[Right-wing Russians want to push Cuba toward a neoliberal
economy.]
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THE NEW RUSSIAN PRESENCE IN CUBA  
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Samuel Farber
August 29, 2023
Foreign Policy in Focus
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_ Right-wing Russians want to push Cuba toward a neoliberal economy.
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Embassy of Russia in Havana, Nick DeMarco/Wikipedia

 

At the beginning of this year, Russia signed an agreement with the
Cuban government promising to significantly increase its participation
in the Cuban economy. This comes more than 30 years after the collapse
of the Soviet Union and the period of the great influence and close
association that Moscow had with Havana.

But why now? Putin is eagerly looking for allies wherever it can find
them, especially considering the military, economic, and political
impact that the Russian invasion of Ukraine and its subsequent crisis
like the rebellion led by Prigozhin has had on Russia. However, the
Russian economy was weak even before the invasion of Ukraine. The
economic weight of Russia does not principally reside in its
manufacturing and industrial power but on its status as a mayor
extractor and distributor of hydrocarbon products, and on a smaller
scale as producer and distributor of other services and products such
as weapons.

Although Russia was apparently successful in its neoliberal campaign
from 2024 to 2018 in reducing inflation and implementing budgets with
surpluses, as well as in creating large monetary reserves and a lower
national debt, it failed to overcome its chronic low rate of economic
growth. A 2019 Chatham House study
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Philip Hanson points out that this success was achieved at the expense
of great sacrifices by the Russian people, especially among retirees,
and through the prevention of massive protests by the repressive
Russian system. This autocratic system, according to Hanson, with its
characteristic corruption and its intrusions in the economy and
society, constitutes an obstacle for private investment and
competition. Hanson ignores the role of the state in boosting economic
growth in the Soviet Union and China, albeit in a highly brutal and
harshly antidemocratic manner. Yet, Hanson is correct to argue that
any attempt to establish reforms in Russia, like the rule of law, runs
the risk of destabilizing the existing political system. For these
reasons, concludes the British study, such an attempt will not likely
be made.

Russia has promised great results with its investments and
collaboration with Cuba, but the specific projects that Russia has
announced for the island are relatively meager. For example, on May
20, 2023, the website of the Russian Federation referred, in very
general terms, to the implementation of projects in the areas of
construction, digitalization, agriculture, transport, logistics,
tourism, and banking. At the same time, Russian entrepreneurs and
functionaries signed agreements with their Cuban counterparts to
improve rum and sugar production, ensure the provision of wheat and
oil to the island, and to repair tourist installations in poor
condition. But there are few specific projects and many of those
announced are small and local, like the establishment of a hotel for
Russian tourists, the accreditation of 14 Russian enterprises by the
Cuban authorities to sell food to the population, the export to Russia
of almost a million dollars’ worth of fruit, the creation of a
wholesale market to sell Russian merchandise, plans to repair and
modernize one sugar mill in central Cuba, and the renovation of the
factory Antillana de Acero.

On Cuba’s part, Minister for Foreign Trade and Investment Rodrigo
Malmierca declared that “we are working to ensure that Russian
investments in Cuba enjoy special protection.” Along those lines,
Putin’s most important envoy to Cuba Boris Titov, the presidential
commissioner for the rights of Russian entrepreneurs, cited the great
concessions made by the Cuban government. These include the granting
of land to Russian agricultural producers for 30 years (compared to
the 20 renewable years granted to Cuban farmers) and other possible
exemptions of taxes related to those lands and tariffs, incentives
such as new mechanisms to repatriate profits, and the development of a
new merchant marine company to attract investments and facilitate
trade with Russia. Russians could also open their own banks and use
the ruble for commercial transactions.

