Every Sabrina Gonzalez is a humiliating reminder to the Castro regime

19 Jan


Sabrina Gonzalez, the young Cuban-American who studied at MIT is already being titled “The Next Einstein.” Sabrina Gonzalez, like many other young minds born in Cuba, or born of Cuban immigrant parents abroad are a showcase of the incredible brain drain that Cuba has experienced for the past five decades. The amount of human capital lost as a result of how many Cubans have had to leave their country is staggering.

Every Cuban-American success story is a humiliating reminder to the regime of what “We the [Cuban] People” can achieve if the band of thuggish revolutionaries that have ruled our country for over five decades just got out of the way.

How many Sabrina Gonzalezes have had to leave Cuba? How many brilliant minds that could have grown up in Cuba have had to find their success under the warmth of other suns?

Cuba is a failure because the regime in power has pushed its most brilliant minds into exile.

Read more here.

The Latin American Left in Crisis

4 Nov

In Venezuela, Cuba, Argentina, Ecuador and Brazil, left-wing governments face their toughest challenges in years. After years of being in power, left-wing governments in several countries are facing tough challenges ahead.

In Venezuela, the regime of Nicolas Maduro faces economic collapse, runaway inflation, high levels of violent crime, and an election it may not well survive on December 6. Venezuela experts predict the opposition will win the National Assembly and rout the chavistas from power. In Cuba, the Castro regime, which is dependent on Venezuela for economic aid, is eyeing the situation closely. If the chavistas lose power in Venezuela, it can spell doom for Raul Castro and his government in Havana and unravel the slow reforms his regime has tried to implement to help breathe some life into the island’s economy and society.

In Argentina, Kirchner’s protégé and government candidate Daniel Scioli will have to face opponent Mauricio Macri in a runoff election after failing to obtain the majority in the first round of voting. Cristina Fernandez de Kirchner’s government has made enemies in many sectors resulting from Argentina’s economic woes, her authoritarian governing style and allegations of corruption. Although some predict that Scioli will comfortably win the runoff election, others point out that the scandals have begun to weaken the Peronists in Argentina.

In Brazil, Dilma Rouseff is also facing tough challenges. Amid corruption scandals and poor economic returns, her approval ratings are in the single digits and are currently hovering at around 8%.

In Ecuador, the government of Rafael Correa, which had until now been largely free of major challenges, has been facing widespread popular protests against a very unpopular death tax that has been championed by the president.

As many have pointed out – Latin American politics tend to be cyclical. Political changes in one country often bleed into others – and it is not surprising if we are beginning to see the decline of the political left in the region.

Time Running Out for Nicolas Maduro…. and Raul Castro

2 Nov

Raul and Nicolas
Recent news reports have announced that the Venezuelan prosecutor Franklin Nieves has defected from Venezuela and has sought refuge in Miami – adding insult to injury to Nicolas Maduro’s teetering socialist regime in Caracas. Franklin Nieves was one of two prosecutors charged with carrying out the politically-motivated trial against major opposition leader Leopoldo Lopez – the current government’s biggest and most passionate opponent. Leopoldo Lopez is currently serving a nearly 14-year sentence for allegedly “inciting violence,” a charge based on a speech he delivered at an anti-government demonstration early last year.

Nieves is now apologizing for his role in the Lopez case, declaring that the 44-year old opposition leader was wrongly accused in a “totally political trial,” and assailing the government for refusing to allow Lopez to present witnesses and evidence in his defense

Time is running out not just for the government of Nicolas Maduro and the socialists, but also for Venezuela’s staunch ally – Cuba – which depends on economic aid from Venezuela to keep its economy afloat. A crucial mid-term election for Venezuela’s parliament is scheduled for December 6. A number of polls and experts have predicted a landslide victory for the opposition.

Nieves’ defection and revelation that Lopez’ trial was politically motivated will only add to the regime’s critics in Caracas’ streets.

If the opposition wins the majority of the seats in parliament, as they are predicted to do, they can declare amnesty with a simple majority vote – which would free Leopoldo Lopez and a number of other political prisoners. If Lopez is freed, the opposition can then quickly follow up its victory and gather support for a referendum to oust the unpopular Nicolas Maduro from power and rout the chavistas.

Cuba is watching closely, as it is dependent on heavily subsidized oil exports and economic aid from Venezuela to keep itself afloat and prevent itself from falling into a second “Special Period” like the one it experienced in the 1990s after the collapse of the USSR. An opposition victory in the December 6 election could mean the end of economic aid from Venezuela.

As Venezuela sinks further into crisis and an opposition victory becomes more likely – one thing is clear; for Nicolas Maduro and Raul Castro…. time is running out.

