Cuba: Capitalist restoration threat accelerates

Cuba: Diplomatic relations with USA restored, embargo eased

Capitalist restoration threat accelerates

Tony Saunois, Committee for a Workers’ International (CWI)

As 2014 drew to a close, 2015 was ushered in by US President Obama and Cuba’s Raul Castro announcing a series of historic agreements.

These restored diplomatic relations between the two countries, relaxed travel restrictions and took the first steps towards the easing of the trade embargo which had been imposed since the revolution in 1959-60. The release of prisoners held by the Cuban regime, including US nationals, and Cubans held in the US has already taken place.

This represents a decisive shift in the policy of US imperialism towards Cuba. It also signifies a further step by the Cuban regime towards capitalist restoration, which has been unfolding for a number of years.

These announcements are the culmination of secretive talks between the two governments which have been taking place in Canada. Negotiations involving the right-wing Canadian government and the Pope have been crucial in brokering the current agreement.

Obama made these announcements recognising that “You cannot keep doing the same thing (for more than 50 years) and expect a different result”. The European ruling classes, Canadian and much of Latin American capitalism took a different approach – one which Obama has now adopted.

Raul Castro made the announcement and urged that Obama be awarded the Nobel Peace prize! As US president he has carried out more drone attacks than George Bush!


Che Guevara, photo Alberto Korda

Che Guevara, photo Alberto Korda

Since the Cuban revolution in 1959-60, US imperialism has enacted a strict embargo and undertaken various attempts – including armed intervention in 1961 – to overthrow the Cuban regime and restore capitalism.

Despite the crippling consequences of the embargo, estimated to have cost the Cuban economy $1 trillion since its enforcement, this policy has failed. This was mainly due to the deep social roots and support for the revolution. It was a policy which was also geared to winning the political support of the Miami Cuban exiles who fled from the revolution.

Now US imperialism is adopting a new policy of beginning to lift the embargo. The threat of capitalist restoration to an isolated workers’ state can come not only from the threat of military intervention. As Trotsky warned in relation to the former USSR, it can come in the form of “cheap goods in the baggage train of imperialism”.

The objective of US imperialism is the same, but now they hope to reach it by a different route. They intend to flood the Cuban economy with goods and investment with the objective of fully restoring capitalism.

This change of policy by US imperialism has been facilitated by a change in outlook within the exiled Cuban community. While previously wedded to support for the embargo and a struggle to overthrow the regime now, according to some opinion polls, 52% of Cubans living in the USA support ending it. Sections of the capitalist class, like the sugar magnate Alfy Fanjul, have pronounced in favour of lifting the embargo, eyeing the prospects of new markets within a capitalist Cuba.

The devastating economic situation in Cuba means many Cubans are dependent on remittances they receive from families in the USA. An estimated 62% of Cuban households now receive support from abroad. According to some economic estimates, they sustain an incredible 90% of the retail market.

The dire economic situation in Cuba has been disastrous for the masses. The massive social gains conquered as a result of the revolution and overthrow of capitalism have been eroded, particularly since the collapse of the former USSR. Wages in Cuba today are estimated to be worth only 28% of what they were then.


Yet support for the revolution and opposition to capitalism and US imperialism meant that the Cuban regime, incredibly, was able to maintain the planned economy and bureaucratic regime throughout the 1990s (the ‘Special Period’) and into the early part of the 21st century. This was despite the tidal wave of free market capitalism which dominated the world economy.

The regime was also able to sustain itself politically using the US embargo which fuelled hostility to US imperialism. The arrival of Hugo Chavez to power in Venezuela also brought it breathing space through its supply of cheap petrol and oil.

The lack of genuine workers’ control and democracy and the consequential bureaucratic mismanagement and corruption further aggravated the economic and social crisis caused by the embargo and isolation.

The revolutionary convulsions which swept Venezuela, Bolivia and Ecuador at the beginning of the century offered the prospect of Cuba breaking out of its isolation.

A genuine workers’ democracy would have seized this opportunity and taken the steps necessary to try and form a socialist federation of these countries.

