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IDS/UG 50th Anniversary Working Paper Series- Working Paper 12.c/12
Working Paper
IDS
e
Institute of Development Studies
Cuban/Caribbean and Latin American Relations: A
Transition from Politics to Economics
Dr. Leroy Binns
DECEMBER 2012
M
University of Guyana
Turkeyen Campus
Guyana
May 2014
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Honouring the Past, Moulding the Present, Transforming the Future
Cuban/Caribbean and Latin American Relations: A Transition
from Politics to Economics
by
Leroy Binns*, PhD
*Leroy A. Binns Ph.D. is an International Relations specialist whose areas of expertise
are East/West Relations and Caribbean and Latin American Affairs. He serves as a
consultant and academic advisor within the Graduate School of Interdisciplinary Studies
at
The
Union
Institute.
Direct
correspondence
to
Leroy
A.
Binns
(Email:
[email protected])
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Published by the Institute of Development Studies,
University of Guyana,
Turkeyen, Georgetown,
Guyana, South America
www.idsguyana.org
May 2014
ISSN 1019- 1305
This paper should be cited as: Binns, Leroy (2014). Cuban/Caribbean and Latin
American Relations: A Transition from Politics to Economics. Institute of
Development Studies, University of Guyana Special Working Paper Series, Working
Paper # 12.c/12 to commemorate the 50th Anniversary of the University of Guyana
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ABSTRACT
In order to substantiate the hypothesis, Cuba has replaced the transfer of ideology with
a dose of generic commercial activities, this composition utilizes qualitative research
methods to demonstrate a Cuba in contradiction with its past. With the aid of texts,
government data, media publications, excerpts and tables it emphasizes an
interdisciplinary blend of history, politics and economics in relaying a scientific
underlying message on Havana’s exportation of communism throughout the Caribbean
and Latin America and constructs a narrative of a country’s foreign policy partly defined
by chaos in promoting social deliverance to the region. At first emergence of a
revolution symbolizes a break from the past dominated by the West particularly the
United States of America. Crystallization of a novel ideology is accentuated with the
advancement of internal applications that accelerated the role of centralized
government and its commitment as a surrogate of the Soviet Union to the exportation of
socialism throughout neighboring Caribbean and Latin American nations in search of
political and economic identity. The literature records inroads and resistance in
Jamaica, Grenada, Nicaragua and El Salvador that served as scenarios of an ongoing
East/West saga. It also brings into perspective susceptibility with regards to the
sustenance of the Cuban political machinery and offers an alternative in a reversal of
leadership to consequences resulting from the disintegration of the Soviet Union. In
summation at the core of the presentation is an era steeped in Cold War context and
residual effects in the form of a philosophical contradiction– the absence of communism
consistent with the early stages of reformation within the Eastern Bloc and the
emergence of a global economy.
Keywords: Cuba, Caribbean, Latin America, politics, economics
SECTION 1: INTRODUCTION
The intensification of communism in the Caribbean and Latin America during the 1970s
was as a response to incompetence of the capitalist system to confront social
discomfort pertinent to employment, education, urbanization, productivity and fiscal
management within the region. Ironically substitution of one ideology with another is
also accentuated with social and economic uneasiness that climaxed with fragmentation
of the Soviet Bloc and the integration of the world markets. The latter has replaced
emphasis on political persuasion and rekindled a market oriented economy specifically
related to trade between Cuba and the Caribbean and Latin American countries.
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As early as the 1960s, communism was equated with radicalism in the Third World.
Classic illustrations were influenced by Ernesto Guervara’s crusades as seen through
progressive organizations specifically Columbia’s National Liberation Army (ELN),
Venezuela’s
Armed
Forces
of
National
Liberation
(FALN)
and
Guatemala’s
Revolutionary Movement of the 13th of November (MR-13)– all of which gained various
forms of endorsements from the government of Havana and were presumed
accountable for urban violence, attacks, assassinations and political kidnappings.
Furthermore Cuban President Fidel Castro’s refusal to compromise on peaceful
coexistence coupled with events such as the Bay of Pigs and the Cuban Missile Crisis
led the charge for armed revolution throughout the Americas (Blasier, 1976).
