Cuba Is on the Clock
The island is in dire need of a new patron.
By: Allison Fedirka
Cuba may be a geostrategically valuable country, but its value far outweighs its actual power.
The island’s proximity to the rest of North America’s coastlines, as well as its position in the Gulf of Mexico, which gives it influence over all maritime traffic in the northern part of the Western Hemisphere, has made it both a prize and a power broker for anyone with interest in this region of the world.
Yet, its small size and limited resources prevent Cuba from projecting much power on its own.
Havana’s solution to this historic dilemma has been to offer itself to a patron who in return can offer economic prosperity and security guarantees.
The Spanish first established this client-patron relationship in the 15th century, using Cuba as a critical resupply station between the Old World and the New. As the Spanish Empire faded, so too did Cuba’s economic prosperity.
Tired of sacrificing for a patron that could no longer meet their needs, the Cubans rose up against the Spanish and allied with the United States.
The new relationship was a boon to the Cuban economy, but Washington’s heavy-handed political control led to another revolution, after which the Cuban government, then led by Fidel Castro, quickly aligned with the Soviet Union.
After it collapsed, the Cuban economy again fell into disrepair (Unlike Cuba's break from Spain and the U.S., the split with the Soviets was not initiated by Havana, which was therefore unprepared for it.)
Foreign aid, strong security forces and state-sponsored initiatives to promote tourism allowed the Castro government to remain in power until a new patron could be found.
Cuba, a communist country in a post-Cold War world, didn’t have a lot of options. Enter Hugo Chavez. His rise to power in oil-rich Venezuela in 1999 made Caracas a viable patron for Havana.
Chavez had the Bolivarian ideology that meshed nicely with Cuba’s. Venezuela gave Cuba subsidized oil, and in return Cuba supported Venezuela with intelligence and security cooperation.
Their partnership, however, was short-lived. Chavez died in 2013, leaving Venezuela’s government accounts distorted with high social spending bills and a population dependent on government services.
Oil prices tanked in 2014. Since then, Venezuela’s ability to lend support to Cuba has dramatically declined. Caracas can no longer feed its own population, let alone prop up a foreign government.
Russia has attempted to fill the void by canceling Cuba’s debt, initiating a railway modernization project and giving Cuba modest grain exports. These efforts were enough to forestall a crisis but not to fundamentally change the direction in which Cuba was heading.
It's now 2021, and Cuba’s behavior over the past few months leads only to one conclusion: that the economy is reaching a breaking point and the government is therefore looking for a patron to ensure its survival. For over a year, there have been anecdotal reports of fuel shortages.
Economic problems in the agriculture sector have compromised domestic production and led to shortages. (President Miguel Diaz-Canel has even acknowledged the situation publicly.) Between reduced Venezuelan oil shipments and the high price of alternative oil imports, transportation on the island is also breaking down.
The brief influx of U.S. dollars after travel restrictions for Americans were lifted in 2015 ended in 2017, when the Trump administration reinstated past restrictions and introduced more severe sanctions against Cuba. The COVID-19 pandemic killed international travel to the island and thus its lucrative and crucial tourism industry.
The government is looking for answers.
It put in a request with the Paris Club for a two-year moratorium on paying its debt; the club granted it a one-year reprieve last month. It has accelerated a raft of economic reforms meant to spark economic activity by reducing distortions and attracting investment.
In July, the government made U.S. dollars more accessible so that they can be used to buy a wider range of basic goods. In November, it streamlined the process by which foreign investment was approved and started to experiment with expanding digital services to further reduce processing times.
The next month, the Foreign Trade and Investment Ministry announced that the government would no longer be required to have a majority share in joint business projects in the areas of tourism, biotechnology and wholesale trade. This was followed by the end of select subsidy programs and the convertible Cuban peso.
More recently, in early February, Cuba announced that it would expand opportunities for private businesses to operate, lifting restrictions on private enterprise in 1,873 of 2,000 sectors. The government also increased fines for those that engage in price speculation.
Mounting social pressure has amplified the government’s sense of urgency. Last November, there was the first of many protests staged by artists who spoke against the government by occupying the palace plaza and going on a hunger strike.
The government intervened, made some arrests and offered an empty invitation to engage in dialogue. Since then, supporters and sympathizers have come together to form the San Isidro and 27N movements.
Their most high-profile activity so far was the Feb. 9 delivery of a letter intended for President Joe Biden to the U.S. Embassy in Cuba, in which they asked him for help ending some of the recent sanctions placed on the island.
Havana subtly broadcast last week that it was in the market for a new patron. It came in the form of a letter from the Cuban Embassy in Bogota warning the Colombian government of a possible upcoming attack by the National Liberation Army, the paramilitary organization better known as the ELN.
The ambassador submitted a document saying outright that the Cuban Embassy had received the information but had not verified it. Given Cuba’s long-standing relationship with the group, the announcement was interpreted as Cuba looking for a political opening.
Among the leading candidates are the U.S. and China. The Biden administration has put nearly all foreign relations under review, and many expect it to revitalize President Barack Obama’s efforts to normalize ties with Cuba.
Through executive powers, a U.S. president can unilaterally control, to a degree, anyway, the extent to which the U.S. opens to the island. But it remains a highly contentious issue in U.S. politics; these kinds of changes require a lot of political capital, and Biden is currently in short supply.
Cuba-watchers – those for and against closer ties with the island, and those inside and outside elected office – have already started mobilizing to get their way. For now, though, the U.S. government does not appear positioned to make any significant changes to its Cuba policy.
China, meanwhile, has been slowly gaining economic influence in Latin America over the past decade and recognizes Cuba’s strategic position relative to the United States. China needs some leverage against the U.S. similar to the kind Washington has against Beijing in the South China Sea.
Improved ties with Cuba would go some way toward getting that leverage. Beijing has certainly used shared ideological beliefs to politically align with the Cuban government, and on the economic front, China is now Cuba’s second-largest trading partner.
Important advances have also been made in Cuba’s telecommunications systems.
Huawei helped establish public Wi-Fi hot spots throughout the island and is now helping increase household connectivity. China’s Haier now assembles laptops and tablets in Cuba, and the China Communications Construction Company operates in Cuba’s Mariel Special Development Zone.
A U.S. Homeland Security report indicated that China’s telecommunications presence on the island already impedes U.S. firms from entering the Cuban market.
Chinese financing now supports port modernization projects in Santiago, and investments are planned in pharmaceuticals and tourism.
Cuban officials have also highlighted renewable energy, cybersecurity, technology and biotechnology as areas in which they’d like to work more closely with China.
These projects help Cuba, of course, but more will be needed to stabilize the economy, let alone change its current trajectory.
How much China comes through will depend in part on how secure its foothold is in Cuba – and how well it will be able to keep the U.S. on edge.
Cuba has made overtures, and though the U.S. and China are the leading options for Cuba, both face constraints in terms of how they can respond.
Either way, Havana is on the clock.
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