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article imageCuba inc. —The empire strikes back Special

By Les Horvitz     Apr 13, 2016 in Politics
While most Cubans welcomed President Obama when he came to Havana last month, the country’s retired leader Fidel Castro sat out the party — probably because it wasn’t his party.
Cuba, he wrote in Granma, the Communist Party newspaper, didn’t need anything from the "Empire," implying that his country could go it alone. In fact, almost for its entire history, Cuba has been dependent on one empire or another — first Spain, then the United States, and until 1990, the Soviet Union.
But events are moving too quickly for the aging revolutionary to apply the brakes. Ties between the U.S. and Cuba are strengthening by the day. An “American invasion,” as The Wall Street Journal calls it, is now underway — not with guns this time, but with money. On his visit to Havana, Obama was accompanied by a small army of lobbyists and corporate advocates, representing major business groups and the agricultural industry.
European and Canadian companies have been investing in Cuba for years, of course, so their American rivals have a lot of catching up to do. But the groundwork has already been laid. Cuba’s moves to privatize increasingly large parts of its economy have been going on since the mid-Nineties.
If the Soviet Union hadn’t collapsed in 1990, Cuba might not have needed to rely so heavily on tourism and remittances from Cubans living in the U.S. For decades, the USSR had been shoring up the Cuban economy with subsidies – paying, for example, four times as much for sugar as it was worth on the open market. The abrupt halt to those subsidies threw Cuba’s economy into a tailspin. In just three years, its GDP fell by an astounding 30 percent. The Castro regime called the resulting depression the Special Period.
Rather than endure the privations of the Special Period, Cubans left in droves for the U.S. — 100,000 in 1990 alone. The migration continues (most recently, through Ecuador and up through Central America and Mexico), spurred by fears that Washington might end its policy allowing Cuban refugees to stay in the U.S. The migrants tend to be younger — the very people Cuba needs for its future development — and they include more women than men. Already, the birthrate on the island isn’t sufficient to replace the existing population. With one out of every five Cubans over 60 years old, you have to wonder how many people of working age will be available to support the needs of an aging population.
But Cuba has benefited from the migration, too: many Cubans in the U.S. helped keep the country afloat by sending remittances to the families they left behind. Their generosity had the unintended effect of promoting inequality. If you had a relative in Miami sending you a hundred dollars a month you could afford to fix up your apartment and buy new appliances. Meanwhile your neighbor who didn’t have any family members in the U.S. would have to make do on a meager state salary. Inequality only increased when the government grudgingly — and gradually — allowed privatization to take root in the mid-Nineties.
Private property was abolished when Castro took power. There’s nothing in the Cuban constitution about privatization at all. (There still isn’t.) In the first years after the Revolution almost everyone received the same salary — doctors and taxi drivers alike — but they were entitled to free medical care and free education from primary school through university. Each family was also given a ration book so that they were assured of obtaining basic staples. Cubans might have lived in poverty, but it was “poverty with dignity,” as retired diplomat Luis Estrada (a pseudonym) terms it in contrast to the kind of poverty that Haitians, for example, suffer from, which no one would call dignified.
While Cubans couldn’t buy or sell an apartment, the state guaranteed everyone a roof over their head. No one could be evicted. If you worked hard enough you earned the right to have a car, usually an Italian-made Fiats or a Soviet-made Lada. You just couldn’t sell it. There was one exception to the rule: vintage American cars. It was because there was a market for those old Fifties Chevys and Dodges that Cubans had a vested interest in keeping them in pristine condition and making them more fuel-efficient, replacing gas-guzzling engines with diesel engines. And they figured out a way to monetize them, too, converting many of the cars into taxis. Today, they’re a favorite way of getting around for picture-snapping tourists. Now you can buy and sell cars of all makes.
In the early days of privatization, enterprising Cubans began to test the waters just to see what was possible. They opened restaurants in their kitchens called paladares and rented out their spare bedrooms to tourists. Now many of those modest paladares have become transformed into high-end restaurants offering a variety of cuisines unavailable just a few years ago. They’re still limited to fifty tables by law, though, meaning that hungry patrons often have to book reservations in advance. For those tourists who visited five or ten years ago and had to endure bad food and indifferent service the change is a revelation. And you don’t need to search for a spare bedroom in someone’s house anymore. If you don’t want to spend the money for a hotel, Airbnb now offers over 2000 listings for what are known as casa particulares.
Privatization is still a work in progress, though. The government doesn’t seem to have decided how much control it should relinquish over Cuban lives and livelihoods. Take a stroll around downtown Havana and you’ll be astonished by the dereliction into which so many buildings have fallen. It’s gotten so bad that an average of three buildings collapse in Havana every day. Although Cubans are now allowed to buy and sell their apartments, the state still retains ownership of the apartment building and the land beneath it. As a result, residents have little incentive (or money) to maintain or improve their building, preferring to focus on the upkeep of their own apartments. All the same, many of Havana’s most famous sites have been restored thanks to the concerted efforts of preservationists who’ve succeeded in resurrecting and maintaining Old Havana, making it into one of the country’s most popular tourist draws.