Besides, the 1966 Tri-continental conference staged in Havana was initially formulated
to discuss and implement action in defiance of Western ideology. Delegates from the
continents of Asia, Africa and North America were in attendance as were
representatives from the world’s two largest socialist states, the Union of Soviet
Socialist Republics and the Peoples’ Republic of China. Despite ideological differences
between the two most senior parties based on philosophical interpretations they
vehemently debated the need to liberate oppressed people from the tyranny of
capitalism. The meeting also enhanced Cuba’s presence within international circles and
increased tensions related to socialism in Africa and Latin America (Jackson, 1969;
Horowitz, 1969).
Havana’s commitment and steadfastness to revolutionary ideals were manifested
through other historic events. The Organization of Latin American Solidarity held a
summit in Cuba in August 1967 and invited approximately 160 dignitaries from
neighboring countries, international organizations and socialist states. It was at this
forum that a militant and defiant Castro denounced Western intrusion as the path to
dependency and along with a gathering of ultra leftists articulated developing and
promoting unity of anti-imperialism movements in Latin America as the central force
against US political and economic aggression (Ratliff, 1976).
In theory, the anti-American stance seemed appropriate but it had repercussions. Case
in point, in the 1960s, allegations of Cuba’s interference in Venezuela’s internal affairs
prompted America, Latin American and Caribbean countries to severe diplomatic,
economic and cultural connections with Cuba. Rippling effects would later result in
sanctions from the OAS. Yet the island’s reliance on Soviets subsidies became the
decisive factor in the solidification of an attachment to the Kremlin and a compromise on
the questionable 1968 Russian invasion of Czechoslovakia (Suchlicki, 1972; Falk,
1985).
As the controversy surrounding détente and negotiations were inadequate to prevent
unwarranted proxy confrontations, Havana pursued practical engagements. Albeit
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Castro was opposed to the pro-western regimes in 1972 he entertained diplomatic
relations with Barbados, Guyana, Trinidad and Tobago and later Venezuela and
Columbia. Further bilateral arrangements were formalized with Argentina and the Latin
American Economic System was established. However, both lacked political will and the
capacity to substantially bolster Cuba’s agenda (Sobel, 1978).
Rapprochement with the White House seemed attainable with the changing of the guard
to Jimmy Carter in 1976. Reconnaissance flights were drastically reduced, trade with
US subsidiaries was finally permitted and government officials, academics, journalists
and Cuban citizens were approved to visit the United States. Cause for optimism
nonetheless lacked longevity as Havana’s solidarity with the Peoples Liberation
Movement of Angola (MPLA) brought the process to an abrupt halt.
The involvement of both Cuba and America on opposite sides of the fence in the
Angolan war and moreover the successes of the MPLA with Cuban assistance placed
both countries on a collision course. The situation was likewise largely exacerbated by
the discovery of a Soviet combat brigade in the region and the presence of an ever
growing Cuban exile community in southern Florida whose influence with right wing
Washington politicians widened the rift. Other issues of magnitude included the
Grenadian and Nicaraguan revolutionaries who Castro wholehearted embraced (MesaLago, 1982; Aguila, 1984).
Following the 1981 inauguration of Ronald Reagan, US/Cuban relations deteriorated
rapidly. Early in his tenure the State Department issued a document that objected to
Cuba’s involvement in the Salvadorian struggle. It also addressed Nicaragua as an
accomplice to such action and despite international criticism regarding the credibility of
the evidence, the new administration sought to undo Cuban fraternization in Latin
America.
The Jamaican elections and the Grenadian catastrophe in 1980 and 1983 respectively
staged at the hands of the American government along with the embarrassing execution
of fifteen prominent anti-socialist citizens during the tenure of Suriname’s President Desi
Bouterse in 1982 encouraged the Cubans to aid and abet Nicaragua and the guerrilla
movement in El Salvador. In response Washington counterattacked by utilizing
Honduras as a training facility for Salvadorian and U.S. military personnel and monetary
aid was made available to the corrupt Duarte regime to suppress social dissent. The US
was also effective guaranteeing assistance to the Nicaraguan contras which
consequently led to fatalities and injury of many citizens and paralyzed the country’s
economy.
The synopses that follow exhibit Cuba’s attempt to debunk the dependency theory
articulated by Argentine economist Raul Prebisch in the 1950s. These illustrations
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perpetuate East/West antagonism in a quest to resolve injustice and inequality in the
Caribbean and Latin America at the hands of Washington (Prebisch, 1959; Erisman,
1984).
