The imperialist Helms-Burton law and the myth of Cuban socialism

by Mark, Detroit
(from Communist Voice #10, Oct. 1, 1996)

. This past winter, Clinton gave his blessings to a bill co-authored by Republican reactionaries Jesse Helms and Dan Burton that tightens the U.S. economic embargo against Cuba. This bill is another rotten chapter in imperialist bullying of Cuba. Ever since the toppling of the U.S.-backed Batista regime in 1959, the U.S. has been trying to restore its lost domination over the island. Meanwhile, the revolution in Cuba died long ago. Castro and the other Cuban rulers adopted the signboard of "socialism" but actually consolidated a state-capitalist order under the wing of the now-defunct social-imperialist Soviet Union. The ruling bureaucrat-capitalists in Cuba have, especially since the collapse of the Soviet bloc, moved toward more "market-style" reforms. In fact, Clinton and Helms's efforts to strangle Cuba come at a time when the Castroite rulers are greatly widening the opportunities for world capitalism to exploit Cuban labor and resources. But Cuba's opening to the world market doesn't satisfy the Clinton administration. It wants a Cuban government that knuckles under to the whims of U.S. imperialism and it wants the votes of the right-wing Cuban exiles. To accomplish this, now it is even willing to irritate other capitalist powers who are upset at Helms-Burton's measures to punish anyone in the world who invests in Cuba.

The Helms-Burton Bill

. Clinton came to power claiming he would change the hard-line policy of the Reagan-Bush administrations toward Cuba. But little has changed. During the 1992 campaign, Clinton began his groveling in front of the reactionary exile group, the Cuban-American National Foundation, which rewarded him with $120,000 in campaign funds despite the group's general sympathies for the Republicans. Even before this February's downing of the planes of the reactionary Cuban exiles by the Cuban government, Clinton was trying to reach a deal with the Helms-Burton backers. After the planes were shot down, however, the administration cast aside its previous misgivings about certain provisions of the bill and paved the way for a vast bipartisan majority in Congress to pass the bill.

. The bill's purpose is to help ruin the Cuban economy and thereby force the ouster of the Castro regime in favor of a "transitional government" that meets the approval of the White House and Congress. The bill explicitly states that a condition of lifting the embargo is a new government which does not include Fidel Castro or his brother, Raul. To this end, the bill makes all previous embargo measures back to the Kennedy administration into laws which only Congress can change. Previously, various features of the embargo could be removed at the discretion of the president. Thus, to placate the right wing, Clinton has allowed one more roadblock to be set up in the way of ending the U.S. embargo.

. The most noteworthy new measures of the Helms-Burton bill are those against capitalists of other countries who "traffic" in property formerly owned by U.S. businesses prior to the Cuban revolution. "Trafficking" is defined as buying, selling, transferring, profiting from, or improving former U.S. properties. The owners of such properties and their families are barred from legal entry into the U.S. As well, the bill allows the former U.S. owners to bring suit in U.S. courts against the "traffickers". Thus, the bill attempts to make foreign firms operating outside the U.S.subject to U.S. laws and courts.

. The "trafficking" provisions were the basis of Clinton's former rejection of the bill and the administration still has great qualms about them. It frets over retaliatory measures against U.S. capitalists, as any serious attempt to enforce a U.S. lawsuit against a foreign multinational operating outside the U.S. would risk a legal and trade confrontation the administration does not want. The response from world capital was quick. From the European Union to Canada, from Japan to Latin America, the capitalist governments have condemned the measures, and some promised counter-suits in their own courts and other forms of retaliation.

. In response, Clinton is straddling the fence on enforcing the "trafficking" provisions of Helms-Burton. The administration is enforcing the measures against travel in the U.S. by "traffickers" but is using loopholes in the bill that allow it to delay implementation of the lawsuit provisions. Though the bill allowed Clinton the option of postponing the right to bring lawsuits, Clinton declared this provision in effect. But he has also decided to not actually allow any lawsuits to begin until well after the November presidential elections. In this way, he hopes to score points with the right-wing exile community in the elections while trying to smooth things over with friendly capitalist powers. In any case, the overall economic blockade would not immediately be affected.

