Small Miracle, Big Impact C.P. Chandrasekhar

The death of Augusto Pinochet partly symbolises the demise of the radical and dictatorial Right in Latin America. That Latin America has swerved to the Left is now an accepted reality. Much has changed from the time when Cuba and Fidel Castro were lonely, intrepid fighters against a giant, vindictive America. The continental march of the Left began eight years ago with the victory of Hugo Chavez in Venezuela. Since then Lula da Silva in Brazil, Nestor Kirchner in Argentina, Tabare Vasquez in Uruguay, Evo Morales in Bolivia, Daniel Ortega in Nicaragua and Rafael Correa in Ecuador, besides a few social democratic coalitions such as the one led by Michelle Bachelet in Chile, have ensured that the tide has turned against the Right and the US in Latin America. The resounding re-election of Chavez recently only establishes that this process is gaining and not losing strength, the outcomes in Mexico and Peru notwithstanding.

Cuba’s role in facilitating this transition cannot be underestimated. Fidel Castro, battling illness in seclusion, can afford to look back over a life of struggle and take pride in the role played by him and the geographically small country he still leads. On November 8, 2006, for the fifteenth time, the UN General Assembly voted a resolution condemning US sanctions against Cuba imposed as far back as July 6, 1960, and calling once more for their repeal. The vote was carried with a 183-to-4 majority and one abstention. The nature of the ‘yes’ vote is made clear by the countries that voted against: Israel, Marshall Islands and Palau. Micronesia abstained.

Global support in the war against US sanctions mattered a lot till recently, when Cuba was isolated after the fall of the Soviet Union. Today, however, with material support from countries like Venezuela, a booming economy, and a growing political and social role, the UN vote reflects the success of the battle conducted by the David of the Americas against the United States. Cuba has established that even a small country, when subjected to economic aggression by a giant, if driven by conviction and commitment, can survive the onslaught. This is a lesson that means a lot in a world where inequality between nations is taken as a given, and where policies are geared to adjusting to and maximising the gains from that reality. Two features of the UN vote reflect the strength of international support for Cuba. First, the overwhelming majority with which it was carried. Second, that it was carried after a diversionary amendment by the Australians, calling on Castro to release political prisoners and respect human rights, was defeated. These are excuses that have been used by the US-with its own appalling human rights record involving arrest without trial, torture, abduction, racial profiling, wire-tapping and much else-to divert attention from its irrational and inhuman blockade of Cuba.

Economic sanctions, we must recognise, amount to pursuit of war with means other than the use of the military. Adopted when military aggression is difficult to pursue or justify, they seek to dislodge governments targeted by the aggressor, by debilitating the economy and delegitimising the State as incapable of protecting the welfare of its citizens. Sanctions as a means of aggression gained popularity during the years of the Cold War, when no single trigger-happy super power could wage war at will without inviting responses that were difficult to ignore.

However, in a world of nation-states and competing super powers even economic sanctions were difficult to implement. According to one study, of all the sanctions imposed between 1914 and 1990, less than 5 per cent were successful. There are many reasons for this. One is that sanctions imposed by one or more nations can be neutralised by others willing to collaborate with the victim for political, strategic or humanitarian reasons. As a result, even in the Cold War years there were few cases where sanctions were successful in terms of realising their objectives. Another important reason is that as in war (witness Vietnam), nationalism and the legitimacy of a leadership can make a state stronger than warranted by conventional indicators of fragility.

In Cuba’s case, the US was initially hampered by the presence of the Soviet state in the international arena. This was an obvious blessing for Cuba, which obtained substantial support from the USSR, including the ability to export items like sugar at above-international prices and import oil (a part of which could be re-exported to earn hard currency) at prices below those prevailing in the international market. Combined with the enormous popular support for Fidel Castro and the Cuban leadership, this allowed Cuba to survive even if at great cost in terms of hardship. Popular support came, among other things, from the success of the regime in creating an egalitarian order by ensuring not merely basic necessities for all, but also major advances in health and education.

The real opportunity for the US came with the fall of the Soviet Union. The collapse of the USSR in late 1989/1990 and the sudden end to Cuba’s beneficial relationship with her brutally brought home the danger of overseas dependence. The figures are telling. From a peak of 19585.8 million pesos (at 1981 prices), the country’s Gross Domestic Product fell by more than a third to touch 12776.7 million pesos in 1993.

Cuba’s entry into the Soviet bloc’s international trade alliance, in response to the US trade embargo, had had two consequences. First, Cuba chose to remain a predominantly agricultural economy, relying on imports to meet its requirements of manufactured goods. Second, agriculture reflected a tendency towards monocrop production, with heavy dependence on sugar as an export crop. In 1989, land under sugar cultivation was three times larger than that under food crops, and sugarcane accounted for 20 per cent of agricultural production. This was not merely the result of the structure of production under colonialism, but also the consequence of the large market offered by the Soviet bloc for Cuba’s sugar exports at prices which, during the 1980s, were on average 5.4 times higher than world prices. In return for those exports at favourable prices Cuba received petroleum which could be re-exported to earn hard currency. The net result was that imports accounted for up to 57 per cent of total calories in the average Cuban diet.