SECTION 2: THE TRANSITION OF CUBAN/CARIBBEAN AND LATIN
AMERICAN RELATIONS
2.1 Jamaica
In Jamaica, Michael Manley and his party, the Peoples National Party (PNP)
campaigned on the platform of democratic socialism and won overwhelmingly in 1972.
Once a conservative National Workers’ Union (NWU) boss, Manley began to alter the
Jamaican political landscape and was likened to Joshua an effective spiritual leader
who gained notoriety through deeds mentioned in the bible. To others mainly
Rastafarians aware of his possession of a cane awarded by Ethiopia’s Emperor Haile
Selassie he was revered as the man with the rod of correction.
Beyond semantics, the prime minister’s insight of previous political outcomes impacted
his support of state ownership of the means of production. Subsequently to the
country’s independence in 1962 foreign trade increased eightfold, normal GNP grew
sevenfold and per capita national income likewise rose sevenfold. In real terms GNP
growth averaged 5-6% per annum overall and 3-4% per capita. This occurred largely at
the expense of the underprivileged exploited by overseas entrepreneurs. BauxiteAlumina attracted North American transitional companies namely Alcan, Alcoa,
Reynolds and Kaiser while tourism, construction and manufacturing enticed foreign
entities with comparable ulterior motives.
To repair a growing trend of income inequality and widespread unemployment, the new
prime minister’s local agenda for social mobility involved vocational training, literacy
programs, free education and land reform. Moreover Manley’s extended support for
nonalignment led to diplomatic relations with Cuba and solidarity with the independence
movement in Puerto Rico (Fage, 1970; Dominguez, 1989).
The Manley regime received the endorsement of the masses and a Marxist-Leninist
group called the Workers’ Party of Jamaica (WPJ) in denunciation of capitalism and
admiration of achievements. It like its Cuban counterpart diminished the power of the
private sector through increased public ownership which first became obvious in the
bauxite and tourism industries (Levine, 1983).
As a bond began to flourish, Cuban health care practitioners were assigned to hospitals
while construction workers participated in the creation of dams, schools and communal
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farms – all under the watchful eyes of the White House that displayed displeasure.
During Manley’s second term (1976-1980) the island was starved of private investment
as the International Monetary Fund (IMF) intentionally established an unattractive
atmosphere with restrictions such as forced devaluations of the local currency and the
unavailability of funds, goods and services culminating in the terminations of 10,000 to
11,000 employees and the dismantling of a wide range of social programs. As a result,
Jamaica experienced an accelerated wave of emigrants and their capital and a crippled
economy (Bernal, 1984).
The return of the Jamaican Labor Party (JLP) in 1980 led to privatization and the
termination of diplomatic relations with the Republic of Cuba (See Table 1).
Table 1: Ideological Effects of the 1976 IMF Program
Before IMF
Anti-imperialism
Anti- capitalism
Characteristics
of
Democratic
Socialism
positive response from all sectors from
all sectors
Down-played: decline in anti-imperialist
except
Positive response from workers and the
unemployed.
Negative response from comprador and
national capitalists, small businessmen
Anxiety among middle class, small
farmers
cultivators
Egalitarianism
Participatory democracy
Anti-communism
Anti-communism
Pro-imperialism
Positive response from workers,
unemployed small farmers, cultivators
Negative from business sector and
professionals
Positive response from all sectors
Characteristics of JLP Nationalism
Positive response from comprador and
national
capitalists
professional
bourgeoisie and workers who blame
Moderate appeal to small businessmen
and small farmers indifference from
workers and unemployed
Positive response from comprador and
national
capitalists,
professional
bourgeoisie and workers who blame
Moderate appeal to small businessmen
and small farmers indifference from
workers and unemployed
Positive response from comprador and
capitalists
Indifference from all sectors
After IMF
own-played: decline in antiimperialist sentiment: except for
anti-IMF of the left
Down-played: mixed economy
and the role of private sector
emphasized, decline of anticapitalists sentiment and growth
of anti- government feeling
Down-played:
desirability
increasingly called into question
Remains but not as important as
bread and butter issues
Greater response from petty
bourgeoisie and workers who
blame socialism for declining
living standards
As seen above capital seen as
means of restoring prosperity
Anti-corruption
Growing response from all
classes
Social
harmony
(anti-class Positive responsive from comprador Growing response from small
politics)
and
national
capitalists
and businessmen
and
workers
professional middle class
unemployed and small farmers
Indifference from all sectors
still relatively indifferent
Source: Richard Bernal, “IMF in Jamaica,” Latin American Perspectives (Summer 1984), 68.
