A recent trip to Cuba with wife and kids in tow proved eye-opening, even to a jaded Latin Americanist like me. I came away convinced that this country is ready for change.
Before we started our voyage to Cuba (my first in 14 years), Cuba hands warned us that “you won’t recognize Havana—it has changed so much.” Changed Havana has, but not so much in the aesthetic sense. In fact, if I compare Havana to any capital city in Latin America, over the last 14 years the Cuban capital has physically transformed at a slower pace than all other regional capitals. Yes, there are a few new hotels, multiple dining options with hundreds of new paladares, plenty more fresh paint in La Habana Vieja, and a revived fleet of 1950s classic cars—all thanks to a thriving tourism sector. Some iconic destinations like El Bodeguito del Medio and La Casa de la Música have even turned into tourist traps.
However, all those changes are largely superficial.
More remarkable is the transformed attitude of the old guard and the intellectuals—the historic benefactors of the revolution and the redistribution of power and privilege it brought. Over the years, my wife and I have befriended some of Cuba’s elite: a former leader of the Cuban feminist movement, a high-ranking general in the air force, the former leader of Cuba’s naval special forces, the former senior officer of Cuba’s counter intelligence division, and one of Cuba’s leading contemporary painters and two of his protégés. All were devout followers of Castro’s Cuba. All had sacrificed years of service in defense of their country and/or its values. All were given handsome homes in Miramar and Reparto Kohly, two of the most prestigious residential neighborhoods in Havana. Fourteen years ago, they all sincerely rang the praises of Communist Cuba, even while much of the population back then was growing weary of the lack of opportunities found in their country.
On our most recent trip, their tune had changed. Sixteen years of economic lifeline from Venezuela (2000-2016) has provided some basic improvements for Cubans—waistlines are larger, cellphones are plentiful, and Cuban hipsters are barely indistinguishable from their Buenos Aires or Barcelona counterparts. But Venezuela’s generosity also halted the momentum of social pressure on Cuban leadership, that is, until oil prices collapsed. According to our firm’s analysis, Venezuelan wealth transfer to Cuba has dropped from an estimated peak of $7 billion per year in 2012 to less than $3 billion in 2016 and a forecast $2 billion or less in 2017. Now, economic pressure is again building and even the elite are openly questioning the wisdom of economic policies unchanged since the Cold War. If the powerful residents of Miramar and Reparto Kohly are ready to throw in the towel, the revolution’s days seem numbered.
Returning to Cuba in 2017 and 2018 will be an estimated 30,000 doctors, soldiers, teachers and engineers that served in lucrative postings in Venezuela and Brazil. Those coming from Venezuela will bring further evidence of the broken policies of Latin American socialism. Doctors serving in northern Brazil will share the mixed message of an emerging economy, replete with both poverty and wealth, consumer choice and freedom. Together, these professionals will be powerful messengers to their friends and family back in Cuba that their country is neither a lost cause nor is it on the right track. Their voices are joined by an entire youthful generation in Cuba who are connected to the internet through limited Wi-Fi spots and millions more who receive enviable accounts of life from cousins in Miami, Panama, the Dominican Republic and New York.
In short, the message will be reinforced—Cuba is broken and the most-recent socialist benefactor has headed down a dead end. No amount of propaganda can dissuade Cubans from their now-entrenched belief that their beloved island has been left to rot by a governing elite whose policies are outdated and misguided.
Without the generous teat of Venezuela, there is no immediate Band-Aid to cover the gaping wounds of an economically and demographically enfeebled Cuba. The number of Cubans emigrating to the US has recently climbed to over 50,0000 per year with more still leaving the country for other destinations. Approximately 110,000 Cubans are born and close to 90,000 die each year. With only minimal immigration levels, Cuba’s population is shrinking and aging.
At the same time, Cuba’s rural youth are moving to Havana to make more money in tourism as Havana’s middle and working class youth seek any way to leave, be it marrying foreigners, winning the visa lottery, seeking asylum or sponsorship, or flying to an open third country like Ecuador. As a result, Cuba’s agricultural output continues to shrink, straining a system of subsidized food benefits and furthering the social divide between those who earn local pesos versus those who are paid in pesos convertibles or CUCs from tourism. Espacios, one of Havana’s hippest paladares which serves a delicious pizza for tourists and local artists alike sends a driver all over town each day to find the one or two markets—in a city of 2.5 million—that sells cheese. A nationwide drought, blamed by many on climate change, has decimated dairy production. With fewer petro-dollars coming from Venezuela, Havana’s dollar stores struggle to import foods not produced in Cuba.
In fairness, Cuba retains some admirable traits. It is the second-safest country in Latin America (after Chile), with a homicide rate on par with the United States. Cuba’s education standards, though slipping in practical terms due to aging technology, still produce, on average, some of the best-read, best-written and best-spoken graduates in Latin America. Though more difficult to tally, Cuba has created a social consciousness that dramatically contrasts the classist instincts of many Latin American societies where a sense of citizenship rarely extends beyond family and friends. That hard-won social cohesion will serve Cuba well when a fresh political start facilitates a new round of nation-building.
The surprising election of President Donald Trump ground to a halt the steady, if slow, momentum of change since December 2014. President Obama’s visit to Havana proved electrifying for a despondent populace. U.S. rapprochement proved a catalyst for the renegotiation of debt with the Paris Club and Russia. Cuba was again a diplomatic darling and a measurable trickle effect was injecting currents of prosperity to the island, particularly in the hospitality sector where most of Cuba’s privately owned enterprises operate. But those days now seem distant history. American tourists keep coming but not in the droves expected. The trade and investment missions to Cuba have slowed dramatically.
The Trump administration has been rather busy since last November, either evading controversy or creating it with little time (or appointed senior officials) to draft a Cuba policy. Mixed messages have emerged that range from “do nothing” to “repeal the Obama presidential orders.” What is clear, sitting in Havana where Cubans have developed a benign, if not positive, impression of the U.S., is that the worst thing that Trump can do is take an aggressive anti-Cuba stance.
The battle for the future of Cuba is being waged in Cuba’s 7th Congress and Central Committee between the reformists and the conservatives. Both want to preserve their own future while facilitating change but reformists are willing to gamble a little chaos and loss of power in exchange for a faster pace of reform and wealth creation in Cuba. To help the case of reformists, Washington should either continue the Obama playbook or do nothing. For all these reasons, Raúl Castro is already under tremendous economic pressure to open Cuba’s economy, internally and externally. Washington can either stand back and let change happen or gently nudge it along. But taking a morally principled stance against Cuba’s leadership in the public sphere, though politically gratifying among some constituencies, will only drive reform underground and embolden Cuba’s stubborn elite.
Cuba is ready to bring change upon itself. Washington should let it happen.
John Price is market consultant and has advised dozens of global firms on their business strategies in the region. John has published over 100 articles on Latin American business trends and maintains a column in the region’s largest circulated English language magazine, Latin Trade. In 2007, John Price co-wrote and co-edited Can Latin America Compete? published by Palgrave. He is an adjunct professor at Florida International University.
