Connect with us

Caribbean

Struggle for Economic Independence of Cuba and Iran

Published

on

Economic Independence of Cuba and Iran

INCOME DISTRIBUTION, POVERTY, INEQUALITY

Introduction

economic independence of Cubaeconomic independece of IranEconomic independence of Cuba and Iran has not been thought together in a study. Both countries are more than 7,500 miles away from each other. Their histories are incomparably different and they both belong to very different regions. Political, social, cultural, and religious norms in the Caribbean are very different than that of the Middle East. The size of the two countries, both by landmass and by population are different. Yet, despite various and obvious differences, they both have gone through radical changes. Moreover, both are mono-cultural economies. 85% of Cuban and Iranian export is a single product; that product is sugar in Cuba, and oil and natural gas in Iran. Both Cuban and Iranian economies suffer due to sanctions imposed by the United States, and both countries stand still in the midst of globalization presenting their own models for economic development. At least rhetorically, Cuba still proclaims to be a socialist economy, while Iran claims its own Islamic economics as the proper way to eradicate poverty and income inequality. In this research, I will mention the economic models they have taken and analyze their struggle for economic independence not by looking at their GDP rates, but by providing empirical data in regards to healthcare, education, rural, and urban poverty statistics. Knowing that the money accumulated in Iran is significantly larger than that of Cuba, it would be more accurate to consider healthcare, education, and income distribution related issues since both claim to be alternatives to the dominant global order. How they perform in their caretaker role for their people will be what I will try to discover.

Brief History of Cuba

Originally inhabited by the Arawak speaking Taino Indians, the island of Cuba entered the middle ages with a genocide committed by Galician conquistadors Nicolas de Ovando and Pánfilo de Narváez. What has driven the Spaniards to discover the Americas was quick profit-making motive, which was embodied in gold and silver. Tainos, who used to live in communalistic tribal economy, were wiped out within a few decades aftermath of forceful transition to feudal slavery, the encomienda system. African slave trade across the Atlantic was rationalized when Bartolomeo De Las Casas accepted the solution proposed by the Dominican monks in an approach to the king in 1511, to the effect that, “as the labor of one Negro was more valuable than that of four Indians, every effort should be made to bring to the Caribbean many negroes from Guinea.” Trading African slaves was legalized in 1513, and it reached its height after the sugar boom in mid 1600s.

Although other islands were under attack from pirates -the agents of early free trade in the Caribbean, Spain was able to hold on to Cuba and monopolize its sugar trade until the British occupation of Havana in 1762-63, during the Seven Years’ War. Cuban sugar reached British colonies in America, and Cuban planters further profited from the slave revolution in Haiti, which removed that supplier off the market. What made slavery on tropical plantations unusual was the master’s total freedom of control over his slaves. Sugar plantations resembled modern factories in a modern capitalist society. To meet the demands of the world market, the owner and his agents had to manage all methods of production. From 1774 to 1861, the island’s population leaped from 171,620 to 1,396,530; 30% of whom were of African decent. By 1820, the first series of technological innovations began to transform the character of sugar industry where mill owners had to invest heavily in steam operated machinery in order to compete with beet sugar. Number of mills increased from 1,000 in 1827 to 2,000 in 1860. Discontent grew among slaves and free blacks. They rebelled in 1810, 1812, and 1844. Wealthy creoles also became resentful of the corrupt Spanish officials. They had growing economic ties with the United States, and began to build bigger mills, knowns as centrales. Economic downturn in 1868 sparked The Ten Years’ War, led by black leaders who wanted abolition of slavery. The civil war decimated the creole landowning class, hindering the formation of a traditional landed elite on the island. Entrepreneurs from the US came to fill the vacuum created by the ruin of creole aristocracy. Elite Spaniards and white supremacists dominated socio-economic and political life, and denied Afro-Cubans healthcare and education.