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2.2 Grenada
In 1979 forty men roused a coup that overthrew the ruthless Eric Gairy regime and
brought Maurice Bishop and the New Jewel Movement (NJM) to power.
Prior to the revolution the country’s head of state controlled large agricultural property
and encouraged a system of patronage among the Grenada United Labor Party (GULP)
supporters. Overt graft was commonplace as was constant victimization of the working
class apparent through a series of unfavorable incidents namely suppressed strikes in
1973, a political demonstration a year later in favor of democratic standards and a
presumed manipulation of the 1976 general election. However under the new
leadership the government immediately introduced adjustments and announced the
necessity for a socialist Grenada (Caribbean Insight, 1979).
St Georges with the aid of Havana rejected parliamentary democracy and embarked on
social programs in the areas of health, education and agriculture to uplift the
unemployed and stabilize the country’s economy. Equally as important was Cuban
assistance of manpower, machinery and the sum of $60 million to help in the
construction of the island’s new international airport (Falk, 1985; Duncan, 1985).
As time progressed there was the assumption on Capital Hill that Grenadian/Cuban
comradeship had impelled the closure of right wing newspapers, the Grenadian Voice
and the Torch and an air of militancy and dominance on the island. Bishop was also
confronted by Caribbean counterparts Tom Adams of Barbados, Eugena Charles of
Dominica and Edward Seaga of Jamaica – all of whom were utilized by the United
States
to
propagandize
developments
in
Grenada.
Meanwhile
the
Reagan
administration initiated the Caribbean Initiative Plan (CBI) a monetary and trade
package worth $11 million over three years which excluded Grenada in order to coerce
political compliance on the island.
In the end, Bishop’s concession – elections as demanded by Washington resulted in his
demise as the decision created a split within the central committee, the collapse of the
government and the invasion of the United States (Levine, 1983).
2.3 Nicaragua
Cuba’s association with Nicaragua was based on a common past. Before the Cuban
revolution, the Batista government ruled Cuba a proxy of United States at the expense
of its citizens. The Somoza regime in exchange for aid and the sustenance of power did
the same in Nicaragua.
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The treacherous Managua dynasty produced a very small elitist hierarchy and a large
underprivileged lower caste. Among the former were the president’s closest advisors,
friends and associates who owned the country’s most valuable assets in contrast to an
impoverished majority lacking democratic representation. Nevertheless in response to
suppression, the country experienced a revolt and with perseverance a desired
outcome –the removal of Anastasio Somoza in 1979 and a new dawn with Daniel
Ortega and the Sandinista National Liberation Front (FSLN) (Falk, 1985).
Following the installation of the government of reconstruction, Cuban/Nicaraguan
diplomatic ties were forged and complimented with Cuban support particularly in health
and education. Initially one hundred doctors assumed duties at various hospitals as part
of a 1979 exchange agreement and a pledge was made to provide seven hundred
scholarships and one thousand teachers and forty professors for elementary, secondary
and tertiary education. Cuba’s involvement likewise entailed an economic arrangement
to supply $130 million worth of agricultural, industrial and building equipment.
Consequently construction workers spent long periods alongside their Nicaraguan
counterparts improving the country’s infrastructure and 1,000 to 2,000 technicians and
security personnel shared experience in their respective fields.
The process of modification nonetheless was turbulent. Ideological problems arose
within the ruling Junta between the likes of Ortega and Moises Morales while critics
Violetta Chamorra, Alfonso Robelo and a rebel organization (the Nicaraguan
Democratic Movement (MDN) and the Frente Amplio Opositor (FAO) coalition) sought a
public forum to discredit the regime. Moreover in the years ahead, CBI interference
engineered by the US government via the support of military assistance to the rebels in
Nicaragua and to the neighboring governments of Honduras and El Salvador and
Nicaragua’s inability to access funds from the IMF and the World Bank amidst rapid
economic decline persuaded the regime to concede to an election which it lost in 1991
(Erisman, 1984).
