Understanding a Cuban transition.

AuthorSmith, Roy C.
PositionReport

The joint announcement by Presidents Raul Castro and Barack Obama in December 2014-after eighteen months of negotiations-that Cuba and the United States would begin efforts to "normalize" diplomatic relations came as a surprise. It was greeted as a sign that normalization of economic relations was likely to follow and that Cuba's half-century experiment with communism would end in transition to some form of market-oriented mixed economy.

Indeed, beginning around 1990, all of the world's other Communist states except North Korea had transitioned to economic systems that relied to a significant degree on market orientation and a central role for the private sector. The Soviet Union and its central European bloc have disappeared, and China and Vietnam have transitioned to pragmatic forms of socialism that coexist with robust forms of market capitalism. All now have for-profit private corporations that benchmark the performance of state-owned enterprises, stock exchanges, foreign direct investors in stand-alone or joint ventures, as well as portfolio investors in local equities and bonds, and they provide legal protection (though often questionable) for private property.

Cuba now faces the kind of existential crisis that the other Communist counties faced twenty-five years ago: unless it abandons its political ideology, it won't generate sufficient economic growth and prosperity for the system to survive and adapt. The transitions in the former Communist countries have generally been successful, but they have taken time and had their ups and downs. But economic liberalization has invariably encouraged political liberalization and demands for key elements of a civil society. This has been most evident in countries such as Poland and Latvia. The process has been more gradual but nevertheless perceptible in China and Vietnam.

Economic transition will force Cuba down the same path, but it will come at a price-political transition that may undo much of the fifty-year legacy of "Fidelismo," which the government, now led by Raul Castro, is likely to resist. Fidelismo, however, is more than socialism-it also has embraced a passionate desire for independence from the United States.

Cuba's Long Search for Independence

Spanish rule of Cuba was chronically troubled by local unrest among Cuban-born Spaniards, other ethnic Europeans, and a large population of Afro-Cubans who arrived as slaves to work the sugar plantations and were emancipated in the 1880s. The first and the most brutal of Cuba's three wars for independence began in 1868 (the Ten Years War). The cause was taken up by sympathetic Americans who pressured the U.S. government to intervene, but President Ulysses S. Grant refused to do so (Smith 2001, 498-99). The Spanish prevailed but had to suppress a second uprising (the Little War of 1879-80). The third effort, the War of Independence (1895-98) inspired by founding father Jose Marti, in which the United States intervened on the part of Cuban revolutionaries (the Spanish-American War, 1898), was successful. American involvement broadened the dimensions of the conflict and ended Spanish control of the Philippines and Puerto Rico.

After independence and contrary to Marti's and his followers' hopes, U.S. politics exerted significant influence on Cuban affairs. To justify withdrawing American military forces still occupying Cuba, protect America's substantial commercial interests, and limit Cuba's economic and political relations with foreign powers, Congress passed the Platt Amendment in 1901. In return, Cuban sugar was given preferred access to the U.S. market. Thus, Cuba's independence was never fully achieved; indeed, the United States simply displaced Spain as the overseas power on which Cuba was dependent.

Cuba's domestic political condition from 1901 to 1959 was tumultuous, and the benefits of economic development for ordinary Cubans, especially in the countryside, were well below expectations. American companies operating in Cuba continued to enjoy the watchful attention of powerful U.S. political officials and remained a dominating presence in key sectors of the economy. The Cuban government seemed perpetually bogged down in internal struggles. The U.S. Marine Corps occupied Cuba from 1917 to 1923 to quell continuing disturbances.

In 1933, Fulgencio Batista-an obscure figure of humble origin-led the Revolt of the Sergeants and overthrew the incumbent government. Batista attempted some reforms but relied heavily on the United States for assistance, which further expanded American commercial control of the Cuban economy. Batista's regime was generally associated-certainly by its opponents-with corruption, collusion with organized crime (the Mafia), repression, and an indifference to the social conditions in which the majority of the population lived (Sweig 2009, 1-33). The once hopeful expectation of a pathway from depressed Spanish colony to a vibrant civil society enjoying die fruits of a competitive market economy was hijacked by American business, a dictator, and the mob.

Castro's Revolution

The driving force of Cuba's revolution in 1959 was Fidel Castro. A lifelong political activist, Castro was motivated by factors other than a desire for a Communist utopia. He craved true independence for Cuba, especially from the United States, which, he believed, considered Cuba to be a convenient ally in the evolving Cold War but otherwise an inferior, dysfunctional Caribbean country not worth much attention.

Castro assembled a small band of guerilla fighters in 1956 that challenged Batista's much larger forces in the Eastern Provinces. He became a romantic figure pursuing a quixotic dream that few expected would succeed. But the Cuban army was not loyal to Batista, so many of his soldiers defected. Surprisingly to many Cubans, Castro prevailed. Even then, many expected he, too, would be bought off by the Mafia, which controlled the lucrative gambling industry in Havana. But Castro surprised everyone again by throwing out the mob along with Batista (English 2007, 31-50).

Fidel's political objectives were not well understood in Washington, but his overthrow of U.S. ally Batista and the killing of thousands of his supporters (often by impromptu firing squads) made Castro an unwelcome figure. A few months after ejecting Batista, Castro sought a meeting with President Dwight Eisenhower, which was refused. Soon afterward, the regime nationalized U.S.-controlled businesses in Cuba and welcomed offers of assistance from the Soviet Union-in direct contravention of the Platt Amendment. The Soviet Union soon agreed to purchase almost all of Cuba's exports (including its entire sugar crop) and provide various forms of economic and financial aid. Such assistance was crucial for Cuba's economic survival and represented a golden opportunity for the Soviet Union to step into the enemy's backyard. Castro declared Cuba a Communist state in 1961.

Soviet presence in Cuba triggered alarms in Washington. In early 1961, the Kennedy administration assisted Cuban exiles in a bungled effort to overthrow Castro forces at the Bay of Pigs. The following year Russia's stationing of nuclear missiles in Cuba resulted in the Missile Crisis, the most intense and dangerous moment of the Cold War. Castro's embrace of America's key enemy permanently soured relations between the two countries and resulted in tough unilateral American sanctions (the Embargo) that were aimed at regime change and to this day remain in place. In Cuba, these sanctions are known as "the Blockade."

Fidelismo

Searching for ideological clarity regarding the revolution's objectives, Che Guevara, an Argentine and one of the Marxist purists in the Castro circle, wrote Socialism and the New Man in Cuba in 1965 (Conroy 2007). The "new man," he wrote, should be literate, healthy, secure, and economically equal, if never actually prosperous.

In 1968, all private property in Cuba was nationalized, and forty-eight thousand private businesses were eliminated. Little was done to improve Cuba's already backward economy. Stripped of sectors such as tourism and dependent on state-owned companies for essentials, the economy lost much of its remaining vitality along with most of its investors and entrepreneurs.

Dependence on the essential Soviet lifeline lasted thirty years. The end of the Soviet Union in 1991 caused a severe economic crisis in Cuba. Gross domestic product (GDP) dropped by 35 percent, and foreign trade was down by 70 percent. The Soviet support was gone, and Cuba had to fend for itself-something its inefficient, isolated economy was barely able to do. The result was an acute state of privation that lasted for nearly a decade, which the regime called the "Special Period in Time of Peace."

Cuba's foreign-exchange holdings collapsed, making it difficult to import food and other essentials. Assistance and investment were sought from China, Iran, Spain, and the Latin American countries, but without...

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