Thursday, December 9, 2010

Cuba: Life After The Castro Brothers

The subject assigned to me, “Cuba: Life after the Castro Brothers”, poses quite a challenge. In the words of a renowned Danish physicist, “prediction is very difficult, especially about the future.” And I would add: more so in the case of Cuba, where even predicting the present is very difficult.

After all, who would have foreseen the “resurrection” of the Narcissist-Leninist Fidel Castro, who was near death not too long ago and has now resumed the role of Maximum Pontificator?

Before venturing into Cuba’s cloudy future, let me share with you a few key facts to provide some perspective. Cuba is facing today the worst economic and financial crisis since the end of Soviet life support in the early 90s. Agriculture is in such dire straits that Cuba has to import 80% of the food it consumes, including sugar.

To secure subsidized oil and generate hard currency, the cash-strapped Castro regime has contracted out to Venezuela and other countries more than a third of its licensed doctors and teachers, along with hundreds of Communist experts in espionage and repression. Last year, the regime, bordering on insolvency, froze bank deposits of foreign investors in Cuba and deferred payment of a large number of overdue accounts.

To pare costs, the Raul Castro regime slashed imports, rationed electricity, and started to phase out workplace lunches as well as the subsidized food basket (ration card). Recently, it announced the layoff of 500, 000 government employees out of a total of 1,000,000 unproductive state jobs, or 20% of the workforce, which will be cut over 2 to 3 years.

To revamp agriculture, the regime distributed fallow lands to some 100,000 small farmers, but only on lease, without providing fertilizers, tools and bank credits. One year later, two thirds of the distributed lands remain unproductive.

The regime is now stepping up the granting of licenses to individuals and hired staff to render a variety of services on their own, ranging from quasi restaurants at home, with a cap of 20 chairs, to barber shops to artisan work in small ateliers. Many of these activities have been going on in the black market for some time. The government now expects them to come out in the open. But to avoid what it calls “concentration of wealth”, the mini businesses will be saddled with four different taxes, including an income tax as high as 50% if the income exceeds $2000 a year.

The proclaimed objective of Raul Castro’s reforms is not to scrap or transform the failed Communist system, but to make it more efficient. Although some believe that Cuba is approaching a China-type opening, the fact is that the bulk of the economy remains under the control of mega State enterprises led by loyal army officers. To quash growing discontent, Raul has intensified repression and exiled most of the prisoners of conscience who were recently released.

The reforms under way signal the beginning of the end of State paternalism in Cuba; the unraveling of the unaffordable government support system that meagerly supplements the average salary of $20 a month. But what is being offered as a solution is nothing more than stopgap measures that do not significantly deregulate the centralized economy, unleash the entrepreneurial spirit of the Cuban people, and cure the dire crisis.

The bankrupt regime may hang on for some time, particularly if it’s bailed out with U.S. tourist dollars and financing. But it will not survive the Castro brothers. The totalitarian grip will eventually splinter and slacken, the fear will wane, and all those yearning for freedom, including the marginalized reformists within the government and the army, will emerge, weigh in and prevail.

Liberation could and should, in my view, be hastened by providing support to the dissident movement, as the U.S. did with Solidarity in Poland, and applying U.S. technology to penetrate Castro’s censorship firewall and overcome the jamming of Radio and TV Marti.

When Cuba truly opens up, I foresee a phased, negotiated transition, culminating in a government of national unity that will install the rule of law, restore individual rights, and pave the way for multi-party elections. The process is bound to be bumpy and messy, but Cubans on the island can draw on the do’s and don’ts of the post-Communist transitions in Eastern Europe and the post-Franco transition in Spain.

Cuban-Americans, with their business experience, contacts and resources, can be very helpful, if they return to the island with a forward-looking mentality—not with the greed of recovering, but with the zeal of rebuilding.

Cuba will definitely resurge post Castro brothers, but it will take some time for the wounds to heal and for the country to settle down. Recovery will require revitalizing the Cuban heritage, dismantling the stifling regulatory system, and renegotiating the country’s huge external debt ($30 billion to the Paris Club of creditors– the largest on a per cap basis).

It will also call for the reconstruction of the island’s dilapidated infrastructure, the shoring up of its social services, and the creation of a business-friendly environment that will attract responsible foreign investors willing to partner with Cuban entrepreneurs.

Investment opportunities will then abound in such areas as tourism, agro-processing, minerals and oil, biotechnology, assembly or maquila, banking, and IT outsourcing.

By Nestor T. Carbonell

From: The Americano

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