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Slow Train Coming

Cuba has a new president. No one knows how he plans to change Cuba — but it’s clear he’s got his work cut out for him.

Newly elected Cuban President Miguel Diaz-Canel (R) shakes hands with former Cuban President Raul Castro during the National Assembly at Convention Palace on April 19, 2018 in Havana, Cuba. Alexandre Meneghini / Getty

On April 19, for the first time in decades, Cuba ceased to have a head of state surnamed Castro. Miguel Díaz-Canel Bermúdez is now president.

This has sparked endless speculation about what kind of man he is and how the new administration will function. Some of this commentary has offered genuinely interesting insight into his background while much else has indulged in speculation. The difficult truth is that right now nobody knows what his ascension means for Cuba. Perhaps not even Díaz-Canel himself.

There are two main reasons for this. First, as many have noted, Díaz-Canel is not nearly as well-known as his predecessors. Though he is a career politician, we have seen little more than glimpses of his thought process and character. For most of his time in public life he has been a middling official, largely limited to carrying out policies set by the Communist Party Central Committee. It is unclear what he will be like at the helm of government.

The second reason his government’s trajectory is so difficult to predict is that unlike Fidel — or, to a lesser extent, Raúl Castro — Cuba’s new head of state faces numerous checks on his ability to act unilaterally. The mechanisms by which the Cuban government cultivated legitimacy in the past have been weakening for years and some of them, such as personal prestige for having overthrown Batista, simply cannot be transferred to anyone new.

The Díaz-Canel government can — and is trying to — wrap itself in the legitimacy of being the recognized successor to the Fidel and Raúl Castro governments, but this will yield limited results. It will have to sink or swim on its own merits. Only two or three years into Raúl Castro’s tenure as head of state, I was already hearing Cuban officials complain that “gratitude is not hereditary” and that the government could no longer rally people around the achievements of the past. Under Díaz-Canel, this issue is even more pressing. This crisis of legitimacy makes it difficult for a new government to push forward controversial or unpopular policies, especially those that might ask for new sacrifices from an already beleaguered Cuban people.

The limitations imposed on the new government by this crisis of legitimacy are reinforced by other checks, such as Raúl Castro’s continued presence in politics. He continues to head the Communist Party of Cuba and, through his family and other connections in institutions of the Cuban government, continues to exercise substantial power. Díaz-Canel has also made a show of saying that Raúl would be consulted on major policy issues. This means that the new president will most likely be on a short leash for a time, especially given that much of what legitimacy he does have is rooted in being Raúl’s hand-picked successor.

It remains to be seen what new dynamics will emerge within the Cuban state’s governing bodies. The Council of Ministers, for example, is made up of the heads of the various ministries (analogous to “agencies” or “departments” in the US government) that administer much of the Cuban economy on a day-to-day basis. The Council of State, on the other hand, directs policy and makes the decisions that the ministers must implement within their respective jurisdictions. Since the country’s legislative body, the National Assembly, meets only twice a year, the Council of State can issue decrees to address urgent issues. Hyper-centralization under Fidel and, to a lesser extent, Raúl, meant that these bodies typically did not show much initiative, at least publicly. With Díaz-Canel commanding less popular support and legitimacy than his predecessors, he might find members of these councils — especially the Council of State — taking more proactive roles and acting as checks on his power. From a largely personal style of government, Cuba’s leadership may be transitioning into a self-reproducing junta in which consensus is far more important.

While the Council of State has been noticeably shaken up, changes in the Council of Ministers have been postponed until July. In both cases, the trend seems to be moving towards younger and more pointedly diverse representatives (in terms of race and gender) in positions of power, which Raúl Castro explicitly recognized as a goal of the new government. Although there have been noteworthy survivals from the old guard, such as Ramiro Valdés, who fought in the guerrilla war against Batista, for the most part the long-awaited “generational change” appears to have finally arrived after a relatively seamless transition. As astute observers have already noted, “First Vice President” Salvador Valdés Mesa is currently next in the line of succession but is already a man in his seventies, meaning that he too will likely be replaced soon enough.

Only time will tell what kind of government Díaz-Canel will aim for and, more importantly, will be permitted to undertake. Rather than engaging in endless speculation, it seems more fruitful to focus on the objective challenges and political strategies that Díaz-Canel has inherited from his predecessors. The character of his soul and the dynamics of the new government will become clear on their own in the coming months.

