This is an anxious, unsettled moment for Cuba.  Its economy is faltering badly and could face a prolonged crisis. The nation’s leadership is on the verge of a critical turning point following the recent death of Fidel Castro and the likely retirement early next year of Raul Castro—who  together have ruled the island with an iron hand for nearly 60 years.  And now that Donald Trump is headed for the White House and conservative Republicans are in full control of Congress, Cuba’s two-year old re-engagement with the United States is at risk.  

Economic Crisis

Cuba’s most visible and immediate task is to manage its way through a mounting economic crisis. According to official figures, Cuba’s growth rate has tumbled from about four percent in 2015 to a negative one percent last year. Some independent economists believe the contraction, the worst in two decades, was even greater. While the US embargo bears some the blame for the slide, the main culprit is the Cuban government’s consistent failure to address the economy’s many chronic problems.

For the past twelve years, Cuba’s economy was kept afloat by annual transfers from Venezuela, amounting to some $5 to $6 billion a year and providing more than one third of the country’s foreign exchange. But, as expected for past several years, these subsidies are fast drying up as the Bolivarian Republic approaches bankruptcy. To be sure, the US-Cuban reconciliation has boosted tourism and remittance flows from the US, but they do not come close to replacing the Venezuelan aid. Expected new investments are falling short, in part because of a weak global economy, but mostly because Cuba has failed to take even minimal steps to reform its centralized, state-run economy, increase productivity, and make the country more attractive to foreign businesses. Investors are waiting for the government to take measures to unify the nation’s currency, allow foreign firms to recruit and pay their own labor force, establish fair mechanisms to resolve government-investor disputes, and permit the repatriation of profits.  The country’s emerging private sector continues to show promise, particularly in tourist-related businesses, but it remains severely hampered by state controls, many expressly intended to keep the size and revenue of the enterprises small. Cuban authorities trust neither foreign businesses nor their own entrepreneurs.  

What could end up being the greatest long-term threat to the economy is the accelerating emigration from the island—particularly of younger, university-trained professionals. Many blame the flight on the US’s special benefits for Cuban migrants and the prospect these benefits may soon end. But the main cause is the glaring absence of opportunities for productive professional careers that offer reasonable incomes. The limits on creativity, free expression, and access to information, along with deteriorating public services, are other factors.

Political Tests

The sluggish implementation of promised economic reforms in Cuba over the past decade points to a broader failure of governance. For some time, the Cuban government has appeared indecisive, unresponsive to the country’s most serious problems. The quality of service provided by the government has sharply declined even in areas like health and education, in which Cuba once excelled.  Basic foods and essential medicines are in short supply and increasingly out of reach for ordinary Cubans. The hardships are most severe for the country’s disabled citizens and rapidly expanding elderly population. Little progress has yet been made toward satisfying  demands for access to internet service and greater connectivity. Tight restraints remain on freedom of expression, while abuses of human rights and due process are common. Cuban citizens are rarely consulted by government authorities, and have no say in the selection of the nation’s leaders—as has been the case since the outset of the revolution in 1959. 

It is disappointing that the government seems to be imposing new constraints on what had been an expanding and lively civil society that was becoming more and more visible. The emergence of a diversity of independent groups conducting measured debate and advocacy on many issues—including, for example, race relations, women’s and LGBT rights, environmental challenges, cultural creativity, and freedom of expression—was a signal for many of the growing openness of Cuban society.  However, many of these mostly small, Havana-based groups have, in recent months, been alarmed by growing criticism and pressure from Cuban authorities, who appear to view many of the groups as potential threats. 

The toughest test for the Cuban regime could come early next year, when Raul Castro has announced he will step down from the presidency. The  transfer of power from Fidel to Raul a decade ago was smooth and uneventful. Similarly, Fidel’s recent death, occurring some a decade after he left office, is unlikely to have any major political impact on Cuba.  Raul may stand to gain some  greater independence of action, with more leeway to pursue reforms that many believe he favors but had been resisted by his brother. But, at the same time, he may also have to be more cautious in the absence of the protection only Fidel could offer.

The coming transition, however, ending nearly 70 years of Castro rule and presenting so far no obvious successor, could turn out to be more contentious and disruptive. Although still projected for next year, no procedures have yet been put in place for selecting a new president (and certainly no suggestion that the Cuban people will have any say in the matter). Cuba will be stuck with the problem that inevitably plagues authoritarian regimes—how, without elections or other forms of popular participation, to assure an orderly transfer of power and confer the new leader with the broad legitimacy and authority he or she needs to govern. While there are no signs yet of disorder or unrest, Cuba, like other similarly closed regimes, could well face a rancorous struggle for power.

