Cuban Development: Inspiration for ALBA.

Cuban Development: Inspiration for the Bolivarian Alliance for the Americas (ALBA)
by Helen Yaffe, Journal of Iberian and Latin American Research (JILAR), vol. 15:2, December 2009, pp 145-162.

Without ideological commitments to the predominance of state property, central planning, free, universal welfare provision and internationalism, the Cuban Revolution could not have recovered from the economic crisis of the Special Period and limited the destructive potential of liberalisation. From the early 1990s, the island began to diversify its trade and economic structure, which resulted in the steady recovery of the economy. Cuba’s survival was a precondition for the alliance with Venezuela which was to lead to the establishment of the Bolivarian Alliance for the Americas (ALBA) in 2004. ALBA is inspired by the welfare-based development paradigm of Cuba socialista and in its role as a soft power through medical and educational internationalism. ALBA in turn has removed from Cuba the obligation to completely insert itself into the international capitalist economy. At present, the regional political and social implications of ALBA have greater significance than the economic impact. It is building a barrier to U.S. domination and European capital penetration, buttressing the most radical governments whilst offering other countries in the region concrete examples of the benefits of trade relations based on south-south cooperation and the potential for welfare-based development models.


Without ideological commitments to the predominance of state property, central planning, free universal welfare provision and internationalism, the Cuban Revolution could not have recovered from the economic crisis of the Special Period and limited the destructive potential of liberalisation. These commitments—which underpin policy formulation—are themselves expressions of the deep, historically-rooted anti-imperialism of the Revolution and an aversion to dependence on capitalist mechanisms in the construction of socialism; expressed as international solidarity and the focus on revolutionary consciousness. It is possible to track back four decades to the ideas expressed by Ernesto Che Guevara to find the modern roots of inspiration for the Bolivarian Alliance for the Americas (ALBA), established between Cuba and Venezuela in 2004 and extended to seven other nations in the region by 2009. At the Afro-Asian conference in Algeria, February 1965, Guevara declared:

‘there should be no more talk about developing mutually beneficial trade based on prices imposed on the backward countries by the law of value and the international relations of unequal exchange that result from the law of value … We have to prepare conditions so that our brethren can directly and consciously take the path of the complete abolition of exploitation, but we cannot invite them to take that path if we ourselves are accomplices in that exploitation.’[1]

In an international capitalist economy, trade between countries at different stages of development is unequal because prices are set in relation to the level of productivity in the advanced countries. The agricultural goods and raw materials exported from the South to the North rarely earn the capital necessary to invest in the means of production and break the chains of underdevelopment; chains reinforced by the burden of un-repayable debts. Guevara advocated trade between socialist and underdeveloped countries which was not motivated by profit or material incentives; and not based on prices set in relation to the law of value. Trade, he argued, should be based on cooperation, not competition, determined as a conscious political act of solidarity to promote development with partners. Guevara warned against competition between regional and political allies:

‘trying to develop the same investments simultaneously to produce for markets that cannot accommodate them. This competition has the disadvantage of wasting energies that could be used to achieve much greater economic coordination; furthermore, it allows imperialist monopolies to carry on their games.’[2]

The trade initiated between Cuba and Venezuela in 2000 and expanded to other countries in Latin America and the Caribbean through ALBA since 2004, has created the opportunity to ‘consciously take the path of the complete abolition of exploitation’[3] in international relations by accommodating economic inequalities in the determination of the terms of trade. The objective of this trade is to foster sustainable and human-centred development, freeing countries from imperialist domination imposed via the law of value in international trade.

Surviving the Special Period

In 1986 the Cuban Revolution entered a period of Rectification of Errors and Negative Tendencies in response to economic and political stagnation, which was seen as a consequence of the Soviet Economic Management and Planning System operating in Cuba since 1973. This system was abolished with an overt return to the economic ideas of Guevara. Fidel Castro announced: ‘We are rectifying all kinds of shoddiness and mediocrities that were precisely a negation of the ideas of Che, of the revolutionary thought of Che’.[4] Under Rectification there were moves to diversify domestic production, reduce dependence on sugar exports and on capitalist levers of production and to improve welfare provision. Arguably, this process of pulling back from the Soviet model of development contributed to Cuba’s survival when that model collapsed with the disintegration of the USSR. The end of the Soviet bloc did not catch the Cuban leadership off guard, although there was little they could do to buffer themselves against it, particularly in the context of the ongoing U.S. blockade. Four months before the fall of the Berlin Wall, Fidel Castro told the Cuban people: ‘if we wake to the news that the USSR has disintegrated…Cuba and the Cuban Revolution will continue fighting and will continue resisting’.[5]

The collapse of the Soviet bloc in 1991 turned the campaign for Rectification into a campaign for survival; the Special Period in Peacetime. Cuba’s exports of goods and services fell from $6bn in 1990 to $2bn in 1993, GDP plummeted by 35 per cent, gross investment and international trade fell by 80 per cent. The crisis was exacerbated by punitive laws tightening the U.S. blockade. The result was critical shortages in hydrocarbon energy resources, fertilisers, food imports, medicines, cement, equipment, and resources in every sector. Caloric intake decreased by nearly 40 per cent, industries closed, infrastructure ground down and unemployment rose. Cuba was compelled to search for domestic solutions, attempting to foster endogenous development.