This could have allowed economic co-operation and planning between them and could have begun to appeal to the working class of the whole of Latin America by offering an alternative to capitalism.

However, unfortunately, neither the Cuban bureaucratic regime nor the reformist leaderships of Morales, Chavez and Carrera were prepared to do this. The latter three have remained trapped within capitalism despite initially introducing reforms and taking some measures to encroach on the interests of the ruling class and imperialism.

The Cuban regime, on the other hand, introduced a series of incremental steps beginning the process of capitalist restoration. These latest developments suggest a further step in this process.

Although the easing of travel restrictions will be welcomed, other measures represent a threat to the remaining gains conquered by the revolution. These were already being eroded and dismantled.

The new labour code represents a serious attack on workers’ rights. The age of retirement was raised by five years in 2008.

Convertible Peso

The introduction of the ‘dual currency’ exchange, whereby some workers are now paid in dollars, vastly exacerbated inequality between those paid in dollars and those in pesos. The regime created the ‘convertible peso’ pegged at 1:1 with the dollar, used in the tourist sector and for imported products.

Local products use the local peso which is worth a fraction of that. The government announced its intention to scrap this dual currency but this has not so far been implemented.

This has inevitably boosted the black market. The government established a target of removing over one million workers from the state sector and allowing the establishment of thousands of small and medium sized businesses; 500,000 licenses have already been issued to ‘cuentapropistas’.

However, these have centred on small businesses like restaurants. The number of workers employed in the private sector has increased from approximately 140,000 to 400,000 since 2007. This is significant but still a minority out of a total workforce of over five million.

A bridgehead for capitalist restoration has been developed in the tourist sector, which has been the centre thus far of foreign investment from European, Canadian, Brazilian and, more recently, Chinese enterprises.

Prostitution, banished from society following the revolution, is now back on the streets of Havana, especially in the tourist areas.

Special Development Zones have been opened, like the building of a new port facility in Mariel Bay – financed by investment from Brazilian and Singaporean capitalism. This was with a future eye on the ending of the US trade embargo and also to capitalise on the expansion of the Panama Canal and the new canal being planned in Nicaragua.

Investors will be given 50-year contracts and can have 100% ownership. They will be charged no labour or local taxes and granted a 10-year reprieve from paying a 12% tax on profits.

Despite these developments, foreign investors are compelled to negotiate with the government or state-run companies. While the Cuban regime still uses some socialist rhetoric, in part reflecting the support which still exists for the revolution, especially amongst the older generation, it increasingly refers to Jose Marti, the 19th century leader of the independence movement against the Spanish colonisers.

The younger generation, desperate to enjoy new freedoms – use of the internet and international travel amongst others – have experienced not the gains but the regression of the revolution, economic and social crisis and the stifling dead hand of the bureaucracy

The arrival of “cheap goods in the baggage train of imperialism” may hold an initial attraction until the reality of life in capitalist society becomes apparent.

These developments clearly represent an important move towards the re-introduction of capitalism. This is underway in some sectors but under continued state supervision and agreement.

The state still maintains powerful control and could choke off these steps at a certain stage. The decisive sectors of the economy have still not been privatised or sold to foreign capitalists.

For socialists and the working class, the moves towards capitalist restoration represent a backward step. They will signify the erosion of the gains of the Cuban revolution for the masses. They will also be utilised by the ruling class, especially in Latin America, to try again to discredit the idea of socialism as an alternative to capitalism.

However, this will not have the same effects as the ideological offensive against the idea of socialism, which the ruling class unleashed following the collapse of the former Stalinist regimes in the ex-USSR and Eastern Europe.

A new phase of capitalist crisis has opened up internationally. The working class and the masses have passed through 25 years of the ‘supremacy of the free market’ and are beginning to struggle against it.

In Brazil, Argentina, Chile and other countries a new cycle of workers’ movements has begun.

The lifting of the embargo represents a defeat for the past policy of US imperialism and its attempt to overthrow the Cuban regime. It will give Cuba the opportunity to trade on the world market.

However, without the existence of a genuine workers’ democracy, there is the danger that it can accelerate the process of capitalist restoration.

