Sunday, September 26, 2010


Strange statements are coming out of Cuba these days. Fidel Castro, in the course of a five-hour interview in late August, reportedly told Jeffrey Goldberg of The Atlantic and Julia Sweig of the Council on Foreign Relations that “the Cuban model doesn’t even work for us anymore.”

Once that statement hit the headlines, Castro backtracked. Dressed in military uniform for the first time in four years (which we suspect was his way of signaling that he was not abandoning the revolution), he delivered a rare, 35-minute speech Sept. 3 to students at the University of Havana. In addition to spending several minutes on STRATFOR’s Iran analysis, Castro addressed his earlier statement on the Cuban model, saying he was “accurately quoted but misinterpreted” and suggesting that the economic model doesn’t work anymore but that the revolution lives on.

Sustaining the Revolution

There is little hiding the fact that Cuba’s socialist economy has run out of steam. The more interesting question is whether the Cuban leader is prepared to acknowledge this fact and what he is prepared to do about it. Castro wants his revolution to outlive him. To do so, he must maintain a balance between power and wealth. For decades, his method of maintaining power has been to monopolize the island’s sources of wealth.

But that control has come at a cost: For the revolution to survive — and maintain both a large security apparatus and an expensive and inefficient social welfare system — it must have sufficient private investment that the state can control . . .

Many Cubans, including Castro, blame the island’s economic turmoil on the U.S. embargo, a politically charged vestige of the Cold War days when Cuba, under Soviet patronage, actually posed a clear and present danger to the United States. There is a great irony built into this complaint. Castro’s revolution was built on the foundation that trade with the imperialists was responsible for Cuba’s economic turmoil. Now, it is the supposed lack of such trade that is paralyzing the Cuban economy. History can be glossed over at politically opportune times, but it cannot so easily be forgotten.

The Cuban-Venezuelan Relationship

Cuba and Venezuela face very similar geographic constraints. Both are relatively small countries with long Caribbean coastlines and primarily resource-extractive economies. While Venezuela’s mountainous and jungle-covered borderlands to the south largely deny the country any meaningful economic integration with its neighbors, Cuba sits in a sea of small economies similar to its own. As a result, neither country has good options in its immediate neighborhood for meaningful economic integration save for the dominant Atlantic power, i.e., the United States. In dealing with the United States, Cuba and Venezuela basically have two options: either align with the United States or seek out an alliance with a more powerful, external adversary to the United States.

Both countries have swung between these two extremes. Prior to the 1959 revolution, the United States dominated Cuba politically and economically, and although relations between the two countries began to deteriorate shortly thereafter, there were still notable attempts to cooperate until Soviet subsidies took hold and episodes like the 1961 Bay of Pigs fiasco sunk the relationship. Likewise, until the 2002 coup attempt against Venezuelan President Hugo Chavez, Venezuela had long maintained a close, mutually beneficial relationship with the United States. With U.S. urging, Venezuela flooded the markets with oil and busted the 1973 OPEC oil embargo, helping bring about the fall of the Soviet Union. That energy cooperation continued with the U.S. sale of Citgo in the 1990s to Venezuela’s state oil firm PDVSA, a deal designed to hardwire Venezuela into the U.S. energy markets. Venezuela obtained a guaranteed market for its low-grade crude, which it couldn’t sell to other countries, while the United States acquired an energy source close to home.

Read more: A Change of Course in Cuba and Venezuela?

A Change of Course in Cuba and Venezuela? is republished with permission of STRATFOR


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