During this Special Period state bureaucracy was slashed and pragmatic reforms were introduced to stimulate the economy and get vital goods to the people: state-owned enterprises were decentralised and given financial autonomy, 75 per cent of state land was transferred to producer cooperatives, joint ventures with foreign capital were initiated, the dollar was made legal tender, and small-scale private enterprise was permitted. Commentators outside Cuba often referred to these reforms as liberalisation. While these reforms were considered as necessary negative concessions to market mechanisms, other measures of expediency were evaluated more positively and have become embedded into Cuba’s development model; organic farming, crop rotation techniques, urban agriculture (organopónicos), the use of bicycles, car-pooling, solar-energy, and eco-tourism.

Socialist Cuba had to find new trade partners, opening and adapting itself to the capitalist world market as never before. Between 1990 and 2001, Cuba received $2.5bn in foreign investments.[6] Despite the Helms Burton Law intensifying the U.S. blockade, Foreign Direct Investment (FDI) flows rose from $82 million in 1996 to $400 million in 2000. In 2000 there were 400 joint ventures and management contracts with foreign companies, up from 31 in 1993 and 261 in 1997. Contracts came from Spain (23 per cent), Canada (19 per cent), Italy (9 per cent), France (4 per cent), and Britain and Mexico (3.5 per cent each), demonstrating the success of Cuba’s policy of trade diversification. Government regulations meant all foreign investors had to partner the Cuban state in joint ventures, in which the Cuban share was 51 per cent. The government mediated between the foreign interests and Cuban workers with strict regulations on payment, conditions, and the environmental impact of production.

Significant investments were carried in mining, oil exploration, telecommunications, and tourism. The tourist industry increased contributions to the balance of payments from 4 per cent in 1990 to 43 per cent in 2000, stimulating domestic production, particularly the food and beverages industries, which supplied an increasing proportion of its deliveries from 12 per cent in 1990 to 61 per cent in 2000.[7] The economic benefits of this liberalisation were seen in the average annual GDP growth of over 4 per cent between 1994 and 2000.[8]

The tangible economic improvements resulting from liberalisation were offset by negative political consequences as the principles of Cuba socialista were undermined; inequality grew as individualism and speculation bought material rewards. Legislation was introduced to limit the potentially destructive impact of the material competition entering Cuban relationships at the grass roots level to prevent exploitation or capital accumulation. Examples include prohibitions on Cubans selling homes or cars directly to buyers, or on family businesses employing non-family workers. Meanwhile, the Revolution did not renege on its political commitment to socialist welfare, state planning, and the predominance of state property and the state sector.

While the concessions to market forces are well documented, less well known are the increases in investments in the biotechnology and pharmaceutical industries and in the healthcare and education sectors. These investments yielded economic benefits both domestically, offsetting inequalities introduced by earnings and monetary incomes, and in international trade.

Between 1990 and 2003, the number of Cuban doctors increased by 76 per cent, dentists by 46 per cent, and nurses by 16 per cent.[9] The number of maternity homes rose by 86 per cent, elderly day care centres by 107 per cent, and homes for the disabled by 47 per cent. Infant mortality was reduced from 11.1 per thousand in 1989 to 6.4 in 1999. Between 1992 and 1996, Cuba invested over $1 billion, or 1.5 per cent of its gross national product in the biotechnology and pharmaceutical industries and sent scientists to laboratories in Latin America, Sweden, Spain, and Germany for research collaborations.[10] A Scientific Cluster was established in Havana, a complex of 53 applied biotechnology research centres and their industrial offshoots. By 2009 there were 14 scientific clusters throughout the island, incorporating more than 120 research centres and employing about 30,000 people. The sector has provided Cuba’s national health care system with over 160 products and produces around 80 per cent of the drugs and medicines used by its 11 million people. The entire industry is state owned, research programs respond to the needs of the population and all surpluses are reinvested in the sector. Cuba has 26 biotech and pharmaceutical inventions and over 100 international patents granted since 1959. In 1996 exports of pharmaceutical products earned $54 million, 2.8 per cent of total exports. By 2009 Cuba was exporting them to over 58 countries with expected earnings of $500 million, possibly qualifying as their fourth biggest export earner. New scientific disciplines, such as bioinformatics and computational sciences are constantly being developed.

