However, when the Cold War ended in the late 1980s, Cuba suddenly found itself cut off from Soviet aid. From 1989 to 1993, the Cuban GDP declined by 35% due to the absence of aid, a tightened U.S. trade embargo, energy shortages and famine. To resolve the crisis, Fidel was forced to open up to new foreign investment and legalize some private businesses.
While temporary, these economic adjustments gave us a glimpse of what capitalism looked like in Cuba. With his brother Raul Castro now President, Cuba is inching further down that path. The administration itself is changing, as Raul has “quietly discarded nearly all of Fidel’s ministers and key aides.” Raul has also overseen a shift in policy; in April 2011, the Sixth Congress proposed 313 guidelines for innovative economic reforms. The guidelines propose creating private property out of state-owned farmland, decreasing the amount of state workers, and encouraging investment by private enterprises. In fact, economist Omar Everleny predicts that “some 35-40% of the workforce of 4.1m should end up in the private sector by 2015.” Echoing the trend towards privatization, Raul called for a “decentralized system where planning will prevail” in his speech to the Congress, and admits that the “lesson taught by practical experience is that an excessive centralization inhibits the development of initiatives in society and in the entire production line…” Raul appears to have learned from Deng Xiaoping’s “Socialism with Chinese Characteristics.”
Wary of an influx of foreign multinationals, the government has been more hesitant in the international arena, where membership in the IMF or World Bank would ease its credit problems. Unifying the two national currencies – the CUC (“convertible peso”) and the Cuban peso – is also an important measure that would greatly facilitate trade. However, with great caution, Cuba is steadily opening itself up to the outside economy. The United States has gradually eased travel restrictions on Cuba, and American goods are more and more available in Cuban markets.
So why is Cuba doing this? Although the communists still clearly control the government, they are implementing reforms that seem antithetical to the creed of the Cuban Revolution. After over fifty years of communist rule, the Cubans are at a crossroads – how do they balance past political tradition with the present reality? The Castro brothers have been forced to adapt to the changing circumstances. Consider state-owned farms, which account for 75% of all agricultural land. In 2007, 45% of this land was not being cultivated, much of it covered in weeds. Hammered by financial recession, defaults on debt, and hurricane damage, reform seems inevitable. There’s a reason why tens of thousands of Cubans emigrate every year.
The economics are important, but a generational shift is critical as well. Today, the glory of the Cuban Revolution has faded. Fidel, who in many ways is the symbol of that struggle, is 85 years old and ill. Raul is 80, and with many in the leadership ageing, it is a mystery who will be his successor. The Castro brothers were popular because of their overthrow of the Batista regime, nationalistic fervor, and Fidel’s charismatic personality. How will the next generation of Cubans respond to their message? Will they remain tolerant of Cuba’s endemic poverty or will they demand new leadership?
If one thing is certain, it is that Cuba has never really achieved the economic independence that the revolution was supposed to bring. Dominated by Spanish imperialism and the American backed dictatorship, Cuba gained freedom from the West with Castro’s victory. However, in the aftermath of the US embargo and the communist takeover, Cuba came to rely on Soviet economic support. While Cuba gained Soviet aid, the island quickly became what was in essence a Soviet client state. With the fall of the Soviet Union, Cuba has come to rely on financial support (subsidized oil) from Venezuela.
Perhaps current reforms – which vaguely resemble early free-market capitalism – are an escape from a long history of dependency. In adopting the Chinese model to Cuba, the Castro brothers might be able to revitalize the Cuban economy. While the future is unknown, the financial and political uncertainties in Cuba herald an era of transformation.
Nick Fedyk is a sophomore at the Georgetown University School of Foreign Service and editorial assistant for the Georgetown Journal’s online content.