It's Time for a Policy Change on Cuba

It's Time for a Policy Change on Cuba

Trump broke with precedent to engage North Korea. Why not do the same with Cuba?

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).”

When I commented during my latest trip on a gas station which sported an “open 24 hours” sign, I was told that “most of the time stations don’t have oil or gas.” A tour guide complained that one has “to struggle to eat.” Former CIA intelligence officer Kevin Hulbert notes that the official food supply typically lasts just a couple weeks, after which Cubans must “resolviendo,” or resolve the problem. “So they pilfer food from work, fill up extra jugs of gasoline when they fill up the company car, work illegally running taxis, restaurants, unregistered commerce of whatever type, selling cigars they stole from the factory, and too many other scams and efforts to mention.” Cubans also take side jobs: I met an anesthesiologist washing dishes at a private restaurant, which paid more than medicine.

Overall, Cuba has lost ground compared to the rest of Latin America. A recent study by economist Pavel Vidal found that Havana vastly overstated national income. Cuba’s GDP is down more than a third since 1985; investment is among the lowest in Latin America. Vincente observed: “years ago in Cuba young people only thought of leaving Cuba to get [a] better lifestyle. After 2011, people thought of staying if they could stay and have a good lifestyle. Now we are moving backwards. People are thinking of leaving Cuba. It is very sad.”

After Raúl Castro took over, observed one Cuban, “the people thought within a couple years things would change.” But his minimal reforms fell far short. Feinberg cited the “frustratingly slow bureaucratic approval process” resulting from “ideology, senior personnel and incentives.” Several entrepreneurs name economic controls and confiscatory taxes when noting how hard it is to comply with the law and prosper.

Havana has “been too timid to bring about meaningful change to the Cuban economy, and the regime is now backtracking on some of them,” complained Antonio Rodiles and Erik Jennische, of the Forum for Rights and Liberties and Civil Rights Defenders, respectively. Last year the government suspended issuance of new licenses after Raoul criticized firms for conducting unlicensed activities and evading taxes. Said one tour guide, “it’s never easy in Cuba.”

Even now needed reforms languish. Last year Raúl Castro declared that currency reform, merging the convertible peso and Cuban peso, “cannot be delayed any longer.” Despite its insistence that the revolution is irreversible, the Cuban government wants foreign investment, which the minister for foreign trade and investment, Rodrigo Malmierca, said “has become an essential issue for the country.” However, the country remains economically inhospitable.

Unfortunately, much-touted constitutional reform will largely reinforce the status quo. The revised document legalizes private business and employment and limits public expropriation, but the new rules also increase public exactions and limit private growth, for instance, barring entrepreneurs from holding more than one license. The Communist leadership wants to loosen restrictions just enough to grow the economy while confiscating most of the gains.

The ongoing leadership transition—Raúl Castro yielded the presidency to Miguel Diaz-Canel, who was born after the revolution—so far has had limited impact. Still, many Cubans, including some younger Communist Party members, hope that the passing of the Castros will open the island’s politics. “The days of one person making decisions are over,” argued Laverty. A journalist told me that “people who come later won’t be able to rule like Fidel and Raúl. They know they have to do this differently. It won’t work if they don’t.” An American living on the island was more optimistic, telling me Raúl’s retirement had created “a completely new scene.”

Unfortunately, U.S. sanctions continue to provide the regime with an excuse for failure. Opposition activists complained to me on my first trip that communist apparatchiks blamed America for their failure. Today the regime hides behind President Trump’s policy.

America could have a huge positive impact. LeoGrande noted that “among ordinary Cubans, the desire for a better relationship with the United States is almost universal.” I saw a young man wearing a t-shirt emblazoned with an American flag and another man driving a car with an American flag on the dashboard. Yet Washington stands in the way. Cuban entrepreneurs blame the Trump administration for punishing them, damaging their businesses and destroying their investments.

Private investment also has a significant political impact. A desperate communist government has been forced by necessity to allow emergence of a growing private sector which provides up to 40 percent of the island’s jobs. People shifting from safe government employment to more remunerative but less certain private work are unlikely to be docile communist drones. Moreover, as people grow more prosperous, people tend to make more political demands. “If you want to create more space for debate, expanding the entrepreneurial class is one way,” argued Laverty. The fact that working privately, even at seemingly menial labor, pays substantially more than government bureaucracies has unsettled those who labor for the Communist machine.

Also, tourists do more than spend money. Jorgensen pointed to a survey last year which found that U.S. visitors engaged owners about politics and culture. Indeed, Professor Perez observed that the island had changed markedly in recent decades. “Compared to twenty years ago you can see many enormous differences.” Particularly important, the regime no longer possesses an information monopoly.

Controls were tight on my earlier visit, but no longer. People have increased access to cell phones, wifi hotspots, flash drives, and a relatively free internet. The latter is expensive, and anti-Cuban websites backed by the U.S. government are unavailable, but otherwise “there is very little internet censorship” one regular user told me. The authorities complain about online news sources but has so far left them alone. Hardliners “want to control the Internet—but can’t,” noted Laverty. A staff member at a Communist publication told me that he was “not saying that people have free access to information, but they have more,” including through shared USBs. He figured that perhaps 80 percent of people received alternative news sources.

The regime treats opponents harshly. For instance, the Ladies in White, who demonstrate on behalf of husbands, fathers and brothers arrested by the regime, have been treated roughly by the police and state-organized mobs. Other targets, according to Cuba Study Group (CSG): “a prominent alternative ‘think tank,’ university professors writing for non-state publications, and even street purveyors of pirated foreign media and TV.” Advocating “changing the political system is a red line,” explained one well-connected Cuban. Such talk is “counter-revolutionary.”