A state monopoly of foreign trade, controlled by a genuine regime of workers’ democracy, is essential to help prevent this threat. Socialists welcome the increased freedom to travel however.


The transition to a full capitalist restoration in Cuba will not be a straightforward uninterrupted process. Sections of the regime do not seem to want to go in this direction. Significantly, Mariela Castro, daughter of Raul, firmly stated as this deal was announced that the people of Cuba “do not want to return to capitalism”.

On 28 January for example, after the U.S. Assistant Secretary of State Roberta Jacobson met with dissidents in Cuba, Raul Castro warned the US not to ‘meddle’ in its internal affairs saying it could make the moves to normalise relations “meaningless”.

Under the conditions of new international capitalist crisis, moves towards capitalist restoration can be checked. A mixed or hybrid situation could continue for some time.

Initially, gains from the revolution, such as healthcare and the education system, may be maintained, although even these have suffered greatly from lack of investment in the recent period.

Many obstacles remain to be overcome and some resistance is likely as the reality of capitalist restoration becomes apparent. Sections of the population are already fearful of losing the gains of the revolution and of Cuba being turned into another Puerto Rico.

The need to build resistance to the developing pace of capitalist restoration, and struggle for genuine workers’ democracy and a nationalised planned economy in Cuba is more urgent that ever.

Such a movement could link together with the working class and youth throughout Latin America, who are increasingly moving into battle to defend their interests, and begin to offer a real socialist alternative to capitalism that has fully learnt the lessons of the Cuban revolution.

The Cuban Revolution

Fidel Castro in Washington 1959

Fidel Castro in Washington 1959

Before the revolution, Cuba was a paradise for the rich but a nightmare of poverty for the workers and peasants. Under the Batista dictatorship, tens of thousands had died at the hands of the military.

Proportionately fewer children went to school in the 1950s than in the 1920s, yet Havana in 1954 had more Cadillacs than any other city in the world! Land was concentrated in a few hands, in huge latifundia. The economy was dominated by the giant American monopolies.

A heroic three-year guerrilla struggle, with the support of the peasantry, led by Fidel Castro, his brother Raúl and Che Guevara finally defeated Batista in 1959. This was greeted with a general strike when the guerrillas entered Havana.

Castro, up to this stage, had been a radical democrat whose ideal was democratic capitalist America: But faced with a life and death struggle with American imperialism, he started speaking of the socialist revolution as the process developed. He relied on the peasants and the rural population, which shaped the character of the movement.

On the one side, was the inability of Cuban capitalism to show a way out of the impasse of society. At the same time, there was the colossal pressure of an aroused peasantry and the working class. With the defeat of Batista, the peasants moved to occupy the land and the working class clamoured for wage increases and the reinstatement of those sacked under the previous regime.

US companies refused to refine Russian oil imported into Cuba and the US government stopped the import of Cuban sugar, aiming to bring the Castro regime to its knees. In response the sugar mills, the oil refinery, the Cuban telephone company, the electric company and were all nationalised. In the next few months, in a rapid succession of blows and counter-blows, all Cuban and American big business was taken over.

By the end of 1960 capitalism had been eliminated in Cuba. US imperialism retaliated by declaring a complete trade embargo and preparing for a military intervention to crush the Cuban Revolution.

A workers’ state had been established – but with power concentrated in the hands of a layer of privileged officials, rather than through workers’ and peasants’ councils.

There was undoubtedly an element of workers’ control in the factories in the first period of the revolution and every neighbourhood and street had a ‘Committee for the Defence of the Revolution’. An indication of the widespread support for the regime is demonstrated by the enormous crowds which gathered in Havana to listen to Castro’s speeches.

But at the same time the masses had no control or management of the state machine. This was concentrated in the hands of Castro and his supporters, the governing party and the army.

The Russian bureaucracy supported Cuba, without which the Cuban Revolution would have collapsed. The enormous aid extended together with the advantages which flow from a planned economy meant a gigantic development of Cuban society. There were huge steps forward in areas such as life expectancy, health and education.