Let’s start
with some basic truths:
Cuba has a
controlled and managed economy. So does everyone else. There is not a
jurisdiction on this planet that doesn’t interfere in what the ‘free market’ proponents
allege should be the unfettered movement of goods and services. Not one.
Every country
controls banking and interest rates, in one manner or another; every country
imposes some level of restrictions on imports and exports; every country taxes
its citizens and, sometimes, the sale of goods and services. Even the United
States – the putative bastion of the free market – has, since 1995, passed more
than 65,000 market regulations and created more than 600 government agencies to
oversee them. That’s some free market you’ve got there, folks. Every country
manipulates its economy to the advantage of someone. Cuba’s great sin is that
it prefers to manipulate its market to the advantage of its own common people.
The world has
long been critical of the efforts of Cubans to exercise control over their
country and the welfare of their people. The critics either miss or ignore the
irony that they do exactly the same thing; but they do it for different
masters. Cuba manages in order to provide for the people; most countries manage
in order to take from the people.
Cuba’s
defenders often point to the brutal US-trade embargo levied against the island
and the pressure the US has exerted on other nations to support the embargo.
Despite that, Cuba has managed to survive. While even they would admit it has
not been easy, and not altogether successful, the Cuban government has shown
the world that it is entirely possible to survive in the face of an onslaught
from the world’s biggest bully.
It should be
remembered that the US embargo is not merely to prevent goods from entering or
leaving Cuba. It also affects Cuban currency, making it untradeable on the
world market. That has caused them to scramble for foreign (mostly US) dollars,
and led to the country creating two currency systems. That gained huge
urgency after the demise of the former Union of Soviet Socialist Republics when
Cuba lost its largest trading partner and its greatest access to world markets,
including currency. Cuba is acknowledging now that the effects of the dual
currency have not been positive, and they are seeking ways to reform it. Inequalities
arose because of the dual system and this is exactly what the system was
intended to avoid.
So now, Cuba is
changing. For the most part, the steps they are taking appear to signal a tacit
acceptance that they should no longer wait for the United States to grow up and
learn to play nice with its neighbours; they are embarking on reforms that
appear to assume that’s never going to happen. The one thing that is not up for
debate is whether Cuba will abandon its socialist principles: It will not, and
the vast majority of its citizens don’t want it to.
Yet when
critics of Cuba look at the transformations currently underway in the island’s
economy, there is a tendency to salivate and to crow that Capitalism has won,
Communism has been defeated. You might want to put away that smirk, you guys;
you’re wrong.
In most
countries, there is a small cabal of elites who control everything. How well
that serves the people varies widely – from the all-encompassing compassionate
socialism of Scandinavia and Finland, to the rapacious and voracious capitalist
trough wallowed in by the US.
And Cuba also
has a group of elites – to which anyone who is willing to adhere to the basic
rules of Cuban society can belong. So it was amazing to watch the five-month
‘congress’ that took place in 2010-2011 wherein some 8 million people were
given input into the direction that Cuba should move in order to get ahead.
This all starts
from a position of natural weakness. Cuba is lacking in natural resources,
produces little that allows it to trade with other countries, and still does
suffer from an inability to freely interact with its closest neighbours (owing
to the US embargo). A major part of its economy derives from tourism, with the
largest group of travellers – by far – coming from Canada. We here have never
adhered to the US embargo and our cold winters make inexpensive vacations to
Cuba very attractive. [Secretly, in the many trips I’ve made to Cuba I had a
certain pleasure in knowing that it’s off-limits to my closest southern
neighbours. I didn’t miss them.]
And Cuba is
doing much to enhance its attractiveness as a vacation paradise. Already, many
resorts are foreign-owned and non-US companies are in great evidence on the island.
[Despite the fabled presence of pre-Revolutionary American cars on the road,
most cars – and there are a lot of them – are quite new models of Mitsubishi,
Toyota, Kia, and so on. The pre-Revolutionary Dodges and Fords are still in
operation, but they are more of a tourist attraction these days.]
When I was
there last, a Cuban I met showed me with pride a power-generation facility
constructed by Cubans and Canadians, and largely funded by donations from
Canada. Canada is not alone in trying to help Cuba make the best of its
situation; but, for the record, Canada’s actions are certainly not altruistic –
we are seeking profit. But we are at least willing to provide assistance and
take a reasonable profit, rather than load up our trucks with the customary
capitalistic theft.
In all cases,
though, the state insists in 51% control of foreign enterprises. Until recently
– read further below.
But the facts
remain that Cuba’s resources are few, and it’s nearest neighbour is obnoxious. The
current leadership has acknowledged there have been failures, and mistakes
made. They have acknowledged that bureaucracy and corruption have crept in in
some places. Fidel Castro himself notes that not everything worked as intended
or expected, and changes need to be made. Fidel says that he is now too old to
embark on major overhauls and, in a gentle way, hints that his brother Raúl may
be too old as well. And, in that regard, the brothers welcome the input and
contributions of a younger administration – one that has only known the current
system and is not misled by false reminiscences of pre-Revolutionary ‘good
times’. They know better.
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Port of Mariel: Work underway to enhance trade zone. [Photo by Raquel Perez] |
The most recent
move of Cuban authorities to raise eyebrows abroad has been the establishment of
a ‘Special Economic Zone’ in the port of Mariel, about 45 km west of Havana. Within
this zone, foreign companies will be permitted to transfer their profits abroad
without paying taxes or tariffs to Cuba. And in this zone, foreign companies
can be 100% owned and controlled by foreigners with contracts enacted up to 50
years in duration. Critics point to the fact these special zones exist
elsewhere in the world, with a spotty record on whether they are of benefit to
the host country. In fact, critics argue there have been more misses than hits.
The idea behind
the project is that foreign companies ship raw materials into the zone where
Cuban workers can manufacture or assemble them into finished products that are
destined to be exported for sale elsewhere. In other words, to produce Cuban
employment. The hope is that the net benefit to Cuban workers will create
economic stimulus in the local economy that is greater than the taxes and
tariffs that Cuba will forgo.
Again, this has
proved successful in some places but not others, so there is definitely a risk
being undertaken by the Cuban authorities. It has to be assumed that Cuba can
make this work – they have survived in the face of great hardship and managed
to keep afloat so there is a reasonable expectation that if this is doable, it
is certainly doable here. To find examples of success, look no further than the
free zones in South Korea, Dubai, and China.
This particular
zone is to be developed by Brazilian capital, and managed by a Singapore-based
firm.
Those who look
at Cuba from the outside often remark that average earnings in the country are
low, availability of consumer goods is sometimes challenged, and Cuban
entrepreneurs are discouraged. Well, that last point is no longer true as the
enterprising spirit of Cubans has been given some new freedoms since 2011. And
critics often overlook the extensive and successful public education and
domestic biotech and medical industries that are extremely strong in Cuba. The
island has become a hive for medical tourism and the export of Cuban medical
technology (and personnel) is thriving. Indeed, Cuba trades medical expertise
with other Latin American nations – to the benefit of all parties.
I think it is
fair to say that those who long for the day that Cuba undoes its revolution
should not hold their breath. Cuba is full of clever people, capable of making
something out of not much. And they will continue to progress and to succeed
without turning their backs on the real needs of real people. Wherever it is
that Cuba is going, it isn’t over to the dark side of brutal oligarchy or
casino capitalism. Their socialism might change, but it will remain socialism.
Paul Richard Harris is an Axis of Logic editor and columnist, based in Canada. He can be reached at paul@axisoflogic.com.
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