Cuba’s medical internationalism began when a disaster relief medical team went to earthquake-devastated Chile in 1960. Over the next twenty years, similar teams were provided to another 16 countries. This forms the basis of what John Kirk and Michael Erisman call Cuba’s ‘soft power’ status on the world stage, ‘flowing from its (medical) aid programs’.[11] By November 2008, Cuba had 17,697 doctors working abroad in 75 countries, along with 20,847 other Cuban health professionals. Cuban medical brigades operate in 27 countries, many outside of Latin America. The programmes use Cuban doctors who are replaced over a ten-year period by students from the host country who have been trained by Cuba.[12]

The Latin American School of Medicine (ELAM) was inaugurated in November 1999, with nearly 2,000 students from 18 countries, receiving free tuition, board, food and a living allowance, with the proviso that they would provide free healthcare provision in poor communities when they graduated. The first ELAM graduates in 2005 represented 28 countries in the Americas, including the United States. In 2001, the International School of Physical Education and Sports was established and by 2005 it had over 1,200 students from 75 countries in Africa, Asia and Latin America.[13]

Cuba’s educational assistance overseas began with the literacy campaign carried out in Angola between 1978 and 1981. By 1987 an estimated 4,000 Angolan students were studying in Cuba. In 1980, Cuban teachers joined the Literacy Crusade in Nicaragua. Building on the success of its teaching method, the Cubans developed a literacy programme for adaptation into different languages and for diverse communities around the world. By June 2008, the ‘Yes, I can’ (Yo sí puedo) Cuban method was being applied in 28 countries, including 15 in Latin America, coordinated by Cuban specialists. Over 3,600,000 people from 23 countries, from New Zealand to Nigeria and Guatemala to Equatorial New Guinea, had already learned to read and write using the programme. Over a dozen different versions of the programme have been devised including in Quechua and Aymara (for Bolivia), Creole (for Haiti), Tetum (for Timor L’Este), and Swahili (for several countries in Africa).[14]

After dipping in 2000, Cuba’s GDP growth averaged 6.3 per cent for the period 2001-2006 (with Venezuelan trade factored in).[15] However, instead of enshrining market mechanisms, economic stabilisation and material recovery led the Cuban government to roll back pro-market measures. Launched in 2000, the Battle of Ideas was a campaign to reconsolidate socialist principles, based on the concept that education and culture create commitment to political ideas but that these remain abstract if the standard of living is insufficient to alleviate daily concerns for survival. Material improvements were not to be achieved by promoting market exchanges and encouraging private enterprise, but by budgetary controls, central planning, and state investment in skills training and education, fostering industry, exploiting natural resources, diversifying agriculture, and investing in research and development for industrial production and the medical industry. Hundreds of social programmes were introduced and investments made to reverse the inequalities and marginalisation resulting from the previous decade.

Government expenditure on education rose from 6.9 per cent of GDP in 2000 to 12 per cent in 2008; and on healthcare from 5.6 per cent of GDP in 2000 to 11.5 per cent in 2008. Sixty thousand new classroom teachers were introduced between 2002 and 2008 and the number of Cubans who complete all educational levels went up from just over 500,000 in 2002/3 to 640,000 in 2007/8.[16] While investment into social welfare increased, between 2003 and 2005 financial resources were recentralised, removing financial autonomy from state enterprises and providing the state with a lever to foster productivity and efficiency gains via investments and planning, not via competition and free enterprise. The number of mixed enterprises (Cuban state, and private/foreign capital) operating in Cuba decreased by 41 per cent from 403 in 2002 to 236 in 2006, accounting for less than 1 per cent of employment.[17] The Energy Revolution launched in 2006 focussed on economic and ecological efficiency, reducing energy consumption, government subsidies, and vulnerability to attack by the United States.[18]

Recent reforms, especially the wage reforms and the distribution of idle state land in usufruct (rent-free medium-term loans) to individuals and families introduced under Raúl Castro, have lead to speculation that the Revolution is increasingly embracing mechanisms of capitalistism. In reality, these measures reflect the Revolution’s flexibility, already demonstrated during the Special Period, in devising policies to deal with urgent problems—low salaries, high food and fuel prices, dependence on imports, and the consequent balance of payments deficit, low productivity and inefficiency, the need for foreign investments, the U.S. blockade, and natural disasters—without sacrificing the paradigm of Cuba socialista. Raúl Castro has clearly stated that he supports large state enterprises and declared: ‘I was not elected President to return capitalism to Cuba or to surrender the Revolution. I was elected to defend, preserve and continue to perfect socialism, not to destroy it’.[19]

