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Cuba looks to capitalism to beat the pandemic

Economy opening up as new vaccines bring promise

By Ricky Browne

The socialist republic of Cuba is opening up its private sector further, to allow more than 2,000 professions to operate privately, while the country races to launch four Covid-19 vaccines.

Some believe it is a move to creating a capitalist society. But the country has been here before, and is unlikely to change much.

If anything, it is the creation of four Covid-19 vaccines that may give Cuba’s economy the much needed shot in the arm that it needs.

A view of the Capitol, from Havana’s roof tops Photo: Ricky Browne

 Cuba is basically facing another special period, similar to the one 30 years ago, when the Soviet Union and its aid to Cuba disintegrated, forcing the people to  scrape to survive. Now its economy hit hard by the global pandemic, reducing its vital tourist trade to about zero. As a result,  it has become necessary for Cuba to release its grip on the private sector.

It used to be about 127 professions that were allowed in the private sector. Previously everything was run by the state – and it was considered a big step when those 120-odd professions were allowed to operate privately for profit.

Meanwhile a group of about 124 professions will remain state-controlled – probably in the areas of education and health.

MANTEQUILLA?

That doesn’t mean that there wasn’t some private enterprise in those areas all along, even though it was prohibited. English teachers, for example, were giving tuition to paying students – even if their knowledge of the English language was extremely limited.

A baker looks at a painting of Castro in his bakery Photo: AFP

Undercover private enterprise also existed over at the state-run bakeries. While standing in line for a loaf of crispy Cuban bread, a man may come up to you and offer you a plastic bag for a fee – as the bread is handed out without wrapping. Or a woman may come up to you and whisper “mantequilla?” – offering you illegal, home-made butter, as if she was selling drugs.

The reality in Cuba is that things didn’t change much with the previous opening up of the economy, apart from the introduction of more restaurants and rooms for rent to tourists. But that didn’t mean that illegal private enterprise didn’t exist. Far from it.

Officially, it is estimated that more than 600,000 Cubans work in the private sector, or about 13 percent of the workforce on the island with a population of 11.2 million people.

The Cuban economy keeps rolling along

But, in all likelihood, the real number of people who are trying to make some money on the side is much higher than that – from the guard at the zoo who charges higher entry for tourists, to the waiter at the restaurant who walks off with meat from the freezer to sell to his customer base, to the person who records American TV shows to sell in a ‘pacquete’ to his customers who have no interest in the state-run TV channels.

Earlier, Cuba got rid of its dual currency system, with the CUC that was fixed to equal the US dollar ceasing to exist as of January 1. This was the currency that tourists were allowed to use. But the ordinary Cuban peso, which was worth a fraction, and was often dirty notes that nobody really wanted, remains.

SOCIALISMO O MUERTE

The last time Cuba faced any massive change was on January 1, 1959 when Fidel Castro came to power through revolution, toppling the US-protected Batista regime.

Fidel the revolutionary

It didn’t take long for Castro to turn to the Soviet Union for support, or for the United States to impose an embargo on the Caribbean state.

The official slogan “Socialismo o muerte!” can be seen all over Cuba, reminding people of the importance of the revolution and of its socialist ethos.

A painting of Cuba’s former president Fidel Castro is seen at a factory in Havana, Cuba November 26, 2016. Photo: REUTERS/Enrique De La Osa

It means “Socialism or death” – not to be confused with “Socialismo y muerte!, which would mean Socialism and death — a quite different message.

So no matter how much the Cuban economy may appear to be pivoting towards free market capitalism, the slogan remains engrained on the psyche of the people. Wouldn’t a step towards capitalism mean a step towards death?

How does a revolutionary, socialist government with a slogan like “Socialismo o muerte! step away from that?

It has stepped away from death before — or at least others stepped away for it — back at the time of the Cuban Missile Crisis.

The world narrowly escaped nuclear war in October 1962, when US President John F Kennedy and Soviet President Nikita Khrushchev faced off over Soviet missiles in Cuba. The two countries stepped away from the brink when the USSR agreed to remove its missiles from Cuba, and the US agreed to remove its missiles in Turkey.

Kennedy (right) meets Khrushchev in 1961 before the Missile Crisis

But since Castro came to power, and moved the country into the USSR’s orbit, little has changed for more than 50 years. The country has a health system that is well thought of, free education and an economic system that is basically controlled by the state.

NO ES FACIL

The country depended on the USSR for monetary support, but that came to a sudden end in 1991 when the USSR ceased to exist and the new Russia moved towards a capitalist system. People had to resort to all sorts of creative methods to survive — cat and condom pizza becoming a well known gourmet delight during this special period.

A street scene in Havana Photo: Yander Zamora/EPA/Shutterstock

The phrase ‘No es facil” – its not easy — was a common one on Cuban’s lips, and it  became more common as the Cuban economy tightened more and more.