Spotlight – Rafael Rojas and his upcoming book “Historia mínima de la Revolución Cubana”

3 Sep
Rafael Rojas in his Mexico City apartment - photo by Rodolfo Valtierra

Rafael Rojas in his Mexico City apartment – photo by Rodolfo Valtierra

“There are many myths about the Cuban Revolution, but there’s a new generation of historians, both inside and outside the island, who are questioning those myths.” – Rafael Rojas

In his new book Historia mínima de la Revolución Cubana (“A Minimalist History of the Cuban Revolution”) (El Colegio de México), Cuban writer, historian and visiting professor at Princeton, Columbia and other universities, Rafael Rojas explains that the Cuban Revolution was a political process that effectively ended in 1976. Although the Cuban government often proclaims that the Cuban Revolution is an ongoing political phenomenon, Rojas explains in his upcoming book that the revolutionary process actually ended when the Communist government established its Communist constitution and institutionalized the revolutionary process.

In his Historia mínima Rafael Rojas explains that far from being a communist revolution, the fight against Fulgencio Batista in the late 1950s was actually a movement encompassed by a diverse group of political actors and factions – which were only later subverted by Fidel Castro and his more leftist group of militants.

According to Rojas, the movement against Batista in late 1950s Cuba was a “democratic center leftist movement that gravitated between populist and nationalist revolutionary” and was not originally a Marxist-Leninist movement as had later been re-envionisned by the regime in Cuba.

Rafael Rojas’ book Historia mínima de la Revolución Cubana (“A Minimalist History of the Cuban Revolution”) (El Colegio de México) will be out on bookshelves in October 2015.

Read more here ( El Pais in Spanish) and here (El Nuevo Herald in Spanish). 

Turning a blind eye to Castro’s Cuba – the hypocrisy of the Latin American left

10 Apr

Honduras' President Zelaya poses with his Cuban counterpart Castro and Venezuelan counterpart Chavez in Managua
“Birds of a feather flock together.”

– Arab proverb

A curious thing is happening in Panama in the Summit of the Americas. Before the announcement of the restoration of ties between Cuba and the United States the 7th Summit of the Americas was supposed to be just another annual meeting of leaders from the Western Hemisphere. But what sets this Summit apart from the others is the recent political rapprochement between the United States and Cuba. Talk of a historic face-to-face meeting between General Raul Castro and President Barack Obama have dominated the news surrounding the event.

Attending the event however, are also a number of Cuban democrats who seek to voice their wishes for democracy in Cuba. Most prominent among them are Eliécer Ávila and Rosa Maria Payá – two outspoken and passionate young Cuban democrats who are fighting to bring change to the island. Rosa Maria Payá is the daughter of Oswaldo Payá – the famous Cuban democratic opposition leader who was assassinated by agents of Cuba’s secret police. The late Oswaldo Paya is best known for starting the Varela Project – a movement that sought to request a plebiscite allowing for free elections in Cuba. Rosa Maria Payá was in attendance at the Summit to present her new project Cuba Decide (Cuba Decides, hashtag #CubaDecide) – a plan that also calls for a plebescite that will allow Cubans to freely elect their leaders.

But on their arrival to Panama Cuban democrats (including Payá and other prominent leaders) were repeatedly questioned, detained and harassed by Panamanian authorities. Outside of the Summit, Cuban democrats have also been repeatedly attacked by mobs of Cuban agents disguised in plain clothes. Many of these agents in disguise have been sent from the Cuban embassy on orders to disrupt any demonstrations or activities organized by Cuban democrats attending the Summit. Their goal is to silence and disrupt any conversations regarding the issue of human rights and democracy in the island. And the worse thing about it? The Panamanian authorities have responded, not by arresting the regime’s paid thugs – but by arresting peaceful Cuban activists. The same ones who were attacked.

A number of these incidents have been documented by the local and international press in Panama but the agents of the regime have gone unpunished.

What explains the impunity with which the Cuban regime is allowed to operate with in Panama? A simple change of administrations in Panama seems to be the answer. After the end of President Ricardo Martinelli’s term in Panama, a new presidential administration came to power in Panama. The new administration apparently is content with keeping a low profile. Panama, which under the previous centrist and moderate Martinelli administration, was a staunch advocate of human rights and an opponent of dictatorship in Latin America, now seems content to turn a blind eye to abuses perpetuated by the Cuban regime.

Which brings to light one of the major hypocrisies of the Latin American Left – a topic I addressed in my first post in Aristocracia – the refusal of leftist democratic governments to recognize abuses by authoritarian leftist regimes like Castro’s in Cuba or Nicolas Maduro in Venezuela. In 2009, when the Honduran military deposed President Manuel Zelaya, most of these Latin American governments were quick to respond and denounced the coup as an affront to democracy. Similarly, when leftist leader Fernando Lugo was impeached and removed from power by the Paraguayan Congress in 2008 – leftist Latin American governments responded with outrage and labeled the impeachment and removal a “parliamentary coup” – even though the impeachment proceedings were completely legal under the Constitution.