The Venezuelan embrace
It is in the context of Cuba’s diversification of trade and production since the 1990s, the investments in and internationalisation of healthcare and education provision, the campaigns for efficiency in enterprise management and energy, and for food sufficiency, and the recentralisation of finances and retraction of the free-market, and the Battle of Ideas, that Cuba’s relationship with Venezuela and the advent of ALBA must be understood. Twenty years after Cuba was left isolated by the collapse of the Soviet bloc, compounding the U.S. blockade, it has fostered new trade partnerships which limit the reintroduction of capitalist social relations and mechanisms which would be gradually imposed via private/capitalist foreign direct investments and increasing reliance on free enterprise. Trade with Bolivarian Venezuela and through ALBA has removed from Cuba the obligation to completely insert itself into the capitalist world market. It has provided the Revolution with an alternative export strategy that is consistent with its socialist principles, reaps the benefits of the Revolution’s welfare-based development strategy, and is not obstructed by the U.S. blockade.

The Chávez government began by attempting to reform the political apparatus within a capitalist framework, to use democratic, institutional and legal mechanisms to wrest power from the oligarchy, and redistribute wealth to Venezuela’s poor majority. Thousands of Cuban educators and medical personnel went to work in Venezuela, particularly in poor communities, in exchange for 53,000 b/d of oil imports sold at below world market prices. This barter exchange brought Cuba a much needed respite from the blackouts and bus queues of the Special Period caused by oil shortages. It also led numerous commentators to conclude that Cuba’s survival was thanks to cheap oil from Venezuela.[20] However, as Max Azicri has pointed out ‘While Havana’s oil payments are actually below world market prices, its services are highly valuable to Venezuela, helping to carry out the Bolivarian social programs aimed at aiding low-income sections of the population … the price tag for Cuban assistance to Venezuela is more difficult to estimate accurately.’[21]

The exchange became the modus operandi for trade between the countries and arguably contributed to the formation of Chávez’s initial proposal, in December 2001, for a symbolic Bolivarian alternative to counter the neo-liberal Free Trade Area of the Americas, known in Spanish as ALCA. (ALBA means dawn in Spanish.) Fidel Castro pursued the proposal and the governments of Cuba and Venezuela began to work on the project. The process was interrupted by political and economic crises in Venezuela; the coup attempt of April 2002 and the oil industry lock-out from December 2002 to February 2003.

When the Venezuelan Medical Federation boycotted Barrio Adentro, a health project proposed by the Chávez government, it cost less money and took less time to trade cheap oil for Cuban doctors than it would have taken to train new doctors to be employed by the Venezuelan state. By mid-2004, 10,000 Cuban doctors were in medical centres throughout Venezuela serving a maximum of 350 families.[22] Thousands more Cubans arrived in Venezuela as, having gained control of the Venezuelan state oil company, PDVSA, the government channelled its profits into five additional social programs between 2003 and 2004 alone.

Medical cooperation was consolidated with the establishment of Operación Milagro, under which Venezuela paid for thousands of people with reversible blindness to travel to Cuba for free eye operations to restore their sight. The project was extended to neighbouring countries, so by March 2009, 1.5 million people from 35 countries had received corrective operations in Cuba and in the 60 eye hospitals Cuba has donated to 12 countries under the program.[23]

In January 2005, Chávez defined the Bolivarian Revolution as building socialism for the 21st century and began to make inroads against private property and capitalist social relations to fundamentally change the balance of economic and political power. This was accompanied by a more radical approach to international relations and pan-Latin American integration. From humanitarian assistance to the poor, the focus turned to coordinated state intervention and investments. Cuba has been a key partner in this process.

In September 2004, a bilateral cooperation between Cuba and Venezuela initiated 116 joint projects in 15 sectors in September 2004. ALBA was launched three months later. In April 2005, another 49 agreements were signed between the two countries to work in basic industry, telecommunications, informatics, iron, steel, water, sports and transport. A joint venture was set up between the two countries’ state oil companies, PDVSA from Venezuela and CUPET from Cuba, principally to upgrade the Cuban oil industry and prospect for Cuban oil. In 2007, an oil refinery at Cienfuegos, which had been closed for 18 years, reopened, bringing significant employment to the city. It began refining 65,000 b/d of Venezuelan crude to contribute to the Petrocaribe initiative (see below). Further investments are underway to expand its capacity. Output will be doubled at another existing refinery in Santiago de Cuba, while a new refinery, designed for Cuban crude, is being built in Matanzas with the capacity for 150,000 b/d. Other PDVSA-CUPET investments will increase crude oil storage facilities and establish a derivatives industry. There are plans to restore the 189 km oil pipeline from Matanzas to Cienfuegos, to design and install a liquid natural gas plant in Cienfuegos, and to upgrade an aqueduct in Baracoa. These projects will take several years to complete, but will give Cuba a refining capacity of 350,000 b/d, to be traded as part of ALBA and Petrocaribe.

