Castro's death could change Cuba reform dynamic, much depends on Trump
- Donald Trump Sworn in as 45th U.S. President
- Wall Street ends higher as Trump becomes president
- Walgreens Boots Alliance (WBA) Said to Face Antitrust Concern for Rite Aid (RAD) Fix - Bloomberg
- Bristol-Myers Squibb (BMY) Says It Won't Pursue Accelerated U.S. Regulatory Pathway for Opdivo Plus Yervoy in Lung Cancer
- Apple (AAPL) Sues Qualcomm (QCOM) Over Patent Royalties in Antitrust Case - Bloomberg
President Fidel Castro addresses the audience as president of the Non-Aligned Movement at the United Nations in New York, October 12, 1979. REUTERS/Prensa Latina
News and research before you hear about it on CNBC and others. Claim your 2-week free trial to StreetInsider Premium here.
By Marc Frank and Sarah Marsh
HAVANA (Reuters) - Fidel Castro's death could give his younger brother, President Raul Castro, more space to pursue economic reforms, but change will also depend on whether U.S. President-elect Donald Trump decides to work with or challenge Cuba's communist government.
Raul Castro has introduced market-oriented reforms in recent years, but the pace of change has been slowed, many Cubans say, by Fidel Castro's continued influence over an old guard that mistrusts both markets and warming ties with Washington.
Two years ago, the more pragmatic, younger Castro engineered a detente with the old enemy that has seen commercial flights, dollar remittances and American tourists all flow into the cash-strapped Caribbean island.
Those advances could easily be reversed if Trump sticks to the harder line he took at the end of his election campaign, when he vowed to close the U.S. embassy, opened last year after half a century, and to renegotiate President Barack Obama's agreement to normalize relations with Cuba.
But Castro's death could also be an opportunity for Trump to keep up an engagement with Cuba that is popular with voters and U.S. businesses.
With Fidel Castro now dead at 90 and the 85-year-old Raul Castro promising to retire in early 2018, working with Cuba becomes easier on a symbolic level.
Trump had not mentioned Cuba since his election and in his first responses to the overnight news from Cuba, he gave little sense of which way he will go.
"Though the tragedies, deaths and pain caused by Fidel Castro cannot be erased, our administration will do all it can to ensure the Cuban people can finally begin their journey toward prosperity and liberty," Trump said in a statement.
Richard Feinberg, a former national security adviser to U.S. President Bill Clinton, said it is now less likely that Trump will reverse Obama’s opening to the island.
"The passing of Fidel Castro removes the object of hatred, fear and revenge of many Cuban-Americans, bringing to an end what has been one of history’s longest grudge matches, opening the gates for the reconciliation of the deeply divided Cuban family," he said.
"It is in the U.S. national interest to compete with China and Russia for influence in Cuba and the broader Caribbean, and to see Cuba as a natural ally in counter terrorism," said Feinberg, author of a book on the Cuban economy.
In the short term, Cuba may see from its government an orchestrated outpouring of support for Castro's undiluted idea of communism.
The first sign of that was a government campaign launched on Saturday to have millions of Cubans sign a pledge to be faithful to Castro’s revolution, “as an expression of the will to perpetuate his ideas and our socialism”.
Even years after stepping down from the presidency, Castro remained a buttress for the old guard among Cuba's political hierarchy and bureaucracy who are not convinced by Raul Castro's measures leading Cuba slowly toward a socialist economy with a strong role for private businesses.
Over time that influence will fade, potentially making it easier for reformers in Raul Castro's government and in the future.
"It removes a court of final appeal for the conservatives while giving hope to the usually younger reformers in the party for more rapid future economic change," said David Jessop, a UK-based business consultant on Caribbean affairs.
The inner workings of the Cuban power structure have always been tough to read, and not everyone believes Fidel Castro was behind a recent backtracking on market reforms, such as allowing farmers to sell products at market prices or permitting private imports and exports.
Mid-level bureaucrats fearful of losing power in the system are often seen as a major reason economic reforms have not been rolled out at the pace announced by Raul Castro in a 2011 policy paper.
"He was fully retired, so his passing is not likely to alter the course of Raul’s economic modernization program," said William LeoGrande, co-author of a book on U.S.-Cuba relations.
"Of course, there are bureaucrats still in office who share Fidel’s ideological hostility to markets. They have been and will continue to be an obstacle to change."
Trump may decide that Castro's demise is an opportunity to pressure the communist government into making concessions, such as freeing political dissidents or preferential access for U.S. products and services.
"President-elect Trump may simplistically see a chance to restart an adversarial relationship ... to prove he is the strong man he said he is," said Paul Hare, a former British ambassador to Cuba.
Cuba has relied heavily on Venezuela for economic help, but a deep economic and political crisis at home means Venezuela cannot provide the same volumes of subsidized oil that Cuba is accustomed to.
Closer relations with the United States have helped, and backsliding on the thaw could further weaken Cuba's economy, already battered by low commodity prices.
But an aggressive policy by Trump would close off lucrative opportunities to U.S. businesses and hand them to European or Asian firms. It would hurt companies like American Airlines, due to start commercial flights to Havana on Monday for the first time in half a century.
"Fidel's death is yet another reason to continue the policies of the last two years. Change is here to stay in Cuba and the U.S. can either be a part of it or sit on the sidelines in the next four years," said Jason Marczak at the Atlantic Council think tank in Washington.
(Writing by Frank Jack Daniel; Editing by Kieran Murray and Jonathan Oatis)
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Donald Trump Sworn in as 45th U.S. President
- Trump son-in-law Kushner can serve as White House adviser: Justice Department
- Car bomb explodes in central Tripoli, near Italy embassy: security official
Create E-mail Alert Related CategoriesReuters
Related EntitiesDonald J. Trump, Barack Obama
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!