Another economic downturn yet again taking place in 1890s sparked a revolutionary movement under the leadership of Jose Marti. Cuba became independent from Spain in 1898 only to come under American occupation a year later. Cuba was absorbed into the economic sphere of influence of the US. The Platt Amendment of 1903 cut the tariff on Cuban sugar exported to the US by 20%, developed latifundio by concentration of land and mills and proletarianized the sugar workers. The expansion of the latifundio reduced the purchasing power of masses. By 1919, approximately half the island’s mills were owned by American companies. Sugar prices soared after WWI, but with the Great Depression prices went further down to pre-war levels. The country suffered under Machado presidency and Batista dictatorship. Fidel Castro led a revolution under the basis of reinstituting the Constitution of 1940, a constitution which abolished latifundios. Until Castro, Cuban economy had followed a neoclassical model based heavily on semi-colonial trade relations with the US. After Castro, the model shifted to a semi-socialist semi-Keynesian structure that focused on poverty reduction and social welfare.

Brief History of Iran

Much different than Cuba, Iran has a much older background and a much complex society. The Achaemenid Persia, acknowledged by historians as the first global empire, has absorbed previous ancient civilizations in the Near East under a single political establishment built upon agriculture and trade surplus. In order to carry on further enhancement of economic development, the ancient Persians invested on a grand transportation project known as “the royal highway,” delighting Babylonian as well as Phoenician merchants. It was them who enthusiastically financed Persian military adventures against ancient Athenians. Under the Parthians and the Sassanids, Iran was challenging Rome over the control of the Silk Road. The Arab conquests introduced Islam to Persians (636 AD), who later joined the Shiite sect under the Safavids. During the Safavid period (1501-1722) trade with Europe, primarily with the Dutch, brought surplus in the beginning. Yet, revenues declined as trade routes gradually shifted away. This shift continued throughout the 18th century. Eventually, under the Qajar rule (1796-1925) Iran found itself politically weak, militarily defeated, and economically underdeveloped.

The volume of foreign trade grew tenfold in 1800s. Iran followed the classical economic model, which was the dominant economic thought at that time. Yet, the country was weak and unable to respond accordingly to changes in global economy. The government had come to a point of realization that there was no alternative other than giving concessions to colonial powers that kept Iran under pressure. Among the most important of all concessions was the one given to William Knox D’Arcy in 1901 to “explore, exploit, transport, and sell petroleum, natural gas, asphalt and mineral waxes in Persia.” This concession, however, gave birth to Iran’s oil industry. Oil was discovered in 1908, and by 1912 the first cargo of crude oil was exported from the giant refinery in Abadan by Anglo-Iranian Oil Company (AIOC). AIOC became the single largest employer in the country. It already employed over a thousand workers. While many Iranian merchants put themselves under the protection of foreigners, others with more traditional orientation and social ties to the religious leaders sought the protection of the clergy, or the ulama. The ulama had led a boycott against the tobacco concession of 1890. Alliance of the ulama, the bazaar merchants, and the western educated elites led to to the Constitutional Revolution in 1906. Economically speaking, the constitutional revolution was a joint political operation of Iran’s national capital and intelligentsia against the incursion of foreign capital.

Under Reza Shah Pahlavi, Iran’s priority shifted from free trade to modern nation-state building. He spent extensively on basic infrastructure projects. Iranian economy has gone through state-controlled modernization. The state capitalist structure was further enhanced during this son Mohammad Reza’s rule. Iranian economy was at the hands of pro-Western Keynesian technocrats until 1979; only with an exception of Mossadegh’s short-lived administration (1950-1953), who had nationalized the AIOC. The Shah launched a controversial “agrarian reform” in 1962. Oil revenues quadrupled after the 1973 crisis. However, problems with income distribution sparked an Islamic revolution.

Economic policies of the early Islamic Republic have been non-communist and distinctively Keynesian in structure. While government intervention was seen essential, private enterprise was protected in the basis of serving the national economy as well as the religion. This Islamic Keynesian attitude changed towards liberalization with presidents Ali Akbar Hashemi Rafsanjani, Mohammad Khatami, and Mahmud Ahmadinejad. Similar to Cuba, Islamic Republic of Iran suffers from trade embargo imposed by the United States. And similar to Cuba, Iranian economy is dependent heavily on oil prices in the global market.

