Figure 1.-- These enthusiastic Cuban Militia boys with their trade-mark guajiro straw hats are pictured leaving Cuba on a Soviet ship, probably during 1961. Our guess is that they did not get to wear them much in Russia. The boys had been awarded scholarships to study in the Soviet Union. Unlike the children heading in the opposite direction to America, we know very little about these boys. Cuban refugee children in America are among the most sucessful immigrant groups. We at this time know very little about the program of studies for these boys in the Soviet Union or how they fared in Cuba after they returned. Perhaps some of our readers will know something avout them. Unfortunately, the Cuban Government allows few of its people access to yjre internet so we do not receive comments from Cubans.

The Soviet Union provided massive military and economic aid to Cuba. The Soviets did not engineer Castro's successful revolution nor were Communists the main support. But Castro's turn to the Communists promoted by his brother Raúl and Ernesto 'Che' Guevara was a propaganda bonanza. At the time many around the world still believed that Socialism and Communism were a superior economic and political system and Cuba provided the Soviet Union a perfect show case to demostrate the superority of their system. And to make sure that that their show case suceeded, they not only provided massive military aid, but even more extensive economic assistance. This effort began under Primier Khrushchev who makes it very clear in his memoirs that he saw it his duty as a devouted Communist. [Khrushchev, pp. 488-505.] Much of the Soviet ais to Cuba was in the form of long term loans The over all level of Soviet aid is not entirely clear, but a good deal is known about it. Soviet aid to Cuba may be the largest aid package to any developing country. And the Soviets ordered their Eastern European satellites to aid Cuba as well. The East Germans were particulsrly active. Cuba was made a member of The Soviet Council for Mutual Economic Assistance (COMECON/CEMA). Given the small Cuban population must be the largest level of aid percapita ever attempted in a developing economy. If Communism was to work anyehere, it would surely be in Cuba. The problem for the Soviets is that their economic policies and Castro's mismanagement turned what had been a very affluent Caribbean island with very high percapita income, perhaps the highest in Latin America, into a poverty stricken island. There were shortages of virtually every consumer product. Store shelves were bare. When I visited in 1980, there were even shortages of rice and chopsticks in Chinese restaurants. This was hardly the kind of Communist show case that the Soviet had intended. Cuba became essentially a show case for Communist economic failure, in much the same way that East Germany failed in comparison to West Germany and North Korea failed in comparison to South Korea. The Soviet answer to this was to increase economic aid. Cuba and the Soviet Union signed a $35 billion, 5-year economic deal (1980). The deal essentially meant a continuation of the Soviet bailout of the Cuban economy, estimated at $7 million a day. Press report suggested that it was 50 percent increase over the aid level of 1976 to 1980. It would prove to be the high point of the Soviet aid effort to Cuba. The problem for the Cubans and Soviets, was that their Communist policies and economic planning actually destoyed wealth rather than creatd it. Not uncommonly, the output of Soviet and Cuban factories was actually worth less than the raw material inputs that went into them. In essence, the nore Soviet economic policies were implemented in Cuba, the more aid was needed to support that economy. The 1980 agreement covering the period through 1985 was the high point of Soviet aid. After that the failing Soviet economy could no longer support such high levels of aid. One has to ask what was the impact of the massive Soviet aid program. As far as we can tell, there was no lasting economic impact. The Cuban economy is today still based on exporting raw materials (nickel) and agticultural products (sugar and tobacco) as well as tourism--precisely the same as before Castro. There has been no meaniggful progress in developing a modern economy. Not only was the aid ineffective if not actually harmful, but the loans massive loans would never be paid off. And the Cuban economy today survives on very limited market reforms and aid from Venezuela in the form of oil deliveries, totaling some $2-3 million annually. The only important difference is that Cuba is now among the poorest countries in Latim America rather than one of the wealthiest. One rmarkable conclusion from all of this is Castro's sussccess in getting other countries to pay the bills for his failed economic policies.

Cuban Revolution

The Soviet Union provided massive military and economic aid to Cuba. The Soviets did not engineer Castro's successful revolution nor were Communists the main support.

Soviet Cold War Show Case

Castro's turn to the Communists promoted by his brother Raúl and Ernesto 'Che' Guevara was a propaganda bonanza. At the time many around the world still believed that Socialism and Communism were a superior economic and political system and Cuba provided the Soviet Union a perfect show case to demostrate the superority of their system. And to make sure that that their show case suceeded, they not only provided massive military aid, but even more extensive economic assistance. This effort began under Primier Khrushchev who makes it very clear in his memoirs that he saw it his duty as a devouted Communist. [Khrushchev, pp. 488-505.] Given the small Cuban population must be the largest level of aid percapita ever attempted in a developing economy. If Communism was to work anyehere, it would surely be in Cuba.

Level

Much of the Soviet aid to Cuba was in the form of long term loans The over all level of Soviet aid is not entirely clear, but a good deal is known about it, at least the economic aid. The military aid was also substantial, but kept secret. Soviet aid to Cuba may be the largest aid package to any developing country.

Soviet Eastern European Empire

And the Soviets ordered their Eastern European satellites to aid Cuba as well. The East Germans were particulsrly active. Cuba was made a member of The Soviet Council for Mutual Economic Assistance (COMECON/CEMA).