Disagreement among the bourgeoisie

. With Clinton and Congress trying to placate the right-wing on Cuba, another section of bourgeois opinion is critical of this policy and wants an easing of the embargo. They do not want the embargo lifted because they are interested in alleviating the suffering of the Cuban masses. Rather, they believe that U.S. imperialism can best push its agenda in Cuba if there is an opening. They object to the right-wing bullying on the grounds of expediency. They point out that 30-plus years of embargo have not brought down Castro and allow Castro to cement his power by playing on the sentiments of the Cuban masses against arrogant U.S. threats. As well the bourgeois embargo opponents note that there is no viable organized force in Cuba that could presently challenge Castro. Thus, they hold that U.S. interests in Cuba are best served by having U.S. corporations inside the country, even while Castro is still around. They know that U.S. corporations entering Cuba will be a source of U.S. political influence there.

. The bottom line for the bourgeois opponents of the hard-line policy is, well, the bottom line. They see the corporations of other countries setting up shop in Cuba and reaching trade deals. They worry that the U.S. companies will be frozen out. This view is expressed, for instance, by Wayne S. Smith, a prominent bourgeois commentator on Cuba who was U.S. ambassador there from 1958-61. In an article in Foreign Affairs of March/April 1996, Smith concludes that the Cuba embargo "complicates relations with America's most important trading partners while denying U.S. companies any share of the Cuban market. The latter is not large, but a recent trade study estimated that the United States and Cuba could quickly be doing some $7 billion a year in business." (1) In another article in the same publication, Pamela S. Falk, Staff Director of the U.S. House of Representatives Western Hemisphere Subcommittee, notes that corporate giants such as GM, Bank of Boston, Sears and major hotel chains have been on scouting expeditions to Cuba. AT&T wants to participate in the multi-billion dollar privatization of the Cuban telecommunications system. The article quotes the CEO of the Ingersoll-Rand construction corporation stating "The embargo is a waste of taxpayer dollars and time" while his counterpart at Archer Daniels Midland claims not to "know a corporate CEO who thinks excluding U.S. business is a good idea, particularly when all of Western Europe is down there." (2)

. While it is undoubtedly true that many capitalists do not like the present policy on Cuba, it does not automatically follow that the embargo will quickly fall. For one thing, the embargo has long had widespread appeal among the U.S. bourgeoisie overall, which does not trust the Castro government to look after their interests no matter how many concessions it gives to foreign investors. For another, there is a question of whether the corporate interest in investing in Cuba is strong enough for them to force the capitalist politicians like Clinton and Dole to forgo political expediency and look "weak on communism". (After all, the bourgeoisie spent decades building up anti-communist hysteria against Cuba.) In the case of the huge potential of the China market, the U.S. bourgeoisie did not allow their usual hysteria against the so-called "communism" there to stop economic relations. But the Cuban market does not have anywhere near the same importance to overall U.S. imperialist interests as does the China market.

. Of course, the embargo against Cuba is not just opposed by corporations who want to conquer the Cuban market, but by progressive activists who oppose various hardships imposed on the Cuban masses by the embargo and the efforts of the U.S. to strangle Cuba. But it would be a big mistake for activists to think that the lifting of the embargo will solve the main problems of the Cuban masses. This requires not only opposition to U.S. bullying but opposing the Castro regime and the state-capitalist order in Cuba. Indeed, an end to the U.S. embargo means the beginning of the U.S. multinationals sharing in the plunder of the Cuban toilers. The anti-embargo section of the U.S. of the U.S. bourgeoisie opposes the pro-embargo section from the standpoint of what policy best serves imperialism. Activists who want to stand with the Cuban masses must oppose the embargo as part of a stand against the exploitation of the masses by Cuban state-capitalism and the foreign corporations it welcomes in.

Castro gives a wide opening for foreign capitalist investment

. Despite its socialist signboard, Cuba has for a long time been a state-capitalist system. But the fact that the Castro government has been pleading with the foreign multinationals to pour into Cuba is a vivid exposure of the class nature of the Cuban social order. Just as other revisionist regimes in the Soviet Union, Eastern Europe and China sought a way out of their economic woes through capitalist "market" reforms and opening up to Western capitalist investment, so now are the Cuban rulers. Castro, of course, claims that he is inviting the foreign firms in to help save Cuban "socialism". But in Cuba, too, what is happening is that the state-capitalist forms are giving way to more naked capitalist measures. The last few years have shown Western investment and market reforms in the former revisionist countries have not solved the economic woes of the masses, much less having anything to do with socialism. Rather they have generally lowered living standards and increased the gap between rich and poor.

