The November 2016 U.S. presidential elections substantially changed the course that had been charted for the process of normalizing U.S.-Cuba relations. What had been a process driven in large part from the Executive wing of the U.S. government and underscored by a host of executive orders meant to “make facts,” within which normalization might proceed on the basis of bilateral negotiations, has been swept aside. The President-elect has expressed his intention to renegotiate—and possibly to cancel—“the deal.” On November 28, 2016 Mr. Trump tweeted: “If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the U.S. as a whole, I will terminate deal.” Complicating things further is the passing of Fidel Castro this week.
While already anticipated, the symbolic effect of his physical disappearance ought not to be underestimated. The death of Fidel is symbolically potent. It supplies the event that may put in play contingencies and plans for a “Post-Castro” Cuba both within the United States and within the sometimes byzantine military-party apparatus in Cuba. However, though as Fidel had long passed from the scene a driver of policy, his influence on the governing ideology of the state is still strong.
United States policy is now grounded in the assumption that (1) Raúl is different (and that is certainly true enough); and (2) that Raul can make manifest those differences in policy (which is less likely given the results of the 7th Cuban Communist Party Congress last April). Cuban policy is grounded in the assumption that it will not change its political or economic system, but that it will accommodate neighbors to the extent that they further internal objectives. The two policy trajectories have little common ground on which to meet.
If these germinal events—an election and a death—form the basis for the development of U.S.-Cuba policy going forward, what might be in store in the near term—in the next year or so—for Cuba’s economy, government and society? In the following, I will consider the twin effects of the election of Mr. Trump, a pro-embargo hardliner, on the U.S. side; and of Fidel Castro’s death and Raul Castro’s promise to step down in 2018, on the other.
With Respect to Economic Development
Initially there will be little change in the Cuban side. The Cuban Communist Party is in the midst of finalizing its blueprint for its economic ideology and reform, set out in the long and complex manifesto: “Conceptualización del modelo económico y social Cubano de desarrollo socialista” (for a discussion, see here).That “Conceptualization” pushes forward the central ideological framework of Fidelismo: markets, and market-driven economic policy, are rejected in favor of state-based central planning; state-to-state economic relations are preferred; and the object of economic policy is to mold the ideal socialist worker operating within a well-run socialist society whose needs are satisfied through socialist central planning. In this sense, Fidel continues to be quite influential.
What is worth watching is the willingness of the U.S. and Cuba to continue to talk about opening support services such as communications, transportation, and banking.
But Raúl is more pragmatic than his ideologically obsessed brother. That pragmatism provides a common ground—albeit limited—for shared policy objectives between the U.S. and Cuba. The course that Raúl Castro has plotted—a slow, steady progress that is institutionally managed—will continue. U.S. companies will find it no more or less difficult to do business in Cuban side of the equation. But that itself, at the moment does not auger well for US companies that are looking for more freewheeling investment. Thus, on the Cuban side of the equation expect to see forward movement in very specific forms: foreign investment funneled through special economic zones; targeted foreign investment within systems of principles-based rules that serve as a basis for the exercise of discretion by Cuban officials; the use of discretionary decision-making to keep foreign investment at arm’s length; and the Cuban state inserting itself between foreign capital and its population, will continue to be the rule. What is worth watching is the willingness of the U.S. and Cuba to continue to talk about opening support services such as communications, transportation, and banking.
The private sector will become more relevant, certainly, but big money transactions will involve the state as customer or business partner. The state also will continue to serve as the supplier of labor in Cuba. U.S. companies can expect to deal not just with the state sector, but with the multi-level discretionary administrative decision making structures. Perhaps a greater tolerance will be permitted the Cuban-American community as a resource for the private sector and its lower-end service sector work. With respect to U.S. regime change and democracy enhancing efforts, it is likely that the Cuban state will not be receptive.
Not all is worry free on the U.S. side. With Mr. Trump’s election, expect more government oversight of outbound U.S. investment. More important may be the governmental control of the financial relationships between the Cuban diaspora and family businesses in Cuba. For business, “the critical question remains whether Mr. Trump, a real estate mogul and hotel developer, will be a businessman at heart and allow Mr. Obama’s measures to continue — or if he will instead keep a vow he made and scale back everything.” Among the possibilities would be to roll back orders that now permit U.S. business to invest in state enterprises run by the military (who operate substantial portions of the tourist sector). On the other hands, the U.S. may be able to negotiate a bilateral investment treaty with Cuba as Mr. Trump has suggested he as an interest in pursuing as a general matter.
