Cuban Situation

Cuban Situation

Cuba needs cows. In January of 2004, a Cuban delegation visited Florida to inspect beef and dairy cows to repair Cuba’s languishing cattle industry. Moreover, under the auspices of the U.S. Trade Sanctions Reform and Export Enhancement Act in 2000, the United States exported $350 million dollars worth of American agriculture products to its island neighbor in 2000 (Bussey 1). This budding trade relationship is symptomatic of a broader move by Cuba to fully re-insert itself in the global economy. Deprived of the protective cocoon of Soviet trade agreements and faced with economic crisis and stagnation, Cuba’s leaders have responded with limited economic reforms. It is clear, however, that Cuba will not emulate the rapid liberalization of much of Eastern Europe and Latin America. A brief review of Cuba’s economic performance since the fall of the Soviet Union reveals a trend of liberalization bred of necessity. Nevertheless, the mixed performance of the Export-Processing Zones and the government’s grudging acceptance of tourism reveal a tension between Cuba’s need for foreign currency and direct foreign investment and a desire to insulate and preserve Cuba’s existing domestic apparatus. This tension underlies Cuba’s ongoing economic transition and has prevented wholesale market liberalization. Cuba’s future movement towards market reforms will be carefully managed by the Castro government to protect Cuba’s revolutionary legacy and to maintain control of political opposition.

The fall of the Soviet Union devastated the Cuban economy. Cuba’s GDP contracted by 35-50% from 1989-1993 (LeoGrande quest 5). As a percentage of total Cuban trade, the Soviet Union’s share fell from 66% in 1990 to 15% in 1994 (5). Moreover, Russia reneged on its oil agreement, and fitful exports caused energy shortages in Cuba. Production and consumption plummeted.

From 1986-1991, Castro undertook a rectification campaign to stabilize the economy as the Soviet Union decreased its support and eventually collapsed. The plan “focused on re-centralizing economic planning authority, dismantling the [Soviet-sponsored socialist management system] and market mechanisms, abolishing the free farmers markets launched in 1980, and combating corruption” (4). In addition, Castro tried to address the massive trade imbalance by reducing imports and reinvigorating the export sector. This program was a resounding failure. More domestic and far-reaching reforms were necessary to save the economy from crisis. Economic disaster had erected a serious challenge to Cuba’s socialist program.

In 1991, Castro’s announcement of a “Special Period in a Time of Peace” marked the beginning of Cuba’s new era of liberalization.