Wednesday, September 29, 2010

A helping U.S. hand to Cuba's market reform?

A helping U.S. hand to Cuba's market reform?
Sep 29, 2010 08:33 EDT

– Boston University Professor Susan Eckstein is author of "The Immigrant Divide: How Cuban Americans Changed the U.S. and Their Homeland" and "Cuba under Castro," and past president of the Latin American Studies Association. The views expressed are her own. –

Raul Castro announced that 10 percent of Cuba's state employees, half a million people, will be dismissed from their public sector jobs and free to pursue work in the private sector.  The near-fiscally bankrupt state no longer can afford to pay inefficient workers.  But the Cuban leadership remains a reluctant reformer.  We Americans have a vested interest in facilitating a deeper market transition 90 miles off shore.

This is not the first time Cuba under the Castro brothers has launched market reforms, having introduced minor openings over the years.  After paying nearly all workers equally and distributing most goods equitably through a ration system in the '60s, it began to tie earnings to work performance, expand private economic opportunities in agriculture and the service sector, and allow goods to be sold off the ration system on an ability to pay basis.  It has also permitted private foreign investment since the '90s.   But measures introduced during economic troubles proved too meager to fuel significant economic growth and many were reversed when priorities shifted.

While head of state, Fidel made the decision to follow neither the Soviet nor the Chinese examples of reform.  He considered the Soviet model — in which glasnost (political reform) preceded perestroika (economic reform) — an invitation for political suicide.  While the U.S. applauded Soviet changes, the political opening drove Gorbachev from power, leaving the Soviet Union to join the dustbin of history.  And when Fidel went very publicly to China to learn about capitalism, he didn't like what he saw — rising inequality and materialism, antithetical to the egalitarian and non-materialistic precepts of the Cuban revolution.

If times have changed and continued commitment to socialist precepts are a luxury the Cuban government no longer can afford, how likely is a full market transition?  Private sector jobs require private investment. Earning only about $20 a month on average, ordinary Cubans cannot be the main source of capital.  The government might provide some financing, but it plans to slim down state employment precisely because it lacks the fiscal resources to keep the economy afloat.

The Cuban-American community and the U.S. government might be sources of capital, but this will require both to break with their policies of the past, just as the Cuban government now plans to break with its past. Unlike overseas Chinese who played a key role in the "Chinese miracle" by convincing officials to reform the economy and by investing large amounts of money in their homeland, the more than half a million Cubans who fled the revolution in their country in the first decade of Castro's rule took a different path.  They determinedly sought to bring Castro's government to heel, partly through economic strangulation.  Although many shared in the American Dream, they resisted sending money home. Instead, they used their emergent political clout in the U.S., their votes, and a political action committee they formed to pressure Washington to maintain a virtual Berlin Wall across the Florida Straits.

Because of immigrant political influence, the U.S. government maintains an embargo on U.S.-Cuba trade and investment, though it has opened up economic relations with China and even Vietnam with which it fought a major war.  The most recent Cuban immigrants send remittances to family they left behind to help them cope with the economic crisis they are experiencing.  They may be a source of funds for the private economic activity Raul will now allow.  But as struggling newcomers to the U.S. they have little money to spare and share.  Although they favor improved U.S.-Cuba relations, many are not yet U.S. citizens and have no PAC of their own — and thus have little influence over U.S. Cuba policy, despite being a force for change.

As both Raul and Fidel acknowledge that their economic system no longer works, we have an opportunity to respond in kind, to make a full market transition more probable.  If we acknowledge that our 50-year embargo has been ineffective (never strangulating the Castro regime to the point of collapse) and signal to the Cuban government that we are supportive of their effort to restructure their economy, we will be working in our best interests as well as Cuba's.  U.S. business will benefit from new investment and trade opportunities, and we will minimize the likelihood of another mass exodus from Cuba, of un- and under-employed Cubans who envision their future prospects far better in the U.S. than in their ailing economy.

In 1980, 125,000 Cubans took to the sea from the port of Mariel to emigrate without U.S. entry permission.  We do not want "another Mariel," potentially on a larger scale, at a time when close to 10 percent of our own labor force is jobless.  Moreover, improved relations with Cuba will further our political interests:  In our post-9/11 world, we could help transform one of our closest of neighbors into an ally.

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