Florida, a key swing state, and many risked everything to get out of Cuba. They do not want to see their investment devalued by hordes of their former compatriots simply walking off the Delta Airlines flight from Havana. Last week U.S. President Barack Obama eased the squeeze somewhat. Americans can now visit Cuba, but only if they have relatives there. This gesture has re-ignited the bondholders' old hopes. Past settlements of defaulted sovereign bonds have tended to pay about half the total of accrued interest plus principal, so the buyers see plenty of upside. Exotix, a specialist trader in "frontier markets", says its price for a typical Cuban bond instrument has risen from around 9 cents on the dollar at the start of this month to 14 cents on April 23. Mind you, the spread is wide, the market thin and as events crowd in on the President, he might feel there are more pressing problems than to risk upsetting those key-voting Floridian Cubans.
In Cuba, low-hanging fruit for Obama
– Bernd Debusmann is a Reuters columnist. The opinions expressed are his own. –
A look at a list of the foreign policy problems facing U.S. President Barack Obama could send the sunniest optimist into depression.
The Arab-Israeli conflict: no solution in sight. Afghanistan/Pakistan: the outlook is bleak. Iran and its nuclear plans: tricky. No easy wins here. Iraq: the war is not over.
But in the foreign policy landscape, there is one low-hanging fruit ripe for the picking — Cuba – and the picking has just been made easier by a report commissioned by the ranking Republican on the Senate Foreign Relations Committee, Richard Lugar, and released this week.
Among its key points: the 47-year-old U.S. trade embargo against Cuba, the only Cold War policy still in force, has been counter-productive; U.S. policies are harming national security interests by impeding cooperation on such key issues as narcotics traffic; and the U.S. image in Latin America has been tarnished by Washington’s insistence that the region share hostility towards Cuba’s communist government.
That government, first under Fidel Castro and now under his brother Raul, survived the hostility of 10 American presidents preceding Obama. It has normal relations with most of the world. Washington’s lonely stand on Cuba becomes embarrassingly apparent once a year when the U.N. General Assembly votes on lifting the embargo. The last count was 185 in favour, three against – The U.S., Israel and Palau.
In much of Latin America, Cuba has become a romanticized symbol of a small country that has stood up to the American giant. That image is exploited to the full in the anti-American rhetoric of such leaders as Hugo Chavez of Venezuela and Evo Morales of Bolivia, whose appeal rests in part on painting Uncle Sam as an Imperialist bully.
Normalization of relation with Cuba would be a great first step towards shaking off defunct old grudges. Too many Americans think we are enemies due to communism, and don’t remember that American corporations used Cuba as their little playground until Fidel came along. Being used as a playground was not very beneficial for the average Cuban so they boosted them out. In short corporate America has helped screw over the average Cuban and the average American past and present, we have way too in common to still be supposed enemies. The current embargo is just a legalistic act of terror against the Cuban people especially when things such as medicines only available from the US are denied.
After Obama win, goodbye to Cuban embargo?
–Bernd Debusmann is a Reuters columnist. The opinions expressed are his own–
By Bernd Debusmann
WASHINGTON (Reuters) – If votes in the United Nations serve as a gauge of global opinion, 98.9 percent of the world opposes the U.S. trade embargo on Cuba, a measure imposed 46 years ago to isolate the communist-ruled island and bring down its leaders.
It failed on both counts. As far as international opinion is concerned, the country that is isolated is the United States, not Cuba. In the latest of 17 successive U.N. General Assembly resolutions on lifting the embargo, Washington mustered only two allies — Israel and Palau, a Pacific island nation difficult to find on a map. It has a population of 21,000.
The Marshall Islands (pop. 63,000), which had voted with the United States from 2000 to 2007, unexpectedly and without public explanation broke ranks this year and abstained in the vote, a non-binding resolution taken a week before the U.S. presidential election.
The count — 185 countries in favor of lifting the embargo, three against — speaks volumes about a bankrupt policy stuck in the Cold War era.
Will that kind of America versus the world line-up change under Barack Obama? Not necessarily. The man who made history on Nov. 4 by becoming the first black to be elected president of the United States has promised to “ease” sanctions if Cuba took “significant steps toward democracy, beginning with freeing all political prisoners”.
I am a Cuban American and I oppose the embargo. It has done no good as far as deposing Castro. Ths Cubans have nothing to sell, except cigars and tourism, so lifting the embargo would only help Cuba’s economy marginally. Only if Cuban moves to a Chinese type of economy, and allows foreign investment in production facilities, will their economy be improved significantly.