After a period of warming US-Cuba relations under the Obama administration, the Trump administration has managed to inaugurate a new ice age.

During the 2016 campaign, then-candidate Trump promised to roll back some of Obama’s new Cuba policies, likely in an attempt to appeal to GOP voters in important swing states like Florida. While Trump himself does not appear to have strong feelings on Cuba (he once looked into the possibility of opening a Trump Hotel there), there are several figures buzzing around him who do take strong hard-line positions against the island. Cuban-American Senator Marco Rubio’s attempts to influence Trump on Cuba are an obvious example. Also troubling is John Bolton’s recent appointment as White House National Security Advisor, despite his notorious efforts to exaggerate evidence of supposed WMD programs in a number of countries, including Cuba and Venezuela. Mike Pompeo, who was narrowly confirmed as Secretary of State after a short stint as CIA director, also has a far from encouraging track record on Cuba.

Compounding this clutch of reactionaries pushing Trump toward harsh Cuba policies are the infamous “health attacks” against US and Canadian diplomats and their families in Cuba. Although the White House initially dubbed them “sonic attacks,” the theory that sonic weapons were used to target diplomats has largely been discredited, even by the FBI. Three University of Michigan researchers claim to have reverse-engineered the sounds reportedly related to these “attacks,” suggesting that they could have originated from dueling eavesdropping devices whose conflicting signals suddenly made them audible to the human ear. However, it remains unclear how this would cause the wide-ranging and severe symptoms reported by diplomats and their families. While some have speculated that the attacks were a complete fabrication, this seems unlikely since Canadian diplomats and their families were also affected, to the point that the Canadian government has withdrawn foreign-service families currently posted to Cuba. As a longtime economic partner of Cuba, it remains unclear what Cuba would gain by attacking Canadian diplomats or what Canada would gain by fabricating such attacks. The US government is now alleging that its diplomats in China have suffered similar “attacks.” In short, the entire affair remains a convoluted mess.

Whatever the truth, the “health attacks” have served as the perfect pretext for the Trump administration to take a harsher stance against Cuba, and depending on what happens next, they may be serious enough to hamstring even a more engagement-oriented US administration in the future.

As bad as things are, Cuba’s efforts to push the needle in Washington towards further normalization aren’t entirely stymied. Havana has wisely bet on the cynical self-interest of Congressmen who, even in GOP-controlled states, can easily see the benefits of trade with Cuba. Representatives from states like Kentucky and Texas have traveled to Cuba or at least expressed interest in expanding links with the island. The possibility of exporting meat and agricultural products to Cuba, or setting up a factory to produce machine parts there, are powerful incentives for business interests that can pressure representatives to swallow any ideological objections they may have. Such trade prospects are slowly chipping away at the congressional GOP’s ability to stay united against normalization. The wisdom of this Cuban strategy and the powerful draw of economic self-interest make this approach viable for the foreseeable future.

In addition to worsening relations with Washington, Cuba has been hit hard by Venezuela’s economic collapse. As Reuters noted last year, merchandise trade between the two countries had plummeted by 70 percent since 2014. Cuba depends on trade with Venezuela in large part because the latter is a major source of cheap oil. While Cuba extracts some oil for domestic use, it doesn’t produce as much as it needs. Venezuelan oil satisfies Cuban domestic demand and Caracas allows Cuba to re-export some of the oil at market value, which is an important source of hard currency.

After the collapse of the USSR and the other Communist governments of Eastern Europe, Cuba was suddenly bereft of most of its foreign trade, especially oil, which it needed to sustain its own farming sector. The years that followed became known as the “special period” and were characterized by brutal shortages of every kind. Even when Cubans managed to find extra sources of income, such as work in the tourist sector or overseas family remittances, there was simply nothing to buy in the stores. Tens of thousands of Cubans fled the island on anything that floated. Cuba’s partial recovery in the late 1990s and early 2000s was largely due to its political and economic ties to Venezuela.

As the crisis in Venezuela has deepened over the past several years, many Cubans have told me of their fears of a return to the dark years of the special period. What will ultimately happen in Venezuela remains unclear, but it has at the very least put pressure on the government to diversify its trade and, in particular, its sources of oil.

