Cuba: whilst the Castro dynasty remains, it seems unlikely there will be any dramatic changes.

Three things to expect from lifting the trade embargo on Cuba

BY OLIVIA ARCHDEACON

Economic development, Political reforms and Changing relations with the US

As Venezuela, one of Cuba’s biggest allies and economic benefactors, struggles under continually falling oil prices, it is clear that Cuba’s agreement to a US trade deal was motivated primarily by economic pressure on Raul Castro’s regime. The embargo has cost the Cuban economy an estimated $1.1 trillion over the 54 years and has severely hampered development – there are 1.21 million landlines for a population of 11.25 million.

However, change will not happen overnight. Clifford Shults, a Loyola University Chicago business professor, compares Cuba’s situation to that of Vietnam’s in the 70s. Given its huge portfolio of state-run companies with close ties to the military and its entrenched bureaucracy, Cuba currently lacks the infrastructure to launch straight into full-on free-market capitalism. Perhaps, like Vietnam and China, it will migrate to a hybrid system(nominally Communist but that practises capitalism to a large extent) that allows Cuba to integrate more into the global economy first.

Additionally, the American embargo is not the only cause of Cuba’s economic problems, so we cannot expect everything to be solved by its removal alone. Cuba already trades with several countries, including some, like Brazil, Spain and Italy, which would consider themselves US allies – the cause of the island’s poverty lies within the country itself. Most tourist services and imported products in Cuba are priced in an artificial currency created by the regime: the so-called “convertible peso,” or CUC, which is pegged 1:1 to the US dollar. Local products use the regular peso, called the CUP, which is 1/25 the value of the tourist version. Though the government announced last year that it would scrap the CUC altogether, the process is moving slowly. Lifting the embargo will undoubtedly increase the number of tourists, but won’t automatically improve the economic situation of the local Cubans. Thus whilst the Castro dynasty remains, it seems unlikely there will be any dramatic changes.

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