HAVANNA, Cuba — Being the only communist state in the Americas and located only a few miles from Miami, Cuba has been under a punitive embargo—ironically a Spanish nautical word—since the height of the Cold War in the 1960s. However, more than half a century and 10 American presidents later, the anticipated collapse of the communist regime in Cuba did not happen.
The regime did not crumble as expected. Instead, the victim is the country’s economy, from whose complete and utter ruins the average Cubans are still struggling to eke out their living. But things are changing, as slowly as their pace may be. The state is opening up and there are signs that the government is willing to undergo self-restructuring.
In early March, Cuba, one of communism’s final strongholds, resumed its bilateral agreement with the European Union which, since 1996, has been rather restrictive in terms of its relationship with the Caribbean island. With Cuba’s powerful northern neighbor imposing decades long sanction on the island, the EU is the country’s second largest economic partner—after its close ally Venezuela.
The resumption of this trans-Atlantic dialogue is part of the EU’s initiative to promote human rights and multi-party democracy in Cuba.
However, Cuba too has been undergoing a lot of internal reforms in the past years. Just as recent as December 2013, the government—although not without conditions —announced that it would allow Cubans to buy new cars.
No longer are Cubans obliged to drive their beautiful, vintage 1950s Detroit convertibles. Nevertheless, these new cars are sold at astronomical prices: a pre-owned Chinese Geely is sold at $30,000 USD in a country where the average monthly income is $20, for example. Thus, the iconic traffic landscape of Havana will not be changing anytime soon with cars being sold at this price.
Furthermore, Cubans are now allowed to run their own private businesses in addition to owning houses.
Nonetheless, “nature” has not been allowed to take her course with the Cuban economy. It is still essentially a state-controlled market. But as Eastern Europe, China and Vietnam joined the global capitalist market—with some flying (red) colors—Cuba too is now looking to change. In addition to the mentioned moderate take on entrepreneurism, the government now allows for certain jobs to be taken up privately.
Occupations such as a construction worker, taxi driver and shopkeeper are some of the 181 jobs that the state now allows people to do on the condition that they obtain a permit. This “liberalization” also entails the laying off of those who have been government employees.
Cuba is also loosening some of the more positive aspects of a communist state as well. Food subsidies, one of the main characteristics of Cuba’s communism, are being scaled down in order to decrease some of the state’s spending.
But, unlike China’s comfortable relationship with the market economy, Cuba is reining in consumerism via price control. Aside from having a dual currency system, the state also regulates the prices of access goods. Not only are prices for new cars unbelievably expensive, the prices other commodities of modern life such as the telephone bill and televisions are also shockingly high.
The government’s rationale used to buttress the imposition of these exorbitant prices is that it serves as a form of the redistribution of wealth. However, in the course of these state-regulated reforms, economists are interpolating that in order to resurrect the withering economy the Cuban government must allow greater freedom for the country’s renascent entrepreneurial class.
Perhaps, since Cuba is now importing twice as much as it exports– one of the causes of the disintegrating social security system—the economists might be correct to suggest that the regime should give more freedom and flexibility to Cuban entrepreneurs, assuming that this would increase productivity and consequently raise the numerical figures of export goods.
Cuba’s current cautious pace in reforming itself might be attributed to the lesson of the collapse of the USSR following Mikhail Gorbachev’s liberalization and restructuring of the Soviet Union. Lastly, aside from its failing economy, the island nation’s other impasse is its relationship with the United States. As its closest ally, Venezuela is itself facing difficulties; maybe it is time for both the governments of the U.S. and Cuba to think about reconciliation.