Yet these same governments are happy to idly by when abuses are carried out by leftist regimes in Cuba and Venezuela. They remain silent when the Cuban regime imprisons and murders opposition leaders in the island and harass democratic activists abroad. And they remain silent when the chavista government in Venezuela blatantly abuses the Constitution and imprisons major opposition leaders like Leopoldo Lopez and Antonio Ledezma. The truth is that the Latin American left is morally bankrupt. Because when it comes to abuses perpetrated by their friends on the Left – leftist governments hear no evil and see no evil.

Latin American governments need to stop their anti-American rhetoric when they are not even willing to stand up for their own. If you are going to advocate for democracy – you must do so consistently.

Predicting what will happen in Venezuela

24 Feb

Venezuela 2015

The recent arrest of Caracas mayor Antonio Ledezma without judicial warrant on orders of President Nicolas Maduro has thrown into question the whole idea that Venezuela might even hold elections this coming December. As Nicolas Maduro’s popularity drops further and further (it is currently somewhere in the low 20s) and the country’s economy sinks to ever-lower depths, the regime is becoming increasingly desperate to hold on to power. The jailing of Ledezma can be seen as a shift in the government’s tactics to hold on to power. Whereas Chavismo was previously content with winning elections, the current deadly mixture of high inflation, low gas prices and severe shortages of goods has brought the country to its knees and forced the regime to rethink how it intends to keep the PSUV (the populist-socialist party founded by Chavez) in power.

Given the regime’s proven track record of resorting to arrest of major opposition figures, like Leopoldo Lopez and Antonio Ledezma, as well as its willingness to use violence force to suppress street demonstrations by unarmed citizens (like it did February 2014) – many are beginning to believe that Maduro and the chavistas intend to hold on to power by any means. Furthermore, given the regime’s ideological proximity and alliance with Cuba’s totalitarian Castro brothers, some are beginning to question whether the chavistas are going to finally “cross the Rubicon” and do the unthinkable.

With Maduro’s popularity at record lows and faced with the prospect of a catastrophic defeat in the December elections (it would also be Chavismo’s first electoral defeat ever) it seems that Chavismo has only a few alternatives for holding on to power. Holding a fair election in which opposition parties are allowed to participate without harassment is unthinkable, as it would open the possibility that the coalition of opposition parties (known as the “Mesa de la Unidad Democrática” or “MUD”) will sweep the elections. An electoral defeat in the legislative elections would open Maduro to a vote of no confidence, which would then trigger an early referendum election. Given his extremely low approval ratings he would likely then be routed in a recall election.

Worse still is that a large defeat would mean that the PSUV would lose a disproportionate amount of seats and possibly be relegated to irrelevancy. After the PSUV won an almost absolute majority in 2005 (an election boycotted by the opposition), it moved to rework the electoral rules to reward winners of legislative elections with disproportionate majorities. This explains why after in the 2010 election the opposition was only awarded 64 seats out of 165, even though the opposition won 47% of the vote. For comparison the PSUV was awarded 98 seats – a disproportionate amount that did not reflect the closeness of the election.

But now the shoe is on the other foot and the the electoral rules passed by the PSUV look more and more like a double-edged sword. With the way things currently stand, it looks like Maduro’s party stands to lose… and lose big. According to some estimates, if the election were held today, the regime would stand to lose its majority and be relegated to controlling somewhere between 35 and 55 seats out of 165 – a potentially humbling and embarrassing result for the chavistas – who have never lost an election.

Faced with these prospects, there are only a handful of possible major scenarios that could unfold.

Scenario One: A somewhat fair election is held with some vote rigging (15% chance of occurring)

As mentioned earlier, this scenario would be political suicide for the chavistas. In this scenario, the chavistas allow the opposition’s major leaders (like Maria Corina Machado, Henrique Capriles, and others) to campaign and lead the efforts to defeat the PSUV. But as things currently stand, an election in December would lead to a major rout of the PSUV on election day. The PSUV’s majority would likely be slashed to an insignificant 35-55 seats – a scenario that would leave Maduro open to impeachment and a vote of no confidence. This vote would then trigger a snap election which is likely to end poorly for the chavistas. Even if the government engages in large scale vote rigging, it will likely be impossible to reverse the tide of votes against the PSUV.

A lot is at stake for many in the PSUV – as many high ranking officials in the government have been accused of corruption and drug trafficking. Losing the elections in December would mean that the hour of reckoning has finally arrived. Don’t expect the heirs of Chavez to concede defeat so easily.