2.4 El Salvador
In view of economic debility underscored through decreased GDP, industrial disputes,
high inflation and unemployment, numerous assassinations and violations of human
rights by Salvadorian military and paramilitary forces, the Cuban government began to
play the role of sympathizer to a country in distress. An involvement commenced in
1981 with Havana shipping arms and other forms of assistance to the country’s
communist party as did her mentor the Soviet Union.
Faced with the rising tide of nationalism, the merger of the Farabundo Marti National
Liberation Front and the Social Democrats and a national strike, the incoming US
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President Reagan created a shift in policy. According to official documentation he was
cited as saying “The situation here you may say is in our front yard, it is not El Salvador.
What we are doing …. is trying to halt the infiltration into the Americas by terrorists, by
outside interference, and those who aren’t just aiming at the whole Central and possibly
later South America and I am sure eventually North America. We are trying to stop this
from being exported here, backed by the Soviet Union and Cuba.”
In apprehension of communism in Latin America, Washington offered military
sponsorship (See Table 2). The aid package included aerial weapons, helicopters, gun
ships and military training in bordering Honduras whereas additional attempts to settle
military conflicts brought to life the Arias Peace Plan. In addition, America sought to
procure San Salvador’s attention through her influence with the international banking
institutions namely the World Bank and the Inter-American Development Bank that
provided loans at lenient rates to the government of El Salvador.
Table 2: US Economic and Military Aid to El Salvador (in the millions)
US Fiscal year
1979
1980
1981
1982
1982
1983
(est)
(supp)
Economic Aid
Economic support funds
Development Assistance
9,100
6,045
P. L. 480 Title 1+
43,155
44,900
33,300
40,000
128,000
35,000
105,000
25,000
3,000
17,200
22,400
30,000
3,269
9,100
7,100
4,900
Housing Investment Guaranty
9,500
5,500
15,000
Commodity Credit Corp
4,000
27,045
24,000
72,024
136,514
144,278
5,947
10,000
6,500
8
3
8,500
300
492
1,000
25,000
55,000
6,255
35,495
81,000
35,000
61,300
78,279
172,009
225,278
163,000
226,221
P.L 480 Title11
Total
2,573
8,618
128,000
164,921
Military Aid
Foreign Military Sales
Military Assistance Program
Training
Section 506 FAA
Total
Total econ + mil assistance 8,618
60,000
35,000
1,300
Source: US Dept of State, Congressional Budget Justification for Foreign Operations, Fiscal Years 1979
– 83.
In short, America’s phobia of a 1989 Frente Democratico Revolucionario/Farabundo
Marti para la Liberacion Nacional (FDR/FMLN) victory, the possible impact of such
outcome on Guatemala, another Latin American country exposed to an identical fate
and the disbursement of approximately $3.6 billion over a nine year period (1979-1988)
to right wing El Salvadorian political machines fell short of a scripted conclusion. In
essence a metamorphosis favoring the White House eluded Washington and the
Christian Democrats for almost a decade (Symth, 1989; Wiarda, 1990; Haggerty, 1990).
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Unexpectedly the late 1980s to early 1990s advanced a change in the course of history
when a domino effect of epidemic proportion purged the Soviet Bloc of communism,
thus isolating Cuba. Confronted with an inability to dislodge the effects of the Prebisch
dependency theory as is evident with the case studies previously under discussion and
more so the disintegration of the Soviet Union, Havana abandoned the exportation of
Marxism in favor of a market economy. While the latter was lacking on the domestic
front, evidence of reaction in times of crisis in this case the Special Period is apparent
through the application of commercial association with the Caribbean and Latin America
where the vibrancy of economic alliances highlight a tendency towards promoting
regional trade. In contrast an ageing Cuban administration survived by reinventing the
wheel to a changing environment. However such a privilege as referenced herein was
not afforded socialist administrations in Jamaica, Grenada and Nicaragua despite their
willingness to negotiate with the White House hence their demise.
The following are abbreviations of the Association of Caribbean States, the Caribbean
Community, the Ibero-American Organization and the Group of 77 to which a Cuba
under renovation shares an affiliation (Amuchastegui, 1999).
2.5 Association of Caribbean States
ACS, the 1994 brainchild of Cuba consults, cooperates and acts on matters of trade,
tourism and natural disasters. Its membership includes but is not limited to the
Bahamas, Barbados, Belize, Columbia, Cuba, Dominican Republic, El Salvador,
Grenada, Guyana, Honduras, Mexico, Jamaica, Nicaragua, Panama, Suriname,
Trinidad and Tobago and Venezuela.
