How to Beggar One’s Neighbor: Cuba in 2015

Our “educational” tour of Cuba in early February 2015 was celebrating the “lifting” of the economic blockade by President Obama. When we landed and saw the devastation of a small island that we Americans had achieved through our vindictive and almost paranoid throttling of this Marxist state over the past 55 years, we had to look within our own society for many but not necessarily all of the causes. Cuba, the largest island in the entire Antilles,was once a most prosperous country producing the bulk of the world’s sugar supply. After its defeat of their Spanish rulers in 1898, the US invaded and until 1959 sponsored a long line of corrupt rulers and their American casino operator buddies. These rulers failed to educate the poor, keeping many in a rural poverty in the sugar cane fields without health care, sanitation or schools. John Kennedy summed it up in a 1963 interview:

“I believe that there is no country in the world including any and all the countries under colonial domination, where economic colonization, humiliation and exploitation were worse than in Cuba, in part owing to my country’s policies during the Batista regime. I approved the proclamation which Fidel Castro made in the Sierra Maestro, when he justifiably called for justice and especially yearned to rid Cuba of corruption. I will even go further: to some extent it is as though Batista was the incarnation of a number of sins on the part of the United States. Now we shall have to pay for those sins. In the matter of the Batista regime, I am in agreement with the first Cuban revolutionaries”.

When the Hegemon Strikes

By the time Kennedy got to the White House in January 1961, three years after Fidel and his small band of revolutionaries walked unhindered into Havana, Batista had hopped a plane to the Dominican Republic with all the cash he could carry and the US had already slapped an embargo upon the sale of American goods and the importation of Cuban sugar. When Fidel Castro’s communist leanings were identified, we declared declared it a Terrorist Country, along with Syria, North Korea and the Sudan, confiscated Cuban bank accounts held abroad, and forced our European allies to boycott the island and provide no financial assistance. The United States attempted at least six times to assassinate this crazy Fidel who seemed to think that a small island just a hundred miles from our shore could exist outside the US hegemon. Without the very profitable US market for their sugar, the economy took a steep dive and Castro had to reach out to the Soviet Union for oil supplies in exchange for sugar. Cuban sugar production which had been 7 million tonnes in the 1950s, managed to grow slightly through the 1980s but with the collapse of the Soviet Union, in 1989, it fell to only 1 million tonnes and Russia was no longer able to provide capital for the big infrastructure projects the Cubans desperately needed. The GDP dropped 35% in three years.  Today the Cuban economy is bankrupt, and still unable to borrow abroad. Hugo Chavez has provided Venezuelan oil at concessionary prices in return for Cuban medical doctors. Cuba has a fine reputation for superior medical colleges and sends medical missions to some of the poorest countries in Africa. I was impressed with the Cubans I saw working at a medical mission in Angola.

Impoverishment is So Egalitarian

What struck us first, when our Code Pink-sponsored delegation of 150 pulled up at the one-star hotel was the shabbiness of the entire city of Havana: apartment buildings unpainted in 25 to 50 years and in utter disrepair, the streets pot-holed and littered, and the hotel rooms crawling with mold. There were no smart-looking shops nor super-mercados, just hole-in-the wall poorly-lit food stalls. Why? The people live on wages that average only 40 pesos per month – less than two dollars a day. While we learned that their government provided free health care, transportation, rent and education, this hardly covers all basic needs. Food consumption declined 36% by 1994 as the Cuban people were forced to tighten their belts and the embargo did its ugly work. Everyone has been declared responsible for the maintenance and repair of their houses and apartments, but building materials and paint were in scarce supply and strictly regulated. The average city dweller seems disinclined to even pick up their trash or fill in holes on their sidewalks. The savings, investments and private businesses of the middle class had been nationalized and only a thin flow of cash from relatives living abroad prevents even worse poverty.. It looked like many of the cities in Markist countries where I have worked.  I have planned industrial and infrastrucutre development projects in three Marxist economies: Russia in the 1990s after glasnost, Algeria in the 1970s after war with the French, and China from 1984 through 2003 after Mao. All of these revolutions had also done away with most private enterprise and stifled individual initiative. Homelessness was eliminated and everyone assured a job and schooling of some sort. Today under Raul Castro, some of the most severe examples of governmental impoverishment has been lessened and some privatization of restaurants and small businesses is once gain allowed.

