What is the next chapter in Cuba’s story?

The booksellers outside in the Plaza de Armas sell some fine old leather-bound volumes along with other used hardcovers and paperbacks. There are numerous biographies of Che Guevara and Fidel Castro on the racks, including plenty of copies in English of Fidel’s speech “History Will Absolve Me,” which he delivered on Oct. 16, 1953, when he was on trial for attacking the military barracks at Moncada. Sixty-two years later, Fidel and his revolution are still standing, though for how much longer, one wonders.

The Plaza de Armas stands near the sea, at one end of Habana Vieja, or Old Havana. Laid out in 1519, it is a beautiful square, the oldest and most important in Havana. In the middle stands a statue of Carlos Manuel de Céspedes, the hero of the Ten Years’ War against the Spanish that began in 1868. From the Plaza de Armas, it is an easy walk to the other squares the Cuban government has restored: Plaza de la Catedral, Plaza Vieja, Plaza de San Francisco.

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Much of the rest of Havana is a wreck, a display of moldering, often magnificent architecture that is falling apart, the product of years of neglect and Cuba’s tropical climate. Driving along the Malecón, the seafront road lined with buildings crumbling from damage by salt spray, one could mistake Havana for a war-torn city, which in a way it is. Fifty years of punishing U.S. sanctions coupled with government mismanagement have taken a toll on the capital.

But, while dilapidated, Havana seems vibrant. If it is too much to say it is thriving, it does seem vital. And these days it seems hopeful too. The move to normalize U.S.-Cuban relations is still new and uncertain, but Cubans think change is around the corner. Just what kind of change, however, remains to be seen.

“What does the word transition mean to you?” Rafael Betancourt, an economist, polled a group of us meeting him at a cafe. Most among the dozen there, part of a 150-strong delegation organized by the peace group Code Pink, answered “capitalism” or “privatization.” That, said Mr. Betancourt, a professor at Havana Polytechnic Institute, is the biggest hurdle to constructing a new form of socialism, a socialism for the 21st century, a third way.

Mr. Betancourt is a Cuban-American whose life journey has reversed the pattern most Cuban-Americans follow. He left Cuba as a child and grew up in the United States. In 1986 he returned to Cuba, where he has raised a family while teaching and working as a consultant on international development.

“Latin America is where solutions are being crafted,” he said. “When you look at those options that are being pursued in Latin America, what’s interesting is how different they are from the Eastern European model. Now those solutions may not work, but nobody else has any ideas about how to deal with the problems capitalist economies are facing.”

Inequality Makes a Landfall

The common problem these economies face is growing income inequality. Many countries assumed the neoliberal model of development would solve all problems, that if countries reduced the size of government, lowered taxes and promoted privatization, they would create the basis for unlimited growth that would trickle down to all. But as the French economist and writer Thomas Piketty documented in his book Capital in the 21st Century, income inequality is growing in capitalist societies, and wealth is becoming more and more concentrated in fewer hands. The income disparity in many countries, rich as well as poor, is growing at a rate that exceeds rates before World War I.

Mr. Betancourt believes Cuba has a chance to avoid that fate, to become once again a model for the world in a way that it has not been for decades. “We’re in a race against time,” he said. “There are those who think we can have a socialist solidarity economy that includes our public economy, that includes our state and private enterprises and that includes our social and private economy—the cooperatives, the small businesses, the family businesses in the informal sector.” He envisions a mixed economy that does not turn its back on social responsibility and a government that neither protects only the privileges of the rich nor defends only the interests of the poor.

It sounds grandiose, particularly in a country where, he acknowledges, people are struggling just to survive, with most people working two jobs to buy shoes for their children and put food on the table. Even with government-supplied food rations, he says, Cubans spend 80 percent to 90 percent of their disposable income on food. Though Cuba is undergoing what Mr. Betancourt calls a third agrarian reform, one that reverses the effects of the second, which concentrated farmland into large inefficient state farms, the island still does not feed itself and imports 60 percent of its food. The government has been trying to change that, offering citizens leases of land in usufruct to encourage private farming.

Over the last 10 years, Mr. Betancourt notes that agricultural output and calorie consumption in Cuba have risen after the desperate days of the Special Period, Fidel Castro’s euphemistic term for the lean years that followed the collapse of the Soviet Union and the abrupt end of the Soviet subsidies on which Cuba had depended. During some of the worst days of the Special Period, from 1991 to 1994, Cuba was gripped by famine and the average Cuban lost 20 pounds. Foreign trade dropped by more than 70 percent, and the economy shrank 35 percent. The United States tightened the screws during this time, extending the embargo to apply to foreign companies that trade with Cuba, barring U.S. bank loans to them and denying entry to the United States to anyone who did business with Cuba.

Few Americans realize the severity of the embargo. The Cuban government considers it a blockade and the chief source of the country’s economic woes, though Cuba has made its share of mistakes along the way, which Mr. Betancourt readily admits.

