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Economic Freedom: Country Studies - Cuba

Rankings in Freedom in the World 2010: 7 Political Rights, 6 Civil Liberties (Not Free)

Summary

Cuba, the largest island in the Caribbean Sea, lies 90 miles off the coast of Florida and has a population of about 11 million. It was ruled by Spain for 400 years before gaining independence in 1898 as a result of the Spanish-American War. For the first half of the 20th century, Cuba's politics and economy were intertwined with those of the United States, but since 1959 Cuba has been ruled by a Communist dictatorship with a firmly anti-American outlook. Despite the loss of Soviet subsidies in 1991 and continued U.S. economic pressure, Cuba remains largely unchanged.



Cuba

In Freedom House's Freedom in the World 2007, Cuba received a score of 7 in both political rights and civil liberties, the lowest possible ranking, and is considered among the worst dictatorships in the world. In the Heritage Foundation's Index of Economic Freedom, Cuba has a similarly abysmal ranking. Nearly all property is nationalized and under the control of the state. Some independent economic activity was allowed beginning in 1993, but it was highly circumscribed and has become more restricted again in the last few years. Due to the nature of the state-run economy, the usual measurements are difficult to ascertain, but GDP based on PPP in 2006 was estimated at $40 billion, with a PPP per capita income of $3,600. Some estimates put the actual average monthly wage at as little as $12, though the state provides a number of benefits that would have to be purchased in a free-market system. The end result is a situation in which citizens' most basic needs are often met, but they remain impoverished and have little control over their economic lives. Since 1959, hundreds of thousands of Cubans have left the island, typically heading for the United States by boat.

History

Spanish Colonization

When Christopher Columbus landed on the island in 1492, Cuba's indigenous population, consisting of the Taino, Ciboney, and Guanahatabey peoples, numbered at least in the tens of thousands, with some estimates ranging into the hundreds of thousands. In 1511, Diego Velazquez de Cuellar founded the first permanent Spanish settlements, and within a few decades the native population had been seriously depleted by disease, forced labor, and dislocation. The Spanish colonists began importing large numbers of African slaves to replace the lost labor, and most of Cuba's modern inhabitants reflect a blend of European and African ancestry.

British Occupation, Spanish Restoration, and the Rise of Sugar

In 1762, toward the end of the Seven Years War, the British occupied the island for about a year before returning it to Spain in a 1763 peace treaty. During this period and the decades that followed, sugar production expanded and became the mainstay of the Cuban economy. The importation of African slaves also increased to provide workers for the labor-intensive industry. Later, French colonists fleeing slave revolts in Haiti transplanted themselves to Cuba, bringing with them additional expertise in sugar and coffee cultivation. By the late 19th century, Cuba had become the world's largest sugar producer.



Jose Marti
Abolition and Independence

Cuba was the last of Spain's New World colonies to gain independence. In 1868, Carlos Manuel de Cespedes and some other Cuban landowners freed their slaves and organized armed resistance to Spanish control. Their 10-year war and attempts to establish a republic failed, but the conflict did lead to the eventual abolition of slavery in 1886. (Cuba was one of the last places in the Americas to abolish slavery; Brazil did so in 1888.) In 1895, Jose Marti, whose writings in support of freedom made him the symbol of Cuban independence, led fellow exiles in an armed attack to end Spanish rule on the island, though he died a month after the landing. Successful in the countryside, the rebel forces failed to take any major cities until the United States intervened in 1898, in the Spanish-American War. That year, after the United States won a quick victory, Spain ceded control over Cuba, Puerto Rico, Guam, and the Philippines to the United States. Cuba was granted independence, but under U.S. occupation.