Continuing Engagement vs. Renewed Hostility

Donald Trump’s inauguration on January 20th is another source of uncertainty and potential disruption for Cuba. Contradicting his earlier campaign statement that the Obama opening to Cuba was just “fine”, president-elect Trump and advisors have threatened to reverse many of the changes of the past two years. Although it is still impossible to predict Trump’s course of action, or the reaction of the Cuban government, the statements coming from Trump’s transition team suggest that a shift of policy is likely. The new administration could turn the clock back to where it was two years ago, or it could, less radically, halt any further US steps toward normalized relations. Engagement might well be turned to confrontation once again.

But why would Trump, who is regularly described as a non-ideological pragmatist, want to halt or reverse the engagement policy launched by Obama? It would not produce any concrete benefits for either the US or the Cuban people. On the contrary, it would make matters worse for both nations. It would come at a cost to the United States, and it would surely deepen Cuba’s economic crisis and set back hopes of political opening on the island.  

Several major US companies, including  American Airlines, Purdue Chicken, and Starwood Hotels, would be among the losers. They are already taking advantage of the ebbing US economic restrictions and have started doing business in Cuba, while others like Google and Caterpillar are considering new investments. But the hardest hit would be small Cuban entrepreneurs who have opened restaurants and bed and breakfast facilities, often with the support of US relatives.  Moreover, although its impact on US relations in the region would be largely symbolic, a Trump turnaround on Cuba policy would be widely criticized in Latin America and Caribbean, where every nation welcomed the US-Cuban reconciliation. Some analysts believe that a reversal could well encourage closer ties between Cuba and one or more of America’s rivals—China, Russia, and Iran, for example, all of which have ideological or historical ties to Cuba.

Still, the Trump administration’s decisions on Cuba are not likely to be based on cost/benefit analyses. The island is vulnerable because it is small and weak, and remains a politically charged issue for many Americans, including many allies of the new president. Cuba policy offers Trump an early opportunity to demonstrate his authority and decisiveness in foreign policy at a relative low cost, at least compared with the economic and political consequences of similar actions toward, say, Mexico, China, or Iran.  Few of his senior advisers or cabinet members would strongly oppose the reinstatement of a hard line approach toward Cuba, and Trump can also count on the powerful support of three Cuban-American senators and other conservative members of Congress.  Although a majority of Americans favor the Obama opening to Cuba, few view it as an important US priority. 

The core argument for ending the US’s current Cuba policy is that the Cuban government has been largely unresponsive to US efforts to build a new, more normal relationship. Critics claim that, while the US has made sweeping changes in its policies and practices (changes they often refer to as concessions), the Cubans have resisted even minimal economic reforms or political relaxation. In short, the critics argue, the Cubans are getting a free ride.

Although offered without evidence, a second argument that has gained ground is that ordinary Cubans have not benefitted much, if at all, from the warming of US-Cuba ties. In this view, whatever the rewards of normalization, they have gone largely to Cuba’s elite—i.e., the country’s top leaders, senior officials of the Communist party, and military brass—and strengthened their hold on the country.  Some opponents of reconciliation have taken the argument further by claiming (also without evidence) that the Cuban government would not have survived the past two years if the Obama Administration had not lifted restrictions on travel and remittances—and thus  contributed to the country’s foreign revenues.

Unquestionably, the case for sustained, respectful US engagement with Cuba has been weakened by the spotlight placed on the glacial pace of change on the island. The Cuban authorities have to date shown little enthusiasm or determination to take essential measures to reform their economy and attract new investment, address human rights violations, or begin to open the island’s politics. The nation’s politics seem deadlocked. Cuban blogger Yoani Sanchez suggested recently that, by failing to take advantage of the goodwill of the Obama administration, the government has wasted two years and would likely soon again confront a more hostile Washington. 

Still, as reported above, important changes have occurred in Cuba and they are largely pointing in the right direction–including, for instance, an expanding private sector, an emerging, if restricted, civil society, and increasing flows of information, and reduced restraints on travel.  Most critically, the great majority Cubans are still enthusiastic about the prospect of a normal relationship with the United States.  Even if change has been slow and halting on the island, and most citizens have so far seen little benefit, few Cubans want to turn back. Most remain hopeful, even optimistic, that increased engagement with the US will eventually bear fruit.   

Fundamentally, there is nothing to be gained by halting US engagement at this point—and much to be lost. Although the Cuban government may be willing to make some concessions to US demands to avert a deepening economic crisis, the most likely response to a reversal in US policy would be a hardening of authoritarian rule in Cuba. And this will bring more economic hardship to the Cuban people and more years more of futile antagonism between the two countries. Both Americans and Cubans deserve better.