Scenario two: Maduro will declare a state of emergency and cancel the elections (50% chance of occurring)

Given Maduro’s rhetoric about the supposed “economic warfare” being waged against Venezuela by the United States, and the recently announced foiling of an alleged coup attempt (all claims which have been widely questioned and poorly supported) it wouldn’t be at all surprising if the regime simply opts for cancelling elections altogether. There would be precedent for this given that Chavez already once called on the National Assembly for emergency powers and that the chavistas have been known to bend the rules or simply ignore the constitution when they see fit.

Scenario three: Allow the election, but jail the opposition’s main leaders before the election (35% chance of occurring)

This scenario is likely given the regime’s willingness to use jail to intimidate and neutralize opposition figures. Leopoldo Lopez, one of the opposition’s main figures, just recently completed one year in jail after leading street protests calling for Maduro’s resignation last February. Caracas mayor Antonio Ledezma was recently jailed and other major opposition figures like Maria Corina Machado and former presidential candidate Henrique Capriles have been threatened with arrest. By jailing major opposition figures on trumped-up charges of corruption or alleged plans to carry out a coup d’etat – Maduro will try to eliminate major figures in the opposition as a way of weakening it before the election and, at the same time, give him the save some face before the international community. The chavistas have been known to make wild accusations of treason and corruption to eliminate political opponents and this would not be anything out of the ordinary.

What is most likely to happen is that the regime will likely resort to a mixture of strategies. As the election draws closer, the regime will probably attempt to land some of its major opponents in jail in a desperate bid to cripple the opposition. If the situation does not improve, it will then move to the second option, which will be to simply cancel the elections by declaring a state of emergency. Holding a fair election is simply political suicide for the PSUV and its leaders.

Both strategies are risky… But then again, things aren’t looking very good for Chavez’s party overall. Resorting to either one would destroy the chavistas carefully-crafted mythos of being a truly democratic people’s movement and would quickly delegitimize Maduro’s already unpopular government.

Is Maduro willing to cross the Rubicon and go where Chavez did not?

Start placing your bets…

Capitalism or death

31 Dec

NGS Picture ID:740785

The recent news of Barack Obama’s decision to re-open diplomatic relations with Cuba came as a shock to many across the world. And while observers and experts celebrated the reestablishment of relations as a positive change from the half-century-old policy of isolating Cuba, it was less clear what the Cuban government’s intentions were in suddenly embracing its old adversary.

It’s no secret that the Castro brothers’ government has used the economic embargo as a scapegoat for everything that goes wrong in Cuba. From the denial of personal liberties, to the shortage of basic goods, the Cuban government has made it a de facto official state policy to blame all of its problems on the United States and its embargo.

Every totalitarian state needs an enemy to underpin its ideology of constant warfare. Totalitarianism thrives off of conflict and division. After all, there can be no David if there is no Goliath. And the United States had been the ever-present “Goliath” that had justified all of the Castro brothers’ repression. Having a constant enemy allowed the Cuban government to run the island like a military camp – constantly under siege.

So why would the Cuban regime voluntarily choose to begin a process of rapprochement with the United States?

The answer is simple.

Ever since the Fidel Castro nationalized the Cuban economy in the 1960s and established a centrally planned economy, Cuba has been dependent on foreign benefactors to keep it afloat. Cuba, once the world’s largest exporter of sugar, became an economically impoverished country almost overnight when Castro’s government began to exercise its control over the economy in the 1960s.

Cuba survived throughout most of the Cold War thanks to the beneficence of the USSR, which subsidized Cuba to the tune of millions of dollars every year in economic and military aid. Although Castro established a firm iron grip on power in the island, he never truly managed to make Cuba self-sufficient economically. When the USSR finally collapsed under its own weight in 1991, the end of economic subsidies to the island precipitated a crisis known in Cuba as the “Special Period,” which lasted for roughly a decade. The country’s estimated Gross Domestic Product per capita came down by 36% between 1989 and 1993.


Cuba GDP per capita (Source: Quartz and World Bank)

Cuba was at the brink of collapse when suddenly in 1998, Hugo Chavez came to power in Venezuela. Chavez, a fellow socialist and self-proclaimed follower of Fidel Castro and his ideology, came to the rescue by providing Cuba with an economic lifeline. The precise amount that Venezuela transferred to Cuba through the years is not currently known. According to Carmelo Mesa, a distinguished professor at the University of Pittsburgh, during the oil booming years Venezuela provided up to US $9.4 billion per year to close the gap in Cuba’s accounts.

