A Case for Keeping the Squeeze on Castro : U.S. Should Not Lift Embargo Until Cuba Decides to Follow Gorbachev’s Lead

As Cuba marks the 30th anniversary of its revolution, Fidel Castro faces unprecedented economic problems. The Cuban economy cannot generate sufficient hard currency to pay for necessary imports. At the same time, Cuba cannot count on the Soviet Union’s continued largesse, given Moscow’s own economic difficulties. There are signs that Castro hopes to resolve this dilemma by seeking improved relations with the United States, while maintaining Cuba’s special relationship with the Soviet Union.

Until now the Soviet Union’s economic problems have not translated into a reduction in Moscow’s aid to Cuba. On the contrary, over the past few years Soviet economic and military assistance have increased. Today they equal an estimated $4.5 billion annually, or $12 million a day, making Cuba the largest recipient of Soviet aid.

Moscow’s aid has kept the Cuban economy afloat. More important from the U.S. standpoint, it has allowed Castro to pursue a global foreign policy that has included sending tens of thousands of Cuban troops to Angola and Ethiopia and supporting both the Sandinistas in Nicaragua and Marxist guerrilla groups in other Central American countries. Without Soviet subsidies, Castro would be a traditional Latin American strongman--although an unusually charismatic one.

While Moscow has clearly benefitted from Cuba’s international behavior, some of it is less useful to the Soviets today than it was in the past. Currently, Mikhail S. Gorbachev’s top priority is an increase in the Soviet Union’s economic productivity. To achieve this, he needs a good relationship with the United States. This will enable him to avoid wasting money on a costly competition with the United States for influence in the Third World. It would also give the Soviet Union increased access to much-needed American capital and technology.

Gorbachev’s desire to deepen the detente between Moscow and Washington helps explain the withdrawal of Soviet troops from Afghanistan, as well as Soviet pressure on Castro to negotiate the removal of an estimated 50,000 Cuban troops from Angola. It might also lead to a reduction of Soviet military and economic aid to Nicaragua and to an end to Cuban support of Marxist guerrillas elsewhere in Central America, but this will depend on whether the Bush Administration persuades Gorbachev that such behavior undermines the U.S.-Soviet relationship.

The Soviet leader’s pressure on Castro has so far been limited to Cuba’s international activity. Within Cuba, Moscow has tolerated Castro’s pursuit of an economic development strategy since the mid-1980s that contradicts Gorbachev’s own policies in the Soviet Union. Cuba is currently engaged in a “rectification campaign” that is replacing material incentives with moral ones. The campaign follows a short-lived experiment with market incentives, which increased Cuba’s productivity but threatened the ideological underpinnings of the revolution and Castro’s control over the Cuban people.

The rectification campaign is partly responsible for Cuba’s current economic woes. Workers are protesting the policy by refusing to work. As a result, Cuba did not produce enough sugar to meet its export commitments to the Soviet Bloc in 1987. Instead, it had to use scarce hard currency to purchase sugar on the world market. Cuba also has been hard hit by the fall in oil prices. Cuba imports almost all its oil from the Soviet Union, which allows Cuba to resell on the spot market whatever it does not consume. As a result, oil exports have become Cuba’s leading source of hard currency. The 50% drop in oil prices in 1986 and the continuing soft oil market have hurt Cuba economically. Finally, the recent decline in the value of the dollar hit Cuba hard because its main exports are denominated in dollars. The U.S. economic embargo obliges Cuba to buy what it needs in market economies from Western Europe and Japan, whose currencies have appreciated vis-a-vis the dollar.

Cuba has already turned to the Soviet Union to offset its hard-currency losses. Castro’s November, 1987, trip to Moscow produced a Soviet commitment to lend Cuba $450 million in hard currency. This is not, however, Gorbachev’s preferred solution to Cuba’s economic problems. Instead, the Soviet leader would prefer that Castro reintroduce material incentives at home and get Washington to lift its embargo, thereby giving Cuba access to American tourism, trade and technology.

Castro is willing to improve relations with Washington, but hopes to do so on his terms, without reducing his tight control over Cuba. The United States should not help him out by prematurely lifting the embargo. Washington should explore with Havana ways of resolving conflicts to the mutual advantage of both parties. Meanwhile, the embargo should be kept in place to oblige Castro to follow Gorbachev’s lead and liberalize Cuba’s economic and political systems. Only then would the lifting of the embargo benefit both the United States and the Cuban people, instead of only Fidel Castro.