The First Steps

Economic independence of Cuba is strongly correlated to political history of Cuba. One of the immediate decisions taken by both revolutionary governments was to nationalize major foreign interests. The Cubans called upon American companies to refine Soviet crude oil. When the US Treasury Department refused, the Cubans nationalized foreign refineries. In retaliation, the United States cut down the sugar quota. Cuba in return, nationalized all US properties, which led to the beginning of the American embargo on Cuba in October 1960.

In Iran, the 1979 revolution nationalized its oil industry and overthrew the Shah. The US government granted the deposed Shah permission to enter the US soil for medical treatment. This contributed to the excitement and fear among some university students about a possible American coup. Iranian students took over the American embassy, and with that, US sanctions on Iran began. Unsurprisingly, the United States reacted negatively towards the nationalizations of Cuban oil refineries and sugar and Iran’s oil and natural gas. It turned out to be easier for the US to cut all relations with Cuba all at once (January 3, 1961), but new sanctions on Iran were added over time.

Subsidies, Employment, Literacy

Another immediate result was the implementation of food subsidies and full employment. “More than 40% of the Cuban workforce in 1958 was either unemployed or underemployed. Schools for blacks and mullatos were vastly inferior to those for whites. Afro-Cubans had the worst living conditions and held the lowest paid jobs.” With the 1961 literacy campaign, illiteracy rate was reduced immensely within a year, and though there was some disagreement as to the quality of the literacy that was achieved, illiteracy was almost wiped out in few years. This was done at a relatively low cost with strong motivated volunteers. Anti-racist stands of the revolutionary government put black Cubans and all women, including children into the workforce. “An army of 100,000 teenagers were sent out to every corner of the country to teach nearly a million Cubans, three quarters of the population, how to read and write.” Batista had left behind 700,000 unemployed and 300,000 underemployed men. By 1964, full employment was achieved not only for men, but also for women. Night schools and boarding schools were set up for the large number of women who had been domestic servants or prostitutes; by 1958, there were 15,000 prostitutes in Havana only. These institutions functioned until women learned new jobs, becoming typists, secretaries, bank tellers, and bus drivers.

The Islamic revolution did subsidize basic food and oil consumption, but full employment has never taken place. Many unemployed youth joined the army as either new recruits for the military or as Revolutionary Guards, Pasdaran, but women did not entirely joined the workforce. According to 2001 World Development Indicator, female labor out of total females was 19.7% by 1975. By 1980, it was 20.4% and it slightly went up only to 26% by 1998. Women’s literacy rate, on the other hand, increased. Perhaps in an attempt to copy Castro’s achievement, by 1962, the Shah issued a “White Revolution” (Engelâb-e Sefid) in which the literacy campaign had a significant part. More than half of Iranians did not know how to read and write at the time. However, his campaign had a slow progress. By 1976, the Shah left Iran with 71% male and 42% female literacy for ages 15 to 24. This was mainly due ti opposition of the Shiite clergy because they viewed the Shah’s literacy campaign as an agent of westernization. After 1979, however, Ayatollah Khomeini’s jihad brought millions of men as well as women into mosques to learn how to read and write. Thought they did not enjoy the social status that their Cuban counterparts did (1974 Family Law), and told by their leader to sit back home, Iranian women played a crucial economic role during the war with Iraq. They adopted strategies to economies, lessen waste, and provided food for everyone. Many raised money to set up local charity funds (waqfs) to help the community by bringing sources together, and provided care for the poor, the sick, and those families whose husbands were at war. Though these charity funds were Islamic ideology, they were socialistic in structure.

