Why Cuba Needs The US

Joshua Jelly-Schapiro focuses on the island’s troubled economy:

A big part of the calculus informing Cuba’s new openness to the U.S., though, is about economic necessity. With Cuba’s birth rate having fallen below replacement level as far back as 1980 (partly thanks to Cuban women’s universal access to reproductive health and abortions), and its work force shrinking, the country’s vaunted health system faces pressing concerns about how it will care for the huge number of citizens readying to retire. Simply put, Cuba’s economic planners realized long ago that their socialist system couldn’t survive without more sources of foreign cash.

Francisco Toro connects the US-Cuba deal to falling oil prices:

The reason is that the considerable help Venezuela sends Cuba is in the form of barrels, not dollars. As oil prices fall, the value of Venezuela’s aid falls. In the final quarter of last year, Cuba’s state finances began to look worse and worse.

He calculates that it would “take some 480,000 extra tourists next year to make up the fiscal hit just from the recent drop in oil prices”:

The only other plausible source of extra revenue on this scale is remittances from the Cuban exile community in Miami and beyond. This is a dicier proposition, as the money relatives send creates a space for independence from state control that Havana’s old-line Stalinist leaders clearly fear. But in an economy that’s still as thoroughly state-controlled as Cuba’s, there’s little doubt that remittance money “trickles up” from individual pockets to the state, as people spend their foreign currency in the state-owned “convertible peso” shops that have a monopoly on the sale of a whole range of consumer goods, from PCs to refrigerators.

Which is why Havana negotiated for — and got — much looser rules for remittances from stateside Cubans. The new limit quadrupled to $2,000 per year and the licensing regime was greatly simplified.

Reviewing a new paper on remittances, Drezner considers how that money might change Cuba:

Multiparty elections are the key mechanism through which remittances can affect democratization. It doesn’t matter if these elections are neither free nor fair, just that they happen, and the dominant party can be surprised by weak electoral support. So, a key U.S. foreign policy goal should be for Cuba to allow for multiparty elections, even if they seem like sham elections at the outset.