But as the years passed and Chavez’ socialist revolution strengthened its grip on the Venezuelan economy, Venezuela fell into its own economic crisis. As Chavez squeezed the Venezuelan private sector, its economy became more and more dependent on oil exports, as other sectors disappeared or where squeezed out by draconian regulations. By the time Nicolas Maduro came to power after Chavez’ death, Venezuela’s economy was nearly completely dependent on oil exports – oil accounting for 96% of the country’s exports.

And that’s when the oil-boom ended. The combination of Chavez and Maduro’s mismanagement of the Venezuelan economy, the astronomical inflation pushing 63%, and the sudden and precipitous drop in oil prices caused the Chavistas’ socialist government’s bottom to be pulled out from under it.

The first to be affected was Cuba – the largest benefactor of Venezuela’s oil largesse. Cuba’s leaders, realizing that Venezuela was well on its way to an economic disaster, and aware that they could no longer survive embraced the inevitable and humiliating proposition of selling out to the United States. And end to Venezuela’s economic aid would precipitate another economic crisis in Cuba and once again push the regime to the brink.

With no new USSR or Hugo Chavez to save them, the Castro brothers had to do the unthinkable – reconcile with the United States or face the imminent collapse of their government. The Cuban regime is in a precarious situation. For the first time in its entire history it no longer has a reliant benefactor from which to survive from. And don’t expect the Americans to take over that role.

Capitalism or death.

Una pelea cubana contra los demonios (A Cuban Fight Against Demons)

15 Oct
Francisco de Goya, The Inquisition Tribunal

Francisco de Goya, The Inquisition Tribunal

“I worry that, especially as the Millennium edges nearer, pseudoscience and superstition will seem year by year more tempting, the siren song of unreason more sonorous and attractive. Where have we heard it before? Whenever our ethnic or national prejudices are aroused, in times of scarcity, during challenges to national self-esteem or nerve, when we agonize about our diminished cosmic place and purpose, or when fanaticism is bubbling up around us – then, habits of thought familiar from ages past reach for the controls.

The candle flame gutters. Its little pool of light trembles. Darkness gathers. The demons begin to stir.”

– Carl Sagan

Set against the backdrop of 17th-century colonial Cuba, the dark and riveting film Una pelea cubana contra los demonios or “A Cuban Fight Against Demons” (1972), tells the story of the inhabitants of San Juan de Los Remedios, one of the original Spanish settlements established on the island. The film, which is directed by one of Cuba’s most revered filmmakers, Tomás Gutiérrez Alea, deals with one of the most interesting and schizophrenic events in Cuba’s history. Plagued by pirate attacks and a local priest who is convinced that the town of Remedios is possessed by demons, a number of families pack up and abandon the seaside town for less favorable and isolated location in the interior of the island.

The events portrayed in the film take place in the village of San Juan del Cayo de los Remedios, located on the coast of Cuba’s north central region. Due to its location, the town of Remedios was a center for illegal trade with foreigners. At the time, the Spanish crown had a restrictive and backward mercantilist policy forbidding its colonies from trading with non-Catholic Europeans. French Huguenots and Englishmen were considered heretics by the Roman Catholic Church and engaging in commerce with them was considered a sin. But ignoring the directives of the Spanish crown and the Catholic Church, the inhabitants of the town disregarded the prohibitions on trade with foreigners and carried on anyways. Although the illicit and clandestine trade was an affront to the doctrine of the Church, the inhabitants of Remedios didn’t seem to mind – they were growing rich. Occasionally, due to the illicit nature of the commercial activity and the inability of resorting to local courts, disputes often escalated to violence and the town was repeatedly attacked by pirates when differences arose between local smugglers centered in the town and their illicit French and English business partners.

It was in this context that Catholic priest and Commissioner of the Holy Office of the Inquisition, José González de la Cruz (portrayed as Father Manuel in the film) arrived in Remedios from Havana sometime around 1657. Fearful of the spread of heretical ideas from exposure to outsiders, Father González almost immediately began a spirited and messianic campaign against locals suspected of dealing with heretics and even advocated for the relocation of the town and its inhabitants to another location closer to the interior of the island. In a report to the Spanish authorities in Havana, Father González even claimed that he had exorcised 800,000 demons in the small town of 613 inhabitants between 1657 and 1659. Father González was convinced that contact with heretics was slowly degrading the moral and spiritual fiber of the inhabitants of Remedios.

In the film, the town leaders are skeptical of abandoning the seaside location of the town with its access to the sea in exchange for the isolated and barren inland location suggested by Father González. But ultimately, through a mixture of fear-mongering and messianic determination, Father González was successful in convincing the inhabitants of Remedios of their impending existential and spiritual doom if they did not immediately abandon the demon-haunted town and the illicit trade with heretics that had made them so prosperous. Gripped by religious hysteria and trapped in an atmosphere of guilt and religious ignorance, a large contingent of the town’s inhabitants finally decided to abandon the demon-haunted town for another location in the interior of the island and began an exodus in 1689.

