Cover: Cuba


Clearing Perilous Waters?

Published 1996

by Edward Gonzalez


Download eBook for Free

FormatFile SizeNotes
PDF file 5.8 MB

Use Adobe Acrobat Reader version 10 or higher for the best experience.


Purchase Print Copy

 Format Price
Add to Cart Paperback145 pages $15.00

Cuba's Course Heading: Toward Safe or Perilous Waters?

The Castro regime has so far survived the acute economic crisis that followed the demise of the Soviet Union. The economy's free fall may have bottomed out in 1995 with the government's success in promoting foreign investments and tourism, reducing the state budget deficit, strengthening the Cuban peso, reforming the banking system, and reopening the farmers' markets. A new foreign-investment law could bring in additional foreign capital, although the island's antiquated and rundown transportation and communication infrastructure and its uncertain political future lessen Cuba's attractiveness to foreign investors. Meanwhile, the government predicts a 2.5-percent-or-more growth rate in gross domestic product (GDP) in 1995.

The economy's slight upturn in 1995 has given the regime greater breathing room. Political stability is further aided by Cuba's strong state—a state that is buttressed by an efficient internal security apparatus, strong regime cohesion, and residual sources of political legitimacy and mass support—and by a weak civil society. The May 2, 1995, immigration agreement with the United States has also helped dampen unrest. This past year was not marred by popular disturbances of the kind that rocked the Havana waterfront in August 1994.

However, Cuba's ship of state has yet to clear perilous waters. Much will depend on whether the island rebounds from the 1995 sugar-cane harvest of only 3.3 million metric tons, the worst in 52 years, after experiencing two poor harvests in 1993 and 1994. A harvest of well over 4 million tons is needed in 1996 if Cuba is to meet its 1996 financial and trade commitments, satisfy internal demand, and generate surplus foreign-exchange earnings.

The economy's precariousness is heightened by the opposition of Castro and other hardliners to market reforms for the internal economy. Cuba is not Vietnam, with its thriving domestic market economy and private sector, which are protected by a new civil code. Castro is intent on preventing the rise of a new, independent Cuban bourgeoisie.

Two years after legalizing self-employment in 150 trades, crafts, and services, the government had licensed only 210,000 individual entrepreneurs, but with the proviso that they cannot hire nonrelatives. These mom-and-pop entrepreneurs are burdened by other onerous restrictions. Indeed, the incentives and guarantees under the new foreign-investment law apply to Cuban exiles, but not to Cuban citizens on the island.

The absence of a large market-driven domestic economy bodes ill for Cuba. To further reduce the state deficit, the government will need to start laying off some 500,000 workers from inefficient or superfluous state enterprises. Although some workers may be relocated to other state enterprises, the vast majority are likely to become unemployed, because the private sector is too small to provide jobs. And social tensions may increase, because, even at a 4.0-percent annual growth rate, Cuba would not recover to its 1989 economic levels until the year 2005.

Meanwhile, Cuba is changing as independent civil society actors emerge. The Catholic and Protestant churches, together with their respective lay groups, have attracted a wide following. A growing number of nongovernmental organizations (NGOs), some spawned initially by the state, could ultimately break free of the government. Although their members have been harassed and jailed, human-rights and dissident circles have mushroomed. Over 100 groups have joined the umbrella opposition front, Concilio Cubano, in pressing for government permission to hold a public forum in early 1996.

Although Cuba is in transition, a liberal, democratic state is not in sight. Instead, Cuba remains on course toward "market-Leninism," in which there are but limited market reforms and the Communist Party retains its vanguard status, monopolizing power with the support of the Army and, especially, the internal security forces. Without nationally recognized opposition leaders and feasible political alternatives, the vast majority of Cubans appear resigned to the status quo. Taken together, these factors point to stasis or, at best, limited controlled change for Cuba in the future.

Nevertheless, because civil society remains embryonic, the impetus for systemic change most likely will have to come from above, from within the regime itself. But the regime is divided into three camps, or policy tendencies, of which only one is committed to deepening Cuba's reforms:

  • Fidel Castro and the duros (hardliners) are prepared to repress any sign of political dissent and strongly oppose the introduction of a market system. They effectively brake political and economic liberalization. The duros are found among the Party's old guard and the Ministry of Interior.
  • Raúl Castro and his centristas are also hard line on security issues and oppose replacing Cuba's socialist economy with a market system. But they advocate employment of market mechanisms and Western managerial techniques to improve the state-run economy. They are backed by the Army, which has assumed a central role in the economy, and by the "Yummies" (young, upwardly mobile communists) who serve as technocrats, managers, and economic expediters. The centrists are behind Cuba's modest reforms.
  • Foreign Minister Roberto Robaina, economic czar Carlos Lage, and, most recently, National Bank President Francisco Soberón lead the reformistas. They may be more willing to tolerate dissidents and a loyal opposition. They recognize the efficacy of the market system and, unlike the centristas, embrace a mixed economy that would include an enlarged private sector. The weakest of the three policy tendencies, the reformists are found mainly among young economists and technocrats, many of whom work in government-supported research centers.