While Venezuela’s crisis has certainly harmed the Cuban economy, Raúl’s government did not simply sit on its hands over the past few years. The so-called “oil for doctors” program, which sent Cuban experts abroad at subsidized prices in exchange for preferential prices for oil and other resources, is a model that Havana can easily reproduce elsewhere. Cuba has already used this model to import significant quantities of oil from Algeria and maintains links to other oil-exporting African countries, such as Nigeria and Angola. While these countries may not necessarily have the same compelling reasons to offer Cuba especially beneficial rates, such efforts can at least partially insulate Cuba from the worst fluctuations of global oil markets.

Cuba has also strengthened its ties to Russia and China, both important trading partners and possible strategic counterweights to the US. Russia recently agreed to export significant quantities of oil to Cuba and has served as a key source of capital for Cuban infrastructure projects, and these renewed connections leave the door open to further military and strategic agreements. For its part, China overtook Venezuela as Cuba’s main trading partner in 2016. It maintains major investments in the Caribbean country, and represents a potential strategic ally for Cuba on political and military issues. Stronger ties with Cuba may even give Beijing leverage over Washington in their clashes over China’s expanded presence in the South China Sea.

The Cuban government has also been trying to attract foreign capital for projects ranging from hotels to the Mariel Special Development Zone (ZEDM). The government plans to turn the port of Mariel, a short drive from the west of Havana, into a major industrial hub where foreign companies can set up factories on terms not permitted for foreign businesses elsewhere in Cuba. Potential benefits include taxes on businesses operating in the ZEDM, which could become a significant revenue stream, as well as relatively high wages (compared to government employment), which could provide jobs to skilled Cuban workers and stem the tide of emigration. Thus far, companies from Spain, the Netherlands, and France to Brazil, Mexico, and South Korea have all set up shop in the ZEDM, though the amount invested remains below the Cuban government’s stated goals.

Under a less reactionary US administration, it seems likely that more American companies would take advantage of this opportunity; having no other ideology than the dollar, they might well strengthen US support for warmer relations with the island.

When Eastern European socialism collapsed in the early 1990s and Cuba was left almost entirely alone to face the horrors of the “Special Period,” the Cuban economy was far more vulnerable than it is today. It had lost its key economic partners as well as its main guarantor against US aggression, the USSR. The Soviet presence in Cuba was the central issue bringing the US to the table on lifting the embargo and moving towards normalized relations, since Washington wanted to limit Moscow’s presence in the Caribbean and Havana could leverage that fact to its advantage. While Venezuela has played a major role in helping Cuba’s economy to recover, Havana doesn’t depend it to the degree it once depended on Moscow. Although it is difficult to discern what will happen in the years to come, Cuba seems in a much better position than it was in 1991.

The Home Front

While the international front presents a host of problems and opportunities for the new government, things on the home front seem positively grim. Most state salaries remain insufficient to cover even basic needs. According to the National Office of Statistics. the average salary among workers in Cuba’s state sector and mixed public-private companies was 740 Cuban pesos (CUP) in 2016. At the current exchange rate that’s about $29.60 a month. The ration card (libreta de abastecimientos) does not cover — indeed, is not meant to cover — all of Cubans’ basic needs.

With the average state salary, a Cuban must spend less than a dollar a day to get by. Given that a pound of pork is often over a dollar, a pound of tomatoes costs 25 cents or more, and cooking oil is sold in stores for well over a dollar, it’s no wonder than many Cubans in the state sector have historically turned to the black market to survive. This can mean maintaining a side hustle in the black market (por la izquierda), reselling state-sector goods, or offering services using state-sector resources. This can lead to frequent absences from work, and it has unsurprisingly fostered a culture of corruption that seems to have seeped into every level of the economy.

As bad as state sector jobs are, many Cubans do scrape by on a combination of token salaries and black-market activities. When, in 2010, the Cuban government proposed laying off half a million or more of its state workforce in an attempt to stem losses in state-owned firms, the outrage and opposition was so great that the measure was only partially implemented. Mass layoffs may still be in the cards under Díaz-Canel, but it is one of those massively unpopular policies that would have been easier for Raúl to sell.

The failure of the Cuban government to provide a living wage to its workers also undermines some of the Revolution’s historic achievements, such as its health care system and universal free education. The “gifts” Cuban patients often give to doctors to ensure quality treatment have, unsurprisingly, also reproduced class differences in Cuba, as those who can pay doctors and nurses often get better treatment than those who can’t. The abysmal salaries many Cuban doctors and nurses receive leave the county particularly vulnerable to a “brain drain” of skilled professionals. To prevent this, the government has historically placed heavy restrictions on travel for those who work in the health sector, especially doctors. After briefly experimenting with more open travel policies, it reinstated harsh restrictions in 2015 to stop the flight of medical experts from the island. While wages for doctors have gone up in recent years, they remain woefully insufficient.

