“Where are you from?” asked the 20-something as he passed me on the street in Havana. America, I replied. “I love America” he declared, before turning into one of the many restaurants near the Malecon, or waterfront. He likely was on staff, a member of Cuba’s growing private workforce.
However, opportunities for young Cubans are still too few. Many are responding, noted the Economist, “not by agitating against the system but by plotting to escape it.” Communist rule is changing, but not enough. Despite leadership shifts and constitutional revisions, state controls continue to stifle the economy.
Ironically, among the biggest barriers to reform are President Donald Trump, Sen. Marco Rubio, and old-line Cuban-American leaders, who seem determined to preserve the fading Castroite dictatorship. They remain committed to isolating the regime, despite the failure of half a century of economic warfare. Vicki Huddleston, who once headed the U.S. interest section in Havana, reported that the embargo “has not influenced the country’s leadership to change its communist government or to improve human rights on the island.” To the contrary, she explained: “we are harming Cuba’s people much more than we are the Cuban government.”
Increased economic ties to the United States are the best, and perhaps only effective means for Americans to undermine the regime. Yet the Trump administration partially reversed President Barack Obama’s opening to Cuba. This switch hurt the island’s many private businessmen and women, who complained to me on a recent visit that they cannot even get a hearing from the administration.
American involvement in Cuba goes back to the Spanish-American War, after which Washington turned the “liberated” island into a de facto U.S. protectorate. In 1959, Fidel Castro and his revolutionaries swept the corrupt Fulgencio Batista from power. Alas, they proved to be far better at tyrannizing opponents than uplifting citizens. They impoverished the island economically, politically and spiritually.
Fidel & co. turned to the Soviet Union, while Washington imposed an economic embargo and attempted to oust the regime. Any claim that Cuba posed a security threat died with the Soviet Union. The consequent end of Moscow’s subsidies sparked a rapid economic contraction known as the “Special Period.” But Florida’s politically active Cuban-American community blocked any change in policy. Even as the case for the embargo faded, restrictions were tightened.
One counterproductive impact of the embargo was to turn Cuba’s nearby market over to other nations. For instance, Europeans invested and traded even after America’s departure. Now Russians are back and Chinese are arriving. Moscow is promoting defense cooperation, supplying oil, investing in infrastructure projects including the rail system and forgiving the bulk of Havana’s old debt to the Soviet Union. China has become Cuba’s largest trading partner, is restructuring debt, advising Cuba’s military, and is supplying cars, telecommunications equipment and additional products. One of my tour guides observed that two Chinese hotels were being built: “In five years we all will be speaking Chinese.”
President Barack Obama broke precedent and relaxed federal controls—many cannot be repealed except by Congress—allowing more travel and business. He also re-established full diplomatic relations. When he visited the island in 2014, people treated him like a rock star. Years later Cubans told me how he gave them hope for a better future. Cars still sport stickers with his photo.
U.S. companies entered the Cuban market and U.S. tourists visited the island. Caroline Anderson of the American Security Project argued: “Airbnb’s advancements offer proof for the success of business expansion into Cuba. Airbnb increases the amount of money distributed directly to Cuban citizens, raises tourist levels, and helps build U.S.-Cuba ‘person-to-person’ relations.” I stayed in a retired lady’s Airbnb apartment on my most recent trip. The private sector grew to account for an estimated one-fifth of the economy.
However, candidate Trump played to the most extreme, and older, Cuban-American activists. “They want revenge. This is vendetta politics,” observed Cuban university professor Ricardo Torres Perez. Taking a similar position is Sen. Marco Rubio, who, Cubans point out, has never visited the island and refused to meet entrepreneurs who visited America. Restaurateur Niruys Higueras told me she wished “to make him understand how much damage he is causing the private sector.”
The president originally threatened to “cancel” the Obama opening, but instead banned business with any of 180 enterprises allegedly tied to the military. He claimed doing so would “channel economic activity away from the Cuban military and to encourage the government to move toward greater political and economic freedom for the Cuban people.” This was play-acting. Money is fungible and payments to any state enterprise go back to the government.
More significantly, the administration prohibited individual “people-to-people” trips. Groups are still allowed to organize such travel. Individuals may visit for specific educational, humanitarian and professional purposes. Unfortunately, the new rules, complained the Engage Cuba Coalition, create a “more convoluted, confusing and counterproductive approach,” which scares off potential tourists. To be safe, tourists can use groups familiar with the regulations such as Cuba Educational Travel (CET), which handled my trip. However, many Americans simply choose to go elsewhere.
Unfortunately, the new restrictions have hit the nascent private sector hard. William LeoGrande and Richard Newfarmer of the Brookings Institution noted that “although President Trump’s policy purports to boost Cuba’s private sector, the prohibition on individualized people-to-people travel will likely hit the private sector hardest.” LeoGrande and Newfarmer figure that “some 60 percent to 70 percent of this spending goes to Cuban workers for wages, to local suppliers, and maintenance and utility expenditures largely unaffiliated with the military.” By stifling private sector growth, the president forced Cubans to continue relying on the state.
I found this to be the reality on the ground. “A lot of private business feels crushed,” complained CET’s Collin Laverty. “So many people opened businesses for American tourists,” said Julia de la Rosa, who owns an Airbnb with her husband, Silvio Ortega. “Now there is little demand.” American tourists are well-liked—they generally tip well and behave responsibly, I was told more than once. They also are more likely to stay at Airbnbs and bed and breakfasts, use taxies, patronize private restaurants, hire individual tour guides, and the like. In contrast, official tour operations, which are better acquainted with federal regulations, are more likely to deal with larger state enterprises, including tourist agencies and hotels. “We don’t have the American market anymore. Everything is going down,” one tour guide told me.
Many entrepreneurs invested in expectation of more tourists. A tour guide complained “some people sold all they had to open a business, restaurant or bar.” For instance, the Airbnb owned by de la Rosa and Ortega began with just a couple of rooms. They have since equipped the entire house for business. Alas, bookings have dropped significantly. So, too, demand for Ortega’s taxis. Other businessmen and women I met complained that the new rules triggered a rash of cancellations and pushed down future bookings. The impact was particularly hard on enterprises, such as Airbnb, which catered to Americans.
Yamina Vincente, an interior designer whose clients are mostly Cuban, said she also is suffering since “Cuban people don’t have the money.” She added: “Many people are scared about the future, so they don’t organize a party.” Also hurt are “all the people you are going to hire for the restaurant, to make the beds, etc.,” said Ortega, whose Airbnb employs twenty-three people. Vincente said she no longer hires as many musicians, make-up artists and clowns for events, including birthday parties. Higueras complained of Washington: “you should know what you are doing before you implement regulations.”
Of course, socialism failed because it always fails. Revolutionary Cuba provided little reward for entrepreneurship, enterprise and hard work. Still, with Moscow’s help it once “looked like socialism worked,” commented a retired government official who believes economic reform to be necessary. Then came the end of Soviet subsidies, when the island’s real economy shrank by more than a third. Today the regime is unable to feed, pay or otherwise care for its people.
When I first visited the island in 2003, Cubans showed me their ration books and complained that some goods, such as milk and eggs, generally weren’t available. Today is more of the same. Richard Feinberg of the University of San Diego observed “persistent shortages of consumer staples, energy rationing, and price inflation are features of daily life. Take-home pay in many public sector jobs fails to cover basic household needs (even taking into account various government consumption subsidies).”