Globalization, Cuban-Style?

Globalization, Cuban-Style?







Renee G. Scherlen
Department of Political Science
Appalachian State University
Boone, NC 28608
scherlenrg@appstate.edu






Prepared for delivery at the 2003 meeting of the Latin American Studies Association, Dallas, Texas,
March 27-29, 2003

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I
Introduction

The 1990s brought a decade of challenges to Cuba. 1989 was the last year of a socialist world order
that Cuba had participated in since the 1960s; the collapse of the Soviet Union and the eastern bloc
created a political and economic crisis. The Cuban government responded with numerous economic
measures in this time referred to as the ASpecial Period in Time of Peace.@ These policies continued
beyond that period of crisis. Much of those economic reforms can be viewed as an reintegration of
Cuba into the non-socialist world economy. But, is Cuba=s Ainsertion@ into the capitalist world economy
a process of globalization? Most analysts would agree that the Cuban experience is not Atypical@
globalization; however, does it represent a Cuban variant on this international trend? This is the question
this paper seeks to answer.

This essay approaches the question of globalization, Cuban-style, from the perspective of a case study.
That is, does the empirical evidence in Cuba support the assertion of a Cuban variation of the
globalization process? Thus, the paper begins first with an assessment of the differing definitions of
globalization. After weighing the various qualities of commonly held understanding of globalization, a
specific definition is selected for application to the Cuban case. Second, the essay turns to a brief
review of the changes within the Cuban system since 1989, focusing especially on those economic
changes that have typically been identified with globalization both in Cuba and in other countries. Third,
this is followed by an evaluation of the situation in Cuba, not in terms of the Asuccess or failure@of the
reforms but rather in terms of assessing if these changes fulfill the operational definition of globalization
presented. The paper concludes with an exploration of why Cuba presents such a unique case in the
realm of globalization.

This essay argues that Aglobalization, Cuban-style@in not globalization. The reasons why globalization is
not occurring in Cuba emanate from both internal and external factors. Thus, globalization, or even a
variation, cannot occur until changes take place in Cuba=s close and influential neighbor the United
States and within Cuba itself.

II
Definitions: What Is Globalization?

Globalization is a recently coined term. The word begins to arise in theses, dissertations, and working
papers in the late 1970s and early 1980s: the first monographs with globalization in their titles appeared
in the late 1980s. As a result of its novelty, there is no clear, concise, commonly agreed upon
definition. Some seek to describe a process: globalization is seen as A[s]hrinking space, shrinking time

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Globalization, Cuban-Style 3

and disappearing borders ... linking people=s lives more deeply, more intensely, more immediately than
ever before.@ (UNDP, 1999: 1) Many definitions give economics a prominent position. For instance,
the International Monetary Fund (IMF) states that globalization Arefers to the increasing integration of
economies around the world, particularly through trade and financial flows.@ But, the IMF also notes
that A[t]he term sometimes also refers to the movement of people (labor) and knowledge (technology)
across international borders [and there] are also broader cultural, political and environmental dimensions
of globalization@. (International Monetary Fund, 2000)

In Globalization: A Critical Introduction, Jan Scholte attempts to categorize the various definitions of
globalization found in the literature. He argues that most definition of globalization fall into one of five
general meanings: internationalization; liberalization (economic); universalization; westernization
(especially Americanization); and, deterritorialization. Definitions that fall into the first category,
internationalization, essentially view globalization as increasing interactions across state borders.
Interpretations that come under the second group, liberalization, equate globalization with a set of
neoliberal economic policies that have dominated international economics since the 1980s.
Universalization explanations interpret globalization as the spreading of objects and experiences to all
parts of the world. The fourth type, westernization/Americanization asserts that globalization is
synonymous with the imposition/adoption of western and/or American customs, practices, and
methods. Finally, there is a set of conceptualizations of globalization that focus on deterritorialization or
a Areconfiguration of geography@so that social, political, and economic space is no longer Awholly
mapped in terms of territorial places, territorial distances, and territorial borders.@ (Scholte, 2000: 15-
16)

Scholte convincingly argues that the first four categories of definitions are Aredundant@ (Scholte, 43-50).
All of those definitions describe processes that predate the rise of the word Aglobalization@. Why
would a new word arise if it were merely describing an old and well-established process? Only the last
type of definitions, those that stress deterritorialization (or supraterritoriality, as Scholte presents it),
constitutes a new conceptualization that captures the globalization process as a new trend. Thinking of
globalization as Adeterritorialization@ enables one to express the Aspace-time@ compression and
disappearing borders frequently noted in the globalization literature in a systematic manner.
Furthermore, it applies to all of the types of Aflows@ (people, capital, goods) that are often the subject
of assessments of globalization. Aspects of transborder simultaneity and instantaneousness figure
prominently in this conceptualization of globalization. So, the assessment of Cuban changes will take
place from the perspective of Adeterritorialization.@ Are conditions in Cuba reflecting the growth of
supraterritoriality in new and distinct ways that constitute a variant on this global phenomena: is there
really Aglobalization, Cuban-style@?