2.6 The Caribbean Community
CARICOM is a miniature model of the European Community emphasizing the
integration of trade and commerce and the establishment of a regional court to benefit
member states. This body is comprised of eleven mostly Anglophone Caribbean nations
with observer status granted to an additional ten including Cuba the host of the 2008
summit.
2.7 Ibero-American Organization
This contingent of primarily Latin American countries with the exception of Portugal and
Spain is committed to social justice through improvements in the quality of life and
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social facilities. Cuba was granted the opportunity of hosting its 9 th meeting in
November 1999.
2.8 G-77
A coalition of 133 member states that transcends the boundaries of the Western
Hemisphere with the inclusion of African and Asian countries adheres to comparable
values pertinent to development through shared resources and expertise. Havana
played host to this gathering in April 2000.
Cuba also enjoys the benefits of full membership within the Latin American Association
for Integration, the Latin America Parliament and the Latin American Economic System
but declined reinstatement to the Organization of American States (Interpress Service,
1999; ACS News Release, 2001).
Despite the disadvantage in natural resources of most participating states and a yield
from Caribbean trade recorded at 130 million pesos in 1994, Cuba’s benefits from such
activity increased beyond 65% in 1998 (See Tables 3 &
4). In contrast the Latin
American figures between 1998 and 1990 which totaled $7.5 billion is expected to
escalate beyond 50% by 2005 (Gonzalez, 1997).
Table 3: Cuban Trade with the Caribbean (exports and imports in millions of pesos)
1974-83
181.3
1984-89
36.7
1990
5.0
1991
7.0
1992
121.0
1993
30.0
1994
130.0
Sources: 1974 – 1992: Statistics from the Ministry
of Exterior Commerce of Cuba
Business tips on Cuba 4, April 1995.
Notimex, June 4, 1995.
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Table 4: Trade between Cuba and the insular Caribbean (in million of dollars)
Country
1993
1995
1998
Antigua
1.9
3.6
0.1
Dutch Antilles
56
229
77
Bahamas
3.5
1.1
24.3
Dominica
0.5
0.2
0.3
Guadeloupe
0.2
1
0.5
Haiti
6.4
16
114.1
Cayman Islands
0.1
0.6
1.6
Virgin Islands
0.5
1.2
0.3
Jamaica
6.3
2.7
6.9
Martinique
0.9
0.7
0.6
Dominican Republic
11.9
22.5
50.5
Trinidad & Tobago
7.2
39.2
25.4
Guyana
0.3
0.6
2.6
Total
95.7
318.4
304.2
Source: Cuban Review, July 2000
Since 1990 commercial traffic between Cuba and the Caribbean by all accounts grew
from at least $8.6 million to beyond $200 million in 2000 (Granma, 2000).
Testament of Cuba’s relentless pursuits to bolster economic interaction is magnified
through Castro’s state visits to Barbados, Brazil, Dominican Republic, Grenada,
Jamaica, Mexico, St Lucia, Trinidad and Tobago and St Vincent and similar overtures
on the part of Caribbean and Latin American heads of state signaling ongoing
possibilities. In fact, commitments of unity were echoed by leading politicians and
capsulated by former Prime Minister Kenny Anthony of St Lucia who stated, “I have
repeated expressed that Cuba is a part of the Caribbean family whose system of
government and traditions deserve mutual respect.” In similar fashion the former Prime
Minister PJ Patterson of Jamaica concurred, “We support Cuba and are implacably
opposed to the economic blockade against Cuba which is morally wrong and
contravenes the right to sovereignty.”
Besides verbal confirmation and business endeavors with the countries aforementioned,
some individual maritime agreements went into effect between Cuba and Mexico,
Belize, the Netherlands Antilles, Trinidad and Tobago, Jamaica and the Dominican
Republic. New or additional Cuban air connections expanded to the San Jose Group
(Mexico, Columbia and Venezuela), Central America, the Bahamas, Jamaica, the
Dominican Republican, Barbados and the Cayman Islands. In addition academic
contracts were awarded to students from Grenada, Haiti and St Lucia and textile and
hotel arrangements materialized with Mexico and Jamaica.
