East Germany’s bitter lessons for Cuba Those looking forward to a happy new capitalist age may find themselves disappointed

There can be no doubt that Cubans are angry and frustrated. Economically, their country is suffering from an existential crisis to which there is no obvious solution, exacerbated by the pandemic which caused its tourism industry to grind to a near-halt. Around 75% fewer international arrivals were registered last year, and recovery in 2021 has been sluggish.

Unlike other countries, Cuba has not been able to borrow money or receive any form of international aid to deal with the pandemic. Pressure from successive US governments has ensured that the island is still excluded from organisations such as the IMF, which has agreed to help the neighbouring Dominican Republic with an aid package of US$650 Million. Unaided and isolated, the Cuban authorities watched on helplessly as the national economy contracted by a painful 11% last year.

People who work in the private sector were particularly affected by the Covid-induced downturn. Since reforms in 2011 allowed an expansion of the non-state economy, around one million Cubans left state employment, some 15% of the workforce. As self-employed workers in jobs that were often tied to the tourism industry, they suffered a disproportionate hit and fell through the cracks of government support systems, a problem witnessed in many other countries too. The salaries of those employed in the majority state-owned sectors were also reduced but they are safe and include at least rudimentary health and social care packages.

It is therefore reasonable to conclude that the July protests were driven and fuelled by those Cubans who had moved into the private sector and would like to see it expand, and in particular open up to the US (including American tourists).

But this protest movement is not necessarily representative of the Cuban population as a whole. There were also widespread counter-demonstrations, which ranged from outright pro-government marches to processions celebrating the old symbols of the Cuban revolution, including images of Che Guevara or the flag of Fidel Castro’s “26th of July Movement”.

It is part of a struggle for the soul of the nation that has been ongoing for decades, a question that can be as important as mere economic questions. Castro and his revolutionaries received widespread popular support during and after the revolution of the 1950s largely because they successfully portrayed their actions as a struggle for independence, not socialism. Cuba Libre is more than a drink to the nation – the famous toast to national independence predates the Castros and socialism by over 50 years and it will likely outlast them too.

However, even if Fidel Castro painted an image of the revolution as a struggle for independence, he could not fulfil this ambition once he was in power. A US trade embargo was introduced in 1960 and continues to this day, making it the longest lasting in modern history. The embargo bans all American enterprises and even foreign ones active in the US from trading with Cuba, isolating the island from commercial interaction with the West. While the aim may have been to isolate Cuba, it drove the state into the arms of communist allies, particularly the Soviet Union, which in turn demanded political loyalty.

The island nation cannot produce everything it needs by itself and so became reliant on communist support for anything from paper to bicycles — and when the Soviet Union collapsed in 1991, Cuba suddenly found itself entirely cut off. Its exports dropped by 61% and imports fell by 72% — staggering figures given that this included basic supplies such as medicines and food. The Cuban economy lost around $28.6 billion between 1989 and 1992, marking the beginning of the so-called “Special Period”, a term for the crisis used by the government to suggest transience.

When I travelled to the island in 2005, toilet paper was still rationed to three sheets at a time in public places. The family I stayed with in Havana had none at all, and resorted to installing a bidet instead. There were long queues in front of shops whenever deliveries of staple goods such as eggs or cooking oil arrived. The situation is so bad that, year on year, the UN passes a resolution to stop the blockade due to its humanitarian consequences. Year on year it is vetoed by the US.

Yet while life is undoubtedly dire, it does not mean that all Cubans want an unbridled opening to the West, as the exiles would have it. On my own travels, I was amazed to find the streets deserted when Fidel Castro broadcast a speech. When I tried to ask my own hosts why they were glued to the TV for hours when the aging revolutionary made an appearance, I was unceremoniously shushed. They later explained that it was a family tradition. I must have raised a questioning eyebrow, which was met with a shrug and the explanation that they “had always done it”.

I visited Cuba in the first place because I was born in a socialist country myself, and having seen its transition to capitalism in a haphazard and abrupt manner, which brought as much unemployment and economic devastation as it brought freedom and private enterprise, I was curious to see a state that was taking its time. Back then, some parts of the economy were being privatised; now constitutional reforms are taking speed under the first non-Castro head of state, Miguel Díaz-Canel.

If the East German model of selling a nationalised economy into the private sector is anything to go by, Cubans ought to be cautious. The GDR, too, began the process in a structured manner by setting up an agency, the Treuhandanstalt, whose task it was to transition around 8,500 state-owned companies into the private sector. Hopelessly out of its depth with the mission to de-nationalise the economy, the Treuhand let the step-by-step privatisation deteriorate into a bargain-basement sell-out, which cost 2.5 million employees their jobs — over half of the workforce of the companies it was responsible for.

The result was that in Germany the former East was already off to a very bad start in 1990. Having lost not only their living, but also part of their identity and sense of self-worth, millions of former GDR citizens did not look forward to reunification, democratisation and freedom but became resentful and disaffected. To this day, East Germans are far more likely to vote for the fringe parties of Alternative fur Deutschland on the Right and Die Linke on the Left than their West German counterparts.

More damning still, this trend towards political extremism is most prominent among younger voters who were only born after the fall of the Berlin Wall. In the former East German state of Saxony-Anhalt, one in five young people voted for the AfD in local elections earlier in the year, the highest rate of all age groups. This is not a problem of political culture but has deep roots in the botched process of transitioning the East German economy.

For Cuba, this process is far more risky. The East German economy had not only been the most stable among the Eastern Bloc nations but could also bank on the financial support of the powerful West German economy, which it was joining. As an isolated island nation with a feeble economy, Cuba has not got such options. If it wants financial aid, it will have to pay for it with its independence and adapt fully to the American system.

I doubt that Cuba’s soul-searching can go on for much longer. It is unlikely that the US embargo will be lifted for anything less than a complete opening up of the island’s economy to capitalism. The Cuban government will come under increasing external pressure to speed up economic reforms, as well as from a disgruntled population who long to have goods on shelves.

Miguel Díaz-Canel is the first Cuban leader to have been born after the revolution, and he is not ideologically wed to its ideals in the way that the Castro brothers were. Whether under him or one of his successors, the temptations and pressure to break the country’s isolation and wed it to the Western economy will prevail in the end. But Cuban leaders would do well to look to the missed chances and often disastrous outcomes in East Germany, Russia and elsewhere — because their country may be next.

---

Katja Hoyer is a German-British historian and writer. She is the author, most recently, of Beyond the Wall: East Germany, 1949-1990.

hoyer_kat