III
Transforming Cuba B The Special Period and Beyond

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Globalization, Cuban-Style 4

Much has been written on the Cuban situation following the collapse of the Soviet Union.1 Therefore,
this paper will be confined to briefly noting the key features of the crisis as well as a general outline of
the policies adopted to confront this disaster. The beginning of the 1990s presented circumstances that
were indisputably devastating for Cuba. The start of the decade marked the demise of the Council for
Mutual Economic Assistance (CMEA), the end of Soviet subsidies, and the end of socialism in Eastern
Europe, all more or less simultaneously. This Atriple blow@ was disastrous for various reasons. First, in
1989, over 80% of Cuba=s total trade was with socialist economies (Monreal, 1999: 21).
Furthermore, in 1989 foreign trade (essentially with the socialist bloc exclusively) accounted for Aaround
half of the national income@ (Hamilton, 2002: 23). Even more ominously, about two-thirds of Cuba=s
food, almost all of its petroleum, and A88% of its machinery & spare parts@ had been coming from the
socialist economies, all at preferential terms of trade, and often even underwritten by Soviet aid.
(Hamilton, 2002: 23)

Thus, the abrupt end of the CMEA, the curtailing of Soviet assistance, and the disappearance of

1 See, for instance, Cuba Today and Tomorrow : Reinventing Socialism by Max Azicri
(Gainesville, FL: University Press of Florida, 2000), Cuban Transitions at the Millennium edited
by Eloise Linger and John Cotman (Largo, MD: International Development Options, 2000),
Development Prospects in Cuba : an Agenda in the Making edited by Pedro Monreal (London:
Institute of Latin American Studies, School of Advanced Study, University of London, 2002),
Cuba's Second Economy : from Behind the Scenes to Center Stage by Jorge F. Pérez-López (New
Brunswick, NJ: Transaction Publishers, 1995), Cuba and the Caribbean: Regional Issues and
Trends in the Post-cold War Era edited by Joseph S. Tulchin, Andrés Serbín and Rafael
Hernández (Wilmington, DE: SR Books, 1997), as well as two editions of Latin American
Perspectives focuses on the Cuban Revolution in the 1990s and beyond, AThe Cuban Revolution
Confronts the Future, Part 1 and Part 2" Latin American Perspectives, Issues 124 and 125, Vol 29,
No. 3 and No. 4 May 2002 & July 2002.

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Globalization, Cuban-Style 5

socialist trading partners in Eastern Europe had profound economic consequences. In small part, the
impact of this transformed world can be seen in stark statistics: imports fell by 70% between 1989-
1993; industrial capacity fell to 15%, power outages resulted in long blackouts, shortages in consumer
and industrial products arose, as well as a substantial decrease in the sugar harvest. (Hamilton, 2002:
23) The contrast with previous decades is startling. Between 1959 and 1989, Cuban GDP grew at
average annual rate of 4.3%. In contrast, from 1990-1993 it declined by almost 35% (Susman, 1998:
187). Incredibly, others put the figure higher - at almost 50%. (Hamilton, 2002: 23)

The critical situation was further aggravating by US policies. The Cuban Liberty and Democratic
Solidarity (Libertad) Act (commonly known as Helms-Burton) greatly strengthened the economic
embargo against Cuba and moved aggressively to punish foreigners who did not participate in the
embargo against Cuba and Atrafficked@ in confiscated property. It was initially introduced in 1995, after
Republicans gained control of the House of Representatives in November 1994. It was signed into law
by 1996. Thus, Cuba faced not only the destruction of its existing economic support system but also a
worsening of the economic pressures placed upon it by the United States. Not surprisingly, the Cuban
government reacted with a wide variety of policies meant to Aresist@the circumstances by surviving the
economic hurricane.