Meanwhile, both basic and higher education are hemorrhaging personnel. Stop-gap efforts like the profesores emergentes program have tried and failed to solve the crisis for more than a decade. In my time in Cuba, private payments to teachers for “tutoring” grew increasingly common, giving wealthier children an edge and sometimes serving as a fig leaf for what were in effect bribes in exchange for grades. Until living wages are established, it is unlikely that Cuba will be able to reproduce the high level of educational quality it achieved in the ‘70s and ‘80s before the slow decline that began in 1991.

The state sector as a whole, including health care and education, continues to employ a majority of Cuban workers, so resolving the problem of inadequate salaries remains an urgent priority for most of the population. Yet the government’s dual-currency regime represents a serious obstacle to any solution.

In Cuba, there are two official currencies: The “national currency” peso (abbreviated as CUP) and the “convertible” peso (abbreviated as CUC). Prior to the collapse of the USSR, Cuba’s sole legal tender was the “national currency” peso, but it lost most of its value after much of the country’s foreign trade and subsidies disappeared in the early 1990s. The initial response was the partial dollarization of the economy, with “national currency” pesos and American dollars both accepted by government-owned corporations. Once the worst was over, the government stopped accepting dollars and began pushing its “convertible” peso, whose value is pinned to that of the US dollar, as a substitute.

As a result, government money-changing houses (CADECAs) becoming a staple of everyday Cuban life. Since some businesses accepted only “convertible” pesos while others accepted only “national currency” pesos, and salaries were almost always paid in the latter, spending extended periods of time under the hot sun waiting in line to change money became a requirement to get by. Under Raúl, this consequence of the dual currency system was partially resolved as stores began increasingly accepting either currency and listing prices in both.

However, that was just the easy part of the slow process of currency unification. The true problem lies in how the government has been accounting for these currencies in state-sector businesses. Although the value of “national currency” pesos has slowly increased at changing houses, the government has been systematically overvaluing them for accounting purposes, creating the illusion that imports are cheaper than they actually are. According to one study by economists at the University of Havana, as much as 38 percent of state-sector businesses may actually be insolvent when realistic exchange rates are applied. The practice also makes workers’ salaries seem much higher than they really are.

To raise wages and rationalize state sector companies, the Cuban government is going to have to figure out a way to untie this Gordian knot. Its ultimate resolution will impact how these companies are run, how many people they employ, what goods they buy, how much, and from whom. Despite Raúl’s repeated statements about the urgency of this issue, in the end, he left it unresolved. Now, the headache and potentially high political cost has been left to Díaz-Canel. While not discussed as much as the other issues facing his new administration, given its centrality in righting the state sector of the economy, it may play a key role in the success or failure of his government.

Compounding these problems is the abysmal condition of the country’s infrastructure. During my five years in Cuba between 2008 and 2013, it was normal periodically to hear of partial or even complete building collapses. The waterlines in Cuba are old, cracked, and full of holes. They leak significant amounts of water every day, which is especially troubling given the chronic droughts Cuba has faced recently. The Alamar neighborhood, to the east of Havana, has had to use water trucks on and off for years to compensate for failing infrastructure. Electrical outages remain a part of everyday life. Some of them are planned, to facilitate repairs and maintenance or (especially in summer) to save electricity. Others are caused by unexpected equipment breakdowns, often compounded by human error, such as the massive blackout that left much of western Cuba without electricity in 2012. Hospital conditions have continued to deteriorate as well. The main highway connecting eastern and western Cuba, la carretera central, has up to eight lanes as it leaves Havana, but shrinks to as little as two lanes (one in each direction) further east. If Cuba could update its train system so that it offered a reliable, cheap alternative to taking air travel or insufferable and expensive fourteen-hour bus rides through winding roads, it would make intra-provincial travel and goods transport far easier than they are today. But this remains a project that will require significant further investment.

Another major hurdle facing the government is the incomplete nature of many of Raúl’s reforms to the private sector. For example, the lack of stores where products can be purchased at wholesale prices by Cuban private businesses forces them to compete for basic goods with everyday Cubans who are just trying to get by. This simply compounds long-running issues with keeping shelves stocked with consumption goods. The result is that many in-demand products, like Malta soda or cooking oil, can suddenly disappear from shelves almost as soon as they arrive. If private businesses have under the table deals with workers at the state-run stores, the goods may not even make it to shelves in the first place.

