Economic Liberty

Whiplash and Backlash in the Republic of Cuba

Starvation won't turn Cubans into capitalists. Trade and tourism might.


In Cuba, the years immediately following the collapse of the Soviet Union are known as "the special period."

It is a euphemism of the highest order. The withdrawal of a global superpower, which had been propping up the Cuban economy with subsidies estimated at $6 billion a year, brought almost unimaginable misery to the tiny nation. Gross domestic product plummeted by more than a third from 1989 to 1993. Daily power blackouts became common. Farms and factories sat idle. So hungry were the Cuban people that cats disappeared from the island—"and doves and pigeons," says Leo, my 30-year-old guide in Havana this summer. He's not the only one to mention the cats.

Leo grew up in a Communist family, so there was no questioning the political system in their household. The state offered meager rations of food—drastically reduced from the quantities in the '70s and '80s, according to Oxfam—but at least it was something. His mother was employed by the Cuban military, which provided lunch to its workers. She would save it, bringing it home, so her kindergarten-age son could have at least one meal a day.

The special years took a toll. The average Cuban lost 12 pounds. Some estimates put the figure at 20.

Which, after all, was what America's policy toward Cuba had been aimed at all along. For decades, U.S. politicians have believed empty bellies are the best way to bring Cubans around to the virtues of a market economy and electoral democracy. "If they are hungry," President Dwight Eisenhower allegedly said, "they will throw Castro out." In 1962, President John F. Kennedy called for a total embargo on the country. In 1994, the conservative Heritage Foundation argued for maintaining the ban: "As the economy's collapse has accelerated, popular discontent has increased to levels that threaten the survival of the regime."

But the disaster of the special period had an unexpectedly trivial effect on the Cuban government's legitimacy. One-party rule continued. Fidel Castro remained.

The material conditions of the average Cuban have improved since that dark time, partly because of the country's close ties to oil-rich Venezuela, and partly because of moves by the Castros—reluctant at first, later with more confidence—to let a non-governmental sector begin to bloom.

Today, Leo works with an American tour company as a self-employed "travel curator," earning many times more than he did during his mandatory year of military service. At the end of our three-day stay this June, each member of my group chipped in $20 as a tip for him. Any one of those contributions was, by itself, nearly as much as a typical public-sector worker in the country earns in a month.

Their new wealth has affected Leo's family in ways the desperate poverty of the special years did not. "When we had nothing," he says of his mom, "she was a blind Communist. Only now that things are better, and you open the fridge and it's so full of food, so much food that you don't have to worry anymore," has she come around to the merits of capitalism.

But the progress on the island may be endangered. This summer, President Donald Trump moved to roll back a three-year-old rapprochement between Cuba and the United States. Hundreds of thousands of Americans have visited the country during the brief period of openness, pouring hundreds of millions of dollars into Cuba's economy. That infusion now seems poised to dry up as quickly as it started.

The experience on the ground is one of whiplash. Just 15 months before my trip, President Barack Obama traveled to Havana and, in a speech deliberately aimed at the Cuban people, said he had "come to bury the last remnant of the Cold War in the Americas." Trump's reversal is causing trepidation. And everywhere I went, I heard the same thing: If the U.S. isn't careful, the whiplash may become a backlash in which "hardliners in the government are empowered" and citizens "close ranks around the revolution."


A self-employed taxi driver picks me up in a '50s Chevy from the private home where I'm staying. He whisks me off to a paladar, or individually owned restaurant, which a friend chose after consulting AlaMesa, the Yelp-like Cuban smartphone app that even without an internet connection directs people to highly rated establishments. (Users update the app whenever they manage to get connected to the country's few sporadically available Wi-Fi nodes.) Along the way, we pass a hip storefront selling T-shirts and posters screen-printed on site with fun slogans. Los Cubanos no le tenemos miedo al calentamiento global. Porque ya estamos en llamas, reads one of them: "Cubans are not afraid of global warming. We are already in flames."

Left: Public Domain. Right: Stephanie Slade.

This sequence of events would have been inconceivable for a tourist in Cuba a few decades ago. Now it's the norm for urban travelers. The Communist Party may have no intention of relinquishing political control in the country. But it has, if only out of necessity, gradually slackened its grip on the economy.

After Fidel Castro and his socialist revolution rolled into Havana in January 1959, America reacted with horror: Suddenly, it seemed the Soviets might have a foothold just 90 miles off the coast of Florida.