As many have noted, the Cuban government responded in a pragmatic (and often uncoordinated)
manner to the economic and political circumstances thrust upon it.2 The actions of the Cuban
government can be divided into distinct phases. The first, from 1990-1993, can be seen as a type of
Cuban Astructural adjustment program@ (SAP). Although the policies were not adopted at the
insistence of the World Bank or the International Monetary Fund, they were very reminiscent of the
SAPs imposed on much of Latin America in the 1980s. In the main, the Cuban government placed
severe restrictions on domestic consumption and attempted to redirect economic ties to the capitalist
economies (save the United States, which rejected opening economic relations with the island). From
1993 to 1994, Cuba deepened its SAP approach while adding a dash of ACuban perestroika.@ Thus,
the government cut subsidies, raised public utility prices, began to charge for previously free services,
and engaged in price increases. Furthermore, it cut the size of the Cuban state. All of these measures
would have been applauded by the World Bank and the IMF. At the same time, a Arestructuring@A of
the Cuban economy began. This Cuban perestroika most notably allowed for official acceptance of
dollarized economy through the decriminalization of use of hard currency (the US dollar). At the same
time, state farms were transformed into cooperatives to increase food production by the introduction of
monetary/market incentives. And, the Cuban government authorized various forms of self-employment.

2 See, for instance, Ruben Berrios, AA Qualified Success Story@ in Problems of Post-
Communism, May/June 1997, Vol. 44, Issue 3, pg. 25-35, William M. Leogrande and Julie M.
Thomas, ACuba=s Quest for Economic Independence@in Journal of Latin American Studies, May 2002,
Vol. 34, Issue 2 pgs. 325-364, and Pedro Monreal, ASea Changes: The New Cuban Economy,@in
NACLA, Vol. 32, No. 5, March/April 1999.

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Globalization, Cuban-Style 6

In an effort to capture some of the revenue generated by these new economic ventures, the government
adopted a comprehensive taxation policy that included income tax (yet another policy near and dear to
the World Bank and the IMF). These policies not only responded to the changed circumstances of the
Cuban economy, they also appear to have learned something from the Soviet experience. Like the
Chinese, the Cubans did not couple perestroika with glasnost.
For students of globalization, it is the period from 1995 on that represents the most interesting phase of
Cuban economic reform. Some might argue that this marks the beginning of policies that created a
distinct Cuban approach to the globalization phenomena. A central piece is the modification of policies
and regulations governing joint ventures with foreign capital. Changes in Cuban law allowed for:
unrestricted repatriation of profits and dividends; 100% foreign ownership of property; guarantee of the
right to invest in real estate; the creation of export processing zones (EPZ); laws offering protection
against expropriation; and the opening of all sectors to foreign investment except public health,
education, and defense. Many are surprised to find that Cuba is an original member of the World Trade
Organization (WTO).


However, it would be erroneous to assume that the state ceased to play a role in economics, even in the
area of foreign trade and investment. Indeed, it would be safe to say that there was still a significant role
for the state despite legal changes to the Cuban system. For example, the Cuban government reviews
all applications for foreign investment. Furthermore, while there are no limits on repatriation of profits,
the Cuban government does tax net profits/income. Even more, the government requires foreign
enterprises to pay employment and social security tax contributions, which support the safety net that
still exists in Cuba today. But, it is undeniable that the changes after 1994 drew upon the constitutional
amendment of 1992 that eliminated absolute state ownership of all means of production and recognized
other forms of property.

So, how have the changes wrought by the government changed the Cuban economy? This is not meant
to be an assessment of the success or failure of the Cuban economy. Rather, the focus is on how the
economy was transformed, especially in terms if imports and exports, foreign direct investment, and
trading relations3. These, among other things, are criteria often examined when exploring the degree of

3As anyone who does economic research on Cuba knows, current data for this type of

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Globalization, Cuban-Style 7

globalization experienced within a country. A Asnapshot@of what is happening in Cuba is essential if one
is to ascertain if Cuba indeed is undergoing globalization.

