If Havana uses a Russian recipe for clinging to power, investors beware.
By Mary Anastasia O’Grady, Wall Street Journal, O’Grady@wsj.com
Vladimir Putin’s op-ed in the New York Times wasn’t a big hit with Americans. But the Russian president does have admirers elsewhere. Some are in the Cuban military, which is rumored to be studying “putinismo.” Would-be foreign investors, take note.
Ever since Fidel Castro’s glorious revolution triumphed in 1959, Cuba has been in need of a benefactor. The Soviet Union played that role until it collapsed in the early 1990s. Cuba got another lifeline when Venezuela’s Hugo Chávez, elected in 1998, began a state policy of providing it with cheap oil.
Even so, Cubans still live lives of privation. Venezuela’s own fiscal woes are on the rise, which means that the oil subsidies are in jeopardy.
Revolutionary poverty is nothing new. But regime bigwigs in Havana fear that Raúl Castro, who is now in charge, could face serious social unrest when the ailing 87-year-old Fidel passes on. Their challenge is to find ways to feed the island without letting go of power, which might prove fatal for some of them.
The Putin model offers a way out. It permits nominal elections in which the opposition gets some seats in the parliament. On the economic front, Mr. Putin has created a loyal cadre of oligarchs who do business with foreigners.
The former KGB operative can say that Russia is no longer shaped by communist ideology. But behind the scenes, putinismo blends authoritarian political control and crony capitalism to produce a lock on power.
Writing from Russia in April 2012, development economist Deepak Lal described this mix of profits for the politically correct and repression for everybody else. His essay, in the Indian daily Business Standard, explained that “ordinary profit making has been criminalized.” Citing the work of Russian lawyer Vladimir Radchenko, Mr. Lal wrote that “there are three million small and medium-scale business entrepreneurs in jail for economic crimes.”
Mr. Putin is reportedly planning on forming his own personal national guard, Mr. Lal wrote. The Federal Security Service is more interested in running businesses than putting down dissidents and the hoodlums hired to do the job are unreliable. Mr. Lal also briefly described the state’s renewed alliance with the Orthodox Church.
I was reminded of the parallels between Mr. Putin’s Russia and Castro’s promises of reform when former Cuban political prisoner Jorge Luis García Pérez Antúnez visited the Journal’s New York offices this month. The 48-year-old Cuban, who spent 17 years in Castro’s jails, calls claims of political and economic reform there “fraud.”
Mr. Antúnez describes opposition to the regime as widespread and growing. It is not more visible, he says, because the “culture of fear” remains intense. Independent reports from the island say that detentions and violent assaults on opposition groups have been increasing.
As in Russia, Cuba can no longer rely on the armed forces to control government critics. They are busy running lucrative businesses in tourism, retail, cigar manufacturing and air travel. The Castros also seem to have a Putin-style relationship with the Church. Pope Benedict met with the Castros during his 2012 visit to the island while dissidents were carted off to jail for asking to see the pontiff.
Mr. Antúnez says that allowing Cubans to run microenterprises isn’t reducing poverty. Perhaps that’s because when entrepreneurs have succeeded during prior so-called liberalization periods, the regime has accused them of the crime of illicit enrichment.
Foreign investors sometimes don’t seem to fare much better. In an Aug. 13 letter to the Economist magazine, British businessman Stephen Purvis, a former business partner of the regime, described the circumstances surrounding his incarceration in a Cuban jail for 15 months between 2011 and 2012.
Mr. Purvis says he was “accused of many things, starting with revelations of state secrets” but was eventually sentenced for “breaches of financial regulations,” even though Cuba’s central bank had “specifically approved the transactions in question for 12 years.”
He was in prison with “a handful” of other foreign businessmen and says “there are many more in the system than is widely known.” A few are charged with corruption, he wrote, but many face charges of “sabotage, damage to the economy, tax avoidance and illegal economic activity.”
What he didn’t see in prison were his island business peers from Brazil, Venezuela and China. Mr. Purvis asks: “Why is the representative of Ericsson in jail for exactly the same activities as [its] Chinese competitor who is not?” Foreigners doing business in Russia have described a similarly risky playing field.
In May, Cuban dissident Guillermo Fariñas, who claims to have contact with a number of Cuban military officers from his high school days, told the Miami Herald that they are studying “putinismo” in order to prepare for a transition. “They don’t want to suffer the same fate as the followers of [Libya’s] Kaddafi,” he said.
The Putin model may be the way to avoid that fate. But it’s a far cry from a plan to liberate the nation.