Cuba: Foreign Capital to the Rescue

On the new foreign investment law being prepared by Raul Castro’s government.

Pedro Campos  

After work. Photo: Juan Suárez

HAVANA TIMES — An extraordinary assembly of the Cuban parliament aimed at discussing a new foreign investment law has been officially announced for the close of this month.

The better part of the legislation sustaining Cuba’s reform process is made up of presidential decrees. Because of its strategic significance for the future of the nation, now they want parliament to discuss and approve this new investment law. That’s interesting.

It is well worth recalling, however, that any such parliamentary assemblies are held at the request of the leadership of the Cuban Communist Party or its subordinate organizations, as per the still effective and anti-constitutional electoral law, making us question how legal this supreme entity, meant to represent the nation’s sovereignty (according to Article 69 of the Constitution), actually is. Read between the lines…

According to the different reports that have been published, this new law would be primarily aimed at encouraging foreign investment in the Mariel Special Development Zone, where a kind of “free-trade zone” is being essayed. There, foreign capital could install its maquilas, operate without paying taxes and exploit Cuba’s cheap workforce arbitrarily. Any resemblance to China’s Special Economic Zones is not pure coincidence: copying others has been something of a tradition among Cuban leaders.

According to Granma, foreigners would also be able to invest in nearly all other sectors of the economy. Quoting Cuban Foreign Trade Minister Rodrigo Malmierca, the newspaper explains that this legislative bill, “far from describing a step back, offers greater guarantees for and incentives to foreign investment and ensures that capital contributes efficaciously to the country’s sustainable development goals and the recovery of the nation’s economy.”

As most of us already know, for Raul Castro’s government, terms such as “national economy” and “sustainable development” mean developing State companies, not those operated by the people. As he himself recently declared: “We must never forget that the economic system that will prevail in socialist, independent and sovereign Cuba shall continue to be founded on the people’s ownership of the main means of production, that the State company is and shall continue to be the main component of the national economy and that the construction of our socialist system will depend on their performance.”

This clears away all doubt: the new foreign investment law seeks to pull the Cuban State’s monopolistic capitalist economy from its fatal crisis. That strange concoction they’ve sought to pass off as socialism is a system where the vast majority of companies belong to the State, workers are badly-paid wage laborers denied independent organizations to defend their labor rights or any real possibility of having a say in the administration and management of institutions and a bureaucratic elite that is not subject to a direct and secret vote by the people makes all of the country’s economic and political decisions.

Industry. Photo: Juan Suarez

State monopoly capitalism has failed in every country where it has been established. In the name of “socialism”, it would now have foreign capital bail Cuba out, after Cuba squandered all of the capital expropriated from the large, mid-sized and small foreign and domestic companies (and even cooperatives and trusts) that existed when the political revolution of 1959 triumphed, overthrowing a dictatorial government but not restoring democracy, to change a form of private enterprise capitalism with a State monopoly one.

What should have led to the socialization of that capital, a process in which workers could have greater and greater control over the property, administration, management and profits of those “nationalized” companies, gradually changed into the absolute centralization of property and profits, which became subordinated to the interests and decisions of the small elite that has ruled over Cuba for more than fifty years, using a combination of populist and repressive policies, denigrating the words “socialist” and “communist.”

Owing to the bureaucratic mismanagement of the economy by Fidel and Raul Castro’s governments, the billions in aid received from the former Soviet Union, the colossal efforts of Cuban workers over half a century and the huge investments arising from trade relations with Venezuela have not been enough for the country’s misguided spending. Now, they want to woo foreign capital (particularly US capital), the same capital they once violently rejected, offering investors guarantees and benefits.

We’ll see how the law manages to guarantee that the investments of foreign millionaires aren’t expropriated, squandered or made unprofitable, while at the same time “making no compromises and ensuring the country isn’t sold out.” Only time will tell.

It would be an extraordinary feat of alchemy, worthy of inclusion in the museum where they will place the marble monument erected as a tribute to the famous super-cow Ubre Blanca (“White Udder”) – even though the liter of milk per person promised by Raul Castro will have to wait for better times to come along.