Many other projects are underway, including an underwater fibre optic cable connecting the two countries, and joint companies set up to develop the nickel industry and exploit other mineral deposits, to construct a cement plant, and to invest in tourist facilities. There is a joint fishing company and five food production companies. Venezuela is financing an upgrade of Cuban railways. Two petrochemical factories have been set up to produce petrocasas—quick-assembly, PVC-based strong housing units that can withstand hurricanes. Cuban technicians have assisted with an energy conservation campaign in Venezuela, providing and installing over 1 MW of solar electric panels in Venezuela, Bolivia, Honduras, South Africa, Mali, and Lesotho.[24]

In October 2007, 14 new collaborative agreements between the two countries in construction, energy, tourism, petrochemicals, fishing, telecommunications, and nickel were signed, raising the number of joint projects to 352 across 28 sectors of economic and social development. Signing the agreements, Raúl Castro cited the principles behind them:

‘trade and investment are not ends, but means to achieve just and sustainable development, as true Latin American and Caribbean integration cannot be the blind child of the market, nor a simple strategy to expand external markets or stimulate trade. To achieve it, it requires the effective participation of the state as the regulator and coordinator of economic activity.’[25]

In the context of organised Venezuelan opposition attacks and U.S. aggression against Cuba, exemplified in the 2005 Commission for Assistance to a Free Cuba, the Venezuelan and Cuban militaries have established close defence cooperation.

Venezuela’s Bolivarian Revolution dovetailed with Cuba’s Battle of Ideas. Both are projects of national regeneration based on popular mobilisation. The material and political relationship between Cuba and Venezuela, formalised by ALBA, has become a mechanism for institutionalising ideological exchange. Today, hundreds of Cuban policy-makers, economists, political scientists, technicians, and academics are visiting or living in Venezuela. Among them are Guevara’s colleagues from the Ministry of Industries, including his deputy, Orlando Borrego. In October 2007, marking the 40th anniversary of Guevara’s execution in Bolivia, Chávez announced:

‘I have discovered Che the critical thinker, Che the transformer of the economic system, Che of the stage of industrialization in Cuba, Che and his reflections in Africa, Che and his criticisms of the Soviet model and the Soviet manual, all of which Borrego has been elaborating upon with an expertise and loyalty to the thought of Che.’[26]

In January 2008, the draft program of the newly formed United Socialist Party of Venezuela included the ‘strategic objective of totally neutralizing the law of value in the functioning of the economy’[27], echoing Guevara’s concerns of 45 years ago.

The Cuba-Venezuelan embrace has taken place in the context of many other multilateral agreements and trade deals signed between Cuba and, particularly, China, Canada and Europe, mainly the Netherlands and Spain (European trade partners), and between Venezuela and its neighbours.[28] Venezuela has initiated Petrocaribe (selling oil under concessionary financial agreements to 14 Caribbean nations, including Cuba); Telesur (a news and current affairs broadcast and Internet-based television channel set up with Cuba, Argentina and Uruguay); and Petrosur (an energy alliance between Venezuelan, Argentinean and Brazilian state oil companies with a social welfare focus); and been instrumental in establishing UNASUR, to facilitate the integration of South American and Andean community common markets, and the Bank of the South, to finance development in the region.

From alternative to alliance: The consolidation of ALBA
ALBA is inspired by the welfare-based development paradigm of Cuba socialista and its role as a soft power through its medical and educational internationalism. This does not mean that only those countries which have embarked upon a socialist development path can or have signed up. Between 2006 and 2008, Bolivia, Nicaragua, Dominica, Honduras, Ecuador, St Vincent and Grenadines, and Antigua and Barbuda joined Cuba and Venezuela, with Paraguay intending to join in late 2009. It provides cooperation agreements between governments, without imposing changes to domestic institutions or social-relations, whilst providing ideological and material support for radical internal reforms. Principally, ALBA is building a barrier to U.S. domination and European capital penetration, buttressing the most radical governments (Cuba, Venezuela, Bolivia, and Ecuador) while offering other countries in the region concrete examples of the benefits of trade relations based on South-South cooperation and the potential for welfare-based development models.

