Miércoles, 26 de Julio de 2017
01:56 CEST.
Economics

What would happen in Cuba if Maduro fell?

There are probably not many Cubans who are aware of the economic and social tsunami that the fall of the military regime in Venezuela could unleash upon them. They can't be. Reading Granma, Juventud Rebelde, and Trabajadores, and watching the nightly news and listening to Radio Rebelde, Radio Reloj and the rest of the radio stations in the country, it is impossible.

Of course, thanks to the new "counterrevolutionary" technologies, and to independent journalists, some Cubans are better informed, and can already spot a new "Special Period" looming on the horizon.

State media asserts that Nicolás Maduro is being harassed by terrorists and fascists organized by "the right" as part of a plot devised by Washington to crush the "Bolivarian Revolution." Those who are anesthetized by this propaganda will be the most shocked when chavismo ultimately collapses.

It is no longer feasible to sacrifice Maduro and replace him with Tareck el Aissami, Diosdado Cabello, Jorge Rodríguez or any other chavista higher-up. The time to do so ran out when they began massacring demonstrators in the streets. There have been almost 70 murders committed by the government, in public, since 2014. These are crimes whose perpetrators must be tried. They do not prescribe.

After Maduro, in Miraflores there can be no other chavista, however "moderate" and "pragmatic" they attempt to portray him. There will be a democratic government, provisional or definitive, and without colonial ties to Cuba. A legitimately Venezuelan regime.  

More cash than in the previous 206 years

Chavismo had the opportunity to diversify the economy and develop the country. Between 1999 and 2015 it received $960.589 billion for its petroleum, an average of 56.5 million per year, according to the consultancy Ecoanalítica. That amount is far superior to all the money generated by Venezuela in its 206 years of history, since its declaration of independence from Spain.

This not sufficing, Chávez, to get his hands on even more, and to continue squandering mass quantities of capital, ordered the issuance of 54.327 billion dollars in bonds by the Republic and the PDVSA, the State's petrol entity. Now broke, the country has to pay those Venezuelan bondholders (creditors) 110 billion until 2027, for interest and principal.  It also owes Russia and China. The debt to Beijing reached 60 billion dollars. The country is bankrupt.

Under el chavismo the total number of public employees shot up, from 900.000 to 2,4 million. And the PDVSA went from 40.000 employees to the over 145,000 it staffs today. Chávez used his fat wallet to buy political allegiances in Latin America and votes in the OAS And the UN, finance leftist electoral campaigns, and consolidate Latin American socialism. And also to prop up the unproductive Cuban economy, and launch social programs without investing anything in the country's socio-economic development. 

The worst part is that part of this fortune was stolen and deposited in foreign banks by members of the chavista leadership. Meanwhile, Venezuelans are suffering the worst existential crisis in their history, beleaguered by a government of malandros, as they call criminals, drug dealers, thieves and murderers there.

Many of them will end up in jail (even in the US). They know this, and are clenching the reins of power. They will never hand it over in an electoral process that they cannot control. In the elections of 2013 the winner was Henrique Capriles. Maduro governs thanks to a fraud cooked up in Havana. The official election result was 50,66% for Maduro and 49,07% for Capriles, but everyone in Venezuela knows that Henrique received more votes than Nicolás.

New elections in Venezuela would make sense if the National Assembly were allowed to exercise its functions, the members of the National Electoral Council and the Supreme Court of Justice were dismissed, people who are respectful of the Constitution were appointed, all political prisoners were released, and adequate international oversight were accepted, including the OAS and EU.

That is what the Venezuelan people are demanding. They know that only pressure from the street can change things. That is why they are out there today. They knows that only pressure on the street can cause a rupture in the Chávez leadership leading to real elections, or an intervention by military forces not linked to drug trafficking and the embezzlement of public funds.

Consequences for Cuba

For Castro Maduro's fall would mean the end of "21st-Century Socialism" and even the Sao Paulo Forum, the Communist/Castro international created in 1990 by Fidel Castro and Lula da Silva with a view to socializing all of Latin America. The chavistas' fall would leave the Cuban dictatorship politically and ideologically helpless, more isolated than ever, because the "socialist camp" would no longer exist.   

As for the economy, according to calculations by Professor Carmelo Mesa-Lago, Cuba's dependence on Venezuela is equivalent to 21% of the Island's Gross Domestic Product (GDP). This includes almost half of the deficit in the trade balance and 42% of Cuba's total foreign trade.

Caracas' subsidies to Havana amounted to, until recently, about 10 billion dollars a year. They have fallen to about 7 billion, according to a range of sources. This torrent of foreign currency, although diminished, constitutes one of the two great pillars of the Cuban economy.

The other is money received from the "empire" via remittances, packages and travel, in 2016 amounting to some 7 billion dollars. The Cuban economy depends on foreigners because the state's productive apparatus generates very little and only exports four products (sugar, tobacco, nickel and pharmaceuticals), worth less than 4 billion dollars. Tourism, in net terms, generates less than 1 billion.

The collapse of el chavismo would knock out one of the two columns underpinning the Castro economy. Until recently Cuba received 36 million barrels of oil per year from Venezuela, 61% of the nation's consumption (59 million barrels). Now it receives 19,3 million barrels (32,7%). The Island also re-exported gasoline sent from Venezuela or refined in Cienfuegos, for more than 720 million dollars annually. 

In short, with $7 billion less in cash, and without receiving 61% of the oil consumed by the country, it is time to ask Raúl Castro out of what hat he is going to pull the 3,7 billion that would be necessary just to buy the oil not sent by Venezuela, and import food.  

Foreign currency from the United States would not be sufficient to maintain even the precarious standard of living of Cubans, whose average salary of $24 is not even half that in Haiti ($59). In response to the reassuring arguments of the regime's economists that a suspension of ties with Venezuela could be weathered without trauma, I can think of three questions: How? Are they counting on subsidies from China, Russia, Iran or Algeria? Is the European Union, Japan, Canada, Singapore or Australia going to give them money? 

These questions lead to another: what can the regime do to prepare for such a socioeconomic tsunami?  Everyday Cubans have the answer: General Castro and his military junta must stop trampling on the economic liberties embodied in the Universal Declaration of Human Rights, such as private property, and having businesses of their own that can grow without state obstacles. And they must be able to export and import, and invest capital in their own country. Foreign investment must be facilitated. And farmers must be able to own their land, and sell their crops freely.

That is, the regime must liberate the Island's productive forces and foster a thriving private sector. Otherwise, there will be another "Special Period," and Cuba might end up resembling China during Mao's "Great Leap Forward," which almost destroyed the country

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