Failure of socialism in Venezuela is imperiling regime survival in Cuba. The Economist:
For the past 15 years Venezuela has been shipping oil to Cuba, which in turn sends thousands of doctors and other professionals to Venezuela. The swap is lucrative for the communist-controlled island, which pays doctors a paltry few hundred dollars a month. It gets more oil than it needs, and sells the surplus. That makes Cuba perhaps the only importer that prefers high oil prices. Venezuelan support is thought to be worth 12-20% of Cuba’s GDP.Recently, the arrangement has wobbled. Low prices have slashed Cuba’s profit from the resale of oil. Venezuela, whose oil-dependent economy is shrinking, is sending less of the stuff. Figures from PDVSA, Venezuela’s state oil company, suggest that it shipped 40% less crude oil to Cuba in the first quarter of 2016 than it did during the same period last year. Austerity, though less savage than in the 1990s, is back. Cuba’s cautious economic liberalisation may suffer.On July 8th Marino Murillo, the economy minister, warned the legislature that Cuba would lower its energy consumption by 28% in the second half of this year and cut all imports by 15%. The government has ordered state institutions to reduce their energy consumption dramatically. Television producers have been told to film outdoors to save the expense of studio lighting. Foreign businesses, some of which have not been paid by their government customers since last November, are being asked to wait still longer, though the government is negotiating to restructure sovereign debt on which it had defaulted.
This, not White House diplomatic brilliance, is why the Castro brothers opened the door a crack to the U.S. In other words, the Castros need more Yankee tourists to drink Rum and Coca Cola.There was never any intention to accelerate political or economic change. The whole point of opening up was to avoid change. The Cubans gathered around the Castro brothers and their creaky (but powerful) socialist state fear the return of full-throated capitalism and democracy to Cuba, in part because the likely result would be that rich Cuban Americans would quickly rebuild their power in an impoverished modern Cuba. Basically, they would buy the island back.With economic power will come political power, and the veterans of the Castro regime will have nothing left to show for sixty years of poverty and sacrifice. The ‘reform’ faction in Cuba hopes that an interim twilight period between total socialism and total capitalism will allow them to do what other ex-communists have done, and shift their political control in a socialist context into political control and economic power as Cuba changes. They hope for the kind of privatizations and investments that leave the current elite holding the sources of wealth.The problem with that theory is that Cuba isn’t a China or a Vietnam, where there is enough wealth-creating power to unleash so that a process of economic reform can be managed in such a way that it shores up rather than undercuts the power of the current rulers. Cuba is too small and too poor.That the Obama White House thinks that a deal with Castro under the circumstances is a diplomatic victory and a trophy to go in the trophy case is not a mark of wisdom—though one can hope that the people who arranged it are smart enough to know that, and are only making a big deal out of it because of all the ageing hippies and Sandernistas out there who will hail this as a glorious victory for working people everywhere.But it remains the case that under the current circumstances it is in America’s interest to do what we can to offer a soft landing to a failed regime and a failed polity in a neighboring state. We don’t want Cuba to collapse in poverty, anarchy and ruin. We don’t want the Cuban people to starve—and to build rafts. We don’t want order to break down. Transition will clearly come; something that is unsustainable won’t last forever. And though we may have to hold our noses to do it, when the time comes it will be better for U.S. interests to work with the heirs of the Castros to arrange a transition that they can live with. We may need to acquiesce in the creation of some new Red Tycoons in Cuba as the price of a peaceful transition.The same, by the way, is true in Venezuela. In that horror of a failing state, the idiots who have created this disaster may deserve a terrible fate at the hands of the people they have done so much to ruin, but it is in everyone’s interest to organize as smooth a transition as possible when the time comes. Anarchy, chaos, urban street fights among armed gangs, or in the worst case, episodes of civil war—none of this is good for the Venezuelan people, Venezuela’s neighbors, or the United States.Two important countries in our neighborhood are melting down; dealing with that is likely to take much more of the next President’s time than most people now think. Pragmatic and levelheaded policy is what we are going to need, and getting to a good place isn’t going to be easy.