Even as the government cuts state employees to save money, the non-state sector (as it’s called) is booming, adding some 360,000 jobs a year. In addition, there may be another 800,000 people who are working in the underground economy. Unsurprisingly, job-seeking Cubans by overwhelming margins say they want to work in a private enterprise. “Private enterprise holds up a mirror to society,” observes Miguel Coyula, a noted Cuban historian, noting that the non-state sector now accounts for over half of Cuba’s GDP. What society sees in the mirror is an increasingly capitalist future, one in which there will be many winners, but possibly more losers.
A taxi driver now can make more in a morning than a doctor earns in a month. And so many people have abandoned the countryside in hope of finding jobs in the city that they’re leaving no one behind to cultivate the land. The government is trying to rectify this situation by offering farmers leases on their land, but even if the effort is successful, Cuba will still need to import a great deal of food. Its rice comes from Vietnam and China. Most of its fish also comes from abroad — not because Cuba’s coastal waters are fished out as they are in many other parts of the world, but because they aren’t being much fished at all: the fishing fleet was mothballed years ago for lack of funds. Cubans with ration books still have a limited selection of food to choose from. More well-to-do Cubans have a better selection of meat, fruit and vegetables which they can buy at private farmers’ markets in gentrifying neighborhoods like Havana’s Miramar district. But prices in these markets tend to be high and there’s still little competition.
A handful of cranes now loom over the Havana skyline where there were practically none to be seen a few years ago. “It represents progress,” says a guide for a U.S. tour company who’s been to Cuba thirty times, “It’s just not happening as quickly as people had hoped.” New apartment buildings are sprouting up, financed by foreign investment. It’s been rumored that penthouses in some of them will cost up to half a million dollars, unimaginably expensive for the vast majority of Cubans.
As relations between the two countries continues to improve, U.S. companies including Starwood Hotels, AT&T, PayPal and Sun-Maid Growers are exploring investment opportunities on the island. For that matter so is Jimmy Buffet’s Margaritaville restaurant chain. Cubans would certainly welcome Google’s entry into the market if it delivered on its promise to expand Internet service which currently ranges from spotty to nonexistent.
But Congress will first need to lift the trade embargo before Coyula’s prediction of a “tsunami of investors” actually occurs. What keeps the historian up at night is the fear that all the money pouring in from abroad may make Havana unrecognizable, even unlivable, filling it with skyscrapers, big box stores, McDonald s and Starbucks…and pollution. Even now, the city is bursting at the seams with two or possibly three million people (no one is really sure). “In Havana today there are no drugs, no guns, and little crime,” he says, “Our responsibility is to preserve Havana. Otherwise we get Shanghai.” Whether Cubans will succumb to the seduction of capitalism entirely is uncertain. “Cubans either fall short or go beyond,” Coyula says, citing an observation once made by a Dominican visitor.
We may have some clues about what happens next when the Communist Party Congress meets this month. The last congress wasn’t exactly a triumph; of the ‘guidelines’ it promulgated, meant to set the goals for country for the next five years, only 20 percent have been met. This congress is supposed to choose a successor to Raoul; he’s now 84 and has announced that he’ll step down in 2018. Right now, though, everything is in flux and that makes life somewhat unsettling for ordinary Cubans. “You don’t know what you can do and what you can’t,” says a Havana native. When a privately printed poster featuring portraits of the two presidents was put up in Old Havana welcoming Obama to Cuba, some people wondered whether it was legal. After all, the government didn’t authorize it. But since no official ordered it taken down it stayed where it was. “Cubans have freedoms they don’t take advantage of,” Estrada says. That may be because they don’t know that those freedoms exist. The government might not know either.
Estrada believes that sooner or later, the government will have to make some difficult decisions. At some point it will only be able to subsidize people who fall below a basic income rather than providing everyone with the same mandated salary of $25 a month. And while there are two currencies (one peso for Cubans and the other a convertible peso for foreigners pegged to the dollar), the retired diplomat believes that eventually they will have to be consolidated into a single currency. Once that’s accomplished, he says, “The dollar will rule.” He acknowledges that there will inevitably be political repercussions, not all of which will be easy for Cubans to swallow. Economic reforms alone won’t be sufficient to revitalize Cuba either, he acknowledges. There will have to be free elections too. “As a committed Marxist I’m probably not going to like the changes, but in the end I think they will benefit everyone.” Perhaps a Havana Tours guide put it best when she tried to describe the changes occurring in her country: “Things are very complicated in Cuba right now. They’re too complicated even for Cubans to understand.”
(This is the second of two articles on Cuba)
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