Cuba’s strategic location has always made it attractive to global superpowers. Throughout its history, it has gone through three phases of domination by such a foreign power. Following the 1990s, the country received support from leftwing countries in the region, but as this support dwindles, the country is now again at a crossroads. For the first time in its history, it might now be able to diversify its global relations.

Our observations

  • Recently, Miguel Diaz-Canel was elected president of Cuba. He is the first non-Castro to rule the country in sixty years. Fidel Castro led the country from 1959 until 2008, after which his brother Raul took over.
  • Under President Obama, relations between Cuba and the U.S. improved. The “Cuban thaw” initiated in 2014 led to the easing of travel restrictions, increasing export of U.S. agricultural products such as poultry, corn and soybeans and the start of limited investments by U.S. companies like Marriott and Google.
  • Nevertheless, strong tensions remain. President Trump has reversed some of the reforms. The U.S. and Canada have recalled diplomats and their families after reports of nausea, headaches and hearing loss that might be due to a sonic attack. Some scientists suggest it is the accidental side effect of two listening devices placed too closely to each other.
  • Over the last few years, China has increased investments in the Caribbean region. It has become Cuba’s second largest trading partner, extends loans to the country and has made investments in infrastructure like renewable energy and Huawei Wi-Fi hotspots.
  • A cornerstone of Cuban development is the Mariel port and special development zone. Brazilian investments in the port have stalled due to corruption scandals in the country, but a range of countries like Mexico and Vietnam have become investors in the project. Singapore PSA runs a terminal at the port.

Connecting the dots

Cuba is the largest island in the Caribbean Sea. It is strategically located in close proximity to Florida and provides access from the Atlantic Ocean to Mexico and the American port of New Orleans. When Columbus discovered the Americas, he visited the island and it subsequently became a hub for Spanish activity in Mexico. Cuba’s strategic location made it important to large overseas empires. Throughout most of its history, it has been reliant on or dominated by external great powers. For four centuries, from 1492 to 1898, Spain controlled the island. The struggle for national liberation (‘Cuba libre’) ended with U.S. dominance after it kicked out the Spanish in 1898. Although formally independent, in the first half of the twentieth century, the Platt Amendment in the Constitution stipulated U.S. hegemony in foreign relations and commerce. Cuban sugar was exported in exchange for American consumer goods. At the time, there was also a plan to purchase the island. The lease of Guantanamo Bay brought a permanent U.S. presence to the island. The Cuban revolution of 1959 initiated a third phase.

The communist regime became dependent on the Soviet Union for subsidized fuel and trade. When the Soviet Union collapsed in the 1990s, the drying up of these funds led to an economic crisis, dubbed locally the ‘Special Period’. From the 2000s on, some relief came when leftwing ‘Pink Tide’ regimes in Latin America (Venezuela, Brazil and Nicaragua) supported the Cuban regime. The recent economic crisis in Venezuela, however, has decreased subsidies and added pressure to further open up the economy.
After this fourth phase, Cuba is again at a crossroads. Although the process has stalled, the country is slowly opening up to the U.S., the regional economic giant. At the same time, other emerging markets in Asia and Latin America, like China and Brazil, are increasingly able to provide alternative trading options for the country. Cuba could finally break with a history of dependence on a single foreign power and use its strategic location to balance different countries. It could follow the strategy of other small countries that we have described before.

Implications

  • Comparable to Poland, China and Vietnam, decades of communism in Cuba have
    resulted in a combination of economic weakness and high social development (in
    terms of education, literacy, life expectancy, healthcare and women’s emancipation).
    Like these other countries, high levels of social development will support strong
    growth once the economy opens up further.
  • Growing global middle classes are particularly boosting tourism to sunny coastal
    regions like the Mediterranean, Southeast Asia and the Caribbean. Cuba can grow as a
    hub in the latter region.