. But Castro is doing all he can to turn Cuba into a haven for the capitalist exploiters of the world. A law enacted in 1995 enables foreign corporations to own outright enterprises in almost every sector of the Cuban economy. Prior to this law, foreign capitalists were allowed to own 49% of Cuban enterprises, but in practice, the government allowed majority foreign ownership. The Cuban revisionist rulers have bent over backwards to make foreign enterprises profitable. There are generous tax policies, ease in remittance of profits out of the country, and foreign employers are exempt from the normal labor codes. The government even agreed to pay for the construction and infrastructure of facilities to entice foreign investors to participate in new and already-existing ventures. (3) In the tourism sector, an area of heavy foreign investment, the Cuban authorities boast that there is a 100% return on investment within five years. Such high returns are verified by even the critics of Castro.

. Among the forms of partnership between the Cuban enterprises and Western capitalist investors are debt-equity swaps. Cuba began borrowing heavily from the Western imperialist countries in the 1970s and the debt crisis grew acute in the 1980s with Cuba unable to meet its debt payments. To solve this problem, the Castro government, like other poor nations buried in debt to the more powerful capitalist countries, has begun to turn over its state enterprises in return for debt relief. For instance, a Mexican firm got part of a billion dollar Cuban textile enterprise under a deal where part of the export earnings of the joint venture go toward reducing debt to Mexico.(4)

. As a result of these policies, an estimated five billion dollars of direct investment has already come to the island. (To get a rough idea of the size of that in Cuban terms, consider that the gross domestic product was about $14-15 billion in 1992.) According to one source, by 1993 there were about a hundred joint ventures. (5) Foreign investment in the tourist industry has played a major role in tourism outstripping sugar, Cuba's traditionally dominant main export, as a source of gross income and hard currency. (Shrinking levels of sugar production in recent years are another factor.) (6)

. Among the bigger investment deals is the $500 million commitment of the Canadian company, Sherritt International, to engage in oil exploration, cobalt and nickel mining, the sugar industry and other areas. In the tourist sector, foreign investors include Spain, Canada, Germany, Japan, the Netherlands and Colombia. U.S. hotel magnate Donald Trump has declared himself anxious to get in on the action. All told, some 1,300 U.S. business executives have met with Cuban officials though actual deals are presently blocked by the U.S. embargo. These meetings have produced a number of non-binding agreements, reportedly as large as $10 billion, which is huge by Cuban standards. Though these deals are non-binding, they not only indicate the interest of U.S. corporations, but that the Cuban revisionist rulers are placing their hopes for the future not in socialism, but in a mix of Cuban and foreign capitalism.

Growing "market" reforms of Cuban enterprises

. Parallel with the opening to outside market capitalism has been the adoption of ever-more market reforms within the domestic economic set-up. The Cuban rulers have not only offered up ownership of state property to foreign capitalists but to small groups of the Cuban bureaucratic elite. The so-called sociedades anonimas are state companies turned over to private ownership of big shot managers and party officials. These companies operate outside even the pretense of a central government plan. They run on their own income and keep whatever profits they generate. There isn't much to distinguish them from "normal" capitalist businesses. These enterprises are not merely small businesses either. For example, these firms are big players in the tourist industry. Some of these enterprises increase their power through interlocking ownership/management with similar companies, and not only offer shares of their businesses to the Cuban elite but to foreign investors. These firms may also branch into different fields of services and production.

. The Cuban tourist operation, Cubanacan, is an example of these large businesses. It not only built hotels and conducted other tourism business but branched into the import business, promoting products from 27 different foreign companies and became the sole exporter of certain medicines among other products it exported. Cubanacan even set up some medical clinics in other countries. Another large enterprise of this type is Cimex, with 48 subsidiaries and a dozen associated companies in seventeen countries. (7) Among other things, Cimex has its own merchant fleet, sugar refineries and export businesses. It uses part of its income to speculate in international stock and commodity markets. The sociedades anonimas compete against each other for foreign investment and hard currency. For instance, rivalries developed between the Cubanacan and Gaviota enterprises and the national airline for dominance over air travel.

. In agriculture, state farms have, in effect, all but been abolished. These farms occupied 80% of agricultural land. Reforms in 1993 divided state farms into competing co-ops. These co-ops have the right to use the land as they see fit with some restrictions. Originally these farms were to sell to the state whatever they didn't consume themselves. But evidently these co-ops are now allowed to sell their surplus production on the open market. Participants in the co-ops no longer will get a set wage as on the state farm but will be get a share of the income of the co-op. In a society on its way to socialism, co-op agriculture may serve as a transition from small private farms to large-scale agriculture belonging to society as a whole. But these co-ops are not moving society toward socialized property but are designed to increase the competition among groups of farmers. Such competition between the co-ops will lead to ever-greater gaps between wealthier and poorer co-ops and their members. Cuban agriculture is thus moving toward co-operative forms that have operated in any number of market-capitalist countries.

