London—They did it. Leaders of the Americas gather today in Panama and although the hemisphere is in all kinds of turmoil, the focus is on whether President Obama would shake hands with Raul Castro, geriatric leader of one of the most sclerotic economies of the region. And they did.
Economic crash in Venezuela. Massive dissatisfaction with a corrupt government in Brazil. Murder a minute in Honduras. Colombia still trying to settle a cocaine-fueled guerrilla war. Lawless Mexico. Central America as a fountainhead of desperate migrants. Argentina trying to ignore its debts.
Maybe it is better for everyone to gaze on the marquis symbolic event of the summit: a meeting that solidifies the crawl towards normalized relations between Cuba and the United States. Obama is going to take Cuba off the US list of countries that support terrorism.
For Obama, the decision to renew relations, made last December, was practically a no-lose move. Even Cuban exiles in Miami hardly peeped about the change, US business is salivating over the possibility of selling stuff to Cuba (though just how much can they to a market of 10 million souls without much money?) and the rest of the country thinks of Cuba mainly as a place to get cha-cha lessons.
For Cuba, the opening is much more important. Los Hermanos Castro, first Fidel (he’s still alive!!) and now Raul, have overseen a classic Stalinist economic program with all its pitfalls and abuses. They nationalized farms and industry. They tried to squeeze wealth out of agriculture to fund industrialization. Farming collapsed and Cubans went on a rationing scheme. They attempted to build up an economy on sugar only to see production fall (for a while, they even sent out the elderly to cut cane). They sought to replace material incentives (money) with social incentives (access to education and health care) only to have people wonder what that has to do with a police state, neighborhood spies and arbitrary jailing. Everyone was put to work except no one was working.
So now Raul, age 84, is dabbling with reforms that would loosen the chokehold of a 55-year old and running command economy. Managers at large state enterprises now have some decision-making powers and the means to provide worker incentives. They can retain 50% of their profits for reinvestment and wage increases. They can also sell idle inventories at a market price. Losing enterprises face downsizing or even going out of business. There are small loans for small businesses, the buying and selling of homes, some open markets for food and permission of Cubans to rent out rooms and feed tourists.
These changes are called “updating” of the economy, so to avoid stating the obvious: the people running Cuba since 1959 totally botched things. The joke is that some of this has been tried before and abandoned when people actually took the opportunity to make money. In addition, Cuba’s reforms fall way short of the “market socialism” economic openings of China and Viet-Nam.
Still, it’s a change.
Where does the US fit into all this? Well, Cuba needs a shot in the arm during this transition. Its lea have run out of patrons to help them stumble along. The USSR was one of them and lately Venezuela. Caracas, however, is low on funds due to lower global oil prices and has cut back the flow of oil to Cuba. So here comes the US bringing with it a possible tourist boom and investment.
So for all the rhetoric sure to be heard in Panama about Cuba’s triumph over the empire to the north, it is Havana that needs eased relations with the United States, not the other way around. Just as there was little opposition to Obama’s move, so to does he harvest any political benefit. For Cuba, however, the stakes of change are high.
This paper talks about Cuba’s yearning for outside benefactors.
Here’s an assessment about whether Cuban reforms can succeed.
Brief explanation of the why of the US-Cuban thaw.
And this is my cynical take from a few months back.