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Cuba since the fall of the U.S.S.R.


By Terence Hilton-Clarke

©Copyright 1996

The Cuban economy, already severely dented by the collapse of the U.S.S.R., is being damaged further by the now strengthened U.S. embargo. In both cases the island is being denied adequate supplies of fuel and raw materials which are needed to generate the economy. More importantly, its is barred from obtaining regular provisions of food and clothing. The seemingly far-fetched Cuban Liberty and Solidarity Act has now made foreign investors liable to prosecution under United States law. These occurrences have thrust Cuba into a situation whereby, now more than ever, they need help from other sources. The latest measure may also signal additional reforms within the economic sphere.One suggested step was the establishment of a dual monetary system. This would involve the use of two currencies: the U.S. dollar and the Cuban peso. The dollar, to be used by foreign investors, would indicate "that Cuban is an open economy with an extraordinary dependence on foreign trade and....foreign currency": the peso would "allow the government to achieve fiscal stability without an abrupt increase in unemployment by gradually but firmly decreasing the fiscal deficit..." (Sanguinetty). For Sanguinetty, monetary dualism "will allow the design and implement policies that have different objectives without interfering (with) each other."

Another suggestion, from Bryan Roberts, has been the establishment of a currency board in conjunction with rapid price liberalization. However, it is foreign investment that holds the key to Cuba's economic resuscitation. As mentioned earlier, foreign capital is necessary to generate employment, increase local production and develop a strong export sector. On this basis, it is urgent that current (and potential) foreign investors establish some sort of solidarity in opposing the Cuban Liberty and Solidarity Act.Drastic changes may also be required in the social sector. The trend toward a free market economy and the introduction of private enterprise are possible indicators that socialism may be coming to an end in Cuba. Measures will have to be taken to ensure that the transition to a more capitalist system is smooth. Of course, there is the current unemployment problem which serves as a source of discontent, Buttari has suggested public employment programmes which would include support for economically helpful and community based self-help projects.Assistance for such programmes should come from general state services aimed at low income population groups (Buttari, 1994).

A move towards capitalism may also cause a shift towards a system of social stratification more in line with other countries in the region. Will the Cuban people readily accept the three tiered system lower, middle and upper class with all its inequalities? What will be their attitude towards the possible return of the "Miami Cubans"? To what extent would some of these Cuban-Americans look to regain lost property and prestige? These are questions that will have to be considered, if a process of democratization is instituted.United States policy towards Cuba is also in dire need of being revamped. One new trend of thought is that U.S. policy in evaluating a Cuban transition must have political rather than economic considerations. This proposal would include the guarantees of rights to free speech and freedom of association, the freedom of movement, the release of all political prisoners and the right to free and fair elections. In 1994, Fekete and Reich proposed a four step plan whereby American policy would serve to guide Cuba into into a "new era" (Cuba Transition Guide, 1995). The first stage would involve the settlements of claims and assets plus the repeal of the U.S. embargo as it was at the time. The second and third steps would feature the negotiation and conclusion of a Bilateral Framework Agreement while the last part of the plan would feature the return of Cuba into the regional economic arena (Fekete and Reich, 1994). It is now uncertain if both the United States and Cuba will chart this course.It is up to the Cuban people to decide what kind of future they want politically. United States policy over the last 35 years has failed to take into consideration that Cuba is a sovereign country, governed by an administration that is still very popular at the moment. There has been no concrete evidence to indicate that resentment towards Fidel Castro is as widespread as to induce fears of his overthrow. In any case, such an event would only lead to instability - the very antithesis of foreign investment. What is really needed presently is the assistance of other, sympathetic, members of the international community in guiding Cuba along the tough road that lies ahead.



Historical Background of Cuba before Castro
Part 1

Historical Background of Cuba before Castro
Part 2

Cuba Under Castro

Cuba Since the Fall
of the USSR


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