. The Cuban government has given growing room for small private entrepreneurship. Even before recent reforms there were 100,000 small private farms alongside the dominant state sector. In 1994, the government returned to a policy it tried in the mid-80s of allowing free-market sales of the surplus production of small private farms. The original experiment led quickly to extreme profiteering and was temporarily canceled by the regime. But the return to the market shows that it was not the free market per se that upset the government. Rather the Cuban authorities were upset over particular results of the mid-80s plan such as the undermining of government agricultural procurement and rampant selling to private speculators who brought up production and then marketed it at exorbitant prices. But once the Cuban officials bless private agriculture, it is ridiculous to expect it will be free of the ills that accompany it everywhere.

. As well, small private service, artisan and manufacturing businesses have been given wide latitude. A large section of the population supplements their income with self-employment ventures. Cuban government estimates indicate that about 20% of the 1991 workforce of four million participated in petty enterprises. And the Cuban authorities are discussing allowing individuals to pool their resources and form larger businesses which would be permitted to hire wage-labor. (8) In fact, the private hiring of wage-labor already goes on to some extent.

. The expansion of the private sector is Castro's solution to the crisis in the state sector. Cuban official are planning massive layoffs in the state sector including the shutting down of unprofitable enterprises. As the state sector shrinks, private business is supposed to take up the slack. Thus, Castro is paving the way for sizable private companies built off of state assets along with a large petty-bourgeois section of small producers.

. But such market reforms are only part of the story of the spread of market capitalism in Cuba. Cuba has long had a major black market economy. With the economic disaster that hit Cuba with the collapse of the Soviet bloc regimes, the black market assumed huge proportions. With the production of Cuban state enterprises greatly reduced, the black market became the major source of retail sales. Cuban government research estimates that the black market sales were equal to about 17% of total retail sales in Cuba in 1990. Two years later they accounted for two-thirds of retail sales! (9) From the materials studied for this report, it is not clear whether the partial economic recovery of the last couple of years has shrunk the size of the black market. But clearly it remains a huge factor in Cuba. While the Cuban rulers periodically clamp down on some "excesses" in the black market, it has generally been tolerated.

State-capitalism en route to private capitalism

. Even before the market reforms of the last several years, Cuba was not a socialist society, nor in the process of becoming one. Rather the Cuban state enterprises are state-capitalist in nature. Under Castro, Cuba developed an extensive social welfare system which was of benefit to the masses. But society remained divided between exploiter and exploited. The main means of production has been in the hands of the state in contrast to the typical capitalist countries where private ownership predominates. But the state property is, in effect, the collective property of the managers and party and state officials. The wealth produced by the state enterprises goes to maintain the disparities between the privileged few of the bureaucratic elite and several millions of workers.

. Moreover, despite state ownership, Cuban state enterprises have mimicked many features of private capitalist ownership. A more extensive examination of how state-capitalism operated historically in Cuba is a subject for future articles. But let's look briefly at one issue, state planning. One feature that marks an economy running on Marxist socialist principles is that it operates as an organic whole according to a centralized state plan. In Cuba, there was a central plan for the entire economy, but this plan was widely violated in practice. State enterprises largely had to survive on their own resources, creating forms of anarchic competition. For example, there has been a constant scramble between enterprises for materials for production, resulting in hoarding. It also resulted in massive trading of resources between enterprises outside of state control. Likewise, enterprises commonly charged more than allowed by the official price structure. (10)

. On this basis, the government generally wound up sanctioning wider and wider autonomy for the enterprises. The autonomy of the enterprises, even when subject to the state production plan, paved the way for the recent measures turning state property over outright to private individuals. In other words, state-capitalism has been paving the way for private capitalism.

. Although a central plan exists today, a series of reforms over the last several years has further weakened its influence. Indeed, of all the different products produced by the government enterprises, most have now been exempted from the state plan. Factor in the other market reforms and the sprawling black market, and it is not hard to see that anarchy of production pervades "socialist" Cuba.