Chavez and Castro were close — here Venezuelan President, Hugo Chavez ispictured with Fidel Castro as he visits the Havana International Book Fair in Havana, Cuba on March 2, 2006 Photo:: Jorge Rey/MediaPunch

After Soviet support dried up, Cuba depended on its friendship with Hugo Chavez and oil-rich Venezuela. But after Chavez died, and the economy spiralled  out of control under Nicolas Maduro – not helped by the collapse in oil prices – Cuba has struggled to keep up.

Gradually the amount of basic food rations that each Cuban could expect to get at a greatly reduced, subsidized price from the State each week got smaller and smaller, as the economic situation hardened.

President Obama took a notably more limp wristed approach in his dealings with Cuba compared to previous presidents

Tourism became more important – and the market opened up to American tourists when Barack Obama was president – only for that door to be shut by Donald Trump.

Now with the pandemic, Cuba has locked its borders to incoming tourists – but there would be few coming in any case, as world-wide tourism has collapsed.

So with no help from Venezuela and now no tourism, Cuba’s economy is in one of its most difficult times since the special period.

MIGUEL DIAZ-CANAL

Cuba’s ‘new’ 60-year-old president Miguel Diaz-Canal came to office in April 2018. He was the first non-Castro to head Cuba since 1959.

President of Cuba Miguel Diaz-Canal

Born just after the revolution, Diaz-Canal might not be as wedded to the Communist platform as Fidel Castro and his brother Raul Castro.

But he still has to be restrained in any economic changes he may want to make, as the octogenarian Raul Castro remains in the more powerful position of First Secretary of the Communist party as well as commander-in-chief of the Cuban Revolutionary Armed Forces.

Diaz-Canal (right) is president, but Raul Castro remains powerful

Due to the US embargo on Cuba, the country has developed its own medical technology over the last five decades. While it is true that the country may be short on simple medications like pain-killers, its medical programme that sees thousands of its doctors head around the world, has been one of its economic mainstays.

Cuban doctors have worked around the world

That assistance to developing countries (paid as it is) has created a lot of good will for Cuba around the world, in countries ranging from its neighbour Jamaica, to countries in Latin America and Africa.

VACCINE TO THE RESCUE

So as the developing world cries out “vaccine apartheid” as they can’t currently get their hands on vaccines from producers in the developed world – companies like Pfizer, AstraZeneca and Moderna – many are looking to Cuba with great expectation.

The country is currently developing at least four types of Covid-19 vaccines, but none have yet finished testing.

It is hoped that a Cuban vaccine will be robust enough to not require storage at extremely low temperatures, and that through its humanity, Cuba will charge very little, for the as of yet non-existent vaccines. Jamaica, for example, has identified Cuba as one of its potential sources for Covid-19 vaccines.

Cuba is developing four Covid-19 vaccines

But in all likelihood, Cuba will want to charge a healthy mark-up, especially given the difficulty its economy is presently facing.

With the UK’s AstraZeneca selling its vaccine at close to cost price at about US$3 per shot (and requiring two shots) the Cuban vaccine will want to be in that range if possible. It would not do the country’s image much good if its vaccine were to be in the US$20+ range, as this would put it in the league of the profit-driven American producers.

The first Cuban vaccine to undergo testing was the Sobrena 01 in August, followed by the Sobrena 02 in November. Since then two other Cuban vaccines are currently under testing…  the Mambisa and Abdala vaccines.

Mamibisa is especially interesting, as it will be delivered nasally. Sobrena 02 is set to begin the third phase of clinical trails in March –with more than 42,000 participants.

Vaccines coming up

Cuba is said to be the only Latin American country currently developing COVID-19 vaccine candidates. It is reported that it expects to produce 100 million doses of its Soberana 02 this year, and that it intends to be the first country to vaccinate its entire population starting with one million people in April.

Israel, the UAE and the United Kingdom have already gotten a major head start, with the UK already vaccinating more than 11 million people – or more than the entire population of Cuba.

BOOST IN THE ARM

If Cuba pulls this off, and is able to offer the developing world an effective vaccine, it will be a major feather in its cap. And if it is able to charge a small premium and still offer a great price, it could go a long way to protecting the Cuban economy, while saving lives.

This could be a boost in the arm, not just for the Cuban economy, but for the Cuban socialist system.

Cuba calls the US embargo a blockade

Bizarrely, if Cuba is successful, it will be largely due the American embargo — called the blockade by Cuba — which forced the country to rely on itself and to become self-sufficient in its bio-technology and health care industries. And it will be the American embargo that ended up ensuring the continuation of Cuba’s socialist dictatorship, rather than achieving its dismantling.

Meanwhile, thanks to its natural control of its borders, the country has handled the coronavirus very well, with about 33,500 confirmed cases and only 244 deaths — less for example than the 350 deaths in neighbouring Jamaica with its population of 2.8 million people.

Maybe, a successful vaccine will not only be a boost in the arm for Cuba and its economy, but could also help to protect the island’s socialism for years to come. Maybe the pandemic and Cuba’s answer to it, will allow the country to continue to shout “Socialismo o muerte!” for at least a few more years.

Sunny days ahead for Trinidad de Cuba?

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