Renewed US ties will strengthen Cuban move to the market

On 17 December last year US President Obama and Cuban President Raul Castro announced a commitment to renew diplomatic relations between the US and Cuba.

The announcement follows 18 months of secret discussions and is a significant shift after 50 years of formal hostilities between the two countries.

To demonstrate commitment to turning a new leaf, prisoners on both sides were released and economic restrictions on travel, and financial transactions to Cuba were eased.

The US embassy will reopen in Havana and public diplomatic talks will continue.

US attacks on Cuba were a hallmark of the broader Cold War with the USSR through the second half of the 20th Century.

This conflict was framed as between “capitalism” and “communism”. In reality, it was a struggle between two imperialist powers, with USSR running a state capitalist economy that required global markets, alliances, and consistent economic growth to maintain competitive position, just the same as the US. In the years following the 1959 revolution, Cuba adopted this state capitalist model.

Initially, the Castro government had no “socialist” aspirations when it came to power. Fidel Castro personally visited America to meet with President Nixon to calm US businesses and politicians worried about the effect the revolution would have on their investments and influence in Cuba.

It was only later that the Castro government nationalised US based companies operating in Cuba and allied with the USSR. Social pressure from below, and a strategic gamble by the Castro government for domestic and regional power, influenced this decision.

Ever since, the US has attempted to disrupt and overthrow the Castro government, most famously in the unsuccessful 1961 Bay of Pigs invasion of Cuba.

The US has repeatedly funded and initiated oppositional groups, terrorist attacks, and assassination attempts on Cuban state officials. Additionally, the US has imposed a strict economic blockade on Cuba since 1960, designed to cripple the Cuban economy, with terrible outcomes for ordinary Cubans.

Blockade’s failure

The failure for the blockade to overthrow the Castro government, even after the collapse of the USSR, is a key factor behind the recent changes. As US President Barack Obama explained in a televised address: “These 50 years have shown that isolation has not worked… It’s time for a new approach”.

Indeed sections of the US ruling class have questioned the efficacy of the blockade since it began. The Economist recently re-published its 1960 commentary on Cuba, which argued at the time the “embargo may well have the opposite effect” of driving Cuba away from American influence into the hands of the USSR.

Arguments against the blockade have been winning out in US policy circles. Nowadays ending the blockade is the mainstream view of the US business press, and the official position of the US Chamber of Commerce and National Association of Manufacturers.

The Cuban government has started to turn towards market reform, opening its economy up to foreign investment. At the same time the US is more concerned with Asia, and emerging Latin American powers, such as Brazil and Venezuela.

Moreover, Obama is attempting to use the opening up of immigration to and from Cuba to placate criticisms of his hard-line immigration policies elsewhere.

In Cuba, the economy continues to stagnate. Economic growth was 1.2 per cent in 2014, whilst capital investment is half the Latin American average.

In 2013 the average real wage of state employees, still the majority of workers, was just 27 per cent of its 1989 level, before the collapse of the USSR.

The response of the Castro government has been to pursue market reforms indistinguishable from the neo-liberal policies of advanced capitalist economies.

The 2014 New Foreign Investment law seeks to attract $2.5 billion a year of investment into the economy through a 15 per cent profit tax cut.

The easing of the US imposed blockade of Cuba will increase access to essential goods and ease pressures on Cuban living standards. However if the history of market reform in Vietnam and China is anything to go by, Cuba’s one party state is likely to remain intact and market reform will see rising inequality and new attacks on workers.

The Cuban working class faces new challenges, but also new opportunities to fight for genuine socialism.

By Eliot Hoving

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