Agrarian Reforms and The Question Ownership

Perhaps the most important factor of socioeconomic change in Cuba took placed to the Law of Agrarian Reform that Castro decreed in May 1959. This law restricted the size of landholdings, and the government the right to expropriate private holdings in excess of stated limits. The owners would be indemnified depending on the assessed value of the property tax services. The government distributed the expropriated land in small plots or established cooperatives. They were administered by the Institution of Agrarian Reform (INRA). 85% of all Cuban farms fell under the jurisdiction of the reform law because landownership had been so highly concentrated under the old regime. Although the process was slow, its tempo accelerated in response to internal and external pressures. Estates of Batista government officials were seized, followed by take-overs of the great castle estates when their owners resisted Castro’s policies. Eventually, all agrarian holdings became granjas del pueblo (state farms) administered by INRA, which employed the same workers but paid better wages and offered improved working conditions.

The character of Cuba’s rural population promised to make the process of the socialist land reform easier than it had been in Russia. Since the sugar industry had proletarianized much of the agricultural work force, farm workers did not demand thrown land but sought to improve working conditions and increase wages. Bolshevik land reform, on the other hand, has distributed land to the landless peasants. This led massive numbers peasants to join the communist rank against counterrevolutionaries during the civil war era and later against Nazi invaders because failure of the Bolshevik revolution simply meant the return of serfdom. Russian land reform has redistributed large feudal estates to the private ownership of millions of former serfs. As the Soviet power firmly established in upcoming years, the structure of agriculture in Russia came under government control. Thus, the structure of the industry became state-capitalist rather than socialist. This was also true for all other industries, and Castro followed the same example. Therefore, it should be concluded that Cuban economy under Fidel Castro has been state capitalist with socialist inclinations.

It has to be remembered that the British economist John Maynard Keynes insisted that government intervention was necessary not to hinder capitalism but rather to protect and sustain it by assisting the weak parts of the economy where private sector is insufficient. According to Keynes, government should provide full employment for the national capital to exploit, thus make the economy keep going and promote a balance between public and private sectors in order to protect the national bourgeoisie. It makes neoliberals unhappy since the government sits in the driving seat in several economic decisions. in other words, the government becomes the boss that collects capital, then distributes wealth around unevenly, and sometimes redistributes more evenly. In Lenin’s Russia and in Castro’s Cuba, government sits in the driving seat with further power to make decisions in economic matters. The same is true for Mussolini’s Italy and Hitler’s Germany. The difference is ideological. Russian and Cuban governments intended towards providing social welfare while Italian and German governments merged with gran bourgeoisie to promote corporate welfare/social injustice. Merger between the corporate elite and the governing elite by definition is fascism.

Whether they were “socialist” or “communist” or “fascist” in political and ideological terms, in the end, they were all Keynesian in economic terms. However, proletarianization of Cuba’s agricultural workers puts Cuba into a different category because the government worked in partnership with the farm cooperatives established by INRA. These cooperatives directly participated in the every part of the production. They had an equal say with INRA over how to distribute what they have produced. Later, Cuban farmers lost this peculiar semi-independence and from 1970 to the collapse of the Soviet Union, the Cuban government was the sole decision maker in every sector of the economy. The liberalization began in 1989, and helped the economy survive the worst years of the “Special Period,” (1989-1994). The use of the US dollar was de-penalized, self-employment, new economic activities, as well as exports were promoted, and most importantly farmers’ markets were legalized. President Raul Castro privatized more farmlands to those farmers who used to work and live on them.

In Iran, land reform launched by the Shah was intended not to empower the peasantry but to weaken the absentee landlords. From 1962 to 1968, landowners were required by law to sell excess land to smallholders and tenants. Government purchased the land and sold it to the peasants with a 30% discount of a given market price and with a very low fixed rate loan to be the paid back in 25 years. Because of evasion, not as much was distributed as had officially been proposed. The new owners lacked the capital, the technology, the cooperative organizations, and the government extension services necessary to maintain and increase productivity. Landless laborers, the Ranjbar, lacking the sources to farm or to pay for the land, received nothing. Having lost their employment in the countryside, they migrated to the cities. Subsequent redistributions benefited the peasants in ownership and tenancy rights, but did not provide adequate lands for subsistence.