At the same time, an exodus of supporters of the ousted Cuban regime—many of whom had left behind valuable property when they fled—made their way to the United States and began agitating, forcefully, for America to get involved. Fortunately for them, Fidel offered Eisenhower plenty of excuses to acquiesce, from nationalizing U.S. assets on the island to summarily executing 200 political opponents via firing squad. Something, the White House agreed, needed to be done.

Initially, the goal was to depose the Cuban leader by force. But after the Cuban Revolutionary Armed Forces defeated the CIA-led Bay of Pigs invasion, Kennedy changed strategies. Economic sanctions were ratcheted up; starving the bastards out became the order of the day.

That didn't work either. The Cubans had an ace up their sleeve: the powerful Soviet Union. America's embargo was rendered, if not exactly moot, at least less harmful than intended by massive infusions of food, fuel, and funds from across the ocean. Only once communism began its fall in Eastern Europe did Cuba's government become desperate. Eventually, to protect his political power, Fidel unenthusiastically OKed a small number of modest pro-market reforms.

In 1997, he authorized families to rent out spare rooms for extra income, and Cuba's bed-and-breakfast industry was born. It's grown by leaps and bounds since then: Airbnb, which entered the country in 2015, says its hosts in Cuba earned $40 million in the last two years.

Farm regulations were also liberalized starting in the early '90s. A third of the country's agricultural land is now reportedly worked by private farmers, and although they're still required to sell most of their output to the state, these days there are more opportunities to offload produce to consumers at mercados. Skirting the official rules is also common: Tobacco growers, someone quips, "sell 90 percent to the government and keep 20 percent for themselves."

More industries have been allowed and more regulations loosened since Fidel's younger brother Raúl Castro took over as president a decade ago. In 2011, it became legal to buy and sell real estate. Paladares can now have 50 seats, up from 12, and private employers can now hire non-relatives and lease commercial space outside their homes.

As of this year, there are more than 200 approved business "activities," from cutting hair to repairing appliances. On an island of 11 million Cubans, at least 40 percent likely have some private-sector income. They call the work they do on the side, often in the black market, la lucha: "the struggle." But self-employment is no longer just tolerated; it's increasingly encouraged. As the University of California, San Diego's Richard E. Feinberg explained in a 2013 report, "The Cuban authorities hoped that an enlarged private sector would absorb redundant workers being released from a bloated public sector."

Cubans see December 2014, when Obama announced a rollback of restrictions on travel to Cuba, as a turning point for their economy. It brought an influx of rich U.S. tourists ("Americans tip twice as much as other visitors," a former Cuban diplomat says) and seemed, tantalizingly, to presage an end to what Cubans call "the eternal blockade"—the embargo on which Cuba's leaders have for 55 years blamed all the country's ills.

Some 600,000 Americans visited in 2016. Because so much economic activity happens "off the books," it's hard to track precisely, but private homeowners and restaurateurs say U.S. residents (including Cuban Americans) have made up 60–80 percent of their customers since Obama's changes went into effect.

One of those business owners is Julia, who with her husband operates a bed and breakfast in Havana that sleeps 22 people and employs 17. The property, which sits atop a hill offering jaw-dropping views of the city, had been crumbling due to a lack of resources in the family to maintain it. So two decades ago, as soon as it was allowed, the couple began boarding tourists and using the money they earned to fix the place up. At first, Julia says, they did most of the renovations themselves. Now they work with cuentapropistas, or self-employed contractors, who cook, clean, make repairs, and tend the bar on their gorgeous, shaded patio. For the last two years, most of their guests have been Americans.

"For the Cuban people it was really, really great to have normal relations with the U.S.," Julia says. "We discovered that we are more alike than with people from some other places that we might have thought we had a lot in common with, like Russia."

Like many Cuban entrepreneurs, she is concerned about Trump's turnabout. In a June 16 speech in Miami, the president announced he was "canceling" what he called Obama's "completely one-sided deal with Cuba." A Treasury Department FAQ sheet says all individual "people-to-people" travel will soon be banned, although Americans will still be able to visit as part of organized educational groups and for some other purposes.

A few days before the president's speech, several dozen female entrepreneurs, including Julia, published a letter asking Ivanka Trump for her support. "A setback in the relationship would bring with it the fall of many of our businesses and with this, the suffering of all those families that depend on them," they wrote.