The loss of revenue from sugar exports that followed the Soviet collapse reduced export revenues from $5399.9 million in 1989 to $1156.7 million in 1993. This meant that after taking into account dollar inflows in the form of remittances, for example, imports had to be massively curtailed, falling from $8139.8 million in 1989 to $2008.2 million in 1993. The consequences for a highly import-dependent production structure were disastrous. Reduced access to fertilisers, pesticides, industrial inputs and oil forced a sharp cutback in domestic production. It also impacted heavily on the quality of life by generating shortages of food, medicines and transportation.

It was in this context that the US sought to make a success of its embargo, by encircling Cuba with restrictions on its relationship with other countries. The intent was clearly to prevent Cuba from finding partners who could serve as at least weak substitutes for the USSR. To that end, the US intensified the blockade through the Toricelli Act of 1992 and the Helms-Burton Act of 1996, both approved by the US Congress. The former prohibited foreign-based subsidiaries of US companies from trading with Cuba. It also prohibited US citizens from travelling to Cuba and banned family remittances to Cuba. According to its author Robert Toricelli, it was designed to cripple the Cuban economy and bring down Castro “within weeks”. Among the provisions of the Helms-Burton Act was one which allowed Cuban-Americans whose assets were taken over during the revolution to file a suit against any foreign company which transacted in those assets as part of their Cuban business interests. The Act also allowed for US visas to be denied to any foreigner holding a stake in property expropriated from Cuban-Americans. In a country where the domestic elite had fled to the US after liberation, this amounted to much of the land and property.

In hindsight, the response of the Cuban government to this aggression was three-fold. The first was to declare the “Special Period in Peacetime”, which made access to foreign exchange a principal concern for the government, since earning foreign exchange was crucial to growth. This involved introducing elements of the market economy, encouraging tourism and opening doors to foreign investors, all within an environment closely monitored and regulated by the State. The second was to legalise the use of dollars acquired in the form of remittances as incomes in sectors linked to tourism and as part payment for workers in government enterprises. This, however, brought problems of a dual-dollar and peso-economy, and the challenge of inequality. It also signalled Cuba’s dependence on the currency of its enemy, which unfortunately was the reserve currency of the world. The third was to respond to specific problems with innovative solutions: encouraging organic forms of farming to compensate for the reduced access to fertilisers and pesticides that were earlier imported; strengthening the domestic drug industry to make up for the shortage of medicines; an alternative energy strategy to counter the inability to rely on electricity generators imported from the Soviet Union at low cost.

The success of this multi-pronged strategy is now more than visible. Though the decline in GDP was halted in 1994, and the rate of growth raised from 0.7 per cent in 1994 to 7.8 per cent in 1996, growth slowed in 1997 and 1998 to an estimated 2.5 and 1.2 per cent respectively. However, growth recovered again in 1999 and has picked up smartly in recent years with the figure for 2005 placed at a remarkable 11.8 per cent.

These figures conceal certain special features of Cuban economic growth. There has been a successful and scale-wise shift to organic farming with model organic farms even in urban areas. The country is going through a biotech boom with biotechnology institutions of international standard, several patents on drugs and large foreign exchange earnings. Finally, Cuba is reportedly going through an energy revolution, involving efficient energy use and reliance on efficient small-power generators linked to a synchronised network. In sum, an enlightened and committed leadership and population have been able to convert extreme adversity into a virtue that has helped shape a better pattern of growth.

In a last-ditch effort, the Bush administration tried to strangle Cuba by cutting off its access to dollars. Besides enforcing harsh penalties on US citizens travelling to Cuba, and on US firms and their subsidiaries directly or indirectly engaging in trade and investment with the country, it sought to limit remittance flows to the country and increase pressure on foreign banks to end correspondence relations with Cuban banks. In response Cuba sought to end its dependence on the dollar. In October 2004 the Cuban government decided to remove the American dollar from circulation, replacing it with the convertible peso. A 10 per cent surcharge is levied for conversions from US dollars to the convertible peso, to discourage the entry of dollars; and tourists are encouraged to bring currencies like euros, pounds sterling or Canadian dollars into Cuba. Thus the country has demonstrated that it can live and even thrive with limited access to the US dollar.

Cuba’s success in the face of sanctions remains an inspiration for two reasons: first, it has demonstrated that imperialist aggression can be defeated in its own backyard by a small country with a committed people and enlightened leadership; second, it has proved that there are ways to development other than the inequalising, socially depriving and environmentally degrading trajectory that capitalist elites impose on their people in the name of globalisation. It should surprise no one that the rest of the world rushes to stand shoulder-to-shoulder with this country when condemning US aggression in the form of sanctions, and that Latin America rises to embrace Cuba’s path to independent development.