Fidel Castro has often been blamed for the state of the Cuban economy, but the longstanding US embargo and the question of what constitutes real economic success make the issue far more complex than that, argues Helen Yaffe

Yaffe, Helen

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Cuba is poor, but who is to blame – Castro or 50 years of theUS blockade?blogs.lse.ac.uk /latamcaribbean/2017/03/01/cuba-is-poor-but-who-is-to-blame-castro-or-50-years-of-the-us-blockade/Fidel Castro has often been blamed for the state of the Cuban economy, but the longstanding USembargo and the question of what constitutes real economic success make the issue far morecomplex than that, argues Helen Yaffe.Alongside his depiction as a “brutal dictator”, negative reflections on Fidel Castro since his deathin November 2016 have focused on his “mismanagement” of the Cuban economy and theconsequent “extremes of poverty” suffered by ordinary Cubans.This caricature is problematic – not only because it ignores the devastating economic impact of the United Statesembargo over 55 years, but also because it is premised on neoclassical economic assumptions. This means that bystressing economic policy over economic restraints, critics can shift responsibility for Cuba’s alleged poverty on toCastro without implicating successive US administrations that have imposed the suffocating embargo.This approach also ignores key questions about Cuba after the revolution. Where can medium and low-incomecountries get the capital to invest in infrastructure and welfare provision? How can foreign capital be obtained underconditions which do not obstruct such development, and how can a late-developing country such as Cuba useinternational trade to produce a surplus in a global economy which – many claim – tends to “unequal terms oftrade”?It was the search for solutions to the challenge of development that led Cuba’s revolutionary government to adopt asocialist system. They adopted a centrally planned economy in which state ownership predominated because theyperceived this system as offering the best answer to those historical challenges.But the commitment to operate within a socialist framework implied additional restraints and complications,particularly in the context of a bipolar world. My book, Che Guevara: The Economics of Revolution , examines thecontradictions and challenges faced by the nascent revolutionary government from the perspective of Guevara’srole as president of the National Bank and minister of industries.Literature on Cuba is dominated by “Cubanology”, an academic school central to the political and ideologicalopposition to Cuban socialism. Its emergence and links to the US government are well documented. Its argumentsare that the revolution changed everything in Cuba – and Fidel (and then Raul) Castro have personally dominateddomestic and foreign policy since, denying Cuban democracy and repressing civil society. Thanks to theirmismanagement of the economy, growth since 1959 has been negligible. They simply replaced dependency on theUS with dependency on the USSR until its collapse in 1990.These ideas have also shaped political and media discourse on Cuba. But the problem with this analysis is that itobstructs our ability to see clearly what goes on in Cuba or explain the revolution’s endurance and Cuban society’svitality.What did Castro inherit?Arguments about the success or failure of the post-1959 economy often hang on the state of the Cuban economy inthe 1950s. The post-1959 government inherited a sugar-dominated economy with the deep socio-economic andracial scars of slavery. Cubanologist Jaime Suchlicki argues that Batista’s Cuba was “well into what Walter Rostowhas characterised as the take-off stage”, while Fred Judson points to structural weaknesses in the Cuban economy:1/5“Long-term crises characterised the economy, which had a surface and transient prosperity.” So while one sideinsists that the revolution interrupted healthy capitalist growth, the other believes it was a precondition to resolvingthe contradictions obstructing development by ending Cuba’s subjugation to the needs of US capitalism.GDP of Cuba, Dominican Republic, and Jamaica 1960-2015 (Source: World Bank)Following the revolution, Castro set out to bring social welfare and land reform to the Cuban people and to confiscatethe ill-gotten gains of the Cuban elite. But when the defeated Fulgencio Batista and his associates fled Cuba, theystole millions of pesos from the National Bank and the Treasury. The country was decapitalised, severely limiting thecapacity for public spending and private investments. Wealthy Cubans were leaving the island, taking their depositsand taxes with them. How was the new government going to carry out the ambitious socio-economic reforms withoutfinancial resources?We have to consider these real circumstances at every juncture. For example, when the US embargo was firstimplemented, 95% of Cuba’s capital goods and 100% of its spare parts were imported from the US – and the USwas overwhelmingly the main recipient of Cuban exports. When the Soviet bloc disintegrated, Cuba lost 85% of itstrade and investment, leading GDP to plummet 35%. These events produced serious economic constraints onCuba’s room for manoeuvre.Putting a price on povertyMoving on, we should also ask: how are we to measure Cuba’s poverty? Is it GDP per capita? Is it money-incomeper day? Should we apply the yardsticks of capitalist economics, focusing on growth and productivity statistics tomeasure “success” or “failure”, while paying little attention to social and political priorities?2/5The state provides a (very) basic food basket through ration cards (Photo: Evan Chu, CC BY-NC-ND 2.0)Even factoring in its low GDP per capita, the Human Development Index (HDI) lists Cuba in the “high humandevelopment” category; it excels not just in health and education, but