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Cuba’s Shifting Allegiances

Cuba’s Shifting Allegiances
Media Center, Image AUGUST 6, 2015 | 16:17 GMT

On July 1, Obama made the official announcement that the United States
and Cuba were to re-establish diplomatic ties. This political thaw marks
the most recent chapter in Cuba’s economic and political history, one
that since the mid-20th century has been characterized by the fostering
of ties with external patrons that have their own strategic interests in
the island nation.

The Cuban Revolution of 1959 dramatically shifted Cuba’s economic
structure away from a capitalist economy integrated with that of the
United States. With the revolution came the nationalization of the Cuban
economy, sweeping land reforms and radical wealth redistribution. The
Cuban government took control of virtually all major economic activity
in the country, even to the point of confiscating foreign — and
particularly Western — businesses operating on its soil, including the
extremely powerful U.S.-based United Fruit Company. At the same time,
the new Cuba became closely dependent on the Soviet Union for key goods
such as oil and food.

With the collapse of the Soviet Union in 1991, Cuba lost one of its
major economic patrons. The highly subsidized oil shipments it had been
receiving from Russia fell 86 percent from 1989 to 1992, and food
imports from Russia dropped more than 40 percent in the same period. But
Cuba eventually found a new economic patron in Venezuela, whose
left-wing government under President Hugo Chavez began sending
subsidized fuel shipments to Venezuela as the Soviet Union had done.

Even with the political transition from Fidel to his brother Raul Castro
in 2008, which brought limited economic reforms, the state continued to
play a dominant role in an economy that remained largely closed off to
the United States. But the death of Hugo Chavez in 2013 and rising
political and economic instability in Venezuela over the past two years
have once again endangered Cuba’s primary economic patron, which in part
explains the latest major development trend in Cuba’s political and
economic evolution: renewed diplomatic ties with Washington.

Thanks to the diplomatic thaw, the Cuban tourism sector is on the rise,
and Cuba’s economy is projected to grow 4 percent this year, largely
driven by the construction and agriculture sectors. That is almost four
times its growth rate in 2014, the fastest climb Cuba has seen since 2008.

Source: Cuba’s Shifting Allegiances | Stratfor –

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