China Power | Diplomacy | East Asia

Sino-Cuban Relations: No ‘New Cold War’ in Havana

If we were going to see a new Cold War in the Caribbean, it should have happened by now.

By Bradley J. Murg and Rasheed J. Griffith for
Sino-Cuban Relations: No ‘New Cold War’ in Havana
Credit: Unsplash

A tourist walking through Havana’s “Barrio Chino” generally finds the experience distinct from visits to other Chinatowns around the world in one rather important respect: The remarkable absence of Chinese people. Until COVID-19 wiped out the tourism sector, a mainstay of the Cuban economy, travellers were more likely to run into one of the 60,000 or so Chinese tourists who visit the country annually than a local, Chinese-Cuban resident. Although Cuban official history highlights the roles of several revolutionary military leaders of Chinese descent, most of the country’s Chinese community, historically concentrated in the urban commercial sector, rapidly emigrated following the 1959 revolution. Some left early, wary of the new regime after having kept a close eye on the progress of China’s own revolution, while others departed later, following the expropriation of their businesses. Still, what the island nation lacks in the form of a Chinese diaspora, it increasingly makes up for in Chinese imports, aid, and investment. That same tourist is likely to have traveled around the country on a Chinese-made bus and is reliant on Chinese-developed infrastructure to gain access to the internet.

China has become the island’s second largest trading partner, after Canada, and its single largest source of technical assistance, with Havana officially signing up to the Belt and Road Initiative (BRI) in 2018 during President Miguel Diaz-Canel’s first visit abroad after taking over from former President Raul Castro. The trip itself was also notable as something of a Cold War nostalgia tour — with Diaz-Canal including Russia, Vietnam, and Laos on his itinerary. 

While reliable statistics are hard to come by, economists in Havana contend that China has already surpassed Vietnam as the island’s main source of investment from Asia (Hanoi and Havana have maintained consistently close economic and political relations deriving from their Cold War history). Cuba’s first computer assembly plant was opened in 2017 by Haier. Chinese cars are now a regular part of Havana traffic — joining the 1950s American Chevrolets and Fords and Soviet Ladas that have dominated the island’s roads for decades, demonstrating the country’s distinctly visible automotive history of geopolitics.

Chinese firms have also made significant investments in the country’s relatively strong pharmaceutical sector — most recently joining together in the production of the drug Interferon ALFA-2B, currently in clinical trials as a treatment for COVID-19. Despite Cuba’s much vaunted health care system (the quality of which remains a point of considerable debate), since the coronavirus crisis struck the island, it has been Beijing that provided over 80 tons of medical supplies to keep the country’s hospitals functioning. 

A container port in the eastern city of Santiago de Cuba, funded by a $120 million Chinese loan and developed by China Communications Construction Company Ltd (CCCC) opened last year; and Chinese firms also have a presence in the Mariel Special Economic Zone (SEZ) — an ambitious initiative that has suffered from Havana’s “two steps forward, one step back” model of economic reform and the country’s dual currency system. The island’s creative approach to monetary policy — which has left the island import-dependent and stifled any significant foreign investment by utilizing a local form of the Cuban Peso (CUP) in tandem with the Convertible Cuban Peso (CUC), pegged at 1:1 to the U.S. dollar but with a conversion rate at roughly 24:1 versus the local peso — will officially come to an end next week. Cuban officials remain optimistic that this reform, despite short term pain, will bring about increased investment as the country suffers from its worst economic crisis since the 1990s “Special Period” when Havana was forced to confront economic reality absent Soviet subsidies. 

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After the disintegration of the Soviet Union, Cuba eventually found a new patron in Hugo Chavez’s Bolivarian revolutionary Venezuela. Beginning in 2002, Caracas exported 100,000 barrels of oil per day to Cuba, much of which was eventually sold abroad in order to provide the country with much needed hard currency to fund imports. The collapse of the Venezuelan economy and the rapid decline in Venezuelan support has brought Cuba back to many of the questions it had to ask itself in the 1990s — Venezuelan subsidies having disincentivized the government from engaging in significant, consistent economic reform. These realities have been exacerbated by the Trump administration’s renewal of sanctions, the implementation of long-deferred provisions of the Helms-Burton Act, and just this week the addition of three new Cuban entities to the restricted entities list of the Office of Foreign Assets Control (OFAC). 

Collectively, these realities have left Havana without many options, leading many to speculate that China would step in and take on the role. Sino-Cuban relations began to improve with visits to the island by the Chinese leadership, beginning with President Jiang Zemin in 1993 and continuing with Xi Jinping’s arrival in 2014. In September of this year, Havana and Beijing celebrated 60 years of diplomatic relations with the standard effusive declarations of friendship and pronouncements on shared interests. Cuba also has begun to do a bit more water-carrying for Beijing — in October of this year it was the Cuban delegation that made the joint statement of 45 countries at the United Nations General Assembly defending China’s actions against the Uyghur population in Xinjiang. While earlier this week, China’s foreign ministry reiterated its continued support for Cuba and condemnation of Washington’s “politicization” of human rights questions.

However, placed in the context of increasingly frantic pronouncements about a “New Cold War” and Beijing’s consistently more aggressive foreign policy, predictions of significant deepening of Sino-Cuban relations have come up short. Even in an era of “Wolf Warrior” diplomacy, Beijing has shown no signs of taking the enormously risky step of formalizing any sort of relationship with Cuba beyond fairly conventional aid and investment support at a level that is woefully insufficient to meet Havana’s severe on the ground needs. Moreover, the window for such an approach appears to be closing.

In Washington, conventional wisdom holds that the incoming Biden administration will return to the status quo ante of the Obama era, rolling back Trump’s restrictions and returning to a Cuba policy based on engagement rather than isolation and embargo. Although this remains complicated by the question of the feasibility of fully staffing the U.S. Embassy in Cuba, following events in 2016 in which American diplomats suffered unusual symptoms which have subsequently been dubbed the “Havana Syndrome.” As the United States returns to engagement with Cuba, Havana’s own incentives to step up cooperation with China concomitantly decrease. If we were going to see a new Cold War in the Caribbean, it should have happened by now; but neither the island at the center of the original Cold War nor China, despite years of predictions to the contrary, have played along with those expectations and it is doubtful they will change course in the near term.

Bradley J. Murg, Ph.D. is Senior Advisor and Distinguished Senior Research Fellow at the Cambodian Institute for Cooperation and Peace.

Rasheed J. Griffith is a Consultant at Kelman PLLC, based in Bridgetown, Barbados.