Cuba - Transforming a Revolution

Cuba: Transforming a Revolution
Castro and Obama balance gradual normalization with showing benefits for
both US and Cuba
Patricia Alejandro
YaleGlobal, 23 July 2015

CAMBRIDGE, MA: During the 1990s, the popular assumption was that most
Cubans, if they had a choice, would leave their country for the United
States in a heartbeat. Today, while many Cubans still try to cross
international waters to reach the United States, many more are looking
towards developing Cuba, from inside and outside. US tourists are drawn
to the mythical colonial Cuba, of antique American cars and fine cigars,
and investors hope to rebuild golf courses and resorts. Cubans want to
move into the future as quickly as possible, craving electronics,
accessible internet and new cars.
Cubans and Americans are equally curious about exploring the other side
since December when President Barack Obama and Raúl Castro made the
surprise announcement on restoration of full diplomatic relations
between the two countries. Both sides concede the process will be
gradual, yet changes in leadership that paved the way for rapprochement
are inevitable – Obama leaves office in January 2017, and Castro, now
84, announced intentions to retire in 2018. Normalizing relations ends
near six decades of hostility that began in 1956 after Raúl's older
brother, Fidel Castro, led an army of guerrilla fighters into Havana and
became prime minister. The United States broke off relations and imposed
a trade embargo in 1960 after Cuba nationalized US businesses without
compensation.
Cuba has been reluctant to allow foreign direct investment and
relinquish control – less than 1 percent of GDP – at 0.1 percent. US
businesses are eager to return to the island nation. US congressmen,
governors and corporate leaders have traveled to Cuba to discuss trade
opportunities. Other countries, such as Canada, have had a head start in
doing business in Cuba. China, a leading creditor for Cuba and its
second largest trading partner after Venezuela, already invests heavily
in the tourism industry and oil drilling.
The United States could benefit from its community of Cuban Americans,
more than 1 million in all, connected and aware of Cuban culture and
ways of doing business. Despite excitement about the potential for
reviving commerce, barriers remain including the US embargo and Cuban's
dual-currency system. The Cuban government plans to unify the system
before 2016. Currently, most Cuban wages are paid in pesos, but commerce
and tourism rely on convertible pesos, pegged to the US dollar and equal
to 24 pesos. Cuban Central Bank officials have told foreign businesses
that devaluation of the convertible peso will progress gradually.
Meanwhile, tourists currently cannot use credit cards or conduct
internet transactions with Cuban vendors. Airbnb, the online service
that matches visitors with residents willing to rent out all or parts of
their home, opened in Cuba this year and conducts transactions using a
middleman agency.
Ditching the dual-currency system will ease tourist transactions, but
reduce Cuban salaries, already considerably low. The government still
controls most salaries in Cuba, so future raises depend on what the
government can afford. Doctors recently had a 150 percent pay raise,
from around $25 to more than $60 per month, but the average Cuban
continues to earn around $20 per month. Meanwhile, Cuban foreign debt is
in the billions, even after Russia forgave $32 billion of Soviet-era
debt in 2014.

The UN General Assembly has voted 23 times to end the US embargo, with
the United States and Israel typically opposed and a handful abstained.
Obama has chipped away at the embargo, contributing to more agricultural
trade and people-to-people exchanges. Each year at the Summit of the
Americans, members criticized the United States, but only Congress can
eliminate the embargo in its entirety. Congressional ranks and Cuban
Americans are divided. Demographics have shifted, with most
Cuban-American constituents supporting restored relations. Surveys
conducted by the Institute of Public Research and the Cuban Research
Institute of Florida International University show that 68 percent of
Cuban Americans support dialogue with the Cuban government compared with
40 percent in 1991. Groups like Engage Cuba lobby Congress and
businesses to support the normalization of relations and reforms in US
travel and trade restrictions.
Cuba's pristine white sand beaches and preserved colonial architecture
are already a lively tourism destination, with near 3 million visitors
last year, most from Canada and Europe. In the first quarter of 2015,
one million tourists visited the island, including more than 50,000
Americans. With Cuba in the news, tourism has surged and the numbers
could strain accommodations and services. Since January, Americans no
longer need to obtain special permission to travel directly to Cuba and
need only declare that they fall into one of 12 special categories
including family visits, official government business, journalism,
professional research, and education and religious activities.
Self-employed entrepreneurs, or cuentapropistas, have increased since
the Cuba government loosened restrictions a few years ago. Still, many
struggle to find supplies required to run their businesses. Restaurant
owners make do without ingredients as basic as wheat, milk or butter,
let alone high-end ingredients expected by tourists. The country still
imports more than three quarters of its food, and business owners lack
capital, with many relying on remittances and supplies sent by family
members abroad.
Only 200 occupations are open for Cuban entrepreneurs, who are barred
from opening private retail or imported-clothing stores, private medical
practices, or private martial arts studios. Retail stores are
government-owned, and US investors will proceed cautiously, assessing
the stability of the Cuban market and political risks before opening
operations in Havana. The US Department of Commerce is preparing small
business owners for the intricacies of global markets with programs like
the Presidential Ambassadors for Global Entrepreneurship.
With an entrenched black market and associated corruption, the road is
not easy for foreign investors or small businesses in either market.
Most Cubans have never been abroad, with a plane ticket costing more
than what the average Cuban earns in a year. In 2013, the Cuban
government eased restrictions on Cubans leaving, allowing travel with
passport and national identity card and removing the requirement of a
re-entry permit. But Cubans must still obtain entry visas from other
countries. In 2013, the United States began issuing multiple-entry visas
that last five years.
Recently, Cubans have increased educational and professional development
trips to Miami, but the government remains concerned with a brain drain
and will monitor if economic development and improved relations
encourage professionals, particularly health care workers, to remain in
Cuba or seek lucrative positions overseas. Notable defectors in recent
years include US Major League Baseball's Yasiel Puig, physician Ramona
Rodriguez, and six dancers with the National Ballet of Cuba.
Rapid economic development could interfere with the tourism industry's
attachment to 1950s-era Cuba, a tropical paradise of beaches, casinos
and nightclubs. For now, Obama and Castro express determination for
gradual improvements in diplomatic relations, economic development and
the tourist sector to avoid social disruption.
With embassies reopened, the US and Cuba anticipate the appointment of
ambassadors soon. The policy will help US ties with other Latin American
nations. The United States removed Cuba from its list of state sponsors
of terrorism, and negotiations progress steadily. The United States
expects freedom of movement for its diplomats and greater respect for
human rights, while Cuba remains wary about US intervention in its
internal affairs, including assisting dissidents and democratic initiatives.
More than 11 million Cubans along with thousands more who left their
homeland since 1956 anticipate normalization of relations to proceed
with benefits for all involved.
Patricia Alejandro studies international relations and human rights law
at Harvard Law School and is a former editorial assistant for YaleGlobal
Online.

Source: Cuba: Transforming A Revolution -
http://yaleglobal.yale.edu/content/cuba-transforming-revolution