Since July 2006, despite all odds, Castro appears to be on the mend. The Cuban government has made repeated statements insisting the 80-year old Cuban leader is making slow but steady medical improvements and will soon be well enough to resume his presidential duties. Such statements have accelerated since the beginning of 2007 possibly symbolizing the Communist Party’s concern that Fidel’s absence could impact the Cuban people’s loyalty to his government. Fidel has also increased communication with his fellow leftist Latin American leaders Hugo Chavez and Evo Morales, wishing to preserve his international image as Cuba’s sole-legitimate leader. Likewise the occasional government photo-shoot is designed to demonstrate his recovery and portray his robustness. However, Fidel’s actual medical status remains unknown and closely guarded.
In July 2006 we identified two governing scenarios likely to transpire in Cuba:
• Fidel continues physical recovery, returning before parliamentary elections in spring 2008. Raul continues acting as president until that time.
• Fidel lives for unknown amount of time but is unable to resume his duties. Raul acquires some independence from Fidel in mid to long-term.
Fidel has proven more resilient then we initially assessed. We do believe Fidel will return to the Cuban political arena, albeit in a diminished role than he previously held as president. Raul and other high-ranking Cuban Communist Party members will be reluctant to relinquish additional power acquired during Fidel’s absence. Fidel will act in a ceremonial role, meeting with foreign leaders but avoiding policy discussions.
Fidel’s Long Road Back
Fidel will continue his gradual recovery from successive surgeries and will assume some lesser political office in the near to mid-term. Raul will continue acting as Cuban President.
• Fidel’s advanced age and health problems will reduce his functionality, allowing Raul to pursue economic policies in line with the Chinese model – export oriented, market-style economy – while maintaining his distance from the US government.
• Raul will oversee the continued reformation of the Communist Party’s Secretariat. The Secretariat will act as a decision making board comprised of 12-high ranking members of the Cuban Communist Party. Raul is 75-years-old, likely limiting his time as Cuba’s acting president, requiring a form of collective leadership following the eventual death of both men.
• Should Raul’s economic liberalization programs prove too radical for the communist old guard that favors maintaining Fidel’s economic and political policies, Raul could be forced to decelerate economic liberalization policies, causing resentment among the party’s younger-apparatchiks. Raul maintains the loyalty of the Cuban military, whose support is crucial to combat any possible internal political struggle.
• Cuba’s relationship with the Chinese government will accelerate under Raul as it did in 2006, with trade more than doubling to US $ 1.8 billion.
• The US government will maintain its current Cuban trade restrictions and financial embargoes, limiting US ability to forge future relationships with the post-Castro governments. A strong Cuban-American expatriate community in Miami and lobbying presence in Washington will resist and prevent any possible normalization or relaxation of relations.
He’s Back…But No Turning Back
Following the inevitable exit of Fidel, Cuba’s economy will not experience robust growth rates and deluges of foreign investment monies. Determining the future course of the Cuban economy and political system poses significant challenges for international investors, particularly those based in the US. The evolution of Cuba’s Centrally Planned Economy to one dependent on free market principles, free from government influence and corruption, will take years to develop and mature. The Cuban state is unlikely to experience any form of democratic governance in the near-term. We anticipate a continuation of authoritarian control under Raul, backed by his Cuban military loyalties. However, we maintain previous assessments that any possible economic, social or political opening following the permanent exit of Fidel from power will be messy and potentially destabilizing to the state.