Another less-discussed aspect of the reforms are the urban cooperatives. The idea behind promoting cooperatives is to allow the Cuban government to take less of a role in day-to-day administration while not leaving all the space abandoned by state-run enterprise to the private sector. However, progress has been slow, and the government has complained that some cooperatives were in fact being run as de facto private businesses. They also suffer from a relative lack of capital compared to private business, excessive restrictions on their functioning, and supply problems.

There are countless other domestic concerns. The government’s chronic failure to communicate plans and projects to the public has resulted in sudden radical policy shifts being announced out of the blue. Grievances in the culture sector have boiled over to the point that debates over censorship that once would have taken place behind closed doors are now being aired publicly. And the government has been unable to adapt to a new era in which it has lost the near-monopoly of news and information it enjoyed through the 1980s, due to spreading access to the internet and the paquete semanal (the exchange of media in digital format through hard drives and flash drives).

There are a thousand fires raging, all urgent. It is unclear how the government can deal with them all.

Legitimacy

There is every reason to believe that the Cuban government is aware of the challenges it faces. As noted above, it has been diversifying its trade, undertaking massive investment projects, such as the Mariel industrial hub, and refining and expanding existing economic reforms. But it would be an error to ignore how the government is, at the very least, attempting to reform its political system as well. As Cuban intellectual Rafael Hernández has correctly pointed out, even under Raúl we began to see the government experiment with new mechanisms designed to create a sense of popular participation in the decision-making process.

The nationwide debates about the creation of the lineamentos under Raul’s administration are one significant example. The lineamentos, or “guidelines,” were a series of broad political and economic objectives that the government was supposed to pursue. They were crafted in part through a series of local events held across the country. While the original draft of the “guidelines” was not produced through this process, the final published version incorporated numerous changes in response to criticism. The constitutional reforms set to begin in July of this year are another signal that the government is aware of its ebbing legitimacy.

Everyday Cubans are increasingly alienated from a government that neither encourages significant popular participation nor uses older legitimation mechanisms, such as the near-constant mass rallies and speeches under Fidel. Representative of this sentiment, one young Cuban told me “lo que yo quiero es vigilar por mi pedacito” (what I want is to take care of my piece [of the world]). He went on to say that as long as the government pushed the economy forward, he didn’t care too much about political changes. This is a dangerous mentality for the new administration since no government can guarantee unending growth. Whether due to its own decisions or to events that take place far from its shores, a major economic crisis will arrive eventually. Like it or not, Cuba is inserted into the global dynamics of capitalism.

When the Special Period of the 1990s hit its nadir, the maleconazo erupted. Numerous Cubans expressed their exasperation with shortages, constant blackouts, and hunger by taking to the streets. In response, Fidel mobilized a counterprotest and headed it in person, which together with police action defused the situation. While support for the government has never been universal, Fidel’s legitimacy among his own supporters was at least substantial enough to serve as a counterweight to a disunited opposition and the many ordinary people in the middle who weren’t particularly political but just wanted to take care of themselves and their friends and family. Most importantly, his legitimacy was never based on ephemeral economic prosperity. He could demand sacrifices of his supporters, and impose sacrifices on the rest of the population, because the government’s legitimacy was based on loyalty to Fidel personally, support of socialism as a universal political project, and the government’s claim to protect Cuban national sovereignty from foreign imperialism.

Building legitimacy solely on economic prosperity is like building a house on sand; the rain will come down, the streams will rise, the wind will blow, and the house will come crashing down. The government is at a crossroads. If it focuses solely on economic reforms and limits political reform to cosmetic or ineffectual changes, it will be like cast iron: hard, but brittle. Only by creating new means of legitimation — such as making the National Assembly of Popular Power a real organ for governance and decision making instead of a glorified rubber-stamp committee — will the government manage to survive. And only by instituting democratic reforms can the Revolution finally live up to the promises made during the struggle against Batista in the Sierra Maestra. Expediency and morality go hand-in-hand.

These structural factors are pushing the government towards change, regardless of what it might want. The question remains whether Cuba’s leaders will anticipate change by leading it themselves, or whether they will swim against the current, slowly drifting downstream until exhausted and swept away.