How Obama can safeguard his Cuba legacy

It starts with keeping American businesses from ruthlessly pillaging the place

Can Cuba be more than an historic trip for Obama?
(Image credit: REUTERS/Jonathan Ernst)

In what will surely go down as one of his signature accomplishments, President Obama is visiting Cuba this week as part of his program of partial normalization of relations with that country. He's the first sitting president to do so since Calvin Coolidge in 1928.

It's a long-overdue development. The embargo of Cuba is a senseless, unjust policy that should have been cast off 20 years ago at least. If America can have regular relations with Vietnam and China, there's no reason we can't do the same with Cuba.

However, all is not bright and shining hope. The eventual restoration of full relations is still some ways off (most of the embargo is under the control of Congress, which would have to pass a repeal), but it's surely only a matter of time. When that does happen, Cuba will have to undergo a process of difficult and probably painful change which could lead to serious instability or even political collapse. If President Obama wants his Cuba legacy to be remembered positively, he should be careful with his promotion of American business.

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Probably the most unsettling aspect of re-opening relations is how Obama has explicitly made American economic penetration part of the agenda. He says Google is going to provide internet service there. He's traveling with a slew of business executives, notably the CEO of Marriott International, the luxury hotel company that is obviously slavering at the prospect of Cuba's many lovely beaches and corals.

Now, there's nothing wrong in principle with American companies investing in Cuba — and if Obama's so-far rapturous reception there is any guide, ordinary Cubans are excited by the prospect of jobs and development.

The problem is the disruption this might cause, particularly if pursued at extreme speed. Cuba is a fairly repressive authoritarian state — indeed, as preparation for Obama's visit, the government detained a bunch of political dissidents. However, it also does a lot of things right. For a relatively poor country, it has high literacy, a good education system, and an extremely good medical system. Its per capita GDP is not too shabby, and over the last several years the Castro government has been implementing a number of economic reforms that have been working reasonably well. And as part of the normalization program, it has been cutting back fairly sharply on political repression.

The overall objective, therefore, ought to be to pursue modernization and democracy while preserving what Cuba has already built. My worry is that the end of the embargo will spark a stampede of American business and ideological pressure, and create something akin to the disastrous post-Communist experience in Russia, where GDP fell by nearly two-thirds and life expectancy by five years, and a handful of well-placed people absconded with half the nation's property.

Despite that record of disaster, a great many conservative and neoliberal economists still think that simple free-markety reforms — privatization, union-busting, austerity, axing wage and price controls, and so on — is some kind of magic formula for creating rapid economic growth. They are sure to react to any Cuban limitation on American business with snarling outrage.

But there is no reason to think that totally unrestricted American investment would be some great boon to Cuba. Luxury hoteliers, for example, would surely prefer to monopolize Cuban beachfront while preventing as much of their guests' spending from leaking out into the Cuban economy as possible. Regulations ensuring that Cuba gets a least a decent cut of the action — perhaps requiring service staff be locals, or charging a stiff property tax — would likely improve Cuba's overall economic development rather than the opposite.

Ultimately, there is only so much Obama can do. What comes ahead will be largely determined by future Congresses and presidents, and most of all by the Cubans themselves. Probably the best thing America can do most of all is avoid stamping all over Cuban sovereignty. To his credit, this is something Obama recognized during his joint address with Raul Castro, saying that "Cuba's destiny will not be decided by the United States or by any other nation."

But it's not nations I'd be most worried about. American business will ruthlessly pillage Cuba given half a chance. If Obama wants his trip to mark the beginning of a period of Cuban prosperity and reconciliation with the U.S., he would be well advised to slow-walk American investment, and instruct America's business titans that they will have to accept some limits on their freedom of action.

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