Cuba Isn't Ready For A China Style Opening
Cuba is not China. Despite the parallels being drawn by advocates of lifting the U.S. trade embargo on Cuba, the comparison doesn't work. Capitalism may indeed be destroying communism in China, but it is a strong domestic market economy, not trade per se, that is subverting the state-owned sector. Lifting the Cuban embargo before Fidel Castro opens the country to free-market forces can only reinforce his dictatorship, not destroy it from within.
The differences between China and Cuba are striking. The human-rights landscape is ugly in both countries. But China has a vibrant market economy dominated by millions of small entrepreneurs that is swiftly swallowing the state-controlled economy. China's military is shrinking, and generals are becoming tycoons. In this context, trade promotes market activity and expands the personal freedom of millions of Chinese.
Cuba remains a top-down economy run by the Communist Party. A few European-financed hotels for Canadian, French, and Italian tourists don't change the spots of a command economy. Neither does "dollarization," with separate shops selling foreign goods (and Cuban cigars) for U.S. dollars. Profits are used to pay for a large government bureaucracy and a big standing army.
There are clear differences between the Chinese and Cuban expatriate classes as well. Chinese exiles in Taiwan, Hong Kong, and Southeast Asia drive China's new market economy. They provide much of the capital, entrepreneurial skill, and international trade connections. With Beijing willing to create a market economy, overseas Chinese are willing to build businesses and create a new middle class.
Not so the wealthy Cuban exiles in Miami. They want the Castro regime out--or dramatically changed--before investing in Cuba. They believe that until Cuba's command economy is dismantled, no amount of trade or investment will generate the kind of growth that produces a middle-class way of life.
Until Havana shifts to a market economy, lifting the embargo is a fruitless gesture on Washington's part. Individual freedoms can only be expanded through trade if a genuine market economy is permitted to operate. Conservatives and liberals pushing the Clinton Administration to drop America's long-standing trade ban with Cuba are being economically and politically naive.