“We got mired in this statist economy,” he said. “We fell into this huge crisis for 20 years, where our economy dropped more than in the Great Depression.” The Special Period spurred economic change: self-employment became legal, foreign investment was allowed, tourism and small-scale agriculture were encouraged along with urban community gardens called organopónicos that, by necessity, grew produce without the pesticides and fertilizers that the country had once imported. Cuba, which had previously used more fertilizer than the United States, embraced environmentalism. More than many nations, it still does.

The mix of privatization and innovation has put Cuba on a path to sustainable development that is rare in the world. In an environmental report in 2006, the World Wildlife Fund voted Cuba the only country in the world with an acceptable ecological footprint. The assessment was based on a human welfare index that measured life expectancy, literacy and gross domestic product as well as the amount of resources used to fulfill a person’s food and energy needs. Unlike most Western countries, Cuba has not overconsumed; unlike many poor countries in Africa and Asia, it possesses excellent literacy rates, education and health care.

Raúl the Refomer

Since Fidel Castro handed power to his brother Raúl in 2006, Cuba has instituted new reforms, the most sweeping since the early years of the revolution. Seeking to resuscitate the failing economy, Raúl Castro has imposed deep structural changes, diversifying the economy and encouraging individual initiative in place of paternalism by the state. “We have to permanently erase the notion that Cuba is the only country in the world where people can live without working,” he declared in 2010.

A year later a grassroots movement of economic reform began at the government’s behest. Each neighborhood held debates on what kind of change people wanted to see. The result was legislation that opened up a real estate market, enabling Cubans to buy and sell their homes and cars. Another change: Cubans no longer needed an exit visa to leave the island. And private enterprise was encouraged, with 450 state enterprises becoming cooperatives owned and run by workers and 250,000 people joining the private sector in 2011 and 2012. The government plans to cut another half million people from the state payroll.

These sound like positive changes, but they have had another, less desirable effect: increasing inequality. Cuba’s dual currency is itself a major source of inequity. Created in 1993 to manage tourist revenue and foreign trade, the convertible peso is tied to the dollar and is worth far more than the local peso most Cubans use and in which they are paid. A waiter who receives tips from tourists can make as much money in a day as a professional can make in a month on the average Cuban salary of $20.

Remittances from Cuban-Americans in the states to family members on the island have also fueled a growing income gap, one that leaves black Cubans at a disadvantage. Most of the Cuban population that emigrated to the United States was white; so are the families on the island to whom they send money. The ability to sell one’s home is expected to further widen the divide between the island’s haves and have-nots. “The fear is that these capitalistic reforms will erode what’s been built here since the revolution,” said Conner Gorry, an American journalist who has lived in Cuba since 2002.

I had come to Cuba because I wanted to see it while the Castro brothers still ran it, before it inevitably became, so I thought before I arrived, Americanized. One night in Havana, I sat outside with several Cubans and an American trying to decide which was worse: poverty or inequality. It has been a long time since I have heard a similar discussion in the United States. But Cubans talk—and some clearly worry—about the social tensions that economic inequality breeds. Some I spoke to say they want better economic prospects yet also want to preserve the benefits of the revolution: the social safety net and strong ethos of solidarity, the emphasis on human capital. Among some there is recognition that greater inequality is inevitable if Cuba is to stanch the emigration of educated young people leaving the island to seek better prospects.

“Cuba has developed a tremendous capacity to train people, but not to employ them,” said the architect Miguel Coyula. He notes that in 1959 there were just three universities in Cuba. Today there are 65.

Ms. Gorry said young people are leaving because of the economy, not because of the lack of free speech or human rights. While Cuba is often criticized for denying these rights, for the average Cuban inadequate salaries and lack of opportunity loom larger among their complaints.

One Code Pink delegate said conversations with Cubans on the street highlighted the frustration many of them feel with the current system. “The level of constraint on the lives of people who have the intelligence and drive and passion to make something of their lives was just palpable,” said Vicki Robin, a writer whose most recent book is Blessing the Hands That Feed Us. “The only way you see people prospering if they’re not in the tourist industry or higher up in the government is that they’re trading on the black market.”

Lifting the embargo will improve Cubans’ prospects, but it will require Congressional approval. Now, as in the past, Cuba remains a hostage to U.S. domestic politics. A younger generation of Cuban-Americans is less opposed to lifting the embargo than their parents are, but some in the Cuban-American lobby remain intransigent, as do their representatives. “Much depends on the American public,” said Ricardo Alarcón, a diplomat and former minister of foreign affairs.

The Art of Coexistence

There is not much Cuba can offer in exchange for the unilateral actions it wants the United States to take—in addition to ending the blockade, removing Cuba from the U.S. list of state sponsors of terrorism and returning Guantánamo Bay, which Cuba regards as occupied territory.

“Profound differences remain,” said Yuri Gala, vice-president of the North American division at the Ministry of Foreign Affairs, about U.S.-Cuban relations. “We have to learn the art of coexistence in a civilized manner.”