"We were full of hope," Julia says when I meet with her two weeks after the announcement. "Now I feel hopeless."


When American politicians talk about our Cuba policy, the emphasis is usually on the need for political reform on the island. Sen. Marco Rubio (R–Fla.) insisted in 2014 that the United States has "to make clear that re-establishing diplomatic and economic relations with Cuba is possible—but only once the Cuban government stops jailing political opponents, protects free speech, and allows independent political parties to be formed and to participate in free and fair elections."

The attitude is unfortunate. Set aside for a moment the gains in material well-being that can accrue to Cubans from greater commercial engagement between the countries. A focus on regime change is also counterproductive to the United States' interests: Far from weakening the Communist Party's hold, the tough language and continuation of the embargo arguably create a "siege mentality" on the island.

Stephanie Slade

Four years ago, Raúl Castro announced that he would step down as Cuba's president in 2018. It's almost certainly too much to expect truly free elections, but that doesn't mean there aren't better and worse outcomes from an American perspective. And according to an official at the U.S. Embassy in Havana, "If the people feel threatened by the U.S., they're more likely to elect a hardliner next year."

Many of those I encountered echoed that view. The University of Havana economist Ricardo Torres says Trump's reversal "could change the balance of power in the country," leading to "less space for honest debate and less openness" on the ground.

In fact, this phenomenon is already playing out with respect to internet access. Getting online in Cuba means buying a scratch-off card for between $1.50 and $8 an hour, then taking it to one of the state-provided Wi-Fi hookups located in public parks and hotel lobbies. To say these connections are spotty and slow would be an understatement. All web activity, it is widely acknowledged, is monitored by the government.

Every small-business owner I met lamented the difficulties associated with not having reliable access to the web. Julia, who runs the bed-and-breakfast, details a convoluted process in which she and her husband pay people in Italy to host their website, people in Ecuador to answer inquiries on their Facebook page, and people in Miami to retrieve their payments and ferry them to Cuba. She laughs, contemplating what she must look like sitting in the local park, surrounded by paperwork and mobile devices, trying to get basic tasks completed.

"I need the internet all the time," she says. "And I miss the internet all the time."

Ironically, the Cuban government seems to agree. Two representatives from the Ministry of Foreign Affairs say they're all for widening access. As recently as 2015, there were just 35 Wi-Fi hotspots in the whole country. Now there are several hundred. The state is even experimenting with installing hookups inside private homes in Old Havana.

But the party leadership is also deeply suspicious that the web will become a means for the United States to foment "counter-revolutionary" (that is, anti-Communist) activity, thus destabilizing the ruling order. "The Americans are letting us know they want to change the regime," one of the Cuban officials says pointedly of the United States' policy over the last 55 years. "That is not in our heads."

Because of these fears, officials are moving slowly and watching closely, trying to ensure they're not welcoming a Trojan horse into their midst. "They want internet for economic development," says my contact at the U.S. Embassy. "But if we intend it to be a democracy promotion tool, the Cubans will have nothing to do with it."

Of course, the Cuban authorities are right to worry; there's almost no way for freer access to information not to have a democratizing effect. But that is all the more reason to let agitation for better connectivity come from the commercial sector, where the regime has already demonstrated a willingness to see benefits alongside the costs.

According to a March 2015 poll of Cubans by The Washington Post, four in 10 are satisfied with the country's political system, but only 19 percent feel the same way about their economic system. Although we tend to lump "Communist government" and "socialist economics" together, many Cubans are looking for ways to open up the private sector and raise living standards without jettisoning their egalitarian cultural identity.

Community is big in Cuba. Leo tells me that during the special period, the government gave people baby chickens to raise for food. At 6 or 7 years old, he was responsible for feeding and caring for his family's chicks. "When the time comes to eat them, you can imagine, these have names. They're pets. No way are we killing them," he says. So what do you do? Ask your next-door neighbor for help, he says, pantomiming the act of knocking on a door. "When they kill your chickens, you share the meal with them. The next day, you kill their chickens, and they share the meal with you."

Leo is no communist true believer. Yet when I tell him that crowds celebrated news of Fidel Castro's death in the streets of Miami last year, he finds it distasteful. "I wasn't happy when he died," he says. "I was happy when he stepped down."

