Cuba after the Castros: escaping a long shadow

 

The appointment of a new president next week will only serve to underline the country’s economic stagnation and fading influence

 

John Paul Rathbone, Financial Times, in Havana,

 

As a set-piece of propaganda, the unveiling of the bronze statue of José Martí that evoked Cuba’s greatest independence hero at the moment of his death was a flop. But as a mournful scene from the closing act of the Castro brothers’ 60-year rule, the official event that took place outside Havana’s Museum of the Revolution this January spoke volumes.

 

Cuba considered the statue an affair of high state. It took four years of meticulous planning, and $2.5m of private US donations, to make the 17-tonne replica of the sculpture and ship it from New York, where the original has stood for over 60 years in Central Park. Raúl Castro, Cuba’s president, even went out of his way during a 2015 UN visit to personally thank New York mayor Bill de Blasio for the city’s help.

 

For Havana, the statue was a symbol of budding rapprochement and hope for change. When the project first launched Cuba was inundated with visiting dignitaries — from the Pope to the Rolling Stones, Karl Lagerfeld and then-US president Barack Obama. Fidelito, Fidel Castro’s eldest son, was even snapped in a selfie with Paris Hilton, visiting Cuba on a celebrity jaunt. Parades of foreign investors also trooped through Havana to scope for opportunities, flattering the sense of optimism in the air.

 

The Cuban economy in numbers

 

580,000: The number of authorised self-employed people, up from 150,000 in 2008

 

30%: Decline over the past four years in GDP of Venezuela, Cuba’s principal economic ally

 

8.4m: Agricultural production in metric tonnes in 2016, down from 8.7m in 2005

 

Just as important for Cuba’s leadership, though, the monument was an expression of revolutionary purpose extending from Martí’s death 123 years ago up to this day. That sense of continuity is especially important to Cuba’s Communist party as it faces a delicate and perhaps even uniquely vulnerable moment this year.

 

On April 19, Mr Castro, 86, will step down as president and likely be replaced by Miguel Díaz-Canel, 57, the vice-president. While the presidency is largely a symbolic role, and Mr Castro is expected to remain head of the party and army, it will be the first time since 1976 that a Castro brother has not held the post. Adding to the sense of uncertainty is the need to undertake drastic reform of Cuba’s hidebound Soviet-style economy — even as such liberalising measures will inevitably erode the Communist party’s grip on power.

 

But much had changed for the worse when Mr Castro finally gathered with party functionaries to witness the statue’s inauguration on January 28, four years after the project began.

 

Now, instead of conveying continuity, the monument seemed to underline Cuba’s multiple challenges and shortcomings. Even the inscription to Martí’s life chiselled into the black marble plinth was marred by sloppy but indelible spelling mistakes. The Spanish word for city was misspelt “cuidad”, while “nacío”, supposedly “he was born”, does not exist at all.

 

Over the past seven months President Donald Trump has partially reversed the US detente begun by Mr Obama. Staffing levels at the US embassy have since shrunk to levels not seen since 1977. Cuba’s economy, hit by Hurricane Irma and a near-halving of aid from Venezuela, remains on the rocks. Despite reforms launched by Mr Castro 10 years ago when he become president, which have led to the creation of 580,000 privately self-employed businesses, the economy is a third smaller than it was in 1985, according to a study led by Pavel Vidal, a Cuban economist teaching at Javeriana University in Colombia.

 

No one expects abrupt change when Mr Castro and other gerontocratic members of the so-called historic generation who led the 1959 revolution move on. The stolidity and inertia of Cuba’s institutional structures see to that. Yet while it is often said that Cuba never changes, change is now biologically inevitable. At stake is Cuba’s historic but faded role as a revolutionary beacon, plus the perennial possibility that the collapsing economy could turn it into a source of instability only 90 miles from the US.

 

The usual first question to ask of any transition is: who is the successor? But Cuba’s is no normal transition. For one, Mr Díaz-Canel is only assumed to be the next president. Although publicly groomed for the post, the appointment will only be confirmed on April 19 by the National Assembly, when the next vice-president and other senior posts will also be ratified.

 

Nor is he necessarily a reformer. The burly 57-year-old uses an iPad and has promised that Cuba’s government will be “more responsive” to public concerns. But the former communist youth leader from the provinces is no moderate. Last year, a leaked video showed him at a high-level Communist party meeting lashing out against dissidents, independent media, foreign embassies and other “subversives”.

 

“I would characterise Díaz-Canel as a non-liberal moderniser,” says Arturo Lopez-Levy, a former Cuban government intelligence analyst and now a lecturer at the University of Texas.

 

Further constraining any reform drive will be Mr Díaz-Canel’s need to solidify his position within Cuba’s main centres of power: the Communist party, the army and the Castro family.

 

“The armed forces, which includes the ministry of the interior, is where the real power lies,” says Frank Mora, a former US deputy assistant defence secretary and now professor of international affairs at Florida International University.

 

It is also the institution where Mr Castro, a four-star general, has the strongest links. His son Alejandro is a counter-intelligence expert at the interior ministry, while his former son-in-law, General Luis Alberto Rodríguez, runs Gaesa, the military-owned holding company that controls much of Cuba’s tourism sector.

 

“I expect that Raul will serve out the rest of his life somewhat like Deng Xiaoping did in China: with decreasing formal power but immense informal power — at least until he dies,” says Mr Mora.

