“Support” or “subversion”? US backing for Cuban entrepreneurs

“Support” or “subversion”? US backing for Cuban entrepreneurs

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For more than 60 years, diplomatic and economic relations between the United States and Cuba have been effectively frozen in time.

Other than a short period of détente in the latter months of Barack Obama’s administration, swiftly and sweepingly rolled back under Donald Trump, the two countries’ relationship has changed little since its schism in the 1960s.

Despite expectations that incumbent US President Joe Biden would return to efforts at thaw, which began during his vice-presidency under Obama, progress toward substantive normalisation of relations has been limited beyond loosening some restrictions on travel and remittances.

In recent weeks, though, a flurry of headlines has raised the possibility that, perhaps, change is in motion.

Following Cuba policy plans published a little over two years ago, on 28 May the US Treasury Department unveiled a package of changes intended to benefit the island nation’s growing private sector.

Cuban business owners will be allowed to open accounts with banks in the United States, along with liberalisations of access to US-based internet services and payment platforms.

Another State Department notice a week earlier indicated that Cuba has also been removed from the US’ list of states not fully cooperating in counterterror efforts (separate from the more punitive State Sponsors of Terrorism list, which the country remains on at this time).

These new measures, on an initial reading, might seem like a tentative step towards cultivando una rosa blanca, Rolling Stones concerts, and visions of an end to the last vestiges of the Cold War in the Americas…

So, are these latest changes a signal of a more constructive, engaged relationship?

In 2024, after decades of both imposed commercial restraints and endogenous economic malaise, Cuba finds itself in the midst of perhaps the worst crisis its entire modern history.

Electricity blackouts are rife, water shortages plague the island, staple foodstuffs and fuel cost a huge portion of the average monthly salary, supplies of basic medicines are running out, and the island’s monetary scenario, following bungled reforms in 2021, is despairingly complex.

All that has led to a mass exodus of Cuban citizens. Since 2022 at least 4% of Cuba’s population has emigrated, mostly via irregular routes – arriving at the Mexico-US border via the Central American mass migration corridor, or attempting to reach Florida on improvised boats.

With immigration a key pressure issue ahead of November’s US presidential election, that huge flow is a problem for Biden. Indeed, the US President has issued an executive action to limit asylum applications at the southern border just this week.

However, at the same time as this acute economic and migration crisis, Cuba’s private sector is enjoying rapid growth.

Since late 2021, for the first time since their abolishment in 1968, Cuban citizens have been allowed to incorporate private, limited companies as micro, small and medium enterprises (MSMEs).

Over 11,000 MSMEs have since been created, with the private sector now accounting for around 15% of GDP and 35% of employment, per figures in Cuban state organ Granma.

These businesses are engaged in virtually all kinds of commercial activity – manufacturing, construction, technology, food and drink, retail and more.

Many have expanded strongly, despite challenging limitations on their access to investment, credit, hard currency, export markets and many internet services, whether due to the effects of the US’ sanctions and trade embargo, known in Cuba as el bloqueo, or the boundaries of Cuban law.

Their work is helping to solve critical problems: offering alternative sources of food supply, repairing and renovating the country’s crumbling architecture, or helping make use of scarce fuel more efficient, for example.

US officials put forward that measures designed to benefit the implementation of such solutions by the private sector, like those announced last week, will help to improve conditions for all Cubans on the island, alleviating poverty and thereby also helping to stymie migration flows.

Why, then, has Cuban President Miguel Díaz-Canel called the US Treasury’s amendments “subversive”?

Government-to-government, US-Cuba relations still remain unquestionably frosty. The top US policy line is to “support the Cuban people,” explicitly distinct from their government and sanctioned officials.

Responding to last week’s announcement, Díaz-Canel wrote on X that US concern for the development of private business is not “genuine,” arguing instead that new measures are aimed at the “manipulation and use” of the sector as a “potential agent of change” in Cuba.

Meanwhile, Foreign Minister Bruno Rodríguez decried a lack of change to el bloqueo or Cuba’s designation as a state sponsor of terrorism – both harmful measures, hitting Cuba’s trade and tourism – and similarly alleged that the new measures aimed to “create divisions in Cuban society.”

Those divisions are no mere fabrication: while the vast majority of Cubans continue to live in extreme poverty, Cuba’s business owners have emerged rapidly and visibly as a new socioeconomic class.

Thanks to their laudable entrepreneurial accomplishments, they often live relatively comfortable lives, many residing in Havana’s leafy suburbs, and are able to afford premium imported food and goods. That divergence is likely to be only accelerated by greater US backing.

In a society where socialist government has, at least nominally, promised egalitarianism for over six decades, these newly arising dynamics of class and, ultimately, capitalism, are piling ever more pressure on the Cuban Communist Party.

Landing at a time of heightened tension in Cuban society – with the eruption of rare mass protests just in March – these new measures show that, for the US, the line between support and subversion in Cuba has perhaps never been more blurred.

Much still hangs in the balance in the development of Cuba’s nascent private sector. The prospect of a return of Donald Trump to the White House, given the nature of Cuba policy during his previous tenure, makes its future all the more uncertain.

 

Freddy Nevison-Andrews

Freddy is Canning House’s Press and Communications Manager. He joined the organisation in 2019. His Master’s thesis, ‘A Cuban E-volution, for Business?’ (2023), examined the Cuban private sector’s use of the internet and digital tools.