- The Washington Times - Monday, October 16, 2000

HAVANA A recent trip to Havana brings the inescapable conclusion that Cuba is grappling with pressures today that will determine the character of "the revolution," the emerging private sector and its relations with Washington for decades to come. As in other relationships laced with emotion, the immediate distorts the important, and so the Elian Gonzalez case and more recent disputes have sustained a trompe l'oeil that confounds clear analysis.
Havana's intentions and decisions have become increasingly nuanced. So to extract useful conclusions on Cuba's political-culture, its flexibility and aspirations, it is necessary to look beyond the agit-prop.
The last decade has been all about change, with Cuban Marxism strongly challenged by the practical requirements of survival. The 1989 Soviet collapse altered the entire economic equation. Cheap oil and high sugar and nickel prices evaporated. In 1993, the plummeting gross domestic product forced a resistant leadership to legalize the dollar and allow limited entrepreneurial activity that included peasant markets and enterprises employing not more than seven people steps not unlike the adjustments made in Beijing during the mid-'80s.
But developments since 1998, and particularly in the past year, show Cuba now confronts its greatest challenge how to invigorate a fading revolution and contain the expanding consumer-driven popular culture that threatens it. The stakes are high. The government must project a coherent theory of the state, which credibly explains the nation to the people. And, while somehow retaining the primacy of socialism, Havana must rationalize its relations with the world's largest market in the United States.
Since 1993, Havana has explored models that used profits from authorized market activity to sustain and advance priority projects. And, although Havana insists Cuba's evolution reflects only the island's unique values and history, some of the most significant policy changes in this regard mirror those made in the People's Republic of China in the mid-1980s. There the Commission for Restructuring the Economy utilized foreign capital for investment in infrastructure, like ports and railheads, tourism and export industries, arguing that the hard currency profits were a necessary and effective tool to advance socialism.
Cuba's problem how to survive in the shadow of the world's most powerful market culture while dependent on sinking world commodity prices was more acute.
Although both the U.S. Interests Section and Cuba's Economics Ministry say the economy will grow about 4.2 percent this year, higher oil prices and lower sugar prices will produce a $500 million hard currency shortfall. To address the problem, the leadership has turned the Ministry of Tourism into a hard currency generator.
Tourism European, Canadian, Latin American has grown at about 19 percent a year in the last decade and, according to the ministry, gross revenues directly related to tourism hotels, airline, telephone, entertainment grew 26 percent last year. Twenty-seven joint ventures using 17 international management groups are spending $1.1 billion to build and improve 15,000 rooms this year. The ministry claims a 20 percent profit on its enterprises more than sufficient to remedy commodity driven shortfalls.
So tourism is very much part of the solution and it is also very much part of the problem.
U.S analysts estimate that between 3 million and 4 million Cubans have direct or indirect access to tourism-generated dollars. A burgeoning consumer culture in Havana, further along than in the island's other cities, produces traffic, restaurants with choices, and shops as in the Dominican Republic's Santo Domingo.
Night Clubs are again full. The old city in Central Havana has had a face lift. Colonial Spanish facades boast renovated bistros, bars and boarding houses that, in turn, host an international crowd.
Government managers are troubled that these developments may signal Washington holds some high cards in the hearts-and-minds sweepstakes. Cubans watch U.S. television, listen to U.S. radio, receive dollar remittances from family and friends in the States, use American consumer products and, with each passing day, find themselves buffeted by two trends: one is a colorful, energetic market; the other is a lengthening list of unkept "revolutionary" promises.
On the latter point, food for pensioners and the needy is sufficient for only three weeks a month the rest, according to relief workers, comes from international agencies like CARITAS. The health service is slow, with some medicines unavailable. Many houses in Havana, while free, have no running water.
So the nation's need to survive to use hard currency for projects that generate more hard currency means government programs, even those at the heart of "the revolution," are often underfunded. Thus the revolution is fading against the backdrop of the expanded choices of a growing consumer culture.
The fundamental question for Havana is: Can it buy enough time with rallies, speeches and graffiti to replicate the Chinese trick of nurturing the market, creaming off the profit, and investing it strategically to retain power? It is a delicate balancing act and hard-fought within the government itself.
Fortunately, for the hard-liners, Washington is mired in its own odd mixture of hostility and inertia with existing legislation preventing open investment, travel and exchange. And so for the time being what is perhaps the globe's most bizarre relationship remains in almost perfect stasis.
But it need not remain so. Were Washington to permit unrestricted investment and tourism that would buttress the island's evolving private sector, the pace of reform would accelerate, personal choice would expand, and market forces would strengthen an outcome very much in Washington's interest. This is the case the administration made in favor of Permanent Normal Trade Relations status for China.
With Havana now following the Chinese model, the time may have come to apply this logic to Cuba.

Stefan Halper is chairman of the American Journalism Foundation and a former White House and State Department official.

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