Cuba: capitalist restoration by the ‘Russian road’?

In recent days, a series of public announcements have been made about Russian investments in Cuba. "They are giving us preferential treatment, the path is clear," declared Boris Titov, the head of the Russian delegation at the closing of the Cuba-Russia Business Economic Forum. The conditions offered to Russian capitalists are very favourable to them: 30-year land concessions – longer than those that have been in place until now – tax exemptions on machinery imports, and the repatriation of profits.

But this is not all. The Russian capitalists – led by the oligarch Titov, whose official title in Russia is Commissioner for Entrepreneurs' Rights – are demanding more, as reflected in a report by the Russian news agency Interfax on 19 May. In the report, Titov himself, after welcoming the conditions already offered, makes it clear:

“But we would like to see new measures as well. The issue of tax preferences, an independent personnel policy of Russian employers in Cuba, including the right to freely hire and dismiss employees, and preferential access of Russian companies to public procurement of the Republic of Cuba (for a separate list of goods) has not yet been resolved. We hope that in the near future there will be progress on these issues, and the whole range of preferences will be enshrined in law."

Read this carefully! When he says “tax preferences”, it should read “pay few or no taxes”. When he says “independent personnel policy”, it means avoiding the current system in which foreign companies hire their staff through the Cuban state (which keeps part of the income). One of the most serious points is when Titov and the Russian capitalists demand the “right to freely hire and dismiss employees”; that is, they demand free hire and fire, with no rights for the workers. And finally, when the Russian Business Ombudsman speaks of “preferential access to public procurement”, he means that the Cuban state’s contracts should be only – or preferentially – given to Russian companies, thus guaranteeing them business. And all of this should be “enshrined in law”.

These are draconian conditions. To put it bluntly, they are the kind of conditions that an imperialist country – which Russia certainly is, albeit within limits – would want to impose on a dominated country.

Concessions to capitalism

The first thing to say on this topic is that Cuba has the right to trade with whomeverwants to trade with Cuba. It is scandalous that the gusano counter revolutionary press is now crying foul and presenting itself as the defender of Cuba's sovereignty, when they are the ones who would like their homeland to once again be crushed under Washington's boot.

However, from the point of view of the Cuban working class – and from the point of view of workers and revolutionaries internationally – it is essential to question these and other measures taken by the Cuban government, which represent concessions to capitalism and the market, nationally and internationally. Do they serve to defend the Cuban revolution? Are these concessions necessary? Are they the way out of the serious economic crisis that the island is facing? 

The economic situation in Cuba is very serious. There is no doubt about it. The causes of this situation are many – both structural and circumstantial – as we have already explained in detail elsewhere. It is the result, on the one hand, of the imperialist blockade, the isolation of the revolution in a backward country, the impact of the pandemic, the crisis in Venezuela and the intensification of the imperialist stranglehold under Trump (which Biden has largely maintained). On the other hand, there is also the bureaucracy, corruption and waste that are a consequence of the above, but which exacerbate the situation. This is not an in-depth analysis, but an enumeration of factors.

The economic situation in Cuba is very serious / Image: Radio Cadena Agramonte

This situation has led to worsening shortages, inflation, desperation and an erosion and deterioration of the gains of the revolution in the fields of healthcare, housing and education. This has left many with a lack of prospects, leading to mass migration, and other problems.

A Cuban comrade told me a few days ago: 

“The economic and social situation is so desperate and serious, it has deteriorated so much that I would even be happy if at least retail trade, through foreign investment, was expanded by Russian and Chinese shops… There is a total shortage, zero, there is nothing. And there is no hope of improvement, which is the worst part of it all.”

In the face of such a grave situation, are these measures justified? Did the Bolsheviks under Lenin (and Trotsky) not apply the NEP, some say?

Indeed, concessions may be necessary to attract investors and revive the economy. How many concessions and how far can be discussed. But Lenin never put forward the NEP as a panacea, as the miracle method to “liberate the productive forces”. The Bolsheviks clearly explained that it was a step backwards, a dangerous concession to capitalism that carried great risks.

As a result, the Bolsheviks implemented a series of measures to counteract the impact of the NEP. These included strengthening the state monopoly of foreign trade, bolstering workers' power and the struggle against the bureaucracy, as well as waging an ideological battle to arm workers and peasants with the perspective of international revolution.

Applying the lessons… of counter-revolution?!

Instead of this, the perspective that seems to be being put forward in Cuba is one of going down the road of China and Vietnam. This road, let us be clear, led to the restoration of capitalism, the brutal increase of social inequalities and the extreme concentration of wealth and capital in a few hands, as well as the destruction of many of the gains of the revolution in both countries.

Or, worse still, going down the Russian road to capitalist restoration. In some of the recent meetings between Russia and Cuba there has been talk of learning and applying the lessons of the Russian economy to the Cuban economy! In another Interfax report in January this year, it was announced that:

“During a meeting in Havana between Cuban President Miguel Diaz-Canel and Boris Titov, Commissioner for Entrepreneurs' Rights of the President of Russia, head of the Russia-Cuba Business Council, a decision was made to jointly establish a ‘Centre for Economic Transformation’, which will prepare economic transformations in Cuba based on the development of private enterprise.

“The joint expert centre will include, on the Cuban side, representatives of key ministries and the Central Bank, and on the Russian side, experts from the Stolypin Institute for Growth Economics, the Centre for Strategic Research and the Russian Institute of Economic Forecasting.”

“Economic transformations in Cuba based on the development of private enterprise” – read this well. What is proposed is to use the Russian model to transform the Cuban economy. 

