Foggy Forecast for U.S.-Cuba Relations

Winds of change are blowing in both Havana and Washington these days, but in what direction no one really knows. Prevailing headwinds from entrenched interests on both sides are scrambling the signals, and may leave the Cuban and American people in the dust.

Let’s try to read the variables currently in play. In Cuba, the sixth Communist Party Congress recently met for the first time in 14 years to ratify President Raul Castro’s promising yet cautious plans to liberalize Cuba’s economy while maintaining a firm grip on political power. The gerontocracy of “historicos” present at the birth of the revolution anointed 80-year old Jose Ramon Machado Ventura as deputy to 79-year old Raul. Only three new members were named to the political bureau, with 12 retreads, including five generals, holding on to their seats. Younger Cubans once groomed to lead a post-Castro Cuba had been sidelined earlier for a variety of transgressions. Raul Castro’s older brother Fidel, now officially out of power, appeared on stage to bless the proceedings as a sort of cheerleader-in-chief.

And yet, underneath the sad spectacle of a fading elite, Raul Castro has managed to get a potentially sweeping set of economic reforms adopted by the party apparatus. Framed as essential “to ensure the revolution’s very survival,” these new measures look like a desperate attempt to stave off bankruptcy. They range from licensing private economic activity, opening idle land to farmers and allowing businesses to hire employees, to empowering people to buy and sell houses and cars and encouraging foreign investment. They include tough measures too, like shrinking the buying power of the longstanding ration card that every Cuban gets to subsidize basic goods, cutting unemployment benefits, and eventually dismissing anywhere from 500,000 to one million employees from the state sector.

It is too early to tell whether these measures will have the intended effect of breathing new life into a moribund Cuban economy. One key question is whether Cuban citizens will register enough small businesses to generate the kind of tax revenue the Cuban regime calculates it needs, and whether they will have enough left over to survive under a less generous welfare system. But at least they will have an opportunity to become more independent of the state, which employs about 85 percent of the five million strong workforce.

With greater self-employment may come a taste for some political freedom as well, though the Castros and their allies will no doubt continue to clamp down on dissent. In a nod toward the younger generation, Raul Castro agreed to devote a special party congress next January to address political reforms, including a proposal to limit presidential terms to ten years. And the recent release of all the 75 political prisoners caught up in the infamous “Black Spring” crackdown on dissidents in 2003 is one small sign that pressure for change, both internal and external, is having some effect.

It is not clear, then, whether this cloudy forecast will lead to brighter days for Cubans or the next Caribbean hurricane. But to the extent the United States can influence the trend (an assumption too easily taken for granted), now is the time to try. Unfortunately, a different type of old guard — this time on Capitol Hill with roots in the Cuban-American diaspora in Florida and New Jersey — is determined to block any meaningful change in U.S. policy.

In the earliest days of his administration, President Obama promised “a new beginning” in U.S.-Cuba relations and to his credit took some initial steps to expand travel and remittances for Americans with family on the island. He quickly fell, however, into the trap of a tit-for-tat approach, demanding additional reforms even as the Castro regime moved in a more positive direction. Despite having clear executive authority to do much more to loosen the embargo, Obama chose a timid approach of hiding behind the case of a USAID contractor arrested in late 2009 for distributing computer and satellite equipment under a Bush-era democracy promotion program. This certainly kept the hardliners in Washington and Miami happy for a while, but did nothing to protect Democrats from eventual defeat in the 2010 midterm elections. With the ascendancy of the Republicans to control of the House, including pro-embargo legislators as chairs of key committees, all hope for congressional action to soften the embargo is gone.

And yet, swirling below the hot air in Congress, President Obama managed to release new regulations last January that potentially could unleash new forces for change here and in Cuba. The new rules, which largely return us to the Clinton era years of expanded people-to-people exchange, provide general licenses for religious, media, research and educational travel; allow more U.S. airports to fly charter flights to the island; and permit Americans to make financial transfers up to $2000 a year to any Cuban not part of the government or party leadership. This latter item could open a critical lifeline to new microenterprises seeking small grants and loans to get started. The Treasury Department’s guidelines, however, still cling to a strict interpretation of the rules, at least on paper. Humanitarian organizations, for example, may not rely on one-off volunteers to carry supplies to needy people, and travelers “are prohibited from importing into the United States any merchandise purchased in Cuba, including but not limited to cigars and alcohol.” So much for helping struggling small businesses sell their handicrafts to eager Americans with cash to spend.

Nonetheless, with little room for political change in Cuba or the United States in the short term, it looks like this is as good as pro-reform constituencies in both countries are going to get. The key question is what they make of it. A determined effort by Americans to reach out and provide help to Cubans willing to take risks for economic and political freedom could make a difference in building constituencies from below for further reforms. In the meantime, be prepared for a bumpy ride.