The brave American move couldmean a dash of hope for the Cuban economy.
Cubans woke up on the morning of 17 December 2014 to alarming news. Their leader Raúl Castro was about to address the nation live. All they knew is that he would be speaking about the US. But few – that morning – could guess it would be such an historic message of change.
At the same time, from the White House, US President Barack Obama was finally announcing what many Cubans thought they would never hear: the re-establishment of relations between the US and Cuba, the reopening of a US embassy in Havana and the freeing of prisoners on both sides. In other words, the first steps towards dismantling the last barricades of the Cold War in this post-revolutionary world.
In his speech – which followed a phone call with Raúl Castro and secret negotiations that took place in Canada and at the Vatican with Pope Francis – Obama said change was long overdue after more than a half century of a failed policy.
“I’m not expecting transformation of Cuban society overnight”, Obama said. The president contends that “engagement is a better tool than isolation”, added a senior US administration official in a White House briefing call for reporters.
“By further opening up to Cuba, we will be able to promote openness and reform”. The most immediate news – on humanitarian grounds – was the release of American contractor Alan Gross, accused of spying and imprisoned in Cuba for five years. Definitely part of the deal was the swap of an American spy, who spent 20 years in prison, in exchange for three Cuban intelligence agents held in the US.
Obama’s rapprochement makes it easier for Americans to travel to Cuba and allows the use of American credit and debit cards on the island. The deal could also open a path for a gradual lifting of the US embargo but that would require a vote by the US Congress.
“There is zero possibility of dismantling the embargo now with this mostly Republican Congress”, said Arturo Lopez Levy, a Cuban Economist at the University of Denver who left the island in 2001. “But the old image of Cuba as a threat, which justified a policy of isolation and hostility, has been replaced by the image of a country in transition. And this opens tremendous room for negotiation”.
Cuba has already been through dramatic changes since Raúl Castro took over from his brother Fidel in 2008, especially since his 2010 reforms. Now Cubans can use cell phones, buy and sell houses or cars, and open small private businesses or cooperatives.
“Everything has changed here”, said Italian chef Walter Ginevri, who opened a pizzeria in Havana four years ago. Back then there were only a dozen restaurants in his neighborhood. Now there are 200. A former public school teacher who now owns a restaurant can make, on a good day, what one used to make in a month of teaching.
Before the reforms, around 150,000 Cubans had permits to work freelance. Now about half a million work in the private sector and another half in the cooperatives. “That’s a million people – nearly one-fifth of the workforce – on track towards a market-based economy”, said Lopez Levy.
Still, Raúl Castro’s reforms haven’t been completely successful. Private opportunities on the island are limited to a list of 201 jobs. If you are a lawyer, for example, you can only work for the government. “There are huge barriers for small entrepreneurship”, said Ted Henken, the co-author of a new book, Entrepreneurial Cuba. “Not many report that about 400,000 Cubans turned in their private work licenses because they went out of business”.
Meanwhile, Cuba’s already weak economy is slowing down to around 1% GDP growth. “More than 50,000 Cubans leave the country for the US ever year, and the population is shrinking with a negative birth rate”, he added. While he and others say change will never be fast enough, some say too rapid of a shift could bring instability.
Gary Clyde Hufbauer and Barbara Kotschwar, who recently wrote Economic Normalization with Cuba, warned about the risk of following Russia’s quick changeover model, which led to corruption and oligarchs. Instead, they point to China and Vietnam as examples of a gradual transition to a market economy.
In the US Congress, the re-establishment of relations has sparked criticism mainly from Republicans.
“The White House has conceded everything and gained little in return”, claimed Florida Republican Senator Marco Rubio, a Cuban-American and possible presidential candidate. He said there was no commitment to freedom of speech, elections, the internet or democracy. “The entire policy shift is based on the illusion – in fact, on the lie – that more commerce and access to money and goods will translate into political freedom for the Cuban people”.
Still, many see Obama’s shift as a bold endgame move that, by no coincidence, came in the last two years of his presidency. “Now that he doesn’t have to respond to voters, he has started doing things he really wanted to do and believes in”, said Henken.
The reopening of relations could be a win-win deal with advantages for both countries.
For the US, “A significant plus would be the removal of the issue as a barrier to relations with other countries of the Americas”, said Kotschwar. Countries in the region have criticized the US for its Cuba policy. Now Obama could find more cooperation on issues like drugs, immigration and counter-terrorism.
For Cuba, the deal brings hope for the economy, especially now that Venezuela is suffering from a crash in oil prices.
Miriam Leiva, a Cuban independent journalist, said, “Raúl Castro desperately needs to ease tensions and re-establish relations with the US. The regime faces a 25-year economic crisis, which it has proven incapable of surmounting and which could worsen if there is decreased financial support from Venezuela”, she wrote in her Huffington Post blog series from Havana.
“The historic decisions by both presidents depend on how they are implemented and how much the Cuban government is willing to allow”, added Leiva. “Nevertheless, once Pandora’s box is opened, it cannot be shut”.
The brave American move couldmean a dash of hope for the Cuban economy.
