Cuba after Castro: Staying the financial course

While Cuba’s economy has gradually opened up in recent years, Fidel Castro’s death is unlikely to prompt larger reforms.

Cuban former President Fidel Castro dies at the age of 90
Experts say the country's next president is all but certain to continue in a similar economic vein [EPA]

Since Raul Castro took Cuba’s helm from his ailing brother in 2008, the communist country’s economic waters have gradually shifted.

Restrictions on private enterprise were eased, allowing Cubans to open restaurants and ply their trades. The government introduced a new salary structure to reward state workers with higher productivity, and subsequently cut hundreds of thousands of positions from the state payroll.

Citizens and permanent residents were granted new rights to buy and sell property and vehicles, while the government vowed to eliminate the island nation’s problematic dual-currency system.

Cuba: Official period of mourning for Fidel Castro

This year, amid a recent thaw in diplomatic relations between Cuba and the United States, US President Barack Obama urged Congress to lift a decades-old trade embargo that has cost Havana billions of dollars over the years.

The death of the iconic leader Fidel Castro, however, appears unlikely to prompt more radical changes in Cuba, a country of about 11 million people where the average income sits at about $20 a month.

“Fidel has not played a major role in Cuba’s governance for years, and the transition of power to his brother was much more smooth than anyone had expected,” said Tomas Bilbao, a policy adviser to the Washington-based Engage Cuba coalition.

“While his absence could help facilitate the process of reforms, it is likely that delays will continue to come from Cuba’s bureaucracy, and more hardline factions within the government, who fear that reforms could undermine efforts to maintain political control,” Bilbao told Al Jazeera.

Economic crisis

Indeed, Cuba’s leadership has faced a challenging task in recent years: to bolster the country’s sagging economy while preserving its long-standing socialist model, along with the authority of those in charge. In 2010, as Raul introduced a series of economic reforms – including a list of 178 newly approved private-sector occupations, from construction labourer to birthday clown – he said the changes would help sustain socialism, rather than bring capitalism to Cuba’s shores.

“The measures we are applying, and all of the changes that are necessary for the modernisation of the economic model, are aimed at preserving socialism, strengthening it and making it truly irreversible,” Raul said in translated remarks published by a number of media outlets at the time.

Isolated from the US and with tourist dollars flowing to foreign-owned businesses, Cuba has long been in the throes of an economic crisis. Today, the average Cuban’s standard of living remains at a lower level than it was before the 1990 economic downturn, which followed the withdrawal of billions of dollars in annual subsidies from the Soviet Union. 

READ MORE: Cuban leader Fidel Castro’s mixed legacy

Had Fidel died suddenly, the ensuing shockwaves could have sparked domestic challenges to the country’s political system, but his years-long illness conversely ensured a seamless continuation of the status quo, said University of Miami professor Jaime Suchlicki, the author of Cuba: From Columbus to Castro and Beyond.

The modest economic reforms introduced by Raul will remain in place after Fidel’s death, Suchlicki told Al Jazeera, but residents should not expect any major new changes.

“It’s a question of, is Raul going to accelerate the changes that he’s been introducing?” he said. “My analysis says no – he’s not a market economist, he doesn’t believe in capitalism, so he’s not going to open up Cuba to the market.”

Richard Feinberg, a professor of international political economy at University of California, San Diego, pointed out that with Raul effectively in charge since 2008, no organised political opposition has been able to coalesce.

At least in the short run, Feinberg told Al Jazeera, “political continuity rather than rupture is the more probable course”.

‘At the crossroads’

Among the key reforms to Cuba’s economic model in recent years was the government’s pledge in late 2013 to end its dual-currency system, keeping the national peso (CUP) while doing away with the convertible peso (CUC).

Most Cubans had only been able to access the CUP, while tourists and Cuba’s elite traded in CUCs, which are worth about 20 times more. Unifying the country’s currency was hailed as a way to level the playing field.

But there is much more the country must do in the years ahead to help heal its ailing economy, noted John Kirk, an expert in Cuban history and international relations at Dalhousie University in Canada.

“Cuba is at the crossroads of potentially very significant change,” Kirk told Al Jazeera. “The primary economic challenge is how to turn an oil tanker around in a very short time – it takes a lot of time to do it, and Cuba doesn’t have that much time.”

The death of the iconic leader appears unlikely to prompt more radical changes in Cuba [The Associated Press]
The death of the iconic leader appears unlikely to prompt more radical changes in Cuba [The Associated Press]

Foreign trade with Cuba has suffered because the country is considered a bad risk, unable to pay its debts, Suchlicki said, noting Cuba should focus on developing more products for export.

With ample farmland, the country could become a major agricultural export hub, he said, but that would require large-scale farming as opposed to the smaller enterprise permitted by Raul’s reforms. One minor step came this year, when a US company was cleared to build tractors in the country.

Currently, one of Cuba’s top exports is medical personnel; the country rakes in billions of dollars annually by shipping its doctors across borders.

A powerful symbol

Significant advances have been made towards improving Cuba-US relations since Raul and Obama agreed in December 2014 to reopen diplomatic relations, Kirk noted. But despite this progress – which has included the easing of travel restrictions for some Americans, the planned resumption of regular US-Cuba flights, the lifting of limits on the use of US dollars in transactions with Cuba, and Obama’s historic visit to Havana this past March – a substantial gulf remains. Of particular concern is the financial embargo still in place today, regardless of Obama’s calls to eliminate it, Kirk said.

“The death of Fidel Castro is an enormously powerful symbol in many ways, from the end of the revolutionary era that started in 1959 to the possibility of a new phase in Cuba-US relations,” he said.

READ MORE: Fidel Castro in context

At the same time, Kirk added, Fidel has warned Cubans to be wary of the normalisation of ties with the US, and to remain vigilant in protecting socialism: “The key question is whether Cubans will remember his warnings as the island moves towards the beginning of a new era.”

Beyond the reign of the Castro brothers – with Raul planning to step down by 2018, amid expectations that he will remain Cuba’s de facto leader in the ensuing years – the country’s next president is all but certain to continue in a similar economic vein, experts say.

“Who runs Cuba? The military. Who runs Cuba? The Communist Party,” Suchlicki said. “It doesn’t make any difference if it’s Joe, Pepito, or Louis in the presidency – the institutions of Cuba are the ones that are controlling Cuba.”

Follow Megan O’Toole on Twitter: @Megan_OToole

Source: Al Jazeera