Cuba's peaceful transition to a more open economy and polity will require ascendance of the reformistas, supported by a civil society.

Present U.S. Policy, Policy Alternatives, and Cuban Outcomes

Internal actors and forces will determine the outcome of Cuba's transition process. U.S. policy may, however, help accelerate or hinder Cuba's transition by the way it (1) affects the regime's internal distribution of power, (2) provides incentives or disincentives for reform, and (3) promotes Cuba's civil society. Current U.S. policy and its options need to be assessed according to these criteria over the short term (under 1 year), medium term (1–3 years), and long term (over 3 years).

The Cuban Democracy Act

The 1992 Cuban Democracy Act (CDA), under its Track I provisions, tightened the then–30-year-old embargo to the point that Castro has made lifting it his number-one foreign-policy priority. The CDA stipulates that the embargo will be lifted once Cuba has held democratic elections, respects human rights, and moves toward a market economy. The CDA provides the U.S. Government with leverage in negotiating a future settlement of U.S. claims against the Cuban Government, and the embargo, by compounding the economy's difficulties, also helps the centristas and reformistas argue for reforms. With increased communication flows, academic and professional exchanges, and support for Cuban NGOs now being implemented under Track II of the CDA, current policy could also help open up Cuba.

On the other hand, the CDA strengthens the political hand of Castro and the hardliners over the short to medium term by enabling them to rally nationalist-minded Cubans behind the regime and to justify a garrison state. And, instead of creating divisions within the leadership, the CDA forces reformers—civilian and military—into supporting Castro.

Imperfect as it is, the CDA remains a prudent course until Cuba undergoes a deeper transformation. It does not give Castro and the hardliners a way out of their historical dilemma. It resonates with the core U.S. values concerning democracy and market economies that are now being adopted in countries throughout Latin America and the Caribbean. If the Castro regime hangs on, however, present policy may not be sustainable much beyond 1996.

The Helms-Burton Bill

Passed in two versions by the House and Senate, the Helms-Burton bill intends to speed Castro's demise by imposing punitive sanctions against foreign governments, companies, and individuals investing in and trading with Cuba, and by opposing international agencies' giving aid and loans to Cuba. Over the short to medium term, Helms-Burton would hurt the Castro regime and the Cuban people economically. It might ultimately lead to the regime's undoing—or to protracted instability and higher levels of state repression by an entrenched regime.

Even though it has not yet become law, Helms-Burton works to the political advantage of Castro and the hardliners. It provides the regime with a further pretext to crack down on dissidents and other civil society actors, and to rally Cubans against the "empire." Because the bill provides for restitution of expropriated properties for Cuban-Americans, the regime exploits the fear of permanent impoverishment among social beneficiaries of the Revolution. And it forces civil and military reformers to close ranks around the Castro brothers in the face of an immediate external threat, notwithstanding the bill's promise to provide aid to a post-Castro military.

Implementation of Helms-Burton would strain relations with U.S. allies. Were it to lead to Castro's downfall, its success would probably set back relations with Latin America and tarnish the legitimacy of post-Castro governments, as occurred in the decades following the U.S.-engineered ouster of the Arbenz government in Guatemala in 1954.

Lifting the Embargo Unconditionally

Lifting the embargo unconditionally would greatly strengthen Castro's stature within and outside the regime. He would be seen as having successfully steered Cuba's ship of state into safe waters, because the regime would now have the U.S. tourist and investment dollars with which to overcome the island's crisis without having to enact deeper reforms. Castro, the duros, and centristas—precisely those circles most opposed to economic and political liberalization—would be firmly ensconced and the reformistas marginalized.

For the short to medium term, this policy option would thus ensure Cuba's continuance as a market-Leninist state—in effect, a Caribbean version of Vietnam. Over the long term, it might eventually set in motion uncontrollable societal forces that would strengthen the reformistas. But whether democracy and a market economy would follow would depend on whether the Castro brothers were still running Cuba.

Lifting the Embargo Conditionally

Lifting the embargo on the condition that Castro hold internationally supervised elections could provide a peaceful mechanism for advancing system change. However, the feasibility of this option depends on the island's experiencing such a sharp economic deterioration that Castro has no alternative but to accept the proposed quid pro quo. Were Cuba to reach that point, one of two possible outcomes would occur:

Castro and the Communist Party Win. This election result would legitimize and strengthen an antidemocratic, antimarket regime. Even so, some political space would have been created for civil society, and the newly elected Castro regime might come to resemble Mexico's authoritarian regime of decades past.