After the collapse of the Soviet Union, Titov mysteriously emerged as the owner of a dominant company in the lubricants and solvents sector / Image: Пресс служба Президента Российской Федерации, Wikimedia Commons

The restoration of capitalism in the Soviet Union was a total disaster – a catastrophe from every point of view: political, social, cultural, but also economic. The economy suffered a brutal contraction that led to a general collapse in living standards, an unprecedented drop in life expectancy, etc. This was in addition to dismantling all the social benefits which the USSR guaranteed, despite the Stalinist and bureaucratic nature of the regime. 

Incidentally, this process is the clearest answer to those who once argued that the USSR was ‘state capitalism’ and therefore contained nothing to defend, since capitalist restoration would not be a “step backwards”, but a “step sideways” from one type of capitalism (‘state’) to another (‘private’); a differentiation upon which, according to them, the working class should not take sides against. Unfortunately, it seems that there are some socialists in Cuba today who claim that what exists on the island is ‘state capitalism’, a theory that disarms revolutionaries and prevents them from defending the gains of the revolution.

The chaos of capitalist restoration in Russia, directed and encouraged by the advisers of world capitalism, was accompanied by the looting of state property, a violent process in which former CPSU bureaucrats became owners of the means of production, controlling enterprises, energy concessions, etc. Through mafia methods, and the physical elimination of business opponents, a process of capital accumulation took place, in which a handful of oligarchs emerged to take control of the Russian economy. The working class paid and continues to pay a heavy price for this. 

Defend the revolution! No capitalist restoration!

Perhaps in Cuba some in the bureaucracy think they have something to learn from that process. From how former ‘Communist’ Party leaders (Yeltsin, Chernomyrdin, Chubais, Putin himself) became powerful businessmen, managers and political operators in the new capitalist Russia. 

Stolypin sought to implement capitalist economic reforms to revive the economy of the Russian Empire while at the same time using the most brutal measures to crush the workers' movement / Image: public domain

Boris Titov's own career is a case in point. He was formerly a senior official in the Stalinist regime (linked to the export of petrochemicals) and a director of a Soviet-Dutch joint venture. After the collapse of the Soviet Union, after just two years as a director in that state enterprise, he mysteriously emerged as the owner of a dominant company in the lubricants and solvents sector. 

A staunch advocate of economic liberalism and a prominent conservative politician, he founded the Stolypin Institute. The Institute takes its name from Tsarist Prime Minister Pyotr Stolypin, who during his term of office from 1906 to 1911, sought to implement capitalist economic reforms to revive the economy of the Russian Empire while at the same time using the most brutal measures to crush the workers' movement, which had just been at the centre of the 1905 revolution. 

If the Cuban working class and other working people have anything to learn from the capitalist restoration in Russia, it is the fact that it was an unmitigated disaster for the workers. It is not by chance that Titov's boldest statements have not been reproduced in the Cuban press and must be sought in the Russian press. 

It is urgent to open a debate in Cuba on these questions and to say loud and clear: workers' democracy and proletarian internationalism are the only way to defend the gains of the revolution against imperialist encirclement and the world capitalist market, and also against any attempt to restore capitalism by the Chinese or Vietnamese (or worse, the Russian) road.

Here is the full text of the Interfax article in English:

‘Titov: Russian investors plan to develop some 30 new projects in Cuba, including UAZ assembly’ (19 May 2023)

[Original in Russian]

About 30 manufacturing projects are planned to be developed by Russian investors in Cuba, reported the press service of Russian Presidential Commissioner for the Protection of Entrepreneurs' Rights Boris Titov, who is also head of the Russia-Cuba Business Council.

“On the sidelines of the intergovernmental commission, the forum ‘Russia-Cuba Business Dialogue’ was organised by our business council. 46 Russian companies took part in it. And if before the forum our portfolio consisted of 11 investment projects, after the forum it was about 30” –the press service quotes the words of the business ombudsman after the meeting of the intergovernmental commission on trade, economic, scientific and technical cooperation between Russia and the Republic of Cuba, held on Thursday in Havana.

According to Titov, they discussed, for example, the organisation of the assembly of UAZ vehicles in Cuba, the sale of Russian-made cars, and the creation of a service centre for their repair and maintenance.

“Projects were worked out for the construction of a solar power plant, the reconstruction of light industrial enterprises, the organisation of the production of building materials, flour, juices, alcoholic beverages, the processing of soybean and sugar cane cake, which is especially important for the Cuban economy, in exchange for supplies of mineral fertilisers from Russia," the commissioner said.

They also discussed joint ventures to develop various hotel and tourist projects. "We can already see concrete ways of opening restaurants, first in Havana and then in other Cuban cities. Of course, the topic of interest for almost all participants in the Business Council is the establishment of a Russian-Cuban trading house. This could really be a decisive step in the supply of Russian products to the Cuban market. Of course, there are logistical problems, we must work on reducing freight costs, bringing Russian and Cuban ships online," Titov said.

He also referred to digitalisation. According to him, Russia has a lot of experience in creating digital superservices, which help entrepreneurs to contact both the state and each other with minimal effort. “This applies to business registration, tax payment and all kinds of financial services. The Cuban side has confirmed its willingness to adopt such products. Moreover, the specialists of the bilateral centre of experts on the transformation of the Cuban economy, created with our participation, believe that digitalisation can become a driver of market reforms, help Cuba reduce the movement of dollars in cash and the shadow economy in general," Titov said.

The commissioner noted that the Cuban authorities are ready to grant special conditions to Russian entrepreneurs: long-term land leasing, duty-free import of agricultural machinery and support for a trading house.

“But we would also like to see new measures. So far the issue of tax preferences, the independent personnel policy of Russian employers in Cuba, including the right to free hiring and release of employees, preferential access of Russian companies to public procurement of the Republic of Cuba (for a separate list of goods) have not been resolved. We hope that in the near future there will be progress on these issues and the whole set of preferences will be enshrined in law," Titov concluded.