They would go on to found the village of Santa Clara, today Cuba’s fifth largest city.

Although the film was intended to tell the true story of the events that led to the abandonment of the town of Remedios in 1689, it also serves as a wider metaphor for the demons that have haunted Cuban society since the founding of the first colonial settlements by Europeans in the 16th century. Similar in nature to the craze that gripped the town of Salem in New England – the story of what occurred in the town of Remedios in late 17th century serves as a metaphor for the demons that plague modern Cuba – messianic ideology, totalitarianism, isolationist economic policies and an atmosphere of fear.

Although Cuba gained its independence from Spain in 1898 and experience a long and prosperous revival from 1902 to 1952 during the years of its democracy, the island is once again under the grip of a religious-totalitarian ideology, a mercantilist-Stalinist economic policy, and a culture of fear that has served to isolate Cuba from the world. Where Cuba had Catholicism in the 17th century to inspire guilt and feelings of spiritual doom, today it has Communism and a state-directed war against individuals who seek individual personal achievement and the creation of wealth. Where illicit trade with foreigners in the 17th century was prohibited by mercantilist Spanish policies, today it is curtailed by a Stalinist-style centralized economy and its prohibitions against almost all forms of independent and private commercial activity. Where 17th century Cuba had a Catholic doctrine that created an all-encompassing everyday reality that revolved around the theme of God against Satan, today it has Communism – with its all-encompassing ideology that frames everything around the duality of Communism versus Capitalism, of Rich versus Poor, America (Satan) against Cuba (Good).

Cuba remains an island gripped by fear of demons. It remains an island gripped by an obsession with the memory of its paranoid and fearful past. In the end, we have replaced one set of demons for another. One type of religious fundamentalism and ignorance with another. One false savior for another.

13 Points: A Socio-Economic Plan for Reform in Cuba

21 Sep
Havana at night.

Havana at night.

One of the hottest topics of conversation about Cuba seems to be the series of “reforms” implemented in the last couple of years by Fidel Castro’s younger brother Raul Castro. From allowing Cubans to finally buy and sell cars, to allowing them to work independent of the state in one of 181 different occupations allowed by the government, there is a general sense that things are “changing” on the island. But just how far have these reforms gone? Is Cuba really making an effort to liberalize its economy and allow for greater freedoms?

It wasn’t long ago that Cuba’s government recently approved its new Foreign Investment Law, but already the verdict seems to be out: Cuba has struggled to attract investment despite reforms. And despite bold predictions of growth by the government – the island managed only a mere 0.6% growth in the first half of 2014 – far below official estimates. The Heritage Foundation, alongside The Wall Street Journal recently released its Index of Economic Freedom, which ranks countries around the world based on a series of factors. Despite recent reforms, Cuba ranks 177th out of 178 countries. Only North Korea had more restrictions on economic activity.

So why exactly is Cuba struggling so mightily to stimulate its economy and spur growth?

Aside from the realities of the American embargo on trade with the island, Cubans refer to something known colloquially in Cuba as the internal embargo. The internal embargo refers to the government’s draconian control of its own economy and its stringent Soviet-style restrictions on personal freedom. Interestingly enough, despite the embargo the United States is still Cuba’s fifth largest trading partner. The truth is that the Communist government’s restrictions on economic and business activity would work to hinder economic activity even if the embargo didn’t exist.

So aside from the embargo, what can Cuba do if it was serious about reform? In a recent article, Cuban economist Pedro Campos listed a number of economic reforms that the state could undertake to truly put Cuba squarely on the path to prosperity. But I believe that we can go even farther.

Here, a socio-economic program for true reform in Cuba:

Economic Reforms

1. Removal of internal restrictions on the movement of people and goods within Cuba. As things currently stand, people within Cuba are not allowed to freely trade goods and products from one province to another. These restrictions distort prices and increase costs for average citizens. A coffee grower in the mountains of Eastern Cuba should be able to sell his product in the streets of Havana.

2. Removal of draconian import and export restrictions and tariffs. The state currently holds a monopoly on foreign trade in the island and Cubans who want to start their own businesses are prohibited from freely buying and selling goods with buyers and sellers outside the country. This increases costs, contributes to scarcity of goods, and restricts economic growth.

3. Removal of all restrictions on Cubans’ ability to work privately and to form their own businesses independent of the state. As it stands, the Cuban government has a very limited list of 181 professions of which Cubans are allowed to work in. This list includes such antiquated (and almost 18th-century-like) and limited professions as “shoe cleaner” and “plumber.” Doctors, lawyers, architects, engineers, technicians and other ordinary citizens should be able to freely contract their work and services.