It would also be a prodigious feat if they managed to transform the Mariel port into the “world’s cruiser, where respectful nations sow the riches they accumulate in passing,” without the lifting of the imperialist blockade. Are they going to accept respecting all of the human rights of the Cuban people as a condition?

In an article I wrote in July of 2008 (1), I explained that, in his paper Perspectives of the New Political Economy, Russian economist E. Preobrazhenski had concluded that “the unnatural alliance between the socialist State and foreign capital will fail and be replaced by a natural alliance between the latter and all of the bourgeois forces in Russia.” History would prove him right years later.

The fact the Mariel port was inaugurated with the docking of a vessel loaded with a cargo of frozen chicken, bought from the United States by Cuba’s State-military commercial monopoly, was it coincidental, or a deliberately symbolic gesture?

Work in progress at Mariel Port, 30 miles west of Havana. File photo by Raquel Perez.

In the meantime, it does not seem as though the weak, restricted, mistreated and heavily-bound (truly) socialist area of the economy – cooperatives and the self-employed – will be seeing any tangible benefits from this new investment law.

We Cubans are tired of the mega-plans the “revolutionary” government hatches up at the expense of our sweat. The unpayable debt of coming generations will continue to grow. Free labor associations will continue to be bound by chains. The political and military bureaucracy, its descendants and most faithful followers, will continue to enjoy the good life.

Officials of the Revolutionary Armed Forces (FAR) and the Ministry of the Interior (MININT) will have to continue guarding the property of the bureaucracy, instead of defending the interests of the Cuban people and nation. The democratization of society will continue to be a dream. The repression of dissenting thought, of the opposition and dissidents, will continue to be the order of the day. The dispossessed will become poorer every day and dissatisfaction in all sectors will continue to grow…until one day. Then, the government will blame imperialist infiltration.

State monopoly capitalism has no objective chance of working in the modern world. It’s been proven. But the shine of gold can blind people. Those who do not learn from history are condemned to repeat its mistakes…and disasters. So, do go on, but not in the name of socialism – not in our name.

(1) Stalin foresaw the restoration of capitalism but erred as to its cause (Spanish).

Pedro Campos:  [email protected]

4 thoughts on “Cuba: Foreign Capital to the Rescue

  • Good analysis, although great pains will be taken to distinguish the reforms from a turn to capitalism. Major industry can be directly owned by the state. Or the state can give ownership to the people via stock ownership while maintaining effective control via regulation and control of the board.

  • When Cuba ultimately transitions to capitalism, those Cubans with access to investment capital will be best able to mobilize scant available resources to rebuild the necessary infrastructure needed to start businesses. That is to say, these Cubans will become the first bankers and insurers, etc. that comprise the early winners in capitalism. Absent sound regulatory policy, these first-in-line entrepreneurs will no doubt take advantage of other Cubans through usurious lending practices and bogus insurances schemes. This is what was and is being experienced in many of the former Soviet bloc countries since their transition to capitalism and even dates back to the early years in the US.

  • Moses, I’m curious, you mention the pain and suffering certain to come once the Castro regime goes the way of every other attempt at socialism that has ever existed….. what exactly do you mean by “pain and suffering”? I’m not at all trying to provoke a confrontation with you…. I’m actually very interested in your opinion. Specifically, what do you feel will cause this pain and suffering, and more specifically, how will this affect the average Cuban?

  • I agree with Pedro’s assertion that trying to integrate State monopoly capitalism with free market mechanisms such a free trade zones is doomed to fail. I believe that the Castros know this as well but are instead developing a structure which at some future date will fully convert to capitalism. In doing so, today’s military generals and colonels who run state-owned enterprises will overnight become tomorrows CEO’s and private sector leaders. This is exactly what happened in the former Soviet Union and to some extent is happening in China. This positions the Castro oligarchy to become the wealthy elite immune from the pain and suffering certain to come once the Castro regime goes the way of every other attempt at socialism that has ever existed.

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