To begin with, has Cuba changed what it exports to the world? The evidence is clear: a transformation
has taken place within the export sector. This change is notable for the decline in sugar exports linked
with a marked increase in other areas of exports. In 1990, sugar represented 80% of the total value of
Cuban exports. By 1999, it had declined to 31.7% of total exports. Increases were noted in mining
(from 7.4% in 1990 to 27.2% in 1999), tobacco (from 2.1% in 1990 to 13.9% in 1999), fishing (from
1.9% in 1990 to 6.7% in 1999) and Aother@ products (from 5.2% in 1990 to 17.4% in 1999). Even
more notable is the transformation from the exportation of goods (95.7% in 1990 down to 36.05% in
1999) to the export of services (i.e., tourism) (from 4.3% in 1990 up to 63.95% in 1999). (Monreal,
2002: 17-26)

Not surprisingly, given the circumstances that prompted the economic reforms, Cuba=s trading partners
are very different at the end of the 1990s compared to the end of the 1980s. Trade with Europe (both
East & West, inclusive of the USSR/Russia) constituted 87.6% of total trade in 1989. By 1998, it had
declined to 38.7%. Within the region, the transformed trade relations are particularly notable. When
looking at the USSR/Russia specifically, one finds that trade between these two countries accounted for
64.7% of the total Cuban trade in 1989. By 1998, trade between the two amounted to only 9.2% of
the total trade for Cuba. Because of the reunification of Germany, trade between Cuba and Germany
(both East and West in 1989) declined: from 5.9% in 1989 to 1.8%in 1998. This is a reflection of the
higher degree of trade within CMEA between East Germany and Cuba in the past. In terms of
AWestern@Europe, trade relations have steadily increased over the decade: trade with France has risen
from 0.7% in 1989 to 6.6% in 1998 and trade with Spain has grown from 2% in 1989 to 13.2% in

economic activity is frequently disputed. Therefore, I wish to clearly identify sources, as well as
acknowledge that the figures are open to counter evidence. The main sources of information in this
section are CEPAL Cuba: Evolucion Economica durante 2001, 6 de junio de 2002, ECLAC, Foreign
Investment in Latin America and the Caribbean, 2001, William M. Leogrande and Julie M. Thomas,
ACuba=s Quest for Economic Independence@ Journal of Latin American Studies, May 2002, Vol. 34,
Issue 2 pgs. 325-364, Development Prospects in Cuba: An Agenda in the Making, edited by Pedro
Monreal, Institute of Latin American Studies: London, 2002, UNCTAD Handbook of Statistics, 2002

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Globalization, Cuban-Style 8

1998. By 2003, trade with the European Union had grown to account for almost 40% of Cuba=s trade.
(Economist, 2003)

Diversification of trading partners has increased the role the Western Hemisphere plays in Cuban trade.
In 1989, the Americas (minus the United States) accounted for 5.6% of Cuban trade; by 1998, it had
risen to 35.6%. The most important trading partners within the Hemisphere are Mexico and Canada.
Asia has also grown in importance for Cuban trade: it accounted for 5.7% in 1989 but had risen to
15.5% by 1998.

Given the lack of capital flows from Eastern Europe and the former Soviet Union, as well as the need
for capital infusion to enhance competitiveness as Cuba seeks to insert itself into the capitalist
international economy, direct foreign investment was targeted by the Cuban government. Changes in
laws as well as the signing of bilateral trade agreements, accords with regional associations, such as
CARICOM, and negotiations with the European Union to join the Cotonou Agreement all meant to
stimulate the flow of capital into Cuba. Of course, family remittances and tourism dollars do contribute
to capital inflows. However, given the absence of credit and the need to import petroleum and food
stuff, Cuba clearly looks to direct foreign investment as a source of capital for development. UN figures
suggest that Cuba has increased foreign direct investment: in 1995, foreign direct investment in Cuba
equaled US$5 million. By 2000 this had increased to US$10 million in 2000. However, a comparison
with other still existing socialist economies suggest that this is not a large figure, globally. For instance,
direct foreign investment in China US$40.772 billion in 2000. Even Vietnam had larger direct foreign
investment, an amount of US$1.289 billion in 2000.

While Cuba sought to enter into the globalized production process through the creation of export
processing zones (EPZ), there has not been much growth in this area. The law was enacted in 1996; by
May 1997, 3 EPZs with a fourth planned. Since then, there has been no reported subsequent
expansion. (Willmore, 2000) This has not emerged as a significant economic component.

IV
Globalization, Cuban-Style?

Do the changes experienced by Cuba during the 1990s constitute globalization? As defined above,
globalization is understood as the rise in supraterritoriality B the creation of a new economic, political,
social, and cultural geography not structured by physical space. Evidence from statistics and
observations suggest that there is little to no Adeterritorialization@ underway in the links between Cuba
and the rest of the world.4


4 The observations here noted come from field research conducted by the author in Cuba
during May and June, 2002. While in Cuba, the author investigated such aspects as Internet access,
mass media, foreign presence, foreign products and other elements.