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With tourism accounting for 43% of regional GDP within the Caribbean in 1999 and 41%
of all capital investments, Cuba the prospective tropical gem has utilized the services of
the 21st Tourism Convention of Havana and the Caribbean Tourist Organization (CTO)
to elevate the Caribbean in general and forge joint ventures with the Dominican
Republic, Jamaica, Mexico and Guatemala. Said exposure would set the stage for
acceleration in commerce as by 2005 Cuba’s domestic exports to the Caribbean was in
excess of EC$ 178 billion – a trade surplus of EC$ 130 billion (Gonzalez, 1997;
Jayawardena, 2000; Cubaminrex, 2011).
Amid some successes, a set of ill-fated circumstances specifically natural disasters,
inadequate management, a lack of demand and fluctuating prices have incapacitated
the country’s ability to diversify the economy effectively rendering it hostage and heavily
reliant on tourism. This industry, while a proven cash cow, is incapable of single
handedly redressing the island’s balance of payment deficit with its major trading
partners (See Tables 5 and 6).
Table 5: Cuba: Contribution to GDP by Sector 2006
Sector
Tourism
Manufacturing
Construction
Agriculture and Fisheries
Mining
%
67
15
7
5
1.5
Source: EIU, 2006
Table 6: Balance of Payments 2006 (Bn)
GDP
Exports
Imports
Balance of payment deficit
GDP per capita
Inflation
36.2
20
75
55
0.33
5%
Source: Caribbean Export Development Agency,
2006
The inclusion of the Caribbean and Latin America as markets for the export of goods
and services is laudable and in part responsible for an economic expansion which grew
from 11.5% of GDP in 2002 to 21% in 2005. However, the sustainability of a viable
relationship is under intense pressure, providing side effects of dual currencies and
exchange rates are ignored. Failure at revision is culpable for inconsistencies that erode
confidence thus reducing the potential of the domestic market. In real terms such
oversight negatively affected the balance in trade recorded at -7.1% in 2002 to -10.7%
in 2007 and an external debt from 10.4% to 15.2% of GDP within the identical time span
(ONE, 2002, 2009).
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Adding insult to injury is the 2008 global recession and related factors; a collapse of the
world market price of nickel and inflated world prices for oil and food along with three
devastating hurricanes that weakened Cuba’s macro-economic prospects. As the rate
of GDP growth declined from 7.3% in 2007 to 4.1% a year later, stagnant exportation at
21% of GDP was matched with an increase in fiscal deficit (6.9% of GDP) and balance
of trade (2.9% of GDP) in said year (Vidal and Fundora, 2011). Further consequences
from the debilitating weather onslaughts estimated at $9,722 million to housing and food
production led to an escalation in imports from 17.6% of GDP in 2007 to 23.3% in 2008
(See Table 7).
Table 7: Macro-economic Indicators 2001-08 (%)
Indicators
01
02
03
04
05
06
07
08
GDP (constant prices)
3.2
1.4
3.8
5.8
11.2
12.1
7.3
4.1
Exports/GDP (current prices
13.2
11.5
13.0
16.0
21.0
18.7
20.3
20.4
Imports/GDP (current prices)
16.1
13.2
13.6
15.3
18.3
18.5
17.6
23.3
(Exports+imports)/GDP
29.4
24.7
26.6
31.3
39.4
37.2
38.0
43.7
-2.9
-1.7
-0.7
-0.7
2.7
0.2
2.7
-2.9
-9.0
-7.1
-7.2
-7.6
-12.3
-12.0
-10.7
6.1
5.4
6.5
7.1
14.9
12.2
13.5
(current prices)
Trade balance/GDP
(current prices)
Goods
Services
Terms of Trade
14.0
-7.9
15.2
9.9
-2.3
26.2
4.9
-34.3
External debt/GDP
10.4
9.8
10.3
15.2
13.8
14.8
15.2
15.8
-2.3
-3.0
-3.0
-3.7
-4.6
-3.2
-3.2
-6.9
38.9
40.5
37.6
38.0
46.1
38.2
37.2
40.6
-1.4
7.3
-3.8
2.9
3.7
5.7
2.8
-0.1
(current prices)a
Fiscal balance/GDP
(current prices)
Money supply/GDP
(current prices)
Inflation (in Cuban pesos)
Sources: ONE, Anuario estadistico de Cuba 2007, 2008 (Havana, 2008 and 2009); ECLAC, Cuba:
evolucion economica durante 2008 y perspectives para 2009 (Mexico, 2009).
a Excludes debt not subject to negotiation since 1986: US$ 7,592 million.