In fact, the major drive of the agricultural programs was the creation of large-scale, state-sponsored farm corporations and private agribusinesses. These farm corporations basically required peasants to pool their lands and take shared in the larger venture, often with the result that farms were mechanized and cultivators driven from the land. Private agribusinesses with heavy foreign investment also favored capital-intensive mechanized farming. Not surprisingly, the state favored capital-intensive agriculture in a country with surplus labor. Nomads were forced into sedentary life, pastoral livestock herding was replaced with mechanized meat and dairy farms. It sounds all good but why these farms failed?

Smallholders faced increased demand for cash income to pay the services and the machinery provided by the state as the prominence on production of commodity crops grew. Since population pressure was high and land plots were small, the new land tenure system has created uncertainties about future access to farmland. The idea to turn peasants into rural capitalists on their own was impractical because entrepreneurship requires risk taking, yet peasants incline towards risk aversion. Based on their perception of risk, they used their own traditional surviving methods. The opportunity cost of money for the peasants was usually high; that of labor and traditional skills, however, was low. Peasants facing financial risks decided to move to the cities. As a result, per capita agricultural production declined, and Iran became more dependent upon food imports and industrial development. Some landlords who sold their lands to the state also moved to the cities and invested their money in industrial sectors. After 1973, the inflow of petrodollars quadrupled and helped the GNP to increase. Iranian industry, however, was still inefficient to compete in international markets due to lack of skilled management and labor. On top of that, rural migration to the cities increased the “reserved army of unemployed.” Wages went down, and that played to the hands of employers which also paved the way for “the new rich” to turn the corner. Coming from humble origins, these new businessmen contributed less to the national economy. They deposited their profits to international banks. Huge influx of money with no jobs in the job market soared inflation. The cost of living went up.

Inflation hit the traditional core, which was heavily rural in origin. Iran’s traditional merchants are known as the town-dwelling bazaaris. In the absence of modern industry, bazaar becomes the most significant element in domestic economy. Merchants, shopkeepers, and artisans dominated wholesale, retail, and franchise businesses. The French word “bourgeois” was driven from Persian words “bazaar,” “bazergan,” “bazergan-e bozorg.” As the economic outcomes of the Shah’s land reform worked against their favor, the bazaaris joined the ranks of the ulama and financed the fundamentalists. After the revolution, the interests of the bazaar merchants, as the new national capital, has been well preserved by the Islamic government up until the Ahmadinejad administration.

On the question of land ownership oversee the equitable distribution among landless peasants, the first majlis (parliament) of the Islamic republic got into a dispute over large tracts of lands (324,000 acres), whose owners were already executed or had fled the country. Some high-ranking clergymen opposed the Land Reform Bill. Khomeini stopped the plan and sent it to the Guardian Council for decision. In January 1983, the Guardian Council called the program non-Islamic and rejected the Land Reform Bill in its entirety. The bill died and never introduced again.

Inequality in Income, Health, and Education

Cuban society enjoyed a relative balance between its most and least affluent. in a speech he made by mid-1970s, Castro acknowledged that Cuban society was still far from its imperfect to achieve the desired income equality. At a time when most citizens have become government employees, a high ranking government official and a college professor received a salary of 700 pesos, while a bus driver received 85 pesos. Therefore, the approximate average ratio between the maximum and the minimum wage was 8:1. This gap is now in a complicated stage in today’s Cuba.

“The collapse of the Soviet union deprived Cuba of $6 billion of its annual income almost over night. In less than a year, Cuba lost 80% of its oversees trade and its GDP fell by 50%, many people were forced to rely on financial support coming from relatives exiled to the United States. 97% of Cuban Americans consider themselves to be whites. So, the overwhelming majority of the remittances sent every year, ended up in the hands of those who consider themselves white. That, in itself, creation social and economic differences… since the fall of the Berlin wall, two currencies emerged: peso and the CUC. CUC is worth 25 times more than the peso. This two-tier currency turned Cuba’s economic structure upside down. While professors and doctors being paid in pesos earn $20/month, a waiter being paid in CUCs an earn $20 in a day.”

Unfortunately, there is no available detailed empirical data in regards to income distribution in Cuba.

