Can Cuba become a Singapore?

The U.S.’ withdrawal of Cuba from its list of “states sponsoring terrorism” on May 29, 2015, after over 20 years, was the first step in Presidents Barack Obama and Raul Castro’s agreement in December 2014 to revive bilateral relations. While this will be an important part of Obama’s legacy, it will be a while before the two countries achieve normal bilateral relations.

Cuba, long on the frontline of the Cold War, now stands on the threshold of a new sort of revolution, far removed from the one in 1959 led by 33-year-old Fidel Castro.

This first step towards reconciliation has raised much hope and some concern in this politically fascinating and richly—endowed island nation that sits on the U.S’s door-step. A sense of optimism—though not euphoria—was palpable during my visit in May to this country of 11 million. But the pace of the opening up between the two countries will depend on domestic pressures in the U.S.—primarily the role of the Cuban-American community in the electoral matrix in the state of Florida, and the ability of a Republican-controlled House and Senate to undo the Cuban embargo.

Cuban society across government, universities, diplomats and youth understand what’s at stake. Cuba is enfeebled by the comprehensive and enduring blockade—commercial, economic, financial and political—enforced through six U.S. Congressional statutes. U.S. think-tank Council of Foreign Relations estimates that Cuba has suffered damage amounting to $1.126 trillion in the last 50 years. Quite apart are the $6 billion in US claims against Cuba on which it justifies the embargo.

The pressure from within Cuba to embrace an open economy and its resultant benefits is strong and growing. Whether it will mean a political opening as well, is the critical decision the Castro regime has to make. There are some examples to follow. Regimes in the Central Asian republics and in south-east Asia like Vietnam, Cambodia and Laos, all of which emerged from the Soviet system developing economic relations with the US without adopting a democratic system- an article of faith with the United States. Most notable is Vietnam which like Cuba has emerged from a long period of hostility with the US.Yet Cuba’s choice of its political system will matter given its geo-strategic location is in the Americas as against distant Vietnam..

First though, the economy needs to recover. For a fertile tropical country with a surfeit of vegetables and fruit, we were surprised to learn that potatoes grown in the north-west of the country are not readily available in Trinidad del Cuba in the south, less than 150 kilometres away. Such disabilities in public procurement and distribution are visible across economic sectors.

World Bank data shows that Cuba has had a consistently low annual GDP growth of 2.1% for the last few years. Its GDP, at $68.23 billion in 2011, is far lower than the regional average, while its oppressive government-controlled international trading system prevented entrepreneurial talent and growth. Its limited information technology backbone is holding back innovation and the leveraging of talent in a country with school enrolment of 98% and a per capita income of $5,890.Its major revenue earners are oil subsidies from Venezuela and remittances from Cuban exiles particularly in the U.S. and across Latin America.

A bright spot is Cuba’s health delivery system, which has been a model in Latin America. Its forays in Africa, and even Nepal during the recent earthquake, have elicited high praise. Also, the country is blessed with one of the lowest levels of environmental pollution in the region. The BP oil spill in the Gulf of Mexico was watched with great concern by Cuba. It is unlikely that Havana will rush headlong to welcome American industrial giants, and stands well placed to develop another technology and green industry hub based on U.S. research and development.

Tourism will surely be a major money-spinner, if Cuba can keep out its negative corollaries like destruction of social and natural environment. According to government sources, Cuba receives 3 million tourists from Canada and Europe. This can triple when the Americans start pouring in after travel restrictions are eased.

Deciding on a model for the country’s economic future will be crucial. So long as toppling the Castro regime does not remain part of U.S. state policy or its zeal to promote democracy and human rights which it unsuccessfully tried in Iraq, Syria and Libya, the Cuban regime could arrive at an outcome based on a form of participative governance. To succeed the regime will have to carry with it supporters who have been beneficiaries of the existing party-based system.

Singapore, sitting at China’s door-step, presents an interesting model for Cuba. It blends the two imperatives of economically entrenching the big neighbour without falling totally under its spell. Its model of limited democracy presents an option which Havana could find attractive. The key is building an economic reform process which will be recognised as irrevocable and self-sustaining, and moving policy from control to regulation. With its strategic location straddling the Caribbean and Latin America, Cuba bids fair to be both, a bridge to the U.S. and a financial, re-processing, and technology centre geared towards the U.S. economy.

China, meanwhile, is already in Cuba taking advantage of Cuba’s statist import system. The predominance of Chinese-made buses, trucks and passenger cars in the transport sector is overwhelming. China’s economic profile is set to grow as Cuba gears to open up. It raises a moot point: could Cuba become America’s Taiwan?

The recent visit to New Delhi of Cuban First Vice President Diaz-Canell has rejuvenated the historic relationship. Pharmaceuticals, automobiles and science and technology were identified for boosting cooperation. Cuba can replicate India’s success in the field of information technology. Active steps by India’s trade and industry could pave the way for it get a foothold in this emerging economic centre in the Caribbean.

Rajendra Abhyankar is Chairman,Kunzru Centre for Defence Studies and Research, Pune. He is currently professor of the Practice of Diplomacy and Public Affairs at the School of Public and Environmental Affairs, Indiana University, Bloomington, U.S. He visited Cuba from 10-17 May, 2015.

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