Friday, November 26, 2010

What's next for Cuba?

What's next for Cuba?

American journalist Jeffery Goldberg interviewed Fidel Castro in The
Atlantic's September issue, in which he quoted Castro saying that the
communist model no longer works for Cuba. The story immediately received
international attention and three days later, Castro retracted his
statement at the University of Havana, saying he meant "just the
opposite" of what was written.

Castro still maintains that the capitalist system will not work for
Cuba, and that it no longer works for the United States or the world,
"which steers from crisis to crisis, which are ever more serious, global
and repetitive, and from which there is no escape."

In the 1960s, Cuba nationalized all otherwise foreign-owned property,
and in turn, the US responded by freezing all Cuban assets in the US,
and severed diplomatic ties. In 1962, the U.S. tightened the embargo on
Cuba, which is still in place. In response, the Cuban government turned
to the Soviet Union in 1991, for support subsidies and as a trading
partner. The collapse of the Soviet Union greatly affected the Cuban
economy – its GDP declined by 33 per cent between 1990 and 1993.
However, since 2000 the country has seen an increase in tourism, which
spurred economic recovery.

Nevertheless, the statement raises the question: if an economic system
falters, how long does one cling to an ideology before it's time to jump

Global markets continue to converge and national politics are
increasingly becoming international affairs. The recession hit countries
in all corners of the globe, but capitalism as we know it remains
unchallenged. North America and Europe stayed loyal to the system when
they chose to bail out big businesses. If Cuba is looking for
alternatives in a modern world, perhaps the country could restructure
its system to emulate China and Vietnam, whose leaders control all
things political, but leave economies and markets alone.

Since the Cuban Revolution, the economy of Cuba has been largely
state-controlled, with a planned economy overseen by the Cuban
government. The Cuban government owns most of the means of production,
employs most of the labor force, sets most prices and rations goods to
its citizens. The government provides free housing, education and
healthcare. The average monthly salary for Cubans who work for the
government (nearly 80 per cent of the population) is $19.50 USD.

Despite Castro's defense of the system, there is evidence of reform of
Cuba's economic model. In 2007, Raul Castro legalized mobile phones and
decentralized agricultural ownership. The president has also stated that
Cuba will be restructuring the labor force to eliminate inefficient
jobs. To achieve this, small businesses have been allowed to operate and
foreign investors can now buy Cuban real estate.

Some speculate that Cuba's reason for beginning to open its economy is
its fear of a mass inflow of U.S. economic, political and social
influence on Cubans that would threaten the regime. While most Cubans
are not ready to give up free healthcare, education and housing for
full-on U.S. capitalism, many would be ready to accept a few reforms to
the system that would bring some economic opportunities.

Julie Sweig, the director for Latin American Studies at the Council of
Foreign Relations also accompanied Goldberg on his trip to interview
Fidel. She stated in a recent interview with PBS that Castro's
retractment of his statement was his attempt to clarify that "although
we are changing our model and it needs to change, that doesn't mean
we're importing their model – the American capitalist model."

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