Wednesday 17 December 2014

Cuba after the Blockade

Sun, sand and socialism is how Cuba's usually billed in leftist circles. And wherever you look, among groups formally opposed to Stalinist regimes, Trots and Progress-types alike suspend their critical faculties and indulge their soft spot for this most persistent thorn in America's side. Doing some violence to the historical record, nonetheless Cuba wears its romantic revolutionary image well. Overthrowing a US-friendly dictator, seeing off a CIA-backed invasion and numerous dirty tricks, and stubbornly refusing to go under as Eastern Europe collapsed. Despite the difficulties of the 'special period', Cuba has managed to maintain an education system and health service considered among the finest in the world, and teams of Cuban medics roam the world like a less flashy version of David Miliband's International Rescue Committee. Big up the Guevarism and its ecosocialist turn, and there's not much left not to like.

The reality is somewhat different. While nowhere near as bad as the truly foul regimes sitting in Riyadh and Pyongyang, Cuba is an authoritarian government in which democratic rights are tightly circumscribed. That isn't to say it is without mass support - no regime can survive 50-odd years on repression alone. The neighbourhood committees and other organs of representation that do exist evince greater levels of popular civic participation than practically any Western nation you care to mention. You see, for bureaucratically planned economies to work inputs at work and community level are required. But the question remains, how much are the characteristics of Cuban "socialism" distortions induced and exaggerated by the blockade? We may well shortly find out.

Though Obama's announcement that the US and Cuba are set to normalise relations is entirely welcome, it's too early to write the blockade off yet. After all, the gift for unpicking that lies with Congress. Instead there will be a resumption of normal diplomatic ties, and the building of a proper working relationship on issues of mutual interest. There will also be an easing of travel restrictions, and the re-establishing of some relatively minor economic measures. The blockade proper stays in place for the moment.

So where has the change come from? At first glance, nothing appears to have changed from the Cuban side. Raul Castro's breakthrough is a mere continuation of Cuba's immediate foreign policy aim of the last 50 years. But the times they are a changin'. Under Castro's moves to emulate China's market Stalinism, the so-called 'New Cuban Economy initiatives aims to expand the scope of privately owned business and make the country appear to foreign direct investment as something other than an exotic tourist location. Here the Cuban diaspora in Florida is a potential source of capital. Remittances relatives can send from the US to Cuba are set to rise from $500 every three months to $2,000, helping stimulate small business generation. There is also a desperate need to diversify the Cuban economy away from the vagaries of tourism and the staple of sugar production, and that requires large quantities of capital too. In terms of the so-called high, or value-added sectors Cuba potentially has what it takes to be a very significant player in pharmaceuticals and biotech, but unimpeded access to global markets is something lacking. Then there is the question of the efficacy of Castro's Chinese turn. Wages remain stubbornly low, meaning that nascent markets for domestic consumption are anaemic and fighting over scraps - a trickle of Miami capital for small business is not about to remedy that situation. Nor will the recent collapse in the price of oil. Though this wasn't an issue impinging on the behind-the-scenes conversations between Cuba and the US prior to today's announcement, it means the favourable oil deals it has with Venezuela will come under pressure. As its economy takes the hit from tumbling prices, solidarity or no the Bolivarian revolution cannot afford to prop up Cuba. What Cuba needs, and fast, is foreign capital. And it is this that the US can provide.

But what's in it for them? Cuba is hardly an undiscovered continent of future prosperity for US capital. Or is it? One shouldn't overlook individual motives here, and for an Obama White House with eyes fixed on the legacy solving Cuba is a relatively easy, painless, and cost-free foreign policy win. At least when you put it next to something as intractable as the Middle East. Some Miami diehards might be upset with it, but again taken in the round US Hispanic voters are more likely to view this Democrat policy change positively. Jeb Bush or whoever takes up the poisoned chalice of the Republican nomination will not curry favour by setting their face against it. Then there are Latin American geopolitics. With centre left leaders in place across South America and an increasing self-confidence thanks to growth and, particularly, Brazil's potential as a regional rival the US has to make nice or risk being excluded from what state department planners arrogantly assumed was its backyard. If US capital is to take advantage of those emerging markets, it needs to throw off its Cold War mindset. Making up with Cuba does its soft power some good.