also in women’s participation and politicalinclusion. Cuba has eliminated child malnutrition. No children sleep on the streets. In fact, there is no homelessness.Even during the hungry years of economic crisis of the 1990s, Cubans did not starve. Cuba stuck with the plannedeconomy, and it enabled them to ration their scarce resources.Yes, salaries are extremely low (as both Fidel and Raul have lamented) – but Cubans’ salaries do not determinetheir standard of living. About 85% of Cubans own their own homes and rent cannot exceed 4% of a tenant’sincome. The state provides a (very) basic food basket while utility bills, transport and medicine costs are kept low.The opera, cinema, ballet and so on are cheap for all. High-quality education and healthcare are free. They are partof the material wealth of Cuba and should not be dismissed – as if individual consumption of consumer goods werethe only measure of economic success.Operation miracleThe specific and real challenges Cuban development has faced has generated unique contradictions. In a plannedeconomy, with an extremely tight budget, they have had to prioritise: the infrastructure is crumbling and yet they havefirst-world human development indicators. Infant mortality rates reveal a lot about the standard of living, beinginfluenced by multiple socioeconomic and medical factors. Cuba’s infant mortality rate is 4.5 per 1,000 live births,which sits it among first-world countries – and above the US on the CIA’s own ranking.It is not just Cubans who have benefited from these investments. Tens of thousands of Cuban doctors, educatorsand other development aid workers have served around the world. At present some 37,000 Cuban doctors andnurses work in 77 countries. They generate foreign exchange of some US$8 billion a year – Cuba’s biggest export.3/5In addition, Cuba provides both free medical treatment and free medical training to thousands of foreigners everyyear. As a direct initiative of Fidel, in 1999, the Latin American School of Medicine  was inaugurated in Havana toprovide foreign students from poor countries with six years of training and accommodation completely free. In 2004,Cuba teamed up with Venezuela to provide free eye surgery to people in three dozen countries under OperationMiracle. In the first ten years more than 3m people had their sight restored.International students of the Latin American School of Medicine in Havana (Photo: Max Dai Yang, CC BY-SA 4.0 )Prohibiting even trade in medicines, the US embargo led Castro to prioritise investments in medical sciences. Cubanow owns around 900 patents and markets pharmaceutical products and vaccines in 40 countries, generating yearlyrevenues of US$300m, with the potential for massive expansion. The sector produces more than 70% of themedicines consumed by its 11m people. The entire industry is state owned, research programmes respond to theneeds of the population, and all surpluses are reinvested into the sector. Without state planning and investment it isunlikely that this could have been achieved in a poor country.In the mid-1980s Cuba developed the world’s first Meningitis B vaccine. Today, it leads in oncology drugs. In 2012Cuba patented the first therapeutic cancer vaccine. The US embargo forces Cuba to source medicines, medicaldevices and radiology products outside the United States, incurring additional transportation costs.Sharing economyEcuador’s president, Rafael Correa, told me in 2009:A great example provided by Cuba is that in its poverty it has known how to share, with all itsinternational programmes. Cuba is the country with the greatest cooperation in relation to its grossdomestic product and it is an example for all of us. This doesn’t mean that Cuba doesn’t have bigproblems, but it is also certain that it is impossible to judge the success or failure of the Cuban modelwithout considering the US blockade, a blockade that has lasted for 50 years. Ecuador wouldn’tsurvive for five months with that blockade.Let’s consider the embargo: the Cuban government estimates that it has cost the island US$753.69 billion. Their4/5annual report to the United Nations provides a detailed account of that calculation. That’s a lot for a country whoseaverage GDP between 1970 and 2014 has been calculated at US$31.7 billion.Yes, Castro presided over mistakes and errors in Cuba’s planned economy. Yes, there is bureaucracy, lowproductivity, liquidity crisis, debt and numerous other problems – but where aren’t there? Castro pointed to theseweaknesses in his own speeches to the Cuban people. But President Correa is right – to objectively judge Castro’slegacy, Cuban development and contemporary reforms today, we cannot pretend that the US blockade – whichremains today despite rapprochement – has not shaped the Cuban economy.Castro almost saw out 11 US presidents since 1959, but he never lived to see the end of the US embargo. Newchallenges face Cuba, with economic reforms underway and the restoration of relations with the United States. Thenext step, including for me personally, is to assess the Cuban revolution’s resilience in this post-Castro, DonaldTrump era.Notes:• The views expressed here are of the authors and do not reflect the position of the Centre or of the LSE• This article was originally published at The Conversation• Featured-image credit: cropped version of Chris Goldberg (CC BY-NC 2.0)• Please read our Comments Policy before commentingHelen Yaffe – LSE Department of Economic HistoryDr Helen Yaffe is an LSE Fellow in Economic History. She is the author of Che Guevara: TheEconomics of Revolution (2009) and co-lead of the joint LSE Latin America and Caribbean Centre-LSE US Centre project US-Cuba Rapprochement: Building Resilience in a Transition Economy.© LSE 20165/5

Cuba is poor, but who is to blame – Castro or 50 years of the US blockade?

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