A long game in Havana

 

Cuba wants a controlled courtship with the United States, not a fevered embrace. That may frustrate Americans

 

The Economist

 

THE contrast was striking. On February 28th Venezuela’s president, Nicolás Maduro, announced the de facto expulsion of scores of American diplomats. It was a transparent ploy by a deeply unpopular leader to foment a clash with the United States so as to justify his repression of the opposition and the possible cancellation of a forthcoming legislative election that he would otherwise lose. Yet a day earlier diplomats from Cuba, Venezuela’s closest ally, sat down in Washington, in an atmosphere that they called one of “respect”, for a second round of talks with the Americans on restoring diplomatic relations after a 54-year hiatus.

 

After the talks, Barack Obama said he hoped the United States could lay the groundwork for reopening its embassy in Havana before the Summit of the Americas in Panama on April 10th-11th, which he will attend along with Cuba’s Raúl Castro. Cuba confirmed that it is prepared to restore diplomatic ties as soon as the administration recommends the island’s removal from the State Department’s list of state sponsors of terrorism. This is likely to happen “very soon”, says a State Department official.

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Following Mr Obama’s historic gambit, announced on December 17th, to start dismantling the embargo against Cuba, American companies are queuing up to offer flights and tours. There is fevered talk of importing cigars and exporting poultry and building materials. Mr Obama said this week that “we’re already seeing” change in Cuba.

 

Such enthusiasm is understandable after the half-century freeze between the two countries, but it may be premature. Even if embassies are reopened in the next five weeks -which looks highly unlikely- this will not lead to a speedy normalisation of relations. Still less will it prompt an immediate embrace of capitalism, democracy and the American way of life by Mr Castro’s communist government. Instead, he has portrayed the diplomatic breakthrough, which followed 18 months of secret talks, as a victory - vindication of Cuba’s resistance to American efforts to topple its regime.

 

Mr Castro told a Latin American summit in January that full normalisation of relations with the United States would depend on the formal lifting of the embargo, compensation for the costs it imposed on Cuba and the restitution of the Guantánamo naval base. The last two items are politically impossible, as he surely knows.

 

Why is he being so prickly? Since he took office as president in 2008 he has quietly dismantled many of the policies of his elder brother, Fidel. A fifth of Cuba’s labour force now works in a fledgling private sector comprising small businesses, farms and co-operatives. While communist rule is still ruthlessly enforced, Cubans enjoy more everyday freedoms.

 

But change faces stubborn opposition from within the Communist Party and the state bureaucracy. As a Cuban academic in Havana puts it, the leader of the opposition is Fidel. Raúl cannot ignore his brother’s views, even though Fidel is now frail and elderly. And Fidel is not a fan of the rapprochement with the United States. “Cuba’s president has taken appropriate steps in accordance with his prerogatives and powers,” he wrote stiffly in a letter released on January 26th. But “I don’t trust the policy of the United States, nor have I exchanged any words with them.”

 

Raúl has negotiated with Mr Obama regardless. A big reason is that his economic reforms cannot succeed without closer ties with the United States. Despite the reforms undertaken so far, and despite Venezuelan aid (the future of which depends on the survival of Mr Maduro), Cuba’s low-wage economy has grown at an average of just 1.9% a year since 2009. After much delay, the government plans to take two big steps over the next two years. State firms will become autonomous, which implies the freedom not just to compete but also to fail, with the loss of jobs. A trickier change is unifying Cuba’s two currencies - state firms use a “convertible peso” at parity to the dollar while wages are paid in Cuban pesos, worth barely four cents. Unifying the currency without triggering high inflation requires the backing of more foreign-exchange earnings. The best hope of those comes from American tourism and remittances - and the foreign loans that the end of American hostility might bring.

 

Raúl Castro insists that he will step down in 2018. He clearly wants to bequeath a viable Cuba to his successor. It will be one in which markets play an increasing role. To get there he is treading an obstacle-strewn path between past and future. Progress will be halting. But unlike Mr Maduro, he knows that the cold war is over and his country must evolve.

 

 

Cubanálisis - El Think-Tank

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