Given the nature of Russian state capitalism, including corruption and
racketeering, this new phase of Russian economic intervention in Cuba
will differ not only from the role that the USSR played until it fell
apart, but also the role that Spanish and other European Union
investors play in Cuba today. The latter generally follow normal
capitalist practices in terms of investments and rates of profit,
except to the degree that these have involved the internal
organization of the Cuban economy and society in labor and fiscal
questions, among others. Thus, for example, according to Boris Titov,
the financing of new projects like the establishment of a new hotel in
Havana specially designed for Russian tourists will be undertaken by a
fund of the Finance Ministry of the Russian Federation, in this manner
combining state action with supposed private initiative that is linked
to Putin and his henchmen. Approximately 120 millionaires control 70
percent of the economy due to the frequently corrupt concessions that
have reinforced the links between the new capitalists and Putin’s
regime.

In the meantime, the so-called Russian private sector has gone much
farther. In January, the Russian news agency Interfax reported that a
“Russia-Cuba Business Council” of more than 100 industrial and
commercial companies, presided over by Boris Titov, was exploring
“the economic transformation of Cuba based on private companies.”
In fact, Titov has publicly declared that Cuba should open the whole
of its economy. During a meeting that Titov had with entrepreneurs
from the Moscow region, he compared
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USSR of the late 1980s before the beginning of the great wave of
privatizations that were for the most part based on the theft of
public property.

Is not at all clear if declarations such as Titov’s mean that the
Russian capitalists linked to Putin’s regime are ready to go beyond
their role as foreign investors to politically pressure the Cuban
government to undertake a large-scale privatization of the Cuban
economy. If this is the case, despite the welcome that the Cuban power
circles have given to Russian private initiatives, most of the Cuban
political bureaucracy will react very negatively to proposals such as
Titov’s. The Cuban bureaucracy has approved foreign investment in
new enterprises, generally in association with the Cuban state, but
has opposed the privatization of existing state enterprises, including
the 285 state enterprises that have reported losses, according to
data
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by the Cuban authorities in March. There are exceptions to this
general rule, such as in the restaurant sector, where small
enterprises such as cafeterias that have clearly demonstrated that
they are not viable as state property have been converted to
cooperatives, formed from above, of the workers in this sector.

THE RUSSIAN ECONOMIC CAST IN CUBA

Putin’s principal representatives who are negotiating the new
economic relationship with Cuba are associated with the Russian
political right. Boris Titov, who heads the list of Putin’s envoys
to Cuba and has been the presidential commissioner for entrepreneurial
rights since 2012, is an entrepreneur and politician who has led the
small Party for Economic Growth that previously was known as Right
Cause. As such, Titov has participated in Putin’s electoral farces
that allow for the existence of small parties who put up their own
candidates but that eventually support Putin when he is elected. In
the presidential elections of 2018, Titov finished in sixth place with
0.76 percent of the vote.

But the most surprising and even shocking new Russian presence in Cuba
is the Institute for the Economy of Growth, Stolypin P.A. named in
honor of Piotr. A. Stolypin who was prime minister and minister of the
interior of the Tsarist government from 1906 until his assassination
in 1911. Stolypin was a violent and energetic represser of the groups
and parties opposed to the Tsarist tyranny, but at the same time he
tried to modernize the archaic Russian agriculture both technically
and socially. Stolypin’s project was a version of what Antonio
Gramsci later called a “passive revolution,” in this case an
agricultural modernization from above that would only benefit the
landlords and the prosperous peasants.

Today, the Stolypin Institute proposes that Russia should change from
its model based on the export of raw materials to the
“competitive” model based on the development of small and
medium-size enterprises, improvement of the productivity of labor in
the private sector, the creation of a new digital economy, and a
social sector that functions well (a euphemism for a “social
sector” that is small and with the lowest possible public cost.)
But, according to the Stolypin Institute, the principal problem is the
economic uncertainty that prevents the Russian economy from growing.
What we need, insists the Stolypin Institute, is certainty in economic
and social policies. The Institute does not say a single word
regarding what undoubtedly constitutes the principal source of this
uncertainty: the absence of democracy in Russia in every sense of the
term, and consequently the absence of the rule of law. The silence of
the Stolypin Institute with respect to this fundamental problem of the
Russian political and economic system is far more eloquent than
anything from its spokespeople and publications.

