Cuba & the U.S. (8 of 11): Cuban Foreign Relations

If you prefer, you can read the whole Cuba report as a PDF by clicking here

.Summary:  Cuba’s friends are other totalitarian dictatorships and other communist or socialist nations. Raul Castro and the Cuban Constitution both condemn the United States.

One of the delights of Facebook is being able to check what friends you have in common before accepting a new friend. Who are Cuba’s friends, now that the Soviet Union is gone?

In a speech of 12/2/2006, Raul Castro referred to his “president and brother, Hugo Chavez,” the socialist dictator of Venezuela. As mentioned above, Chavez signed an agreement with Fidel by which Venezuela provides Cuba with heavily subsidized oil in return for goods and services.

In a speech of 7/26/2007, Castro mentioned “our brothers in Venezuela, Bolivia and Nicaragua, and our solid ties to China and Vietnam.” China recently invested $500 million in Cuba. In the same speech, Raul mentioned the Movement of Non-Aligned Countries, whose past presidents include Tito of Yugoslavia, Mugabe of Zimbabwe, and Fidel Castro of Cuba. Other members of the Movement include North Korea, Iran, Iraq, Vietnam, Syria, and Sudan. (Am I the only one who thinks their logo of a globe surmounted by an olive branch looks like a grenade?)

On the State Department’s list of state sponsors of terrorism, right there beside Iran, Syria and Sudan, is Cuba. It maintains relations with several guerrilla and terrorist groups and provides refuge for some of their members.

How does Raul Castro feel about the U.S.? In a speech of 12/2/2006, he noted that “the U.S. government, in the opportunistic manner characteristic of them, have stepped up their hostility and aggressiveness against Cuba to an unprecedented high, in the hope of economically suffocating the country and overthrowing the revolution by intensifying their subversive acts.” He refers to “Washington’s multimillion-dollar campaigns of disinformation, the blackmail and brazen interference.” In a speech of 7/26/2007, he refers to “3,478 victims of terrorist acts directly organized, supported or allowed to happen by the United States authorities,” and states that “There has been not one minute of truce in the face of the politics of the United States government, aimed at destroying the Revolution.” He describes the U.S. trade embargo as a “blockade” that “constitutes a relentless war against our people.” In a speech of 1/1/2009, he refers to the “unhealthy and vindictive hatred” of the U.S., and calls it “aggressive, treacherous and dominant.” In short, his attitude has not changed over the past few years, and indeed, one would not expect it to, given that the Cuban Constitution refers explicitly to “Yankee imperialism” (Preamble).

What points is Raul Castro willing to negotiate about? Back on 12/2/2006 Raul Castro publicly stated, “We take this opportunity to once again state that we are willing to resolve at the negotiating table the longstanding dispute between the United States and Cuba, of course, provided they accept, as we have previously said, our condition as a country that will not tolerate any blemishes on its independence, and as long as said resolution is based on the principles of equality, reciprocity, non-interference and mutual respect.”

That means: “We’ll accept your money and goods, but do not make any demands in return.”

Cuba & the U.S. (7 of 11): The Cuban Economy

If you prefer, you can read the whole Cuba report as a PDF by clicking here.

Summary:  The Cuban economy cannot operate without substantial foreign subsidies, and it is deeply in debt.

The Cuban economy is socialist, and in accordance with the Constitution, it is directed and planned by the state (Art. 9a). The state owns the means of production and operates under the principle “from each according to his capacity, to each according to his work” (Art. 14). Except for a few small farms, private ownership is banned. Workers are allowed to join one and only one union, whose primary duty is to ensure that the state’s production quotas are met. The expropriation of private property is authorized “for reasons of public benefit or social interest and with due compensation,” but the compensation takes into account “the economic and social needs of the person whose property has been expropriated” (Art. 25): no wealthy capitalists need apply. Today the Cuban government says that 76% of the labor force works for the government, although the U.S. State Department estimates the total at more like 93%.

In the early 1990s, the Soviet Union collapsed and stopped subsidizing its satellites and allies. Cuba lost a significant portion of its revenue (an estimated $4 to $6 billion annually), and entered what the Castro brothers called the “Special Period.” From 1989 to 1993 the country’s GDP dropped by an estimated 35%. Raul Castro is sometimes credited with proposing to revive the moribund economy by action on the Chinese model: lifting some restrictions on business, trade, and tourism while maintaining strict political control.

Then, in 2000, Venezuela’s Hugo Chavez—an admirer of Cuba’s socialist programs—signed an agreement by which Venezuela sent some 100,000 barrels of heavily subsidized oil to Cuba daily, in exchange for assorted goods and services. By 2001, the economic reforms of the “Special Period” were being revoked.

In 1986, Cuba defaulted on most of its international debt. It has not resumed payments, and therefore is ineligible for loans from institutions such as the World Bank. When the Republic of Cuba needs to borrow to purchase food, it must do it at short-term rates of up to 22%.

Cuba suffers dire shortages of basic goods. Raul Castro spent a substantial portion of his “21st Century Socialism” speech (7/26/2007) discussing in mundane, boring detail how milk could be more efficiently distributed. The Cuban government made headlines a few years back when it bought rice cookers to distribute to housewives. Buried in the text of the story was the fact that the rice cookers were distributed because of their low energy consumption. Demand for electricity was overloading Cuba’s Soviet-era electrical system to the point where blackouts were common, even in Havana.

When there are shortages, Cuban leaders are wont to demand more sacrifices and order more controls as the economy worsens. In Raul’s “21st Century Socialism” speech, he called for “organized work, control and dedication, day after day; systematic rigor, order and discipline, from the national level down to the thousands of places where something is produced or a service is offered.”

As always, the inefficient state-controlled economy has spawned an “informal” economy where buyers and sellers exchange scarce goods at mutually agreeable prices. It has been estimated that 40% of Cuban economic activity is on the black market.

The Index of Economic Freedom (compiled by the Wall Street Journal and the Heritage Foundation) rates economic freedom based on such factors as tax rates, tariffs, property rights and government size. This year it ranked Cuba 177th out of 179 countries in economic freedom—trailed only by Zimbabwe and North Korea.