STRATFOR ANALYSIS

US investment in Cuba will reinforce the military

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First of two parts

THOUGH Cuba is on the edge of a political transition, the Revolutionary Armed Forces (FAR) will play a major role in post-Castro Cuba. The United States and Cuba have made diplomatic strides toward reconciliation, and recent economic changes have enabled American businesses to increase their investment in the island. The tourism sector in particular will experience a boost in revenues, and state-owned companies run by the military will also benefit. First Vice President Miguel Mario Diaz-Canel Bermudez, a civilian, is formally set to take over the presidency in 2018. However, as US investment in the country increases, the military’s integration into the economy will ensure that it maintains its power.

Following the diplomatic thaw between Cuba and the United States, US President Barack Obama loosened economic restrictions on Havana, increasing the amount of money that could potentially flow to the island. Americans currently send $2 billion to Cuba in the form of remittances each year, but new changes will allow individuals to send up to $2,000 per quarter to family members in Cuba, up from $500 per quarter. American banks are also now allowed to process credit card transactions from Cuba, a move that enables Americans who travel to the island to use their credit and debit cards. Furthermore, on March 24 the US Office of Foreign Assets Control made changes to the Cuban Assets Control Regulations, which restrict Cuban business and travel to the island. The changes removed dozens of Cuban companies connected to tourism and shipping from the sanctions list. Obama’s actions have strengthened the US’s negotiating position by demonstrating the economic impact that is possible, even without a formal lifting of the US embargo.

While the White House has taken steps to take pressure off Cuba, the actual embargo is likely to remain in place for some time. Also, opposition to an outright repeal of the 1996 Cuban Liberty and Democratic Solidarity Act, more commonly known as Helms-Burton, runs high in the US Congress. The law requires Cuba to transition to a free and fair democracy, conditions Havana is unlikely to meet. Nevertheless, further economic and diplomatic measures such as re-establishing embassies are possible in the near future.


Before June, the US State Department will complete a review that could result in Cuba’s removal from the list of state sponsors of terror — one of Havana’s demands for restoring diplomatic relations. In fact, US Under Secretary of Commerce for International Trade Stefan Selig and US Assistant Secretary of State for Western Hemisphere Affairs Roberta Jacobson recently commented that the decision could come before then. Even without a complete lifting of the embargo, US executive actions have the potential to dramatically increase the amount of money in the Cuban economy over the coming years, money that would invariably increase the economic power of the Cuban FAR.

The military and the economy
First Vice President Diaz-Canel would take over for President Raul Castro if he were unable to complete his term in office, and Diaz-Canel is expected to succeed Castro as president when he steps down in 2018. Diaz-Canel is a civilian and one of the first major leaders of the Cuban Communist Party to rise through the organization after the revolution. Fidel Castro wore his dual roles as a civilian and military leader interchangeably, and as the long-standing general and defense minister, Raul Castro has relied on his brother and his relationship with the military for legitimacy. The imminent succession, therefore, will not only mark the beginning of the first non-Castro in power since the 1959 takeover, but also the first transfer of formal leadership to a clearly civilian head of state.

Nevertheless, the military will retain a role in the governing institutions of the country. Nine of the Politburo’s 14 members are uniformed military, as are five of the seven Council of Ministers members. The FAR is the most developed national institution, and it has generally been well-respected for its military competence and historically sound relationship with the population. Much of the direct economic power of the state lies with the armed forces, and the military will be an integral part of post-Castro Cuba.

To be concluded tomorrow

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