The New York Times Has Moment of Lucidness on Cuba

Monday, April 18, 2016
In an editorial ahead of last weekend's VII Cuban Communist Party gathering, The New York Times (NYT)expected "a series of economic and political reforms" to be announced.

Well, that's not happening.

As General Raul Castro made clear in his opening remarks, Cuba's totalitarian regime will remain in tact, military-run state enterprises will control the economy, and the private accumulation of wealth and property will be restricted (and punished).

But, to be fair, the NYT had peppered its hopes with a dose of reality (frustration). It wrote:

"For many Cubans, the island’s languishing economy is the most pressing issue. In 2011, party leaders promised to overhaul the centrally planned economy, but they have moved too slowly in opening up the country to foreign investment and allowing a private sector to take root. The main obstacle has been the Cuban military, which has long exercised monopoly control over large segments of the economy, creating an oligarchy in uniform that is reluctant to spread the wealth."

Alas, a moment of lucidness.

But if you recognize this is the main obstacle -- then why support business deals with Cuba's military monopolies?

If this is the main obstacle -- then why is the Obama Administration skirting U.S. law and giving a special license to Starwood Hotels to cut hotel deals with the Cuban military?

It defies common-sense to think that doing more business with Cuba's military monopolies will somehow weaken them -- and make them less of an obstacle. To the contrary.

As the renowned political risk firm, Eurasia Group, prognosticated over the weekend:

"The recent rapprochement with the United States will probably undermine the regime’s sense of urgency regarding the pace of liberalization on the island since it has led to an increase in dollar inflows from both remittances and increased tourism and reduced the need to expand local private sector activity."

Moreover, along the lines of the NYT's revelation, it concluded:

"The government is also beholden to elite interests, which will continue to operate as a constraint to more substantive reform. Senior figures within the Revolutionary Armed Forces (FAR) have significant business interests in the country’s most important sectors, including sugar, tourism, and cigar production. In fact, the military’s holding company, GAE, reportedly employs 20% of Cuba’s workers and includes the island’s largest tourism corporation, real estate, retail, and warehouses, as well as the Mariel special trade zone, run by Castro’s son-in-law."

And guess what was the only business pitch made by Raul Castro during his remarks at this weekend's Party Congress?

"Every hotel that is opened is a factory that produces income necessary for our country," said Raul.

In Castro-speak -- that means for his family and its military regime.

Yet, that is precisely what Obama is catering to.