Cuban officials have a point when they observe that the populace isn't rioting. But they're also well aware that the economic situation is not sustainable. According to the Post poll, almost 70 percent of Cubans in the 18-to-34 age bracket want to leave the country to pursue a better life elsewhere. This creates a strong incentive for the government to embark on further reforms to keep them at home.

In his 2013 report, Feinberg argued that a "soft landing" in Cuba—that is, a peaceful transition to a more market-friendly economy—is achievable so long as the powers that be don't view such a scenario as politically threatening. Raúl is far more supportive of private-sector growth than his brother was, boasting that half a million people have been moved off the government payroll in the last few years. But Trump's policy clampdown is not helping, and it may be putting the Cuban leader and those around him on high alert.

The Miami speech was "loaded with hostile rhetoric" recalling "the times of open confrontation," the Castro administration said. "Once more, the U.S. government resorts to coercive methods from the past, by adopting measures to strengthen the blockade [that] brings damage and privations to the Cuban people."

Six weeks later, on August 1, the Cuban government abruptly announced an indefinite stop on issuing new private-sector work licenses for a variety of jobs and industries, including construction, hospitality, and language instruction.


There are two main objections to normalizing relations with Cuba, one practical and the other moral.

The first argument is that virtually all the gains from openness between the two countries ends up in the hands of the state, and so by trading with and traveling to Cuba, we strengthen the Communist Party without aiding people on the ground. This is the thrust of a recent Weekly Standard cover story, which alleges that "many Cubans are not convinced tourism has helped them" and suggests that ending the embargo would only benefit the "near-bankrupt" Castro regime.

The idea has some surface plausibility. Vast swaths of the Cuban economy do continue to be publicly controlled. Raúl's son-in-law heads an enormous conglomerate called the Armed Forces Business Enterprises Group that "has restaurant and gasoline station chains, rental car fleets, and companies that import everything from cooking oil to telephone equipment," according to a Bloomberg report.

And all the best hotels are run by the Cuban military's tourism company, Gaviota. So when Rubio in June tweeted that "no direct transactions will be allowed with the businesses owned & operated by the military monopoly or its affiliates," saying the move would help "the independent Cuban small business sector," it might have seemed like tough but necessary love from the United States.

Stephanie Slade

A walk down any Old Havana side street highlights the uneven allocation of riches brought by American visitors. On the ground level are tourist attractions such as the Victor Hugo house and snazzy state-owned restaurants like the one where I paid $5 for imported Icelandic bottled water. Above: open-air apartments, sectioned off crudely so as to sleep more people, with disposable plastic grocery bags that have been washed out for reuse and hung on the balconies to dry.

Many non-U.S. tourists bypass Havana altogether, beelining instead for the country's all-inclusive government-owned beach resorts. Trump and Rubio worry that if Americans are allowed to do the same, they'll be dropping greenbacks into the hands of a Communist dictatorship that regularly violates its citizens' rights to assemble, protest, speak, and more.

But while the goal of limiting travel might be to starve the military of resources, Cuban small businesses are "necessarily going to lose," my U.S. Embassy contact notes, "since Americans vastly, disproportionately spend money in the private sector."

On closer scrutiny, the argument that more openness doesn't make things better for ordinary people in the country disintegrates. "Trade, and especially American tourists, who are interacting with the private sector, by definition is spreading wealth to the people," Feinberg says. "Even if you stay at a Gaviota hotel, you're giving tips that end up in the pockets of average Cubans. And then if you're doing associated activities—eating in paladares, taking private taxis—all of that also redounds to the benefit of average Cubans."

"The best jobs today in Havana are tour guides," he adds. "They are getting rich by Cuban standards." It's not uncommon for a full-time private-sector tourism worker to take home more than 100 times the government salary of a medical doctor or university professor.

And the embargo? Its effects, too, are felt on the ground. Studies show U.S. sanctions impose a "penalty" on imports to the country. Food, medicine, raw materials—all are significantly more expensive thanks to Cuba's neighbor to the north. In 1997, a comprehensive report from the American Association for World Health found that U.S. policy was responsible for 7,500 unnecessary deaths in some years.

But perhaps the best counterargument to Trump and Rubio's claims is this: The Cubans want us there. According to the 2015 Washington Post poll, 97 percent of people on the island think normalizing relations between Cuba and the United States will be good for their country. (Lest you worry the respondents were just saying what their government wants to hear, the same survey had only 44 percent saying they had a positive view of Fidel.) It's hard to imagine they would be so eager for more openness if all the profits were really flowing to the state.