Civilized coexistence with Cuba has not been the American way. But the United States has been trapped for decades by its own irrelevant policy, and Cuba is not the country it was 50 years ago. There is less state control and more personal freedom. The religious discrimination that Catholics suffered in the 1970s and ’80s when they were prohibited from joining the Communist Party is gone. So is official atheism.

Pope John Paul II’s visit to Cuba in 1998 helped mend the fissure between the regime and the Catholic Church that opened during the revolution. The church now plays a significant role in Cuban civil society and is probably its strongest independent voice. In 2010 Cardinal Jaime Ortega of Havana met with Raúl Castro in talks that Ortega praised as marking a step forward in church-state relations and that resulted in the release of 53 political prisoners by the regime.

Cardinal Ortega also played a role in the recent U.S.-Cuban rapprochement, which began with a private letter from Pope Francis urging Presidents Obama and President Castro to resolve the impasse between their two countries. Though Mr. Obama had ignored a previous offer from Mr. Castro to negotiate differences, the letter and increasing pressure from other Latin American leaders on the United States to end its isolation of Cuba pushed matters forward.

Détente does not mean an end to the struggle over who controls Cuba, as statements from the two sides demonstrate. Cuba regards normalization to mean that the United States has the same kind of diplomatic relations with Cuba as it has with other countries. The U.S. government describes détente as a change in strategy, not in goals, with the desired outcome democracy and the end of one-party rule in Cuba, an attitude that strikes officials in Havana as meddling and imperialistic.

In his book Cuban Revelations, the journalist Marc Frank, a resident of Cuba for 20 years, notes that everyone is a dissident in Cuba, but not in the way Washington imagines. “Discontent runs deep in Cuba, where no one has made a living wage for two decades, but most Cubans are seeking change through reform and evolution of the system, not in open alliance with Washington and Miami’s political establishment, which seeks regime change,” he writes.

Cubans do not consider the revolution a finite event but an ongoing project, one now 56 years old. A billboard close to the airport trumpets the revolution “of the humble, by the humble, for the humble,” a quote from Fidel that can sound as much Catholic as Communist. Will the revolution come to an end or continue, and if the latter, what shape will it take?

I left Cuba less certain about its future than when I arrived. The American presumptions I had brought with me had been formed without regard to Cubans’ egalitarian ideals or their strong sense of nationalism and history. The old state-centered socialism is dead, done in by the Castros themselves. Will the new generation of leaders who succeed them embrace American-style capitalism, a Chinese model of market socialism or the third way Mr. Betancourt spoke of? It is a complex and pregnant moment in Cuba, and nobody can know what will happen next.

Comments are automatically closed two weeks after an article's initial publication. See our comments policy for more.
Joseph Keffer
2 years 6 months ago
"Seeking to resuscitate the failing economy, Raúl Castro has imposed deep structural changes, diversifying the economy and encouraging individual initiative in place of paternalism by the state. “We have to permanently erase the notion that Cuba is the only country in the world where people can live without working,” he declared in 2010." A pithy statement.
Henry George
2 years 6 months ago
While the Embargo by the US had not helped the Cuban economy it cannot be the case that once the Embargo is lifted that Cuba's fortunes will immediately and vastly improve. Without well paying jobs it does not matter how educated you are. Yet, without freedom of the press and speech - which America Magazine would hopefully denounce in any other country - is Cuba still not a dictatorship ? Capitalism will always overwhelm Socialism - a sad truth of economic history.
michael alba
2 years 6 months ago
Beg to differ "Capitalism (free enterprise) will always overwhelm Socialism( Communism, socialism of the XXI century, etc). Thanks God for the welfare of man
michael alba
2 years 6 months ago
Margot complains against the economic inequality created by Capitalism (I rather call it Free enterprise). However, at the same time she also questions the “less desirable” inequalities resulting from the recent positive economic changes instituted by Raul Castro. We will always have inequalities because as Vick Robin said “The level of constraint on the lives of people who have the intelligence and drive and passion to make something of their lives was just palpable”. Searching for income equality is a chimera. I agree we should find mechanisms to reduce flagrant inequalities through other means—taxation, for example but keeping private initiative free. I prefer inequality over poverty.
michael alba
2 years 6 months ago
What does the word "transition" means to me ? A free enterprise run private economy with sound moral responsibility within a free democratic system backed by an honest judiciary and a "government that neither protects the privileges of the rich nor defends only the interests of the poor" Too idealistic but worth working for it !
michael alba
2 years 6 months ago
Cuba is destined to be "Americanized" due to geography -just 90 miles from our shores , history.and now economic survival. People may not recalled that since the XVIII century the island-nation has been close to the Continental U.S. It was sugar trade at that time thereafter several attempts at annexation or purchase from Spain. Narciso Lopez was inspired to place one-star in the Cuban flag by the Lone Star flag of the new Texas. At that time some Cubans wanted to be what Texas was becoming -a part of the U.S.

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