Castro and the Communist Party Lose. This election outcome would put Cuba on the road toward democracy and a market-oriented economy. A more robust civil society could now begin to emerge. For an indefinite period, however, there probably would be considerable political turmoil of the kind that befell post-1990 Nicaragua: Fidelistas and/or raulistas could still control the Army, and the Communist Party could order strikes and antigovernment demonstrations.

The conditional lifting of the embargo is unrealistic. Castro will not repeat the Sandinistas' mistake and risk losing power through a bourgeois election when he retains control over Cuba. He underscores this point by continuing to imprison or exile dissidents, human-rights activists, and independent journalists and intellectuals.

A Proactive Policy for Cuba

Rather than adopting Helms-Burton or lifting the embargo, a bolder approach would be to maintain the embargo, or at least its ban on U.S. investments and credits and on loans from international agencies, while selectively targeting Cuba's agents of change, who are present not only in an embryonic civil society but also within the regime itself. The objective would be to induce those agents to bring about system change from above and below.

Change agents outside the regime include the Catholic and Protestant churches and their lay groups, together with students, intellectuals, artists, workers, small entrepreneurs, and dissident and human-rights groups. Those inside the regime include the regime's civilian and military reformistas. Together, they could become the genesis of a coalition government of national reconciliation in a post-Castro Cuba.

On the societal front, the proactive policy would expand on the U.S. efforts to strengthen civil society actors that are currently being implemented under Track II of the CDA. For example, the present onerous restrictions on humanitarian assistance distributed by Cuban NGOs could be eased. Advanced telecommunication equipment, such as cellular phones, could be licensed for marketing in Cuba. The August 1994 ban on cash remittances by Cuban-Americans could be rescinded to enable individuals and fledgling NGOs to become financially independent of the Cuban state.

A more robust civil society is needed if change from above is to be supported by change from below. The model should be Leipzig 1989, when a coalition of Lutheran pastors, reformed communists, and intellectual leaders, supported by mass demonstrations, precipitated the defection of the East German army and the collapse of the communist regime.

On the regime front, the proactive policy would employ public diplomacy to address the concerns of Cuban elites. American officials should pledge nonaggression toward Cuba, respect for the sovereignty and independence of a post-Castro Cuba, and recognition of the future role that civilian and military reformers could play in a new Cuba. Because it is a pivotal institution, the Revolutionary Armed Forces (FAR) should be singled out for special attention. The U.S. Government should lift its ban on contact between U.S. and Cuban military attachés in third countries and consider such confidence-building measures as inviting FAR observers to military exercises in the Caribbean.

To weaken Castro's hold, and perhaps hasten his departure, the United States could also publicly propose a "grand bargain" for the Cuban people. The United States would pledge not only to lift the embargo and normalize relations but also to return Guantánamo Naval Base to Cuba after Castro had left the island and after internationally supervised elections for a new government had been held. By offering the grand bargain, the United States could begin to alter the political calculus of key civilian and military actors in the regime, and among the populace at large. Ultimately, Cubans may conclude that Castro has ceased to be indispensable, that they now have a way out of Cuba's predicament, and that the comandante and his followers must go.


Since this study's completion in early December 1995, Cuban developments have taken a turn for the worse. In mid-December, Castro fired his Minister of Investments and Cooperation, Ernesto Melendez Bach, a reformista. Starting in mid-February 1996, some 100 members of Concilio Cubano were arrested by state security agents. Then, on February 24, after earlier violations of Cuban airspace and dropping of leaflets, two civilian aircraft flown by the Cuban-American humanitarian group Brothers to the Rescue were destroyed by Cuban MiGs. State repression against internal civil disobedience thus assumed an external dimension in heightened confrontation with Cuban exiles and the United States.

The White House promptly responded, not only with new sanctions but also by negotiating an agreement with Congress on the stalled Helms-Burton bill. Henceforth, the embargo will be greatly tightened and locked into law, to be lifted or eased only by Congress. A new, tougher U.S. stance toward Havana will thus complement the stasis that Cuba is virtually certain to experience during the remainder of 1996 and beyond.

Download the Full Report ⤴

This project was conducted under the International Security and Defense Policy Center of RAND's National Defense Research Institute, a federally funded research and development center sponsored by the Office of the Secretary of Defense, the Joint Staff, and the defense agencies.

This report is part of the RAND monograph report series. The monograph/report was a product of RAND from 1993 to 2003. RAND monograph/reports presented major research findings that addressed the challenges facing the public and private sectors. They included executive summaries, technical documentation, and synthesis pieces.

This document and trademark(s) contained herein are protected by law. This representation of RAND intellectual property is provided for noncommercial use only. Unauthorized posting of this publication online is prohibited; linking directly to this product page is encouraged. Permission is required from RAND to reproduce, or reuse in another form, any of its research documents for commercial purposes. For information on reprint and reuse permissions, please visit

RAND is a nonprofit institution that helps improve policy and decisionmaking through research and analysis. RAND's publications do not necessarily reflect the opinions of its research clients and sponsors.