In 2000, the UNDP inequality measure between the richest and the poorest 20% was 4:1 in Norway. The share of income or consumption for the poorest 10% of Norwegians was 3.9%, the poorest 20% was 9.6% the richest 20% was 37.2%, and the richest 10% was 23.4%. In Iran, however, the share of income for the poorest 10% of Iranians in 2000 was 2%, the poorest 20% was 5.1%, the richest 20% was 49.9%, the richest 10% was 33.7%. Norway was and still is at the highest HDI (Human Development Index) rank in the top of of UNDP high human development list, while Iran is at the 99th place. There has been a little change from the figure taken in 1996: while top 10% of the population enjoyed 40% share in total income, the bottom 50% had to struggle for a share of 16.7%.

In healthcare, Cuba has made remarkable achievements compared to most of the other latin American countries. By 1970, nearly 90% of the children between ages 6 to 12 have been enrolled in school. That number went up to 98% by 1986. Within a 30-year period, life expectancy in Cuba jumped from 58 years in pre-revolutionary times to 75 years right before the Special Period. Havana has a major bio-tech center. It accepts students from other countries, including the United States. After the Soviet economic assistance to Cuba ended, however, there was a serious decline in GDP, and that directly affected the quality of education and death services. The government that was able to provide free education up to university graduation now can provide free education up to the 9th grade. Although high school and college education are still relatively cheap, due to tough economic conditions, many young people drip out of school. University enrollments also decline.

Iran, however, continued to increase the quality in education and healthcare. Increase in women’s participation in economic life is a major part for the success. Also, the Constitution of the Islamic Republic states that Iranian economy has three major sectors: public, private, and cooperative. The cooperative. The cooperative sector is mainly about the bonyads (foundations) or charitable trusts. There are bonyads for the poor, the needy, and the families of the martyred soldiers. They provide housing, food, clothing and work for millions of poor Iranians that re registered under a bonyad. The goal is to provide “Islamic” social justice. However, 20% to 30% of Iran’s budget is being spent on bonyads. Bonyads are tax exempt. Many reformists complain about corruption that goes around bonyads. They are originally intended to protect the section of the society that cannot make the ends meet. However, employees do not provide adequate service and often collect checks from government for doing basically nothing. Imams, hojjas, and other members of the clergy in change of supervising bonyads also receive government checks. Nepotism, political favoritism, and conning are rampant. This is also true for the reformist camp who complain about the very corruption in bonyads. Yet, in the macro level, Iranian society continues to get healthier and more educated, despite having not a good record in its Gini index. When Iran suffered similar economic shortages in the 1980s as Cuba did in the 1990s, Iran produced and exported millions of barrels of crude oil each year. Oil and natural gas did compensate for survival in Iran’s worst days. Cuba, on the other hand, had to wait for closer diplomatic and commercial relations with Venezuela in the 2000s. Cuba’s closer tie with Venezuela is largely due to “oil for doctors” exchange.

Orlando Perez and Angela Haddad analyze the positive and the negative outcomes of the “oil for doctors” plan in their insightful article “Cuba’s New Export Commodity: A Framework.” The article is important to observe macroeconomic and microeconomic results that directly effect inequality, poverty, and income distribution in Cuba through healthcare.

“In 2000, the two leaders signed an accord in which Chavez agreed to provide Cuba with 53,000 barrels of oil a day at preferential prices. In exchange, Castro pledged to supply Venezuela with 20,000 medical professionals and educators. In August 2004, Chavez expanded the agreement up to 90,000 barrels a day with 40,000 Cuban medical professionals… according to the Pan American Health Organization, since 2003, the Cuban medical mission has performed over 150 million consultations and saved over over 18,000 lives… however, only 20% of the proposed modules had been built by August 2007. Moreover, the Venezuelan Medical Federation has repeatedly complained about the qualifications of the Cuban health professionals.”

