Beginning with a trickle and then growing rapidly, a steady
flow of money into Cuba will be the first tangible effect of normalized
US-Cuban relations. With more cash reaching the island’s impoverished citizens
comes hope for a better life, something all Cubans desperately want.
Cubans typically earn only $20 per month so that tips from
visitors rank just below remittances as a financial lifeline.
Like the communists in China, the overriding objective of
Cuba’s communist party is retaining power. But unlike the Chinese who have
concluded that higher living standards derived from economic freedom is the
recipe for preserving one party rule, Cuba’s leaders haven’t made that
determination.
“Cuba’s communists are going through an identity crisis, not
knowing what they want,” says John Kavulich of the US-Cuba Trade and Economic
Council. He says the ruling party views
itself as still under US attack and fears the income inequality that would
result from a freer market.
Kavulich says it was economic desperation that led Raul
Castro to agree to the normalization with the US that was announced in
mid-December. Cuba, he says, is essentially bankrupt with huge debts that it
can’t pay. With the collapse of oil prices, Venezuela has cut back on transfers,
aggravating Cuba’s financial distress.
While US companies can now sell to Cuba, the ban on
financing for Cuban importers remains. Most business transactions will be cash
only, a significant impediment particularly to US food and agricultural firms
eager to expand in the Cuban market.
Trade lawyer Robert Muse doubts that congress will repeal
the 55-year-old trade embargo this year. He concedes that President Obama has
wide authority to use executive action to resume trade and travel but says the
ban on financing is a huge constraint.
Kavulich, a frequent visitor to Havana, believes “Cuba will allow in only what it thinks
it can control.” Permitting travel
and lifting of the ban on credit card use are positive moves but the island is
not being thrown open to US trade and investment. US Visitors still have to
obtain visas to enter Cuba and normal tourism is still banned under terms of
the embargo that only congress can lift. Havana has a limited tourist
infrastructure with few restaurants and hotels that meet western standards.
Before there can be widespread investment American firms
have $5 billion of outstanding claims that have to be resolved.
Since Raul Castro succeeded his brother Fidel as president
in 2008 Cuba has initiated modest economic reforms. Cubans can now buy and sell their cars, homes and
apartments. During a visit to Havana this month I was surprised to see
occasional “for sale” and “for rent” signs. Small-scale entrepreneurship is beginning to take hold.
Rental apartments in Old Town Havana
While the charm of once grand but decaying buildings, 1950’s
automobiles, the absence of advertising and US-style fast food may be
compelling, prospective visitors should scale back their expectations. Internet
service is spotty. English-language newspapers aren’t available. Those vintage
cars can’t be exported.
What visitors will find is a vibrant Cuban culture, great
music, friendly people and a receptivity to Americans.
Marco Rubio, the Cuban-American senator from Florida,
believes the loosening of US
travel and trade restrictions creates “a windfall for the Castro regime that
will be used to fund its repression against Cubans.” Short-term there may be truth in his assertion but long-term
Rubio is certainly wrong.
Like people everywhere Cubans crave freedom and that quest
will not endear them to the Cuban communist party. Equally Cubans value their
independence and are proud of their revolution’s accomplishments.