In 1895, Jose Marti, whose writings in support of freedom made him the symbol of Cuban independence, led fellow exiles in an armed attack to end Spanish rule on the island...
The Platt Amendment

U.S. authorities formally handed over power to newly elected Cuban leaders in 1902. However, the U.S. Congress passed language known as the Platt Amendment that required Cuba to lease Guantanamo Bay and granted the United States the power to intervene in Cuban affairs. The amendment was inserted into the new republic's constitution. U.S. forces reoccupied the country from 1906 to 1909 in order to put down a rebellion against the U.S.-backed government, and the United States retained a high level of involvement in Cuba after returning control to Cuban leaders. U.S. investors dominated many aspects of the island's economy, including sugar production, industry, and eventually the tourist trade.

Democracy, Dictatorship, and the Sergeants' Revolt

Cuba was governed under a constitution modeled on that of the United States. After Gerardo Machado, first elected in 1924, resorted to increasingly dictatorial tactics to suppress his opponents, he was forced from office by a general strike and army revolt in 1933. A short-lived provisional government was then toppled in the so-called sergeants' revolt, led by army sergeant Fulgencio Batista. He assumed the title of army chief of staff and wielded power behind the scenes under a series of proxy presidents before being elected president himself in 1940. Initially, Batista adopted a liberal constitution and various other progressive measures aimed at improving social welfare. Voted out of office in 1944, he decided to retire to the United States, but he returned to Cuba in 1952 to run for president again. Trailing in opinion polls, he seized power in a coup three months before the elections, ending Cuba's period of at least nominal electoral democracy.



Fidel Castro
The Overthrow of Batista

Batista's increasingly repressive rule provoked opposition from various political parties. After failing to win a legislative seat in the canceled 1952 elections, young lawyer and activist Fidel Castro organized a small guerrilla band and unsuccessfully attacked the Moncada army barracks on July 26, 1953. After being jailed for two years, he was amnestied and went into exile in Mexico. He returned in December 1956 with another small rebel force called the July 26 Movement. The group's initial landing was a failure, with most of the fighters killed or captured, but Castro and several associates escaped to the Sierra Maestra highlands, recruited new guerrillas, and allied themselves with several other anti-Batista groups. Batista, facing military defections and civilian resistance in the cities, and having lost U.S. government support, fled on January 1, 1959. In the political vacuum, Castro seized control with his guerrilla force and formed a provisional government.

Consolidation of a Communist Regime

Castro consolidated power quickly by co-opting or marginalizing other revolutionary groups and imprisoning opponents and onetime supporters who broke with him over his radical policies or authoritarian methods. He sealed a trade agreement with the Soviet Union in early 1960, and after U.S. companies refused to process Soviet crude oil at their refineries in Cuba, Castro seized the facilities. Relations with the United States quickly soured, with U.S. authorities imposing a trade embargo and the Cuban regime expropriating the assets of other U.S. corporations. Castro also enacted sweeping land reforms that collectivized large-scale agriculture and increased the number of small-scale farmers, at the expense of the previous landowners.

The United States broke off diplomatic relations with Cuba in early 1961. An armed force of Cuban exiles, sponsored by the U.S. CIA, landed at the Bay of Pigs on Cuba's southern coast in April 1961, but it was quickly defeated by government forces. The failed invasion attempt spurred the Cuban regime to tighten its grip on the population and move even closer to the Soviet Union. Castro also repressed Cuba's largest independent institution, the Roman Catholic Church, eventually nationalizing its schools and imprisoning or expelling clergy members. The country's middle and upper classes fled the insecurity in large numbers, as property rights and civil liberties evaporated. By the end of 1961, Castro had declared himself a Communist, although the regime's umbrella political organization was not reconstituted as the Communist Party of Cuba until 1965.

Missile Crisis

In 1962, the United States confirmed that the Soviet Union was establishing intermediate-range nuclear missile bases in Cuba—a direct threat to U.S. security. The U.S. government ordered a naval blockade in October to prevent the transfer of missiles to the island. After a tense standoff that brought the world dangerously close to nuclear war, Soviet leader Nikita Khrushchev agreed to withdraw the weapons and dismantle the bases in exchange for a U.S. pledge not to undertake an invasion of Cuba in the future. (The United States also secretly agreed to remove its nuclear missiles from Turkey.) Considering the Cuban regime an ongoing threat, however, the U.S. government maintained its trade embargo.