4. Allow for the creation of business associations such as corporations and sociedades anonimas by ordinary Cubans. These entities would have the power to raise capital, form contracts, begin projects, own property, and have limited liability for their owners and associates. As things currently stand, ordinary Cubans are only allowed to work independent of the state if they obtain “licenses.” Only the state is allowed to own and operate business enterprises. Cubans with licenses to work independently are not independent private sole-proprietorships in the true sense of the word – they are legally merely independent contractors working for the state. These licenses do not grant their owners the same rights that they would have as owners and managers of independent business associations such as would be the case with a corporations or other privately-owned business associations.

5. Removal of restrictions on foreign investment. Cuba’s new Foreign Investment Law released a few months ago, although a step in the right direction, does nothing to help capital reach the hands of ordinary Cubans. Foreign investment is only allowed in state-owned enterprises. Investment, loans, and capital transfers to ordinary Cuban citizens is not allowed. A ordinary Cuban launching his own business is not allowed a business loan from his relatives in Madrid or Miami.

6. Removal of restrictions on the accumulation of wealth and property and an easement of restrictions on the sale and alienation of property. Stringent and rigid rules prohibit the accumulation of wealth and property by ordinary Cubans on the island. These artificial and unnecessary restrictions limit the participation of ordinary citizens in any sort of meaningful economic activity. Cubans before 1959 could freely sell and transfer property. Why can’t Cubans in 2014? The free transferability of property is one of the basic tenets of a truly free economy and should be a basic right open to all Cubans.

7. A reduction of the extremely high tax rate on individual business activity. One of the least spoken about aspects of the government’s recent reforms has been how the high tax burden (sometimes as high as 50% for some businesses) has led many independent businesses to close down. With such a high tax burden, barriers to entry into the economy remain high for the ordinary Cuban citizen. Those with access to remittances (and thus dollars) from abroad have an unequal advantage.

8. Elimination of the double currency. Cuba is one of the few (if not the only) countries in the world with a double currency. Tourists, travelers, and foreigners who do business in Cuba all do business with the Convertible peso, a currency that is pegged to the dollar. Ordinary Cubans are paid in the National Peso, a currency that is on average twenty five times less valuable than the convertible peso. As things currently stand, the double currency creates a country of haves and have-nots – those (such as those who work in the tourism business, prostitutes, and those who receive remittances) who have access to dollars and convertible pesos – and everyone else.

Socio-Civic Reforms

1. Freedom of expression. It is no secret that economic and personal freedoms go hand-in-hand. Cubans who wish to conduct business, or advertise their business, or criticize government inefficiency, corruption or policy should be able to voice their opinion freely without being subject to police harassment, arbitrary detention, jail time, or exile (or worse).

2. Freedom of the press. The facilitation of communication between citizens should not be a monopoly of the state. Currently, all forms of media – television, newspapers and radio are in the hands of the state. Cubans should be able to form their own independent newspapers and mediums of communication. This facilitates commercial advertising, national dialogue, and promotes the creation of a healthy and well-informed body politic.

3. Separation of powers. The devolution of powers from the highly centralized government to municipalities and provinces and the separation of powers between the executive, legislative and judicial branches of government are essential if Cuba ever hopes to truly create a society that is based on the rule of law. Cuba’s Communist 1976 Constitution concentrates most of its power in the hands of a few decision-makers at the very top.

4. The removal of the ban against political parties that are not the Communist Party of Cuba. The motto of the Cuban Revolution is “Everything within the Revolution, nothing outside of it.” A truly free and plural society has many voices. These voices are sometimes directly at odds with each other. There are workers, there are peasants, there are capitalists, there are merchants, there are entrepreneurs, there are social activists, there are communists, there are anarchists, there are conservatives and there are liberals – free societies are a complex agglomeration of different people – all trying to speak at once. Our government should be a reflection of the will of an entire nation – not of one single political party.

5. The removal of restrictions on access to the Internet. The Cuban government currently restricts its citizens’ access to the internet. The Internet, perhaps one of the greatest tools for communication, commerce, and dialogue in the history of humankind, is something that only 2% of Cubans have access to. Access is generally limited to those with connections in the government or those who have familial or outside connections with friends or relatives abroad. Even then, access is restricted to a limited state-controlled intranet. It’s about time that Cuba join the modern world.

These and a whole series of other reforms are just some examples of basic reforms that the Cuban government could undertake if it were truly interested in starting the path towards increased prosperity. The path to economic growth and increased personal freedoms is not a secret one.

Until then, the “reforms” were are seeing in Cuba are only cosmetic half-hearted attempts to appease and maintain control. If Raul Castro and his Politburo really want change to arrive in Cuba, they know where to begin.

Until then, you should remain skeptical about talk of “reform” in the island.