ALBA and associated trade agreements, such as Petrocaribe, assist countries in stabilising their key economic parameters (for example the price and supply of hydrocarbon resources) and invest in raising the skills level of the labour force through health and educational provision to facilitate endogenous development programs. The projects planned under ALBA use member-states’ resource strengths to promote domestic development focussed on eradicating poverty and breaking traditional patterns of economic dependence, exacerbated by neo-liberalism. Thus it buffers those countries from ‘the vicissitudes of competition, to all the fluctuations of the market’.[29] This bloc has the potential to become increasingly important in the context of the global financial crisis, highly unstable world commodity prices, and recession in the most developed capitalist countries with devastating consequences around the world.

At present the regional political and social implications of ALBA have greater significance than its economic impact. In the past ten years, the United States’ dominant position in loans, investments and trade with Latin America has been eroded by the European Union and now, increasingly, by China.[30] ALBA goes several steps further, proposing to replace the exploitative conditions imposed via unequal exchange, with regional trade based on cooperation, established to keep resources and surpluses in the region to be invested in structural development, not just to inflate GDP statistics. The region is extremely rich in primary resources, hydrocarbons, metals, and agricultural land, all of which are essential for domestic development but also for the continued prosperity of the advanced capitalist world.

Cuba was expelled from the Organization of American States (OAS) in 1962 as every country in Latin America, except Mexico, cut off diplomatic relations. Having worked hard to reverse its isolation, Cuba now has diplomatic relations with every country in the Americas except the United States. At the Summit of the Americas in April 2009, ALBA countries forced the demand for Cuba’s reintegration in the OAS to the top of the meeting’s agenda. The Cuban government declared that it will never rejoin, instead proposing a radically different regional integration, free from the dictates of the United States. In December 2008, a Summit for Latin American and Caribbean Integration and Development was held in Brazil. It was the first time in history that heads of state from every country in the region had met without the participation of representatives from North America, Europe, or other external powers.

By April 2009, there were over 100 ALBA projects underway. During the first half of 2009, ALBA began a process of consolidation, organising a permanent secretariat and setting up political, economic, and social councils to coordinate and supervise the treaty. At the ALBA Summit in June 2009, it was renamed from Bolivarian Alternative to Bolivarian Alliance for the Peoples of Our America— Trade Treaty of the Peoples (ALBA–TCP). Chávez claimed that this was not a semantic modification, but reflected the fact that ALBA had evolved from a theoretical proposal into a regional and geographic political platform of power.[31] Mechanisms for achieving this include: a multi-national plan to unite efforts in the basic industry sector, coordinating what each country produces and its import needs; a ministerial council of women; a work group to review industrial property doctrine; and a work group to focus on international law, self-determination, respect for sovereignty and human rights. The intention is to produce a common political economy approach, which expresses ideological affinity as well as concretely promoting development.

The current structural crisis of the global capitalist system has served to extenuate the anti-capitalist leanings at the heart of the ALBA project. This was encapsulated in the April 2009 Declaration of Cumana, which described as ‘insufficient and unacceptable’ the declaration of the Summit of the Americas that same month. Entitled ‘Capitalism Threatens Life on the Planet’ the ALBA declaration stated:

‘it is necessary to develop and model an alternative to the capitalist system. A system based on: solidarity and complementarity, not competition; a system in harmony with our mother earth and not plundering of human resources…in summary, a system that recovers the human condition of our societies and peoples and does not reduce them to mere consumers or merchandise.’[32]

Cuban-Venezuelan ALBA ventures include the company TRANSALBA, which owns oil tankers for ALBA trade, and a fishing company with a 31-vessel fleet to supply 25 per cent of the Venezuelan market and export to low-income countries, functioning within the ALBA food Programme which aims to achieve ‘food sovereignty’ within the member-states.[33] By June 2009, Cuba also had ALBA agreements with Bolivia, Nicaragua, Honduras, Dominica, St Vincent, and the Grenadines in the fields of education, health, tourism, transportation, culture, agriculture, communications, mining, and energy. New projects emerge under the banner of ALBA on a monthly basis. It will be several years until their economic impact can be measured. Already there are sports competitions and literary awards organised under ALBA.