The second argument against engagement is that political change must come first. Otherwise, by doing business with Cuba, we legitimize the regime's decades of shameful (and very real) human rights abuses.

One response to this challenge might be that greater economic freedom inevitably leads to greater political freedom. After all, things do seem to have improved in recent years. Raúl is calling an election. Blogging is common. Although most religion was once banned, I watched a gaggle of Catholic nuns in blue-checkered habits cross a major Havana artery unmolested; in July, a group of Jewish leaders in Cuba released a letter arguing that engagement with the U.S. strengthens the country's religious institutions.

The U.S. Embassy points out that the state has largely shifted tactics from imprisoning and torturing dissidents to detaining them, usually for hours rather than days. It's not exactly a triumph of civil liberties, but it's not nothing.

The real question is whether Washington should be holding the people of Cuba hostage to their government's offenses. In his Miami speech, Trump insisted that "we will not lift sanctions on the Cuban regime until all political prisoners are freed, freedoms of assembly and expression are respected, all political parties are legalized, and free and internationally supervised elections are scheduled." This is the epitome of making the perfect the enemy of the good.

Until last month, Americans could legally travel to every other country on Earth. (In July, Trump declared a ban on visits to North Korea.) China—hardly an exemplar of human rights—is our second biggest trading partner. Why the double standard here? It's especially odd, Feinberg says, "coming from Trump, who has made a point of embracing the most authoritarian regimes on the planet. The Saudis? Seriously? The Philippines?"

It is possible that no amount of commercial engagement will weaken the Communist Party's grip on Cuba's political system. But we have the ability to make life a little better for real people right now by easing the restrictions on our end. We can put money and information in the hands of a suffering population.

"The Cuban [government] will not negotiate away their political system," says my U.S. Embassy source. "They'd rather eat cats." But once enough Cubans have tasted the fruits of the free market, they may find themselves wondering about a regime that can muster only kitty stew.


My trip to Cuba was part of an educational junket organized by Engage Cuba, a coalition that pushes for normalizing trade and travel between the two countries. Since an advocacy group arranged for me to meet with many of the individuals quoted in this story, it's natural to wonder how representative they are of the larger population. In the end, my experience was designed to reinforce a belief that the Cuban people crave more open relations with the United States.

Yet the data, so far as they exist, support that conclusion as well. Recall that The Washington Post found all but universal support for further engagement. Even The Weekly Standard quotes a Cuban journalist saying that "every Cuban here, on all sides, wants the embargo ended."

And not all of my interactions were curated. I spent my last day on the island wandering Old Havana on my own. Late that afternoon, as I was standing on the edge of Parque Central, a downtown square that bustles at all hours with both locals and tourists, a Cuban man came over to me. Upon realizing I was from the United States, he became animated.

In broken English, the man explained that his wife, who I took to be an American living in California, was upset about something. He pulled out his smartphone—startlingly, despite the lack of cellular data services, there are an estimated 4 million Wi-Fi–dependent mobile devices in use in the country—and showed me a text message. It contained the dates when she would be visiting in July, followed by a not-particularly-accurate description of Trump's policy announcement as she understood it. He was cracking down on travel, she said. Soon, it would be prohibited altogether, and she could be jailed for coming to Cuba. She didn't know what they were going to do, but "I love you so much and I can't wait to see you." Amiably, he asked me to convey his predicament to my president.

For five decades, America's policy toward Cuba has operated on the assumption that desperate people make the best allies for democracy and markets. But by insisting that political reforms precede economic openness, the United States forecloses the most realistic road to progress—and by speechifying about the necessity of regime change, American politicians lend credence to the Cuban government's anti-American propaganda. This only makes the job of the island's militant wing easier.

The embargo has failed on its own terms: 55 years later, the Communist Party stands. It might once have been reasonable to think the fall of the Soviet Union would finally be the tipping point. But if the Cuban people didn't turn on the Castros during the special period, they're not likely to do so because of tough words and moderately stricter trade rules from Donald Trump. Reducing tourism eliminates a lifeline for millions of Cubans while standing little chance of undermining the Cuban state.

"America isn't going to defeat communism by starvation," Leo says. "We're used to starving."