A Place With An Indomitable Spirit

In rural Santa Clara, a city of 250,000 where a major battle of the revolution took place, living conditions are far worse than in Havana. Housing in the middle of town is totally run down and the only public transportation are horse-drawn carts holding eight persons. A million-dollar monument to Che Guevara sits on a hillside and looks down on shabby Santa Clara. But, in the bar of a restaurant and theater, a string ensemble of eleven violins, violas, cellos and bass were tuning up. I sat down awe struck, and heard them play Andante Cantabile by Tchaikovsky and Anitra’s Dance by Grieg. Tears flowed as I felt the indomitable spirit and hope being expressed. In the second half of this report, I will examine the people’s loyalty to the Castro Brothers and their single party government and speculate about the future as Raul Castro, fully in charge since 2008, opens up the economy to individual initiative while attempting to preserve the Socialist Model.

Can Cuba Find a Middle Way Between Capitalism and Communism? 

In Havana, a billboard reads: “In Cuba, the only changes are for more Socialism”. In Vietnam today, they are seriously searching for a middle way that they call “A Socialist Based Market Economy”. They seem to be doing well but I have not been there. Cuban Central Bank President Francisco Soberon addressed his nation in 2006 and worried about how Cuba could change:“In the USSR the errors made led to popular unrest caused because of the poor functioning of the economy. It is true that in our specific situation, we have a colossal safeguard of Socialism that is the faith of our people in Fidel and Raul. But if we do not manage to continue to increase the standard of living of the population and guarantee a program of sustainable development, we are running the risk that these great personalities will become the only pillar that maintains our system”.

Raul Castro’s New Economic Model

Fidel was always the visionary: impulsive, disorganized, mercurial and in deep denial over Cuba’s changing reality. Raul insists that the system adapt to changes, not the other way around. He is the rational planner and pragmatist: “Tell it as it is, tell the truth without justifications, because we’re tired of justifications in this revolution.” Many of Cuba’s economic woes today are self-induced, the result of a rigidly-held Communist ideology that still shows little sign of relaxing its grip. Six hundred foreign firms have hundreds of millions of dollars frozen in state banks which they are unable to withdraw because Cuba has no money to back up the accounts. Someone said that Fidel tried to fix the entire world, while Raul merely wants to fix Cuba. He seems to realize that no state can subsidize the entire population, its impossible. Raul has started along a path that relies more upon individual initiative, allowing private restaurants, road side stands, small cooperative ventures, the freedom to buy and sell property and building materials, privatization of farming, small home loans for improvements, and much more. He has replaced many of the aging revolutionaries with younger leaders. Severe restraints still remain upon foreign investment in business or industry: Such foreign ownership, up to 50%, is now allowable but cannot be passed on or sold off. Foreign investment in housing is not allowed and consequently no Florida developers are lining up to build condos and vacation resorts. Without outside capital, not much will happen. But, the fear of a capitalist tsuami sweeping across the island is palpable: Imagine McDonald McPiggies on every corner, flashy tourist resorts and casinos, and Safeway stores and shopping malls in every barrio.

How About a Capitalist Tsunami?

Can Cuba resist the pressure for foreign investment indefinitely? When senior officials were asked this, they said their resistance was unrelenting. The former Speaker of Parliament and UN ambassador Ricardo Alarcon told our CodePink Educational Tour emphatically that “Cuba is not for sale! This will not be like the landing of Columbus”. Will the ordinary people, not quite so wedded to Socialist ideology as the nomenclaura, eventually force the doors open? Can capitalist investment be channeled to just those areas where Cuban planners want it? With economic growth in 2014 estimated at 1.3% versus a 2.2% target, Cuba can hardly hold back all foreign investment. US investors are also restrained by US laws making it impossible to invest in Cuban enterprises unless they privately owned. John Deere tractors can now be imported but the US insists that they can only be sold to private farmers, few of whom have the necessary dollars. As travel increases, Havana must erect new hotels and restaurants and rebuild its tattered and crumbling waterfront along the sea wall. Roads cry out for repair, private enterprises thirst for capital, and Cuba’s equivalent of the Iron Rice Bowl must be smashed. We found little encouragement for economic liberalization from the government officials with whom we met, nor were they accepting of criticism either. As one member of our group commented: “They don’t like the word failure here”.

Jim Houle spent fifty years as a consultant to the World Bank, foreign governments, and the US State Department in China, Russia, sand throughout the Middle East.