Central Problem

The problem for the Soviets is that their economic policies and Castro's mismanagement turned what had been a very affluent Caribbean island with very high percapita income, perhaps the highest in Latin America, into a poverty stricken island. The problem for the Cubans and Soviets, was that their Communist policies and economic planning actually destoyed wealth rather than created it. Not uncommonly, the output of Soviet and Cuban factories was actually worth less than the raw material inputs that went into mamufacturing them. In essence, the more Soviet economic policies were implemented in Cuba, the more aid was needed to support that economy.

Results

There were shortages of virtually every consumer product. Store shelves were bare. This was hardly the kind of Communist show case that the Soviet had intended. Cuba became essentially a show case for Communist economic failure, in much the same way that East Germany failed in comparison to West Germany and North Korea failed in comparison to South Korea

Personal Visit (1980)

I visited Cuba in 1980 as part of the U.S. delegation to an Food and Agriculture (FAO) sponsored fisheries conference. It was an eye opening experience. In between meetings I was able to move around Havana, albeit with security surveilance. People I spoke with thoughtI was East German because of my fair complexion. It was like going back in time. Cuba was like a car museum, all the 1950s cars I remenber from my boyhood. The country did not hve the money to import new cars. So anyone who had a car at the time of the Revolution (1959) was managing to keep their cars going. The atmosphere was unlike anywhere else I had experienced in Latin Ametrica. From Mexico south to the Southen Cone, down-town market areas in cities and villages were a vibrant calcopphony of loud-speaker musics, crowds, cars blowing horns, people moving, a hawkers selling. None of that in Havana. Down town Havana was dead as a doornail. No music, movement, or selling. In facr when you went inyo stores there were empty shelves and shortages of virtually everything. Goods worth having were rationed. There were even shortages of rice and chopsticks in Chinese restaurants. This was before private individuals were allowed to open small resturants. Toilet paper was in especially short supply. Guests at the internationl hotels were issued a roll when thy registered and had to make do with it. And in the windows, there were not only prices afixed to goods, but the ration cupons needed to buy them. Curiously, in just about every shop window I passed, not matter what kind of sore, there were inexpensive black, plastic fedora hats and no ration cupon was needed. I did not understand this at the time. But I now realize what had happened. Soviet official had ordered all its Eastern European empire to aid Cuba. This was done by provoding goods to th Cubans. Apparently the Bulgarians had sent a huge shipment of these hats, but Cubans did not want them. So every store in Cuba (all goverment-owned) was given an allotment of these hats to sell. Another interesting observation was occassionl signs on privately owned homes--'For Trade". Individul could own homes if they were not too big. But if they needed to move, they did not want to sell them. Pesos has no real value. There was little to buy in the stores and anything worth buying required ration cupons. So home owners were only willing to trade, not sell their homes. School boys around the hotels begged for pencils and pens because they were virully unobtainable in Cuba.

Increased Aid (1980)

The Soviet answer to this was to increase economic aid. Cuba and the Soviet Union signed a $35 billion, 5-year economic deal (1980). The deal essentially meant a continuation of the Soviet bailout of the Cuban economy, estimated at $7 million a day. Press report suggested that it was 50 percent increase over the aid level of 1976 to 1980. It would prove to be the high point of the Soviet aid effort to Cuba. The 1980 agreement covering the period through 1985 was the high point of Soviet aid.

Soviet Reassment (1985)

After that the failing Soviet economy could no longer support such high levels of aid. General Secretary Gorbechev began efforts to rationlize the Soviet economy. And one are he looked at was aid to Cuba which was achieving no real success. One secret CIA report indicated, "The USSR appears to be tightening up on economic assistasbce to Cuna, forcing Havana to reshape its economic policies, but no signs of fundamental changes in the reltionship are evident. Soviet economic aid un the form of trade subsidies [commonly paying hiher than market prices for sugar and other Cubn exports], prject aid, and trade defecit financing have declined from an estimated peak of $4.7 billion in 1982 to about $4.4 billion in 1984. Any hopes tht Hvana may hve held for increased Soviet generositu were squelched at the meeting of the CEMA heads of government last November, when Moscow said it would increase neither economic aid nor oil deliveries when the durrent five-yea pln expires at the end of this year. The Soviets also insited thst Cuba begin meeting targets for exports to CEMA nations on hich it has fallen short in recent years. To fulfill CEMA quotas for sugar this year Havana already has had to buy on the world market to supplement domestic production. Meeting CEMA goals for exports will limit Havana's eamings of hsrd cirrency from trade with the West." [U.S. CIA. Special Analysis]

Cuba after the Soviets

One has to ask what was the impact of the massive Soviet aid program. As far as we can tell, there was no lasting economic impact. The Cuban economy is today still based on exporting raw materials (nickel) and agticultural products (sugar and tobacco) as well as tourism--precisely the same as before Castro. There has been no meaniggful progress in developing a modern economy. Not only was the aid ineffective if not actually harmful, but the loans massive loans would never be paid off.

Cuba Today

And the Cuban economy today survives on very limited market reforms and aid from Venezuela in the form of oil deliveries, totaling some $2-3 million annually. The only important difference is that Cuba is now among the poorest countries in Latim America rather than one of the wealthiest. One rmarkable conclusion from all of this is Castro's sussccess in getting other countries to pay the bills for his failed economic policies.

Sources

Khrushchev, Nikita. Edward Crankshaw, intro, commentary, and notes. Strobe Talbott, trans. and ed. Khrushchev Remembers (Little Brown: Boston, 1970), 639p.

U.S. Central Intelligence Agency. Special Analysis: Holding Tight on Economic Aid (June 16, 1985).

Created: 4:35 AM 10/9/2014
Last updated: 6:55 AM 10/9/2014