People's Democracy

ECONOMIC NOTES

Cuba: Winning The War Against Imperialism

C P Chandrasekhar

AMONG the many acts of aggression of the US government that lack international legitimacy, the economic blockade it still seeks to impose on Cuba stands at the top of the list. On November 8, 2006, for the fifteenth time, the UN General Assembly voted a resolution that condemned US sanctions against Cuba imposed as far back as July 6, 1960, and called once more for their repeal. There were two features of the vote that reflected the strength of international support for Cuba. First, the vote was carried with a 183-to-4 majority with one abstention. That was an improvement on last years 182-4 verdict (also with one abstention). The nature of support for the US is reflected in the character of the other countries that voted against the resolution: Israel, Marshall Islands and Palau. Micronesia abstained.

Secondly, the vote was carried after a diversionary amendment by the Australians, calling on Fidel Castro to release political prisoners and respect human rights, was defeated. These have been the excuses 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 a small country.

It is often forgotten that the current vote is the result of a long and difficult battle to win international support. In 1992, 59 out of 133 participating countries voted in favour, 5 against and 71 abstained; in 1998, 157 out of 171 voted in favour, 12 abstained and only 2 (the US and Israel) voted against.

Economic sanctions, we must recognise, amount to the 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 the aggressor targets by debilitating the economy and delegitimising the State presented as incapable of protecting the welfare of its citizens. Sanctions as a means of aggression gained in popularity during the years of the Cold War, when no single trigger-happy superpower could wage war at will without inviting responses that were difficult to implement.

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 other nations that are willing to collaborate with the victim for political, strategic or humanitarian reasons. As a result even in the Cold War years there are 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.

SOVIET HELP AND AFTER

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 legitimacy of and enormous popular support for Fidel Castro and the Cuban leadership, this allowed Cuba to survive even if at much cost in terms of hardship. Popular support came, among other things, from the success of the regime to create an egalitarian order providing not merely basic necessities for all, but ensuring major advances in areas such as health and education.

The real opportunity for the US came with the fall of the Soviet Union The collapse of the Soviet Union in late 1989 and 1990 and the sudden end to Cuba's beneficial relationship with her, brought home the danger of overseas dependence in brutal fashion. 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 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 a heavy dependence on sugar as an export crop. In 1989, land under sugar cultivation was three times as large as 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 even accounted for 57 per cent of the total calories in the average Cuban diet.

The loss of revenue from sugar export 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 forms 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.

ENCIRCLEMENT STRATEGY

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 allows 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 bill 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 fled to the US after liberation, this amounts to much of the land and property in the country.

CUBAN RESPONSE

With 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 use of the dollar acquired in the form of remittances, incomes in sectors linked to tourism and as part payment for workers in government enterprises. This however brought with it problems of a dual – dollar and peso – economy, and the challenge of inequality. The third was to respond to specific problems with innovative solutions. Reduced access to fertilisers and pesticides that were earlier imported meant that organic forms of farming had to be encouraged. Shortage of medicines meant that the domestic drug industry had to be strengthened. The inability to continue with reliance on electricity generators imported from the Soviet Union at low cost necessitated an alternative energy strategy.

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 growth 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, with 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.

Seen in this sense 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 it moves to condemn US aggression in the form of sanctions.