Three Caribbean nation-state members, excluding Cuba, have a combined population of a little over 260,000 people and a land mass of just over 2,500 square kilometres. These tiny nations are insignificant in relation to world trade or production. This is not the point, however, as recognised by Daniel Fisk, national security advisor for the Western Hemisphere in U.S. President Bush’s administration, at a congressional hearing in October 2005. He identified the ‘strategically located Caribbean basin’ as a ‘high priority for this Administration’ and warned of the growing influence of Cuba and Venezuela in the region. ‘Cuban and Venezuelan attempts to drive a wedge between the United States and its Caribbean partners’ Fisk said, represented a political threat, endangering the traditional U.S. dominance in the Western Hemisphere.[34]

The Bank of ALBA is a key institution, providing finances to member states. Inaugurated in December 2008 with initial capital of $2bn, 85 per cent contributed from Venezuela and the rest from Cuba, Bolivia, and Nicaragua, it operates without loan conditions and functions on the basis of members’ consensus. In April 2009, members approved a bank loan of $50 million to Nicaragua, following a financial boycott imposed on the country by the IMF. A $9.3 million loan was approved for Haiti, which is not a member of ALBA, to invest in rice production and to finance a Cuban literacy campaign there. The Fund ALBA Caribe links the Bank of ALBA to Petrocaribe. By June 2009, $222 million had been used to finance 84 projects in 11 Caribbean countries.[35]

On 1 January 2010, a new common currency for exchanges within ALBA will be introduced. The SUCRE (Unique System for Regional Compensation – also named after Antonio José de Sucre y Alcalá, aVenezuelan independence leader who fought alongside Simón Bolívar) will initially function as a virtual currency for the creation of a shared accounting unit. Raúl Castro described it as a ‘fundamental factor for boosting the trade and economic integration between us.’[36]

Four days after three additional countries joined ALBA, José Manuel Zelaya Rosales, elected President of Honduras, was ousted at dawn in a military coup ordered by the Honduran Supreme Court, thus obstructing a referendum, due to take place that day, proposing to establish a constituent assembly in Honduras. The United States is Honduras’ main trading partner, and the powerful agri-business elite of that country benefits from the control of these flows. It is they who oppose structural changes to promote South-South trade, to invest in welfare development, to bring literacy to the people with Cuban educators (introducing ideas of empowerment, cooperation and development, as well as literacy skills), and changes to the balance of political power. ALBA had lost its fifth largest member, in relation to population (the authority of the coup regime is being seriously challenged and Zelaya’s return is conceivable as this article is submitted). The Honduras experience underscores a potential weakness in the ALBA process, which is dependent on the political will of radical governments which can be removed from power either by elections or force. The Alliance proposes humanitarian, economic and social cooperation through non-market, non-profit-based exchanges between countries which, other than Cuba, are not yet socialist, and in which the means of production are not predominantly in state hands.

Other challenges lie in the operational details; creating the appropriate institutions to implement programmes efficiently, avoiding the destabilising impact of partisan interests, or competition for resources between member states. As the global recession deepens the temptation increases to implement protectionist measures, reneging on preferential pricing and development assistance to regional neighbours. The collapse of oil prices earlier this year suggested financial strain for Venezuela whose huge reserves are essential to bankroll the project.

However, Cuba’s ambassador to Venezuela, Rogelio Polanco, argues that it is the complementary basis of ALBA exchanges which bolster member states in the face of economic crisis. ‘Members will not be exempted from the effect of the crisis but they are already taking measures to diminish its impact on social fields’, he said. ‘ALBA is working to cooperate with other integration structures to combine forces. There are already examples with ALBA–Petrocaribe common summits, ALBA–UNASUR agreements, and so on’.[37]

Resistance from less radical political trends who want to exclude Cuba from the Bolivarian project is also a problem, as is the threat of a U.S. backlash. In June 2008, the U.S. Fourth Fleet began patrolling the Caribbean and South American waters for the first time since 1950. Following the United States’ tacit support for the military coup in Honduras, it does not seem that the prospect of direct or indirect military intervention in the region has been significantly reduced with the entrance of the Obama administration. Expelled from its military base in Manta, Ecuador, in September 2009, the United States has reorganised its military infrastructure in South America, transferring its regional base for operations to Colombia, which borders ALBA nations Venezuela and Ecuador. The announcement about the establishment of five new military bases in Colombia coincided with the coup in Honduras. Both can be considered as signs that under the Obama administration, the US government is stepping up aggression against the growing radical forces in Latin America. ALBA provides a forum for united action in the face of such challenges and adverse circumstances.

For half a century, policy in Cuba has been formulated within existing limits: political commitments (socialist welfare, state planning, the predominance of state property, anti-imperialist internationalism) and economic constraints (the U.S. blockade, trade dependency, difficulty with obtaining credit, and the relative ‘backwardness’ of Cuban industry and agriculture outside pockets of advanced technology). With patience, caution, and resolution the government has trodden a difficult path on the road to recovery from the Special Period. The journey is by no means over. Current priorities are to raise food production and solve housing shortages. 2008 was a challenging year for the Cuban Revolution because of the fall in world prices of Cuba’s principal exports (nickel, sugar, and seafood), the rise in the cost of importing foodstuffs and fuel, the world recession (with its impact on tourism), and three hurricanes which caused $10 billion of destruction, equivalent to 20 per cent of Cuba’s GDP. Despite this, Cuba’s economic growth reached 4.3 per cent, down from the 8 per cent planned, but far superior to the advanced capitalist countries. Growth was planned for 6 per cent in 2009, but has since been revised significantly downwards as the impact of the global recession hits the island.

