Getting Ready For Cuba After CastroRudi Dornbusch
If the U.S. focuses only on hastening Fidel's exit, a unique chance to endow the island with a strong free market could be lost. Here is an economic plan to help democracy and prosperity take root in a new Cuba.
We are too fixated on when Fidel Castro's dictatorship will fall, and how. The truth is, it doesn't matter whether Castro dies in bed in Spain or is strung from a lamppost in Havana. What does matter is that Washington needs a strategy for a smooth transition, social stability, and economic progress. Otherwise, extremist groups could fill the vacuum and command the agenda. U.S. policies can either help create stability and prosperity in Cuba, or they can risk promoting destitution, political and financial instability, and mass exodus to Miami.
For millions of Cubans, U.S. policy toward their homeland is decisive. There will be a Cuba after Castro, and we will have to live with it. The Havana regime certainly cannot last now that Russian subsidies are gone. Rationing has become pervasive, inventories are down to nothing, buses are not running, and enterprises have ground to a standstill because parts and raw materials are no longer available.
War economies last long--but not forever. A jape frequently encountered in Cuba has it that the revolution has three accomplishments and three problems. The three accomplishments are education for all, health for everyone, and athletic accomplishments beyond belief. The three problems are breakfast, lunch, and dinner.
OFFSHORE THREAT. If the regime retains power, it will be--at least in part--through plain repression. But also playing a role is an ingrained anti-Americanism fostered by the long state of siege and a pride in the social reforms that raised millions of Cubans from rags to some dignity.
It would be a mistake to underrate these two factors and focus merely on the present disintegration. Cuban socialism has outlived its time, but millions of Cubans don't agree that it was a mistake in the first place. To the average Cuban, life under Fulgencio Batista's repressive dictatorship was far from the American dream. The U.S. must decide how to promote the regime change and what specific set of economic propmsals to offer to post-Castro Cuba.
So far, the policy has been to foster the collapse of the regime first--by an increasingly effective embargo--and to ask questions later. Even if it were a good idea, a Democratic President can't be seen negotiating with Castro in the way former President Richard Nixon could with China. But surely we can spell out what we are ready to offer once Castro is gone and free elections are a reality. What the U.S. is willing to do for Russia, we should be equally prepared to do on a scaled-down basis for Cuba. Russia, with its nuclear threat, is a special case, but so is Cuba, with the threat of mass migration and destitution right off our shores. Specifically, the U.S. should set as priorities some of the following items:
--An immediate, major debt restructuring. Fortunately, U.S. citizens (and banks) are prohibited by law from holding Cuban debts. That makes it much easier for the U.S. to sponsor debt forgiveness, just as it did in Poland, where the debts were likewise held by Europeans, not U.S. banks.
--An immediate lifting of trade and payments restrictions, including the allotment of a sizable sugar quota. If Cuba has no markets, even a market economy cannot do much good. And as soon as possible, Cuba should be invited to join the North American Free Trade Agreement.
--An emergency financial package that allows Cuba to finance the rebuilding of industrial and consumer-goods imports. Also, the transition to a market economy and price liberalization without the risk of massive budget deficits and currency collapse. Perhaps we could divert a billion from the Russian aid package to more productive use in Cuba.
--Early membership in the International Monetary Fund and the World Bank, which would result in access to financial resources and technical expertise.
--Investment guarantees that put trade credit and direct investment in the express lane. The availability of financing avoids extreme inflation and acts as a shock absorber in the transition from a failed control economy to a fledgling market system.
--Agreement that property should not be returned to previous owners, exiles or otherwise. Property should be privatized to new owners, unimpeded by the deadlock of court battles over legally and socially questionable claims. In eastern Germany, claims of former owners will take years to settle, deadlocking prospects for reform, investment, and modernization. Whether and when financial compensation should be offered can be discussed in time. For the near term, the government's resources should be kept free for reconstruction. If the future looks reasonable or even good, Cubans will stay at home and foreign investment will come. If prospects are bleak, or worse, Cuba will go into an economic and political tailspin.
The notion that all we need is Castro gone from Cuba to get democracy and prosperity there is absurd. We may see a replica of Russia, or worse. We have won the war, even if the capitulation is slow in coming; the hard part is to win the peace.