Succeeding on the margin

Last week, Anita Snow, an AP reporter who spent ten years working in Havana, wrote a fantastic piece about returning to Cuba and how things are changing for average Cubans. The entire piece is great and worth reading. What really caught my attention, however, was how the Cubans she quoted spoke about the reforms of the last few years and the possibilities created by the recent rapprochement with the United States. All of them talk about the new economic opportunities open to them and how they think their lives can continue to improve. This stands in contrast to many opponents of the new policy position toward Cuba here in the United States as well as many prominent dissidents, who focus much more heavily on issues of political rights and democratic transition.

This is certainly not to say that those issues aren’t important. Cuba’s status as an open dictatorship with a completely closed political system remains a stain on the Americas, not least because so many prominent democratic politicians openly fawn over Fidel Castro and the Cuban Revolution. Nevertheless, I think it’s very likely that right now, most Cubans are far more concerned with the potential economic benefits of reform than they are about political ones. Moreover, helping generate a sustained improvement in the material living standards of Cubans is a much more achievable goal from the perspective of US policymakers than a democratic transition. The negative effects of the embargo on Cuba’s economy are probably overblown, but allowing US citizens and companies to travel, work and invest in Cuba will almost certainly be a net benefit for the Cuban economy, improving the livelihoods of Cubans. In contrast, the current arrangement is a net negative for the Cuban economy and Cuban livelihoods, yet also has done nothing to generate a political transition, or even superficial moves.

There a definite value to human rights activists and dissidents in Cuba fighting for a political opening above all else. And in a perfect world, Cuba would be well on its way there. However, treating that as the price of entry for Cuba to have economic and political relations with the United States makes perfect the enemy of good. Cubans end up poorer than they otherwise might be, and still stuck living in an oppressive dictatorship. US policy toward Cuba needs to be geared to improving the lives of Cubans within the current constraints, while working to bring about the eventual political opening.


¿Pendejo, jalabolas o ideólogo?

Once again today, the Venezuelan government held a press conference in which major economic announcements were expected, specifically, related to the foreign exchange system. Unsurprisingly to anyone paying close attention to Venezuela since Hugo Chávez died in early 2013, the big announcements amounted to little more than a renaming of the existing system of extensive and complicated capital controls. This included some minor tweaks and a small devaluation and a new “free” rate where people are allowed to sell as many dollars as they want, but limited to buying $300 at a time.

Many people are interpreting this as proof that either Nicolás Maduro and those advising him have no idea what they’re doing or that they’re being overruled by factions within chavismo that benefit from the distortions caused by the current forex system. Outside of the hardcore chavista intelligentsia–who have spent much of the last year attacking Maduro from the left–, there is little consideration to the possibility that Maduro and his advisors are genuinely committed ideologically to these policies and believe that the orthodox reforms most people expect them to implement sooner or later will be counterproductive. This is not to discount the fact that there are definitely powerful members of the government who benefit personally from the current system and are fighting to keep it for reason of personal gain. Nor is it to argue that the current course has any real chance of creating a sustainable, productive Venezuelan economy. It is simply to argue that it’s worth considering it as a possible motivation for Maduro’s decision-making since it could inform how his government behaves in the future.

In his book A Failed Emprie: The Soviet Union in the Cold War from Stalin to Gorbachev, Vladislav M. Zubok notes that one of the most striking things in the declassified minutes from Politburo meetings all throughout the Cold War is the degree to which the leadership in the Soviet Union genuinely believed in Soviet ideology and how reluctant they were to abandon or even modify it. This includes even Gorbachev who was genuinely committed to reforming the Soviet to better fulfill its founding principles and ideologies, not to introduce proto-capitalism.

Similarly Fidel Castro is arguably much more ideological–and consequently, less cynical–than many give him credit for. For example, once the economy had stabilized following the collapse of the Soviet Union, he began rolling back many of the limited market reforms that had been implemented during the Special Period. Moreover, during the 1970s, Cuba maintained its support of lefitst insurgencies in Latin America and Africa, even though it alienated him from the Soviet Union, upon whose protection his government depended.

Of course, Nicolás Maduro and his advisors being ideologically committed does not preclude them from also being incompetent. Nor does any amount of ideological commitment change the simple reality that people respond to incentives and that the Venezuelan political economy creates countless incentives to exploit arbitrage opportunities and few incentives to produce goods and services. Nonetheless, why Maduro is making the decisions he makes matters, both for the opposition and others, because it informs how he might react to new stages of Venezuela’s economic crisis. A Maduro who is ideologically committed might react differently than one who is beholden to the interests of the enchufados or one who is simply too stupid to think of any new course of action.

Losing the war he invented

Last night, I floated on Twitter a question about how many long Nicolás Maduro can blame Venezuela’s troubles on an economic war waged against him before his supporters come to believe that he’s too weak to succeed in winning it. Obviously this question rests heavily on the assumption that there are a good number of Maduro supporters who believe that Venezuela really is the victim of some sort of vast conspiracy, and not just the predicatble consequences of poor policy decisions over the past 15 years. Recent surveys, however, indicate that one in five Venezuelans still supports Maduro and reporters have to problem finding people to interview in the now-ubiquitous grocery store lines who at least claim to believe his claims, so there is at least a bit of a constituency.

The threat in this propaganda line for Maduro isn’t really in the opposition so much as within the chavista coalition. Few people who support the opposition are likely to believe that the problem is anything other than the government anyway. However, things are different among chavistas who continue to believe that chavismo is a path to prosperity. For these people, the country’s continued economic malaise might not demonstrate the failure of the model so much as show that Maduro is too weak to protect the gains brought by Hugo Chávez. This is exacerbated by the fact that the policies Maduro has selected to fight the economic war–currency and price controls, taking over producers and distributors, etc–will mostly only contribute to the problem, whatever positive optics they might give. If anything, those positive optics (fighting contraband on the border, taking over stores, seizing “hoarded” inventories) might simply cast into starker relief how little those efforts are doing to alleviate the shortages and inflation wracking the Venezuelan economy right now.

So what happens if the loyal chavista base decides that Maduro is too weak to win the war he says he’s fighting? The conspiracy-minded might say that this is the machiavellian plan of some high ranking officials who have allowed–or even encouraged–Maduro to founder while enriching themselves off the distortions, only to swoop in and save the day once the situation starts to risk chavismo’s hold on power. Whether that’s someone’s plan or not, any clear-eyed people close to Maduro must be concerned about what happens if the chavista base ends up in the streets protesting. Considering how openly authoritarian the government has become in recent times, it seems difficult to believe that the opposition would be able to end up in power, at least immediately.