Cuba’s Future Depends On More Than Regime Change

Cuba is only 90 miles from Florida, but it is decades behind the Sunshine State’s economy. That combination of geographic proximity and economic distance gives Florida and the rest of the United States a significant stake in Cuba’s future.

Americans have generally viewed Cuba as a failed communist state that once confiscated people’s businesses and wealth and now oppresses its citizens, who respond by escaping to Florida in droves. But that view focuses on what will soon be Cuba’s past. Another view deserves attention: What happens in Cuba when the opportunity arises for substantial political and economic reform?

That question was central to a recent American Enterprise Institute event, “Cuba the Day After: Building the Infrastructure.” The event brought together experts in infrastructure reform and international finance, who concluded that success depends on accomplishing three things simultaneously: Quickly rebuilding essential services, building institutions that provide investor and citizen confidence, and organizing industries for sustained commercial success.

Cuba’s success matters to Americans. A Cuba that develops a functioning economy could become a valuable trading partner, a destination for investment, and a more stable neighbor. Cuban Americans can play an important role: Many possess expertise in the infrastructure sectors, knowledge of Cuba, connections to communities on the island, and technological expertise.

National security provides an additional reason for American interest. Cuba’s longstanding relationships with Russia and its expanding economic and technological ties with China raise questions about the influence of America’s rivals on an island of such close proximity.

But revitalizing Cuba will be challenging. When Fidel Castro took power in Cuba in 1959, he laid hold of a vibrant urban economy and substantial infrastructure. But inequality was significant, particularly for rural areas where many Cubans lacked access to basic services. That became a focus for the communist government, and it expanded electricity and drinking water access. But its grip on the economy undermined that progress and the rest of the economy. Subsidies from first the Soviet Union and then Venezuela helped, but their declines doomed the supports and laid bare Cuba’s weaknesses.

Today, the deterioration of essential infrastructure illustrates the country’s predicament. Cuba was meeting only about 50 percent to 70 percent of its electricity needs even before Trump’s maximum pressure campaign. Millions of Cubans are forced to ration water, and Cuba ranks near the bottom among countries in mobile phone access and internet access.

It is tempting to imagine that a change in Cuba’s political leadership would quickly unleash the country’s economic potential. Many Cubans are well educated and have family relationships in the US. But these assets are not enough. Economic recovery needs institutional and infrastructure foundations. Economic success requires a legal and commercial environment in which contracts are enforceable and financial commitments are honored.

Data centers and manufacturers cannot succeed if electricity is unreliable. Hotels cannot attract visitors and hospitals cannot care for patients without clean water. Small businesses need communications networks and AI services to reach customers and suppliers and process payments.

The infrastructure challenge is particularly difficult because Cuba’s service providers have been organized around state monopolies and political priorities. Electricity and water tariffs have generally been too low to finance operations and investment. The state-owned telecommunications monopoly helps fund military-linked enterprises, keeping prices high and limiting investment. And the challenge isn’t just economic: Political reforms won’t be sustainable without improvements in daily life.

The United States cannot determine Cuba’s political future. It can, however, prepare to respond constructively when opportunities for reform emerge. Infrastructure reconstruction will require decisions that cannot be improvised successfully in the middle of a political and economic crisis.

A government in transition will need to restore essential services quickly, establish credible regulatory institutions, and create industry structures capable of attracting investment. These activities must begin in parallel because each influences the others.

A political transition in Cuba should open the door to substantial economic improvement. Whether there are lasting benefits will depend in no small part on the preparations made before it arrives.

This is the first in a series of essays emerging from our event “Cuba the Day After: Building the Infrastructure.” Subsequent articles will explore taking urgent steps, establishing a stable regulatory system, and sector reforms for electricity, water, and telecommunications.

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