. Cuba's state-capitalist course has also been connected to its historic dependence on the Soviet revisionists. After the early post-revolutionary years, Soviet advisors largely devised the Cuban economic plans, modeling them on the same capitalist principles on which the Soviet economy ran. As well, Cuba was integrated into the Soviet state-capitalist economic bloc. This integration maintained the country's lopsided dependence on sugar exports, a backward feature left over from the days of U.S. domination. Large trade deficits to the Soviet bloc contributed to Cuba's mounting debt crisis. Finally, the economic collapse of the state-capitalist regimes dragged the Cuban economy into severe crisis.

Expose Cuban revisionism

. Even as Cuba adopts one after another market reform, even as its pretenses of being socialist are being stripped, the predominant view in left-wing politics is to glorify the state-capitalist system there. Such views are pushed by an array of revisionist and trotskyite groups. Some, like the Socialist Workers Party (SWP) or the Workers World Party (WWP), gush over every move of the Castro regime and tout Cuba as the model of socialism. Others have criticism of the regime but consider Cuba as essentially socialist or support the regime's alleged "anti-imperialism." But in whatever form, such views must be opposed.

. Of course, the apologists of Cuban revisionism may claim that Cuba's rulers are just organizing a temporary retreat, not giving up on socialism. After all, according to Castro, the concessions to capitalism are just a "special period" of socialism. This is nonsense. Marxism recognizes that even revolutionary societies striving to establish socialism may have to temporarily put up with the vestiges of the old exploitative order. But the so-called "retreat" really began decades ago when the state-capitalist order was consolidated. The naked capitalist forms that are fashionable today are merely the retreat from one form of capitalism to another.

. But the apologists don't care much about the consequences of Cuban revisionism. For instance, a member of the Chicago Workers' Voice group, which has constantly belittled the notion of anti-revisionism, argues that it was necessary for Castro to form an alliance with the social-imperialist Soviet Union to combat U.S. pressure on Cuba. This is a good example of using the theoretical possibility of making unpleasant concessions to capitalism into an apology for concessions that cemented Cuba's path toward state-capitalism at home and undermining the revolutionary movements abroad. (11)

. Instead of apologies for Castroism, it is time for revolutionary-minded activists to combat its influence. Just as the socialist ideal was dragged through the mud by the Soviet and Chinese revisionists, so Cuban revisionism is following in these footsteps. Pawning off Cuban society as "socialism" undermines the ability for the ideas of genuine communism to inspire the masses. Standing with the Cuban masses means not only fighting U.S. imperialist bullying, but encouraging our class brothers and sisters to build up their own class organization, independent of, and opposed to the Castroite revisionist rulers. Only the building of such a trend really means supporting the cause of socialism in Cuba. Only such a trend can offer a revolutionary opposition to imperialism. As well, only an anti-revisionist trend can build the class movement to defend the immediate interests of the Cuban toilers in the face of austerity measures and the ravages of the free market policies.

. Exposing Cuban revisionism is a vital task facing all those who want to hold up the banner of genuine socialism and the Marxist-Leninist ideals.


1. Wayne S. Smith, "Cuba's Long Reform," Foreign Affairs: March/April 1996, p. 111. (Return to text.)

2. Pamela S. Falk, "Eyes on Cuba", Foreign Affairs: March/April 1996, p.14. (Text)

3. Eckstein, Susan Eva; Back from the future: Cuba under Castro, p.103; Princeton University Press; 1994. (Text)

4. Ibid., p.104. (Text)

5. Perez-Lopez, Jorge F.; Cuba's second economy: From behind the scenes to center stage,p.156; Transaction Publishers; 1995. (Text)

6. Foreign Affairs: March/April 1996, p.17. (Text)

7. Eckstein, p.70. (Text)

8. Foreign Affairs: March/April 1996, p.103. (Text)

9. Perez-Lopez, p.143. (Text)

10. Meanwhile, in the realm of distribution of consumer goods among the population, an official two-tier system has long been in place. For the masses as a whole, there were subsidized but scarce basic necessities. On the other hand, the government's "parallel markets" offered a wider array of goods but at much higher market prices that workers generally can't afford. "Dollar shops" officially open only to foreign tourists (until recently) are another tier. The black market is yet another tier. This multi-tiered system of distribution reflects anarchic production, not socialism. (Text)

11. Mind you, the author of such views doesn't like such things as Castro's foreign policy and its stand towards the revolutionary trends in other countries, but ignores that this too was a "necessity" of Castro's alliance with the Soviet revisionist rulers. For more on such views of the CWV's Julie (a.k.a. Sarah), see Communist Voice, vol.1, #3, pp. 21-22. (Text)

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