Americas
10:22 am
Thu November 7, 2013

A Soft — And Prosperous — Landing For Cubans Is In The U.S.'s Interest

A private Cuban shop vendor
A private Cuban shop vendor
Credit Brookings Institution

There are two basic realities about Cuba’s communist dictatorship that U.S. policy, and the anti-Castro hardliners that shape it, prefer to ignore. The first is that the Castro brothers will almost certainly die in power. The second is that market-oriented economic reforms, albeit tentative, are as much a part of Cuba’s landscape today as 1956 Chevrolets.

Anyone who’s serious about helping Cuba make the post-Castro transition to a capitalist democracy will get serious about those facts. Which means it would behoove Washington to focus less on pushing Fidel and Raúl into the Caribbean and more on “nudging a pro-market system as forward as possible” onto the island, says Richard Feinberg, author of a comprehensive new Brookings Institution report on Cuba’s precarious changes.

WLRN.org was given an advance look at Feinberg’s study, "Soft Landing in Cuba? Emerging Entrepreneurs and Middle Classes," which will be released on Friday. Based on a year’s worth of on-the-ground research and dozens of interviews with Cubans moving from socialism to start-ups, it’s one of the more vivid pictures to date of a threadbare economy that’s as antique as those Chevrolets, but which may be reaching for the 21st century. Well, at least the 20th.

Readers should take away two core conclusions, Feinberg told me. One is that “Cuba is changing dramatically and becoming more entrepreneurial every day.” But the other is that “orthodox communist foes" of a more hybrid, socialist-capitalist economy, a la China, "keep battling to maintain the status quo.” That makes it all the more imperative that the U.S. help bolster reformists and “strengthen market forces” there, he says.

Feinberg, a senior fellow at the Brookings' Latin America Initiative, says that’s not necessarily a call to eliminate the U.S.’s 51-year-old trade embargo against Cuba. “It does mean,” he says, “a relaxation of economic sanctions” that the Cuban-American caucus on Capitol Hill continues to guard as jealously as it does votes in Little Havana.

"Soft Landing" paints a schizophrenic picture of Cuba’s budding business scene. On the one hand, Feinberg writes, it’s obvious that Cuban leader Raúl Castro’s recent reforms – which include letting Cubans buy and sell private property like cars and houses, and his plan to unify Cuba’s two disparate currencies – “have opened exciting opportunities for aspiring entrepreneurs.”

He estimates 40 percent of Cuba’s five million workers are now self-employed or otherwise active in the fledgling private sector. And he even sees more Cubans entering a middle class, although in cash-strapped Cuba that's a relative term.

But their frustrations, Feinberg notes, are as long as Fidel Castro’s beard. For starters: scant sources of capital and credit, even though he reports it can take as much as $36,000 to launch an enterprise like a bed-and-breakfast – in a country where the usual monthly salary is $20 a month. Add to that a heavy tax burden and a ban on access to the wholesale supplies (only state-run firms can buy them) that every business needs.

And on top of the hindrance comes harassment: “Disturbing stories,” Feinberg writes, “of crippling fines and imprisonment for minor offenses, cancelation of licenses and confiscation of assets, are commonplace.” Cuban entrepreneurs “purposely restrain their growth so as not to capture the attention of the authorities.”

Cuban business owners complain via code: tapping their shoulders with two fingers, “to signal military stripes and unaccountable, overbearing authority.”

So this is not a document written by a naïve Castro apologist. Feinberg told me he’s as aware as anyone what an absurdly contradictory move it was this month for the government to shut down private movie theaters because they gave dilapidated state-run cinemas too much competition.

But "Soft Landing" nonetheless makes a strong case that in spite of the lingering communist obstructions – or precisely because of them – the U.S. needs to do more to throw Cuban entrepreneurs a lifeline.

Some of Feinberg's recommendations are questionable -- such as giving a bigger role to USAID, a U.S. foreign aid agency that Havana believes is out to topple the government. But it's hard to argue that Washington should find ways to “fill the capital gap” in Cuba.

To Feinberg, that means letting U.S. firms do business with “independent entrepreneurs in Cuba” and provide the financial and technical assistance Raúl can’t (or won't) give them. Feinberg acknowledges that would require a means of certifying that U.S. companies are doing business with private and not state-run Cuban enterprises.

It would also require Raúl’s consent – and Feinberg insists the U.S. call his bluff. Castro, he writes, “would have difficulty explaining to [Cubans] why [he] had refused to authorize a weakening of U.S. economic sanctions.” His refusal would, in other words, all but prove that the Castros prefer that the U.S. embargo stay in place as a scapegoat for Cuba’s dismal economic failures.

Feinberg, a professor of international political economy at the University of California-San Diego, says it’s time Cuba admits what communist China has – that “getting rich and prosperous is a good thing.” And it’s time Washington realizes, he adds, that helping Cubans get there “is in the U.S.’s interest.”

Tim Padgett is WLRN's Americas editor. Read more of his Latin America coverage here.