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Globalization, Cuban-Style 9

As the summary above notes, most of the transformation in government policy has been in terms of
economic policy. Furthermore, these changes are best understood as representing alterations in the
international economic connections between Cuba and the rest of the world. Prior to 1990, Cuba had
extensive economic ties with socialist economies in Eastern Europe and the Soviet Union. After 1990,
Cuba sought to create links with other countries. This policy represents, at the most, globalization solely
as increased internationalization (with regard to capitalist economies) as well as aspects of globalization
as economic liberalization.

Deterritorialization is the creation of connections not bound by physical territory. In a wide range of
spheres, this is absent in Cuba. Some of the areas most commonly associated with the this
deterritorialization are communications, travel, markets, production, finance, and governance.5 Thus,
one seeking to assess Cuban globalization would need to look at the deterritorialization of each of these
aspects in Cuba, as well as the changes noted above.

Communication. The degree of transborder communication, especially in terms of easy, quick, widely
available links to all points of the global, is uneven in Cuba. When examining both personal connections
as well as mass connections (such as global publications and electronic mass media), it becomes
apparent that deterritorialization has not been widespread in all areas. For instance, in Cuba phone
connections are still relatively limited, not consistently operational, and quite expensive. Likewise,
Internet links are not widely available to the general public; communication via electronic means is
slower than that experienced in other locations and expensive. International newspapers and magazines
are also not sold in neighborhood stores or even hotel lobbies. (Scherlen, 2002)
In contrast, US films are widespread. For example, as early as in 1993 US films accounted for just
over 40% of the movies shown in Cuba). US radio flows into Cuban air space (UNESCO, 1999).
While the signals are blocked in Havana (targeting, especially Radio Marti and TV Marti), outside of the
city car radios pick up a variety of signals from the US. (Scherlen, 2002)

5 See, for instance, the Rise of the Network Society by Manuel Castells (Malden, MA :
Blackwell Publishers, 2000), and Global Transformations: Politics, Economics, and Culture by
David Held, et al (Cambridge: Polity Press, 1999), as well as Globalization: A Critical Introduction
by Jan Scholte (Hampshire: Palgrave, 2000).

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Globalization, Cuban-Style 10

The presence of satellite/cable television is more ambiguous. While Cubans rarely have satellite/ cable
hook-ups in their homes,6 hotels frequently show foreign TV in their bars and restaurants. Thus,
Cubans who work in these tourist locations are able to watch this television openly.

Travel. Since tourism is a major industry in Cuba, global travel offers the potential for one area in which
deterritorialization may take place. However, circumstances dictate that this too is not the same
transborder experience as found elsewhere. Legal restrictions mean that one of the most ubiquitous
indicators of transborder flows B the American tourist B is not a common sight in Cuba. Likewise,
travel restrictions in place by the Cuban government mean that relatively few Cubans travel beyond
Cuba=s own borders. Furthermore, the dual economy in place in Cuba creates a boundary between
those who travel to Cuba and those who live in Cuba. While casa particulares offer an opportunity for
travelers to live with Cubans, much of the tourist trade is with traditional travelers who stay at
internationally-managed, joint venture hotel chains. So the globalized aspect of travel is one
predominantly experienced by the tourist: a trip that typically envolves staying at a place that could be
>anywhere= exotic (hotel amenities are all standaridized), as are the planned excursions into the >local,
exotic= surroundings.

Markets. Even in the economic realm, where the Cuban government has been changing its regulations,
deterritorialization does not truly exist. Globalization implies global markets, with global brands, and
global sales strategies. The US embargo, though, precludes Cuban participation in much of this
process. Global brands such as Wal-Mart, McDonalds, and Starbucks do not dot Cuban streets
(unlike, say, in China).7 Some global brands are present B Coca-Cola and Reebock for instance.
However, these items are sold in dollar stores, where merchandise can only be bought in this foreign
currency. Their penetration into Cuba is limited to those who own US dollars. The dollarized dual
economy creates a barrier which restrains the flow of these products through out Cuban space.

Likewise, Cuban brands encounter substantial barriers to their flow outside of Cuba. In a globalized
economy, identity must flow across borders without barriers. Brands must be supraterritorial. While
the Cuban cigar Cohiba is arguable a global brand, it faces US government regulations which stop it
from entering into the world=s largest consumer market. This creates obstacles to benefitting from Cuban

6 I encountered only one household that had a cable connection; in their case, it was from an
illegal split in the cable from their neighbor who was a foreigner working in Cuba.
7 From a personal perspective, this is not necessarily a bad thing!

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