As Chávez Falters, Cuba Faces An Uncertain Future

The health problems of its most important ally could force Cuba to finally build a better economy

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When President Hugo Chávez admitted two weeks ago that he'd had a cancerous tumor removed in Havana, Venezuelans weren't the only ones suddenly worried about their country's political stability. Chávez and Fidel Castro are close friends, and Cuba relies on Venezuela for more than $3.5 billion in oil subsidies. With a population living on subsistence wages and an economy sensitive to import prices, any dramatic change in Venezuelan oil access could leave Cuba staggering -- and accelerate their long-overdue process of economic liberalization.

Cuba is a country accustomed to living in crisis. The Havana I saw on a January 2010 research trip was just starting to recover from hurricanes that had caused $4 billion dollars worth of damage two years earlier. I arrived on a 1968 Russian Yakovlev, a Soviet hand-me-down with insulation hanging from the ceiling in strips. My taxi from the airport, a red 1950 Bel Aire held together by wire and duct tape, lurched north in the sticky heat. Holes left by crumbling brick revealed full views of offices rooms. Through the thick brown smog, people were going about their afternoon business. This being Cuba, a friend told me, "People here are used to going with the flow."

Since the devastating time known as the Special Period, following the collapse of the Soviet Union -- when the average Cuban lost 10 pounds and the protein-starved island collectively ate an entire species of anaconda into extinction -- Cubans have perfected the art of "resolviendo." Like many jokes that are only funny because they approach the truth, people "resolve" -- the office worker who steals supplies to sell on the black market, or the mechanic who makes a moto out of a soda bottle gas tank -- when they practice the creative strategies that help them survive. "The salary of an average Cuban is not enough to buy food for a month," said a Cuban government official on Monday, who asked to remain anonymous because, as she put it, "There can be confusion about who and who is not an enemy of the Revolution, and there are many people in Cuba who unfortunately can't tell the difference between one and the other."

"Cubans can't afford to have a balanced diet, we just eat what we can afford. So, I'm not talking about having a car, or clothes, shoes, or even paying rent. We are talking here about surviving," she said.

After Fidel quietly stepped down from leadership in January of 2008, Raúl Castro loosened economic restrictions and encouraged the slow burgeoning of a private sector, granting 250,000 licenses for new small businesses. The lucky few who can afford these licenses now legally drive taxis, offer a room for tourists to spend the night, or run a small restaurant out of their home. Although the government still employs 80 percent of the work force, the sixth Communist Party Congress this April ratified the first major adjustment of their Soviet-style economic model. While change has been slow in coming -- Cubans still can't buy or sell homes or cars, and businesses are still heavily regulated -- Raúl's regime is attempting to bolster trade, devaluing the tourist currency by 8 percent and lowering bulk prices on Monday to simulate a whole-sale market.

But the transition to increased economic freedom has been difficult. Raúl originally announced the scheduled lay-offs of a million government workers this winter, a decision he was forced to postpone this spring due to Cuba's faltering economy.

This restructuring could lead Cuba to greater self-reliance, something the government has sought since the loss of Soviet sugar subsidies. Venezuela currently provides Cuba more than 115,000 subsidized barrels of oil a day, but Anya Landau French, the Director of the New American Foundation's U.S.-Cuba Policy Initiative, said Cuba's relationship with Venezuela is different than their past relationship with the Soviets. Since the Special Period, Cuba has diversified its exports. She says if Venezuela abruptly cut ties with Cuba, "Cuba would be staring a similar moment in the face, but it wouldn't be quite as bad or as shocking. They've been trying to wean off a single-benefactor system. The reform process has just been going very slowly, in part because Raúl doesn't want to make any mistakes, and in part because there are still hardliners in the Cuban elite who are nervous about the dangers of market capitalism."

Presented by

Lois Farrow Parshley

Lois Parshley is an assistant editor at Foreign Policy magazine.

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