Refugees from the Mariel Boatlift
The Exodus

Following Castro's agreement to allow the United States to provide air transport for those seeking to leave, some 250,000 people immigrated to Florida between 1965 and 1973. They were motivated in part by a fresh assault on private property in Cuba, in which the government seized thousands of small businesses. Castro relaxed emigration rules again in 1980, prompting around 125,000 people to leave from the port of Mariel in the so-called Mariel Boatlift. Many were working-class Cubans, but Castro also expelled violent criminals and psychiatric patients in violation of humanitarian law. A surge in attempts by Cubans to reach the United States on flimsy rafts in 1994 led to a U.S.-Cuban agreement in which U.S. officials pledged to admit at least 20,000 people a year through normal channels. The U.S. government also adopted a policy of granting asylum to any Cubans who reached U.S. shores, but returning those who were intercepted at sea while attempting an illegal crossing. Since the 1959 revolution, an estimated one million Cubans, equivalent to nearly 10 percent of the current population, have fled Cuba. Although the regime has generally sought to control emigration, essentially treating those who try to leave as traitors, it has also used the departures to relieve domestic pressure in periods of economic crisis.

Since the 1959 revolution, an estimated one million Cubans, equivalent to nearly 10 percent of the current population, have fled Cuba.
Economic Freedom

As noted above, the Castro regime adopted a Communist model of dictatorship. Economically, this meant that the local branches of foreign companies were nationalized, foreign property was confiscated, and private property was seized without fair compensation. The state directed all economic activity, including production, distribution, and purchase. Food rationing was imposed in 1962 and has continued to the present day, meaning each household is restricted to a minimal amount of basic foods. Cuba was long dependent on the Soviet bloc, which provided massive subsidies, including energy exports, in exchange for sugar and other agricultural products. But much of the economy was also devoted to the greatly increased military and security forces. As part of its alliance with the Soviet Union, Cuba supplied troops to conflicts in Africa (especially Angola) and sponsored numerous revolutionary groups in Latin America with the aim of establishing Communist states in the Western Hemisphere.

The "Special Period"

When the Soviet Union collapsed in 1991, Cuba lost its economic subsidy—at that time estimated at $5 billion a year—and entered what Fidel Castro called the "special period." The country's gross national product fell by nearly half between 1989 and 1993. Castro announced the need for additional revolutionary mobilization and sacrifice. This meant forcing students and government workers to plant and harvest crops as well as rationing necessary goods. In 1993 and 1994, the regime adopted economic reforms to allow foreign investment, especially in tourism. The reforms also allowed a limited degree of independent economic activity and the use of the U.S. dollar as legal currency alongside the peso. As a result, joint ventures were formed by foreign companies and Cuban state entities, with the latter maintaining a majority stake. Small, semiprivate cooperative farms were established and permitted to sell surplus agricultural products on the market. Private restaurants opened, and special dollar stores (usually run by people close to the regime) arose.

In 1994, U.S. president Bill Clinton eased the embargo to allow family remittances and limited travel to the island, but relations worsened in 1996 after the Cuban military shot down two unarmed civilian airplanes operated by the U.S.-based exile group Brothers to the Rescue, which conducted searches for refugees stranded at sea but also dropped political leaflets over Cuba. The Helms-Burton Act, adopted by the U.S. Congress in 1996, extended the embargo to penalize foreign firms doing business in Cuba. Regulations on allowable travel and family remittances to the island were further restricted by U.S. president George W. Bush in 2004.

