Situation in Cuba: Facing Challenges

01.12.2017

Cuba has spent one year after the death of Fidel Castro in rather complicated internal and external conditions. First, this happened due to the final disappearance of its economic sponsor,  Venezuela, which fell into the worst financial and economic crisis in decades and was forced to suspend preferential oil supplies to the island, which had met more than a half of the country’s needs. This significantly complicated the economic situation, especially since Cuban leadership was not able to find new large-scale suppliers of energy resources. Naturally, this hit the already low standards of living of the majority of the population.

Second, despite the policy of economic reforms announced by Raúl Castro, they were generally very limited in nature, especially because the authorities again adopted the tactics “a step forward – a step backward,” as it had already happened at the end of the 20th century. This can be illustrated by the following facts. Right after Obama’s historic visit to Cuba in March 2016, when he expressed support for small private initiatives, which could lead Cuba to the mixed economy model, in the next few months the country’s leadership took steps to curtail private entrepreneurship (housing leasing to foreigners, restaurant businesses, etc.). Naturally, this did not help garner support of the population, although in general society responded with silence, except for the opposition groups.

Not unnoticed was the fact that at the municipal elections held in late November, voter turnout was lower than usual (slightly more than 80% in some cities) for the first time and even opposition groups of moderate social-democrats were not admitted to the ballots.

Third, Donald Trump, as the Spanish El País newspaper wrote, tried to bury the detente with Cuba, brought about by his predecessor. This was evidenced by restrictive measures taken by the US president concerning the ability of Americans to visit Cuba, termination of the postal service, accusing Cuba of organizing an “electronic attack” against the personnel of the US Embassy in Havana and the decision to bring back about 20 American diplomats to the United States. Most independent experts recognize absurdity of these charges.

Relying on the most aggressive anti-Castro opposition and seeking to “score points” inside the US, Donald Trump called for a ban on any commercial contacts between American businesses and Cuban enterprises, which, as he said, are 60% controlled by the military.

However, despite the sharp deterioration of the economic situation, it is not necessary to expect any social explosion – at least in the foreseeable future. Cuban society as a whole shows its traditional tolerance for economic hardship. Moreover, the Donald Trump’s actions intensify the “besieged fortress” psychology cultivated by the authorities, which in many ways unites the population around the country’s leadership.

Cuba seeks to expand investment opportunities through ties with the EU, China, Latin American countries. However, this was not always successful in recent years. The European Union has normalized relations with the island, but so far, it has not shown any desire to become its main economic partner. China took a very pragmatic stance, guided not by ideological considerations, but primarily by its own benefit. It is significant that despite enormous investment opportunities, real Chinese investments in Cuba do not exceed $0.5 billion. The rise of center-right governments in the leading states of Latin America, as well as the unprecedented political and economic crisis in Brazil significantly limit the opportunities for Cuba’s cooperation with most Latin American countries.

As for relations with Russia, real large-scale shifts have not yet occurred despite overcoming of the 1990s crisis and the resumption of cooperation in investment and other areas. It is enough to say that the share of Russia in Cuba’s trade does not exceed 2%. In general, the real opportunities for bilateral cooperation are not fully used.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.

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