Workloads and responsibilities of Cubans exceeded their capacity. In addition, “63 Cuban health professionals sought asylum in Colombia in 2006, and and estimated 500 Cuban doctors worldwide have applied to US sponsored program to help medical personnel seek asylum in the US. However, Cuban doctors wold like to take foreign assignments, which allow them to get paid a lot more than in Cuba.” While families of those doctors increase the quality of their lives, patients in remote parts of the country become unable to receive direct medical help. Due to these facts, it can be concluded that inequality in Cuba is rising. Its Gini index of income inequality rose from 0.24 in 1986 to 0.38 in 2000.

Conclusion

Both Cuba and Iran work tirelessly to become economically independent despite the dominant global order. To accomplish economic wellbeing, they implemented policies to eradicate poverty and inequality, and provide just distribution of income. These policies were implemented in various forms of economic models. Instead of looking at statistics on how much wealth the both countries accumulate, I decided to look at the outcome of their policies in healthcare and education. It is clear that Cuba is changing. Yet, this change does have consequences. The revolutionary government in Cuba is promoting private ownership in a slow pace. I do believe that the pace should be slow. It will be better to analyze the upcoming poverty growth and it would be better to see whether Cuban economy -together with its healthcare and education statistics- is getting better or worse. Cuba may go forward or backwards. In a sudden change, however, the country may go back to the inequality level of 50 years earlier or to the inequality level of 500 years earlier. In other words, faster pace of integration into the global economy may result with the foreign-dominated 1950s economy. Much faster pace of economic integration may result with a recreation of a social structure resembling that of the 1500s where a section of Cubans become a conquistador to the other section of Cubans. The shift in economic policy is necessary for Cuba. Poverty, inequality, and discrimination in income distribution were high when Cuba was following a neoclassical model up until the revolution. After the revolution, the Cuban economy was a semi-Keynesian and semi-socialist. During 1970s and 1980s, it became totally Keynesian and highly protectionist. Liberalization is necessary to generate more money for healthcare and education. Following a 30-year of relative wealth, it has been more than 23 years of “Special Period” and that needs to come to an end. However, the expected imbalances of liberalization should also be checked through some protectionist policies for the sake of healthcare and education of the country. Once it is achieved, I am sure the charts and graphs will illustrate better statistics for the future.

Cuba’s new phase of economics should not undervalue the old phase. Today Cuba generates much less wealth than Iran even though Iran went through eight years of war destruction of many of its oil refineries. Yet, Iranian revolutionaries always relied on the prominence of oil and natural gas the way Cuban revolutionaries relied on Soviet assistance. Even when there were no sanctions and Iranian relations with the US was at its best, A Batista type administration headed by the Shah, failed to implement its own land reform. Iran’s Islamists whose revolution had been a microeconomic as well as macroeconomic outcome of the failure, also failed to implement their own land reform. In addition, they prevented any reform in agricultural industry. What has increased the quality of healthcare and education in Iran was partly due to the Islamic revolutionary discourse of social justice under theocratic democracy via the creation of bonyads, and partly due to increasing number of women’s participation in economic life. Women’s participation in economic life was consequential in Iran, but voluntary in Cuba. While Castro regime opened job training centers for women, the mullahs attempted to take women away from the job market. However, the war with Iraq and indoctrination of the society required women to do more than what they have been originally planned for them. They labored for the benefit of the larger section of the society in a collective and cooperative manner. In return, Iran has benefitted through rise in quality of healthcare and education.

The collapse of the Soviet Union was a great loss for Cuba. Unlike Cuba, the war with Iraq was a loss for Iran. Iran lost the war, and hen reconstruction era began through liberalization. Both countries had started economic liberalization almost at the same time. While Cuba intends to take more liberal steps, Ahmadinejad fully implemented the IMF plan to lift all food and oil subsidies. It may increase the influx of petrodollars into the country but it will not help to balance the gap in income distribution. It would be east for Cuba to carry out poverty reduction if the regime had to have the same access to oil. The interesting key here is Venezuela, which has friendly relations with both nations on the basis of oil. Open trade among these nations hopefully will be beneficial for all parties to generate money in neoliberal way (business mergers), provide capital for the national economies in Keynesian way (protectionist policies) and distribute the benefits to their masses in Marxian way (providing quality in healthcare, education, and other services to every individual).

 

 

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Trending