Change coming fast to Havana
The softening of relations between old enemies continues today as Cuban and American officials meet in Washington, but there’ll be plenty of difficult topics on the table, write Karen de Young and Nick Miroff
WHEN Cuba was hit with rolling blackouts a decade ago, Fidel Castro decided to save energy by ordering everyone on the island to switch from incandescent to fluorescent lighting. Millions, perhaps billions, of bulbs were ordered from China, and teams of students were dispatched to enter every home and business and make the switch.
It was, a former high-level government official said, “a typical Fidel thing”.
The grand gesture as a way of addressing economic crises, from the mass mobilisation to harvest sugar in 1970 to the attempt to replace every light bulb in the country 35 years later, has disappeared under Cuba’s current leader, Fidel Castro’s brother Raúl.
“What most people want now is prosperity that can be sustained,” said the former official, who did not want to be identified so he could speak candidly. “Fidel wouldn’t accept anybody telling him he was wrong. Raúl is a hard-line party guy. But he wants the opinions of experts.”
And economists here have been telling their government that prosperity will require significant changes in the way Cuba does business.
A month after President Barack Obama eased travel and trade restrictions against Cuba, it remains unclear whether Havana can or will take full advantage of new opportunities to buy US products.
Meanwhile, with the US and Cuba set to resume talks today in Washington on the restoration of diplomatic relations, a further perhaps more important issue is firmly on the table.
A senior Cuban official said his government wanted to be removed from the US list of terrorism-sponsoring nations and to be able to reopen US bank accounts for the diplomatic process to move forward.
While Obama has asked the State Department to review Havana’s inclusion on the terrorism blacklist, Cuba’s formal removal would “create the favourable context” for the countries to once more have formal embassies in their respective capitals, said Gustavo Machin, vice-director for US relations at Cuba’s Foreign Ministry.
Cuba’s lead negotiator, Josefina Vidal, will meet today in Washington with Roberta Jacobson, the top US diplomat for Latin America, as they continue talks that began last month in Havana.
US officials are eager for the negotiations to advance swiftly, with Obama preparing to attend the Summit of the Americas in Panama, to be held on April 10 and 11. He is likely to receive praise for his opening to Cuba from other leaders in the region, especially from allies who have argued US sanctions against the island are counterproductive and an anachronism of the Cold War.
Still, Cuba cannot be fully removed from the State Department’s list of terrorism-sponsoring nations until a 45-day waiting period has elapsed. US lawmakers are supposed to review the president’s decision in that period, but it does not require congressional approval to take effect.
The White House has not yet set the 45day process in motion.
The Castro government has been on the list since 1982, mostly for giving refuge to ETA Basque militants and Colombian FARC rebels. But the presence of the ETA in Cuba is a product of an agreement with the Spanish government, and Havana is hosting landmark peace talks between FARC and the Colombian government.
Still, Cuba’s presence on the terror list remains a red flag for international finan- cial institutions wary of doing business with the island because of the US trade embargo. Cuba’s diplomatic mission in Washington and its UN office in New York have been without access to banking services since last year, and Cuban officials say they can’t operate an embassy without a checking account.
Machin also said the US had accepted Cuba’s proposal to hold bilateral talks on human rights issues, though a date has not been scheduled. Rights violations by Havana’s one-party communist government are a recurring issue between the two long-time adversaries, but Cuban officials say they have their own concerns about abuses in the US, citing cases of police violence against African Americans.
On the subject of permitted US exports, such as telecommunications equipment, this is tied to expanding civil rights and freedoms for the Cuban people, and purchases will require political decisions by the Cuban government.
Critics of the new policy say Havana won’t take advantage of the offer as it prefers to keep its people in the dark, with limited internet and access to the outside world. More immediately, any purchases from the US will require cash that’s in short supply. Under the terms of the US embargo, Cuba cannot buy US products on credit.
“We don’t have enough money to buy what we need,” Juan Triana Cordovi, a government economist at the University of Havana’s Center for Cuban Economic Studies said. “The financial situation today in Cuba is strained.”
While the US has long permitted the export of agricultural goods to Cuba, last year’s shipments were the smallest amount in more than a decade. The difference, in an economy that imports up to 75 percent of its food, has been made up by Latin American and other countries that sell on credit.
There is much about life here that most Cubans take for granted and are unlikely to want to give up. All receive free education and health care; housing is free or heavily subsidised for many. Each Cuban receives a ration book each month for food staples. Life expectancy and literacy are the highest in Latin America and among the highest in the world.
But government control of the economy extends far beyond such basics. Except for a relatively small number of allowed private enterprises and portions of the agricultural sector, all businesses and means of production belong to the government. Foreign investors, including those who have built many of the tourist hotels that draw more than 2 million visitors a year, must recruit their workers through the government and pay wages into government coffers in a dollar-pegged special currency.
The government then pays all workers, from doctors to tourism workers to janitors, in the far less valuable local money, the national peso.
The dual-currency system, and the average monthly wage of about 475 pesos, leaves most with a converted monthly income of about $20 (R227), even as it allows state enterprises to hide inefficiencies and corruption.
But even for those with disposable income to buy consumer goods, few things are available. Most imports must be paid for in “convertible” pesos.
Increased tourism and remittances under new rules are expected to offset falling oil shipments from Venezuela, its key foreign ally, which account for 20 percent of Cuba’s gross domestic product. In exchange for medical services, which Cuba has in relative abundance, Venezuela provides the oil free, and Cuba sells some of it for hard currency.
In recent years, Raúl Castro’s government has taken small steps towards reorienting the economy away from the strict state-run system that has prevailed for more than 60 years. Private business is allowed in more than 200 sectors, Cubans can travel overseas, and private sale and purchase of real estate is allowed. Foreign investment laws have been revised, although so far there have been few takers.
“The government is into a lot of sectors that are never going to be efficient,” economist Triana said. “But it provides things people need.”
Besides, he said: “We’re a socialist country.” – The Washington Post