Cuba in transition

Cuban President Raul Castro speaks with First Vice President Miguel Diaz-Canel
Miguel Diaz-Canel (L) will be taking over the Cuban presidency from Raul Castro (R) in April, but how will he manage the country’s opening to foreign investors? (source: dpa)

2018 will be a big year for Cuba. In April, President Raul Castro will step down and hand over the presidency to First Vice President Miguel Diaz-Canel. Mr. Diaz-Canel will be the first person not named Castro to lead the country since 1959. However, Raul will continue as head of the country’s Communist Party. The big question is how his legacy and that of his brother, Fidel, will play out in politics, the economy and international affairs in the coming year and beyond.

On January 21, municipal assemblies across the country nominated candidates for the 605 seats in the unicameral legislature, the National Assembly. Elections will be held March 11. The list of candidates is a clear example of the determination to decentralize power and to diversify the presence in the chamber that is one of Raul’s most daring reforms in his decade-long presidency. Municipalities have exercised local authority in an autonomous manner for several years, but never has there been a move to translate this authority to the national stage.

Growing international role

Perhaps as daring has been Raul’s effort to embrace globalization (something Fidel railed against in his last years) while attempting to maintain control over the forces it has let loose. This is a balancing act we have seen before in communist countries such as China, Vietnam and in the former Soviet republics. Raul’s greatest success has been at the international level, buttressing the geopolitical role that Cuba earned in the Cold War through its armed interventions in Africa and, most important, as the symbol throughout Latin America of opposition to U.S. hegemony.

Even as the Trump administration has tried to turn back the clock on normalizing relations, the European Union rushed in to certify the new normal for Cuba in the international community. As a complement to this diplomatic success and reinforcing it, the country’s foreign trade has become increasingly diverse, with no country accounting for more than 20 percent of total merchandise trade.

How much freedom can there be in a state controlled by the Communist Party?

The same is true of investment in the vital tourism industry. Cuba recently was admitted to the Central American Bank for Economic Integration (CABEI) and gained access to resources at the multilateral Andean Development Corporation (CAF). Raul even reached out to the Cuban diaspora – there are more than 2 million Cubans living abroad, 1.3 million in the U.S – offering them the possibility of getting back their Cuban residency. Half a million of these expatriates visited the island in 2016 and provided more than $3.4 billion in remittances.

Where Raul has seemed most reluctant to loosen the state’s control has been in the economy, where the expansion of the private sector has been curtailed. Economic activity over the past few years has been lethargic, with projected growth in 2018 at a dismal 1 percent of gross domestic product, according to the World Bank (the Cuban government says it is 2 percent). Similarly, the internet is tightly controlled, although access is expanding rapidly.

Socialism, Cuban style

These mixed signals affect the most energetic and educated segments of the population, those elements of an emerging middle class that might be feared as seeking greater freedom in the future. An important factor in the regime’s balancing act is the widespread popular support for what many on the island call the New Socialism or Socialism, Cuban style. Despite numerous and vocal dissidents and their repression by the state, the public is overwhelmingly in favor of the government.

The same ambivalence about opening appears in dealing with foreign investment. Raul recognizes that Cuba desperately needs foreign capital. In the huge Mariel Port Project, the centerpiece for enhancing Cuba’s international role, dozens of projects representing tens of billions of dollars are stuck in a pipeline clogged with state bureaucratic approval procedures.

If Raul and his cohort were convinced of the unambiguous benefits of globalization and showed it by completing the Mariel Development Zone (ZED Mariel in Spanish), it would have been completed by now. It will remain for the new president to decide whether this project – and the need to rationalize the exchange rate, which will have its winners and losers – will be pushed so that Cuba enters the world economy with enthusiasm.

The question for the coming year is whether the new generation that is beginning to take power, at least partially, can resolve the central dilemma of Cuban socialism: how much freedom can there be in a state controlled by the Communist Party, and how much can the standard of living be recovered in a mixed economy?

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