Monday, December 22, 2014


On Wednesday US President Barack Obama announced the restoration of relations with Cuba in a move that unwinds the world’s most intractable diplomatic row and brings down the curtain on the last vestiges of the cold war era.

Relations were severed after the ascendance to power Fidel Castro in 1959. That he nationalised a lot of American interests and hobnobbed with the USSR did not endear the island nation to the US.
After attempts to force Castro out failed dismally, legislation to institutionalise economic sanctions was passed with the hope of making the country ungovernable and for the population to push out Castro.

Ten US administrations later, Washington has come around to the fact that the sanctions did not achieve their intended aim except worsen living conditions for the everyday man. Raul Castro took over from his brother in 2008, after Fidel’s health took a turn for the worse.
Understandably Cuba has not come away unscathed.

Havana estimates that the economic sanctions have cost the country more than a trillion dollars in lost economic activity and with the demise of the Soviet Union the economy has limped on, but only just.

"Despite being frozen out by the largest economy in the world, Cuba has done very well for itself when seen against the record in other regional US allies like Haiti, Grenada and Jamaica, when judged against the quality of life of its citizens using the UN’s Human Development Index.
It’s doctor to patient ratio rivals that of many western European nations, has a health budget that amounts to about $251 per person and has a first world life expectancy rate of 78 years...

To lift the economic sanctions hanging over the island will have to come with legislative approvals, a move the Republican Party, which controls both Congress and Senate has vowed to oppose.

A loosening of economic restrictions will do wonders for the Cuban economy. For instance US citizens will now be able to send $6,000 more a year to Cuba and if visiting the Caribbean island can return with goods worth up to $400.

This may sound like mere tokenism but as it is now, about $5b in cash and goods, is sent to Cuba from America, which is more money than is made by their best performing economic sectors: sugar, tourism and pharmaceuticals.

A boost in hard currency inflows would help them pay for oil on the world market. They have been benefitting from cheap crude supplies from Venezuela, a luxury the South American ally can least afford with falling oil prices.

US interventions in Latin America during the cold war left terror and poverty in their wake, Cuba survived most of that.

Cubans can expect that with their country opening up to the US, things will not be the same again. With improved economic prospects and improvements in people’s welfare, one can expect greater agitation for freedoms. It is unlikely that the island will revert to the den of inequity it was, as a haven for organised crime, gambling and racketeering that it was before Castro came along but integrating into global economy may call for dramatic changes in the structure of the economy and politics that Havana may find hard to swallow.

For the rest of us Cuba stands as an example of what poor countries can achieve by relying on their own resources and despite insurmountable odds.

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