Socio-Economic and Political Trends in Cuba

In July, the United States formally reopened its embassy in Cuba with no less than Secretary of State John Kerry as the guest of honor. It was the first visit by a top US official since 1945. In his speech, Kerry underscored the opening of another positive episode in US-Cuban relations and normalization of ties between the two countries. President Barack Obama also made a previous declaration about the restoration of diplomatic relations which was in Limbo for almost 50 years.

Now that cold war politics was over, both Washington and Havana agreed to a mutual cooperation that could lead to benefits for their respective countries. Regardless of the considerations involved, this development is viewed as a significant gain for the people of Cuba.

Cuba Today

Cuba today is very different from the Cuba two decades ago. It now appears that the fundamental political and socio-economic structures are stronger than before. The Communist Party is still in control and the government dictates the economic system. There are projections that Cuba will go through an accelerated transformation just like Vietnam or China. The island is entering a new era which cannot be described or classified easily.

Many observers prefer to portray the up-and-coming Cuba as a public and private crossbreed where there are different forms of economic policies and trends mixed with a military-regulated state and one-party rule. The new legislation on migration has shaped ongoing reforms especially the removal of white card requirements.

Last December, the Cuban government set free 53 political detainees even as the Castro regime still takes dissenters into custody and fights back international pressure to alleviate repression. Cuba is also a party to several human rights as well as humanitarian law treaties even as it has voiced out its reservations on some of these pacts.

Cuba might not be able to espouse the design of Vietnamese or Chinese economic reforms at this point. However, there are some factors that distinguish this country from other developing nations. These are distinct location, population and economic status. It is very near the United States with a mix of highly developed human capital and decrepit physical infrastructure. From different perspectives, Cuban reforms may be exasperatingly lethargic, inadequate and inconsistent. The government seems inept in addressing economic problems of its citizens as well as better. In spite of all these, Cuba is expected to make progress even at a slow pace.

Investments in Cuba

The National Assembly of Cuba has ratified a new legislation in foreign investments last year to bring urgently needed capital. It also offered abrupt tax reductions and promised an atmosphere of investment security. Said investments have been allotted for shared ventures with Cuba and investments linking overseas and Cuban firms. The countries doing business with this communist nation are Spain, France, the United Kingdom, Germany, Canada, Russia, the Netherlands, Venezuela, Mexico, China, Angola, Chile, Brazil, and Panama. It is expected that Brazil will be investing more in the future primarily because of the Mariel Special Economic Development Zone. This is being constructed with ample subsidy from the Brazilian Government.

Direct investments from the United States will not possibly go up in the near-term. Yet, there is a need for overseas investors in Cuba need to partner with the Cuban government as minority shareholders and not private corporations. At present, Cuba lacks primary infrastructure required by a developing economy which also encompass wholesale suppliers and independent banks. Cuban President Raul Castro has not yet specified that Cuba will improve freedoms of speech, press and censorship.

Trade Opportunities

Business opportunities will grow mainly because of the lifting of the embargo. There will be more export prospects which include construction materials for residential buildings, merchandise for private entrepreneurs and agricultural machineries for small farmers. Cubans will have additional access to goods that cost lower and obtain economic independence from the government. Providers of telecommunications services will also be allowed to build more infrastructure and other mechanisms such as the Internet in Cuba.

Some components of President Obama’s plan, will likely cast a less perceptible effect on these countries’ economies. For instance, it remains unclear on how the Cuban government can afford to pay for imports after Washington relaxed export restrictions on agriculture, construction and telecommunications merchandise. Havana pays in cash for agricultural imports from the US and few private financial entities are ready to open credit lines to Havana, because of Cuba’s closed economy. Some of the other more major changes are in agriculture; progressive taxation code; and, reduction of public payrolls by permitting small enterprises to take center stage. These are the so-called early stages of real estate, wholesale marketplaces and private credit.

Commerce will definitely take place in the top five cities in Cuba which are Havana, Santiago de Cuba, Camaguey, Holguin, and Guantanamo. Meanwhile, all these developments are expected to have a significant impact on Cuba’s cultural diversity which is influenced greatly by the Spanish, North Americans, French, Africans, and Asians.

Overall, this is a new dawn in the relationship between Cuba and the United States as well as other nations that affects other countries in the region. This can be a first step in the right direction to mend fences and start new relationships.