For over 7 years, Cuba has benefited from a courtship with Venezuela borne mostly
from agreements to share subsidized oil and exploration privileges in exchange for
teachers, medical and technical professionals. Consequently Venezuela is currently the
island’s largest trading partner accountable for 27% of total trade - a bilateral
relationship valued at $1.4 billion in 2004 and at $5.26 in 2008 (See Table 8).
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Table 8: Bilateral Trade between Cuba and Venezuela 2008
Year
Value in dollars
(bn)
2004
1.4
2005
2.0
2006
2.6
2007
3.5
2008
5.26
Source: Newsmax 2/27/07 and BBC
News 12/13/2009.
One year later the stakes between both countries were raised with an economic
cooperation agreement worth $3.2 billion to address energy, sports and technology.
Unsurprisingly in this volatile environment, Caracas is not immune from economic
constraints triggered by the global recession. As such, reduced Venezuelan GDP
hampers the demand for Cuban exports. The same is obvious with less resourceful
Caribbean and Latin American partners, many of whom for years have been limited in
offerings, lacking in purchasing power and are now nearing paralysis. On the other end
of the spectrum the rippling effects of this cataclysmic distraction are encouraging
contraction from the likes of Canada, the European Union and Russia which together
are the economic engines behind 25% of the island’s trade. Such is profoundly
acknowledged by Cuba’s Minister of External Trade Rodrigo Malmierca who laments,
“At the end of the third quarter of 2009 statistics show that Cuba’s total trade in goods
was 36% lower than the same period of 2008” (Granma, 2008; EFE, 2009; ONE, 2009;
2010).
Notwithstanding an island that is credited as the third most important tourist market in
the region with a million visitors or 10.4% growth during the first quarter of 2011 and a
haven for nickel and possibly oil has endless commercial potential. A lack of information
regarding opportunities in Cuba, inadequate social infrastructure, a demand for
structural adjustments to Cuba’s business practices and confrontation with US
legislation are obstacles that must be overcome for an unrestricted exchange of goods
and services to become a reality (Cubaminrex, 2011).
SECTION 3: CONCLUSION
The Prebisch dependency theory endorses Lenin’s notion of imperialism. In essence it
opposes economic penetration of Third World countries such as Cuba which
experienced an inferior relationship with Spain and the United States. The doctrine is
primarily based on the maintenance of a divide between poor and wealthy states via
unequal terms of commercial transactions of raw material originating in the
underdeveloped world and manufactured commodities from industrialized countries. By
extension it also speaks to North/South politics, in this case reliance on Moscow which
became unhinged with the collapse of the Eastern Bloc.
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Faced with the loss of its chief ally and associated monetary benefits President Fidel
Castro sought to overcome what became known as the Special Period with invitations
to invest and attempts to advance trade. The same is true over two decades later as his
successor and younger brother Raul faced with a global financial downturn is jump
starting a process that was partly abandoned in its infancy in the mid to late 1990s.
Thus far, his domestic agenda includes public access to electrical and electronic
appliances, cars and hotels, land reform and wage adjustments whereas foreign
interactions noted within conform to universal commercial principles and practice
(Ambassadors Review, 2008; Prebisch, 1959).
While observers may differ in assessment of leadership displayed by the Castro
brothers particularly their link to conversion, most will concur the nature of Cuba’s
transition is unclear if the following questions are on play.
Is Raul in his final term ending in early 2018 prepared to secure his place in history by
acknowledging that Cuba is inextricably connected to the global market and in so doing
emulate with all its discrepancies the Chinese model – a mix of socialist governance
with consistent long term market oriented policies?
Is the island’s assumed heir Council of State Vice President Miguel Diaz-Canel a true
reformist?
Can Venezuela’s newly elected president Nicolas Maduro sustain power amidst strong
opposition coupled with severe economic hardship? If not, what will be the implications
of the termination of Petrocaribe on Cuba?
Can Cuba maximize on a 2012 initiative proposed by Brazil’s president Dilma Rousseff
that promotes the production of ethanol on the island as an efficient and alternate
source of energy?
An island at crossroads while susceptible to unexpected external undercurrents
currently awaits decisive action akin to progress on steroids.
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