The False Dichotomy

Sympathizers with the Cuban revolution or with Fidel Castro's vocal opposition to the United States often point to the regime's "social improvements" as justification for its human rights abuses and political and economic control. As noted above in Essential Principles, no such dichotomy exists among democracies, where economic and social progress are seen as going hand in hand with political freedom. Still, it must be noted that Cuba's social improvements are generally overstated in areas such as education and health care, and especially in the overall economic condition of the Cuban people. In education, most schools are short of textbooks and other materials, such as computers. The regime uses education as a vehicle for ideological indoctrination and tightly restricts student access to literature and other outside information. Foreign newspapers and journals are banned in most places. The internet is thoroughly monitored and censored, although internet access is rare, since computer sales are strictly controlled. Independent libraries have emerged but are brutally suppressed by the authorities. At present, there are more than 10 independent librarians in jail, most with harsh sentences of between 10 and 25 years.

In large part, the economy is dependent on a foreign tourist industry that has been financed by European and Canadian investment and is organized so as to prevent foreign visitors from interacting with Cuban citizens.

Cubans receive public health care for free or a nominal fee, and the system has achieved positive results in a number of areas, such as prenatal care and overall life expectancy. However, there is a chronic shortage of medical supplies and drugs, and the best facilities are typically reserved for the ruling elite and paying foreign guests. Ordinary Cubans must often pay bribes to be treated by underpaid doctors or gain an opportunity to have needed surgery.

Resilience of the Regime

While some predicted the fall of the Castro regime soon after the Soviet Union's collapse, it has proven resilient. It has withstood growing international pressure regarding its human rights record, and European Union countries remain divided on the issue of sanctions. In large part, the economy is dependent on a foreign tourist industry that has been financed by European and Canadian investment and is organized so as to prevent foreign visitors from interacting with Cuban citizens. Venezuela's socialist president, Hugo Chavez (see Country Study of Venezuela), has also provided a new energy subsidy, bartering oil for the services of Cuban doctors, other medical personnel, and teachers. Bolivia, led by leftist president Evo Morales, has more recently been brought into this economic partnership. Limited private economic activity has offered an opportunity for Cubans to supplement their income through peer-to-peer basic trade and simple services (restaurants and inns, for instance). Expectations for change were raised again when Fidel Castro transferred presidential and other powers to his brother Raul in July 2006 before undergoing intestinal surgery, but the regime has continued to operate smoothly under Raul's leadership. The 81-year-old Fidel has remained out of public sight, and there are contradictory rumors of his impending death or ongoing recovery.

Cuban Democracy Movement

Most Cubans working to organize democratic opposition and promote human rights have been imprisoned, exiled, or executed or had their lives otherwise destroyed. Despite such repression, a new democracy movement emerged in the mid-1990s, issuing a declaration entitled "The Fatherland Is for All."

The government's control of all media and its sweeping restrictions on free expression means that the public has no reliable information about the economic situation in
Cuba.
The document's four authors were arrested in 1997 and subsequently sentenced to prison, but all had been released again by 2002. That year, other dissident leaders mounted what was known as the Varela Project, gathering more than 11,000 signatures for a petition to make democratic changes to the constitution by referendum. Although it met the constitution's requirement of 10,000 signatures, the petition was refused and the government instead organized a referendum to declare Cuba's socialist system "untouchable."

The growth in civil society prompted the regime to strengthen its apparatus of repression and tighten restrictions on economic activity. In 2003, a total of 75 independent journalists and civil society activists were arrested and sentenced to between 10 and 25 years in prison. Still, the number of civic groups, independent libraries (based in apartments), and other initiatives is growing in all parts of the island. The Assembly to Promote Civil Society, a coalition of such groups, has nearly 300 member organizations. Its leader, economist Martha Beatriz Roque, was one of those arrested in 2003.

The government's control of all media and its sweeping restrictions on free expression mean that the public has no reliable information about the economic situation in Cuba. One of the government's prime targets in its efforts to control the civic movement is independent journalism. Reporters writing for publications and news outlets based outside Cuba have attempted to provide factual assessments of the economy, government discrimination in employment, repression of trade unions, and many other topics.