And then there is oil. The Cuban government have estimated some 20 billion barrels are located in offshore deposits. The US Geological Survey say it's less than half (some nine billion) but there also exists 21 trillion cubic feet of gas, and thanks to the blockade not one US-owned oil concern can go anywhere near it. There has been exploration deals with Russian firms but nothing considered commercially viable has been found yet. Despite the oil price collapse even if black gold is struck, oil production would still be a useful shot in the Cuban economy's arm. And it would be very nice for US oil profits too. If sanctions can be lifted a series of deals can be struck that not only opens up a new, lucrative reserve but puts it partly under the USA's strategic control.

Speaking earlier, Obama was right to say the blockade was effectively a relic from a previous era. It is in both countries interests that diplomatic and economic relations are entirely normalised. But also, it's an opportunity for the Cuban people too. As authoritarian they may be, nevertheless the envelope of political freedoms in China and Vietnam have expanded since their experiments with "market socialism" began. With it has come a whole host of social problems and new inequalities as well. It is to be hoped that as the window of the Florida Keys opens the Cuban people will draw deep on their traditions of self-reliance and forge a different, freer, more equal path.

Image credit


Alex Dawson said...

When I first saw the headline, I thought it would be McDonalds in Havana by next Christmas, but actually this is all quite nuanced and choreographed.

The prisoner releases, embassies etc...are all good moves of course, but today is just a series of baby steps to unfreezing things, rather than a march towards rapprochement.

I deeply hope Cuba can sustain its more equitable social system as it has managed for so long in the face of such odds.

My fear is that the moment the ferries start running between Havana and Florida, the moment the cancer of US gun violence, obesity, arrogance and monoculture spills over and ruins everything, as it appears to have ruined the rest of the Caribbean. Look at Haiti for a comparison.

I strikes me the lifting of the embargo will likely be far more damaging for the Cuban people than the American political classes.

Anonymous said...

He was probably playing to the domestic audience but Obama sold this deal as just the latest US tactic to destroy the Cuban revolution. Hardly fills you with confidence that this deal will stick!

Cuba doesn't only have a great health service it also has noticeably great people, who generally really do differ from people you meet elsewhere. A friend who is pretty ring wing and pretty anti communist said to me upon visiting Cuba, there maybe something in socialism, if you could get the economy to match the generosity of the people you would be onto something.

asquith said...

The best thing about this business is that more remittances can be sent. It has been proven time and again that remittances not only yield more revenue for developing countries than aid, they also work better.

UKIP types often argue that immigration is bad because it deprives developing countries of their most talented people, but this is wrong because it only spurs, for instance, the training of Filipina nurses (to the benefit of the Philippines), but also because working, taxpaying immigrants benefit not only the country they are in but also their families at home.

And this is not something "old Labour" types or socialists will like, but nothing ever is, and as a liberal I know this to be the case.

What Castro must do is allow more movement to America in workers as well as goods, and this (like our own single market) will work to the good of us all.

What I say is that we make business deals, not war. That is why I welcome this deal. And I consider it significant that the Pope, a Latin American and man of conventional Argentine views (right down to his erroneous view of the Falkland controversy) is giving his blessing. I haven't studied this aspect in any great depth but I am certain it will prove of only greater significance.

(And alienate right-wing Catholics in America from the church, but by endorsing full-on American conservatism they became Protestants in all but name long ago, which is also interesting).

Not a bad one that.

Anonymous said...

May I ask why you made this statement?
"Cuba potentially has what it takes to be a very significant player in pharmaceuticals and biotech"

Why do you think the Cuban biomedical sector is capable of innovative drug design or the development of biologicals?

Gary Elsby said...

Doesn't Cuba have more patented drugs than any other country?
It has so many doctors that they are let out in exchange for oil.
Everyone has equal access to health and everyone can read, write and has guaranteed food and housing.

I wonder if he died the other day?