 

Nonetheless, succession will bring changes in style and perspective, if not in substance. “Inevitably, Díaz-Canel’s appointment as president will also see a re-arrangement of patronage inside the party,” says Mr Lopez-Levy. “I think Díaz-Canel will have some space to enact reforms.”

 

The economy is his biggest challenge. Party resistance, central planning and halfhearted implementation blunted even the limited reforms launched by Mr Castro. Poor economic performance has in turn forced cuts in vaunted education and social services, which official figures show have shrunk by 8 per cent since 2008. Although tourist arrivals have doubled in 10 years, imports have shrunk from $15bn in 2013 to $10bn in 2016, forcing ever greater scarcity.

 

Cuba’s foreign investment drive has stalled. “I’ve been trying to get my [tourism] project off the ground for years,” says one European businessman. “Nothing happens. The bureaucracy is impossible.”

 

A cumbersome multiple exchange rate system for the peso only makes matters worse. Inequality is also widening, exacerbated by state wages worth only $20 a month, and cuts in subsidies and pensions. Meanwhile, frustrated by lack of opportunity, younger generations seek to leave — a demographic shift with dire pension implications for a country that has a median age of 42, older than the US, France or UK.

 

“Many of Cuba’s best and brightest now live in Miami, Madrid, Montreal or Montevideo,” says Richard Feinberg, a professor of political economy at the University of California.

 

The most important task is to reform the state-sector, where lossmaking enterprises absorb a fifth of the budget as subsidies. Currency unification, long mooted by Mr Castro, would help force that process, as multiple exchange rates within state enterprises mask chronic inefficiencies and fuel exchange rate arbitrage, and thus corruption.

 

“The country is becoming a kleptocracy, a ‘robber-lution’ instead of a revolution,” says one disenchanted foreign tour operator with long experience of the island.

 

Although Cuban officials in February told a visiting US delegation that currency reform would happen this year, fear of its social consequences is one reason why it has not advanced so far.

 

“What will happen [after currency unification] to all the state companies that have double or triple bookkeeping entries? Many of them would then be revealed to be unprofitable,” says Marta Deus, an entrepreneur who provides accountancy services to Cuba’s fledgling private sector. “But what will happen then to people that work there? Will they end up in the street?”

 

The solution anywhere else would be to expand the private sector. This has already absorbed more than half of the 1m state jobs shed by Mr Castro since 2008. It could absorb more and provide much-needed tax revenues to the state, too. But Cuba’s private sector is seemingly only tolerated by the authorities and its growth would further imperil their control — a perennial dilemma for the regime, which recognises the need for change but is simultaneously afraid of it. “Cuba’s vanguard party has become its rearguard,” says Mr Feinberg.

 

Worryingly, a draft of new private sector regulations circulating on the island “suggests a focus primarily on more control and penalisation”, notes Mr Vidal, the economist.

  

Cuba is alone. For almost the first time in its history — as a colony of Spain, a supposed satrap of the US and Soviet satellite, and most recently as a recipient of Venezuelan aid — it lacks an economic patron. Émigrés continue to provide a rare lifeline, sending over $3bn a year to relatives on the island. But elsewhere, Havana has all but exhausted its credit lines with China, while allies such as Russia lack the economic wherewithal to fully step in.

 

Meanwhile, the charisma of its revolution has faded and peeled like the paint on so many of Havana’s crumbling walls. “Cuba is simply no longer important,” says Jorge Castañeda, a former Mexican foreign minister. “It no longer matters to anyone any more — except to Cubans.”

 

That disinterest is most obvious in the US. The state department’s decision to reduce Havana embassy staff following a series of so-called sonic attacks has meant visa processing for family reunification visits is now done in Georgetown, Guyana. It has also left Washington badly-placed to understand and influence unfolding events on the island.

 

Cuba still enjoys a residue of international goodwill. It provided an important facilitating role in Colombia’s peace process, which helped end the hemisphere’s oldest insurgency. Yet it continues to give unbridled support to Venezuela, where Havana is widely understood to provide intelligence services to President Nicolás Maduro in return for subsidised oil. As international condemnation of Mr Maduro’s regime grows, Cuba’s free ride may not last long.

 

“When we confront the Maduro regime, first we must confront Cuba,” says Luis Almagro, head of the Organization of American States. “The Cuban regime is the worst kind of dictatorship.” Tension could come to a head in mid-April at the Summit of the Americas, which Mr Trump and Mr Castro are expected to attend. Mr Maduro has been disinvited.

 

For now Havana remains tranquil. There are some bright spots — particularly in the expansion of the internet. This has helped some start-up businesses, such as Clandestina, an online shop that sells graphics services to its sister US company, which then prints the designs on T-shirts and distributes them globally. “We can do that because I am a Spanish citizen,” says co-founder Leire Fernandez. Few others can.

 

“I pray every day that everything goes well, because I love my country. Things need to get better. But I am afraid,” says Niuris Higueras, a private restaurateur in Havana. Fellow restaurateur Miguel Angel Morales echoes her caution: “We shall have to wait and see. From big crises can come big changes.”

 

Sadly, few expect them. Indeed, four days after the Martí statue inauguration, and three years after his infamous selfie, Fidel Castro’s eldest son committed suicide. While surely only a coincidence, many took it as a sign of the times. As state newspaper Granma noted in its terse coverage, Fidelito was suffering from acute depression.

 

 

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