Dollars, dollars and more dollars

26 Jul

Havana Then and Now

[On the left, Cuba during its capitalist years, and on the right, under communism]

 “If you ask me to name the proudest distinction of Americans, I would choose–because it contains all the others–the fact that they were the people who created the phrase ‘to make money.’ No other language or nation had ever used these words before; men had always thought of wealth as a static quantity–to be seized, begged, inherited, shared, looted or obtained as a favor. Americans were the first to understand that wealth has to be created. The words ‘to make money’ hold the essence of human morality.”

– Ayn Rand

One of the things about Cuba that fascinates foreigners and travelers the most is the island’s large collection of old and antique American cars.  The association between Cuba and old cars is so strong that you are hard-pressed to find pictures of the island before eventually running into a picture of an old Chevy, Ford, or Buick – left over from the days when Cuba was awash with American influence.

It wasn’t always this way. Cuba wasn’t always awash with old cars. Those cars were new once. Cuba was a major importer of American cars until the Revolution in 1959, when Castro came to power and put the island on a collision course with the United States. A large part of the island’s middle and upper classes left in an exodus that continues to this day. Although Cuba’s government has rejected capitalism and all of its values – Cuba’s cars are a reminder that the island once looked to the United States as a source of inspiration and culture.

Before the Revolution, Cuban culture looked not to Spain or Latin America for inspiration – but to the United States. Art Deco architecture, American cars, modernism and everything American was celebrated.

In 1900, Cuba became the first country in Latin America to have an automobile. Cuba was also the place where the first woman in Latin America drove an automobile – Renée Méndez Cape. In 1950, it became the second country in the world to transmit television after the United States. In 1958, it became the second country in the world to transmit color television, also after the United States. As if though it weren’t enough to be in love with American culture, Cubans were also fierce proponents of capitalism and the entrepreneurial spirit.

But with the country’s rejection of capitalism and all of its values, Cuba today is only known not for its modernism and progressivism, but for its old cars, its cigars, decayed buildings and octogenerian dictators. The island’s decline is directly related to its rejection of capitalism.

In Cuba, it is illegal for citizens to accumulate wealth. The accumulation of wealth is considered an economic crime – one that can result in fines, jail and political harassment. Equality is imposed, and no one is allowed to be wealthy.

Venezuela, another country who’s government has rejected capitalism in favor of socialism, is finding itself in what may eventually be a similar situation. This car-crazed country’s automobile industry, once the third largest in South America, has seen its car production output drop by 80% in the last few years.

A lack of dollars and capital, and the government’s increased control of the economy has forced many car manufacturers in Venezuela to drastically cut production. The drop in production is directly related to its government’s animosity towards the profit motive and the idea of making money. In addition to placing limits on the amount of profits that corporations can make, the government frequently expropriates and nationalizes private property – creating an environment that discourages investment in the economy.

President Nicolas Maduro and his socialist Chavista government take any opportunity to demonize anyone who dares to create wealth. The government recently fined General Motors Venezuela after accusing it of selling overpriced car parts. “The only things that these little managers want is dollars, dollars and more dollars,” President Maduro said.

Ever since the first automobile arrived in Caracas in 1904, automobiles have become ingrained in Venezuelan culture. But ever since Maduro’s predecessor, Hugo Chavez, made the government the only source of greenbacks (dollars) in an attempt to control more and more of the economy, car manufacturers are finding it increasingly difficult to find the dollars they need to finance their operations.

Many Venezuelan car manufacturers now find themselves in survival mode. Once South America’s third largest car manufacturer – Venezuela finds itself in a precarious situation. Venezuela’s Chavista government has rejected capitalism and has demonized the profit-motive as evil. Making money is bourgeois and immoral. This is reflected in the government’s treatment of its private sector and anyone who has a business or wants to make any money. Such people are fascists and Imperialists. The result of this attitude towards entrepreneurship and economic liberty? Economic decline.  

Will Venezuela end up like Cuba? In the future, if nothing changes and Venezuela’s car industry disappears – will tourists and adventurers go to Venezuela to gaze at its collection of antique American cars?

Only time will tell. But one thing is certain – if Venezuela continues along the path it is going – its car manufacturing plants and factories will shut down and Venezuelans will have to learn to live with their parents, and then grandparents’ cars. Just like in Cuba.

Because when making money is a crime, when dollars cease to be the way that men deal with each other… well, we know what happens then.

As Ayn Rand eloquently wrote in her novel, Atlas Shrugged“Until and unless you discover that money is the root of all good, you ask for your own destruction. When money ceases to be the tool by which men deal with one another, then men become the tools of men. Blood, whips and guns–or dollars. Take your choice–there is no other–and your time is running out.”

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