It remains unclear how far the Stolypin Institute is willing to go in
its consultations and advice to the top economic and political
officials of the  “Marxist-Leninist” Cuban state and how those
high bureaucrats would respond to the interference of the Russian
right in the domestic affairs of the island. If Russian economic
interference does not lead to significant improvement in the Cuban
economy that somehow “compensates” for foreign interference and
the corruption caused by such intervention, the answer of Cubans, be
they bureaucrats, workers, or professionals, will be highly negative.

THE CUBAN ECONOMIC SITUATION

The Cuban government is by and large receptive to recent Russian
initiatives because of the very serious economic crisis affecting the
island, which is approaching the economic disaster that the country
suffered in the wake of the collapse of the Soviet bloc. Today, Cuba
suffers a grave shortage of the basic products needed for the health
and nutrition of its population. Inflation reached 45 percent in April
2023. It’s no surprise that one dollar recently traded for 240
pesos, which 10 times the rate of 24 to 1 that was common until
recently.

This crisis has produced the greatest wave of emigration that Cuba has
ever witnessed. This wave has been permitted and indirectly stimulated
by the Cuban government. Since November 2021, Cubans don’t need to
obtain a visa to enter Nicaragua, from which they undertake the long,
costly, and frequently dangerous trip to the U.S.-Mexico border. As an
ally of the Cuban government, Nicaragua would not have established
such a policy without the consent (and likely encouragement) of the
Cuban government. By the end of 2023, more than 450,000 Cubans will
have emigrated during the previous two years, an extraordinary number
for a country of 11 million people. This emigration, especially of
young people, will aggravate the demographic crisis that Cuba has
experienced for several decades.

Among the immediate causes of the present crisis include the great
impact that the COVID pandemic had on Cuba and the consequent dramatic
reduction of tourists, along with the measures that Donald Trump
adopted to worsen the impact of the criminal blockade of Cuba that
President Biden has modified to a very limited extent. For its part,
the incompetence and clumsiness of the Cuban government also played an
important role in this crisis, particularly its “reordering.”
During the great shortage of dollars and euros provoked by the fall of
tourism, this monetary reform provoked a great deal of inflation by
raising the value of the Cuban peso without a corresponding increase
in the productivity of the Cuban economy. Another result of the crisis
was the relaxation of government controls over the economy in 2021,
allowing the expansion of the private sector with the legalization of
micro, small and medium-size private enterprises) which in the case of
the middle-sized ones may legally have as many as 100 employees.

In this context, the new Russian policies in Cuba must be viewed with
considerable skepticism. The possible contributions of the Russian
Federation do not appear likely to rise to the level of Cuban needs,
at least in what concerns its economy. Besides, it raises the
possibility that Russian initiatives will translate into the adoption
of a racket-ridden state capitalism on the island, with a qualitative
increase in corruption and social crisis.

_SAMUEL FARBER is an American writer born and raised
in Cuba. Farber came to the United States in February 1958. He
obtained a Ph.D. in Sociology from the University of California,
Berkeley in 1969 and taught at a number of colleges and universities
including UCLA and, most recently, Brooklyn College of the City
University of New York, where he is a Professor Emeritus of Political
Science. His scholarship on Cuba is extensive and includes many
articles and two previous books: Revolution and Reaction in Cuba,
1933-1960 (Wesleyan University Press, 1976) and The Origins of the
Cuban Revolution Reconsidered (University of North Carolina Press,
2006). He is also the author of Before Stalinism: The Rise and Fall
of Soviet Democracy (Polity/Verso, 1990) and Social Decay and
Transformation: A View From The Left (Lexington Books, 2000). Farber
was active in the Cuban high school student movement against Fulgencio
Batista in the 1950s, and has been involved in socialist politics for
more than fifty years._

_He writes about Cuba and its revolution. He also contributes to
several Latin American newspapers, such as Brecha._

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