With Respect to Diplomatic Relations
Mr. Trump’s policies towards Cuba might be the overriding factor, rendering the passing of Castro irrelevant. One can already see the effect of Mr. Trump’s election—no high-ranking U.S. official will attend Mr. Castro’s funeral (that is to be regretted if only because funerals, like weddings, provide an opportunity for high level meetings to move agendas forward). More important, none of Mr. Trump’s government-in-waiting is likely to attend. That is the greater lapse, the consequences of which will become apparent during 2017. Mr. Trump appears to be surrounding himself with Cuban exile hardliners, and thus there will be some roll back of Obama’s normalization gestures, though which ones is unclear. Like his Republican predecessors, though, Mr. Trump may seek ways of ensuring that U.S. business interests are to some extent protected from his ideological campaigns. The principal effect might be to make the Cubans less willing to re-negotiate, especially if they can get the backing of another state that would like to block U.S. interests.
Fidel’s death will put a spotlight on the most important parts of the puzzle pieces that will determine the shape of U.S.-Cuba relations. Critical among these are the confidence of the Communist Party apparatus in their control of the state, and the Cubans’ reading of the intentions of the incoming U.S. administration. But also important is the actual development of a U.S. policy. The current two-track negotiations—the public and private ones—are likely to be the first victim; whether they are started up again in January remains to be seen. There is no doubt that Mr. Trump will likely amplify the ideological parts of U.S. engagement with Cuba; the real question is whether the U.S. and Cuba can continue doing business beneath the ramped-up rhetoric on both sides that is likely to come after January. More importantly, on the U.S. side, will be the choice for Secretary of State (the current choices all seem to be members of the old Republican ruling group) and the effect of defense (Defense Intelligence Agency etc.) and commerce considerations.
What to Expect Next
(1) In the U.S., the Trump government needs to defer, at least symbolically, to exile hardliners in order to pay back his political debt. In the past, these actions have been used buy both Cuban and U.S. governments to kill forward movement in diplomatic normalization, and when the symbolic act becomes concrete—especially when the act is ruthless (such as the downing of the Brothers to the Rescue plane)—the result can be a return to pre-normalization politics. That is the danger of the gamesmanship that may be anticipated for the next several months.
(2) Miscommunication between the U.S. and Cuba will be the norm, increasing the likelihood of error and disaster. Mr. Trump’s negotiating style is quite different from the standards of international diplomacy. In some ways, it is similar to those of old European Marxist regimes. But that art of negotiation through bluster and aggressive provocation is virtually unknown now. The Cubans,and especially Fidel, were once good at this as well. The clash of styles may lead to unintended consequences which are difficult to predict but unlikely to be in the long-term interests of either state.
(3) Expect the “wet foot, dry foot policy” to be a sacrificial offering on the alter of migration control. From an American perspective, this would indulge politics and produce a negotiating blunder of large proportion. It is in Cuba’s interest to end “wet foot, dry foot.” If Mr. Trump meant what he said about renegotiating, then he might use the termination of this policy as a bargaining chip. However, ending “wet foot, dry foot” would require the amendment of the Cuban Adjustment Act, something Mr. Trump may not do unilaterally without the formal or tacit acquiescence of Congress.
Mr. Trump may choose to follow the approach favored by certain hard right elements within the Cuban-American community and push first for the traditional menu of direct U.S. style political reform.
(4) Expect progress on economic agreements. Cuba has selected tourism as a favored economic objective. The U.S. sees in Cuba both additional markets (for agricultural products and tourism-related commerce). It is unlikely that Mr. Trump will annoy his supporters by threatening these objectives.
(5) Expect a greater focus on ideological work from the U.S. and a strengthening of ideological resistance on the Cuban side. Rather than work on economic reform through encouragement of freer markets, an expansion of the private sector and direct economic activity between U.S. interests and non-state sector enterprises to further the ultimate goal of opening up civil and political life, Mr. Trump may choose to follow the approach favored by certain hard right elements within the Cuban-American community and push first for the traditional menu of direct U.S. style political reform. As Mr. Trump’s spokesman Jason Miller noted on Nov. 28th: “The president-elect wants to see freedom in Cuba for the Cubans, and a good deal for Americans where we aren’t played for fools. Our priorities are the release of political prisoners, return of fugitives from American law, and also political and religious freedoms for all Cubans living in oppression.” The likely consequence will be an incentive for Cuba to more strongly hold on to its Stalinism and central planning ideals, and to resist political change as a threat to its control. We then go back to stalemate, and ultimately inattention, until the next great Cuba-related crisis looms.
Final Assessment
The legacy of Obama might not be completely undone. But it will be redirected, and the pace of change may slow. Fidel’s death makes things easier—he has moved from contemporary to historical presence. But Cuba and the U.S. still speak quite different political languages, and their objectives for Cuba are quite different: well-managed economic contributions for the Cubans, and political transition for the United States. There is a small space where their interests converge. But there are still many people fighting old ghosts on both sides of the Florida Straits, and it is possible that even this small space may be appropriated by those with a substantial interest in preserving the past.
Cover Image by Gilberto Conill. Little Havana Street Celebration of Fidel Castro’s Passing (Nov. 26, 2016)