The Revolution’s leadership have made concessions when necessary but Cubans have understood them as such and reversed them when expedient. By 2000, the Battle of Ideas reflected the success in this strategy and the road to recovery converged with the Bolivarian Revolution in Venezuela. Cuba embraced that process and in return became a central axis in the movement for pan-Latin American integration. As radical Latin American governments have rejected the savage legacy and modus operandi of neo-liberalism, they have increasingly recognised the alternative example of Cuba, which has resisted imperialism for 50 years.

ALBA is the fruit of Cuba’s internationalist, welfare-based development model, internationalism, and socialist principles. It is the expression of Guevara’s historic desire for international cooperation between underdeveloped nations. It is the vindication of the Cuban Revolution on its 50th anniversary. There are contradictions still to be solved and battles still to be fought. For Cuba that means strengthening the socialist character of the Revolution and supporting the socialist tendencies within ALBA to, in the words of Guevara, prepare ‘conditions so that our brethren can directly and consciously take the path of the complete abolition of exploitation’.[38]

[1] Ernesto Che Guevara, ‘Algeria’, in Ernesto Che Guevara: Obras 1957-1967, Vol. 2, Havana, Casa de Las Americas, 1970, pp. 574-75. For an analysis of Guevara’s economic ideas and his work as Minister of Industries in Cuba, 1959-1965, see Helen Yaffe, Che Guevara: The Economics of Revolution, London, Palgrave Macmillan, 2009.
[2] Guevara, ‘Algeria’, p. 597.
[3] Guevara, ‘Algeria’, p. 575.
[4] Fidel Castro, speech, 8 October 1987, in Ernesto Che Guevara: el gran debate, Havana, Ocean Press, 2003, p. 399.
[5] Fidel Castro, speech, 26 July 1989,
[6] This and the following information data from Claes Brundenius, ‘Whither the Cuban Economy after Recovery? The Reform Process, Upgrading Strategies and the Question of Transition’, Journal of Latin American Studies, 34:2, 2002, pp. 365-95, pp. 374 and 384.
[7] Brundenius, ‘Cuban Economy’, pp. 383-84.
[8] Elda Molina Díaz, ‘Cuba: Economic Restructuring, Recent Trends and Major Challenges’, on Monthly Review website, 19th April 2009.
[9] These and proceeding figures are available from Cuban sources. However, for a concise overview see Hannah Caller, ‘Socialism is Healthier’, Fight Racism! Fight Imperialism!, 208, April-May 2009,
[10] This and proceeding information from Charles Chinweizu, ‘Cuban Socialism Shows the Way for Biotech and Pharma’, Fight Racism! Fight Imperialism!, 210, August-September 2009,
[11] John M. Kirk and H. Michael Erisman, Cuban Medical Internationalism: Origins, Evolution, and Goals, New York, Palgrave Macmillan, 2009, p. 93.
[12] Caller, ‘Socialism is Healthier’.
[13] By 2005, over 800 students had already graduated.
[14] ‘Yo sí puedo in Kiswahili’, Granma International (Havana), 5 April 2009, p. 2.
[15] Elda Molina Díaz, ‘Cuba: Economic Restructuring, Recent Trends and Major Challenges’, Monthly Review website, 19 April 2009,
[16] Data available at the website of Cuba’s Ministry of Education: For a concise overview of the Cuban Revolution’s education policy, see Rebecca Rensten and Helen Yaffe, ‘Cuban socialism: “To be educated is to be free”’, in Fight Racism! Fight Imperialism!, 211, October-November 2009, p. 12.
[17] Carmelo Mesa-Lago, ‘The Cuban Economy in 2006-2007: Fidel’s Legacy and Raul’s Policies’, paper presented at the Association for the Study of the Cuban Economy annual conference, 2-4 August 2007, p. 15; and Emily Morris, Country Profile, Economist Intelligence Unit, London, 2007, p. 18.
[18] Helen Yaffe, ‘Cuba: Stirring Society at its Roots’, Fight Racism! Fight Imperialism! No 189 (Britain), February/March 2006,
[19] Raúl Castro, speech to the National Assembly of People’s Power, 1 August 2009,
[20] For example, ‘The Cuban revolution at 50: Heroic myth and prosaic failure’, The Economist, 30 December 2008,
[21] Max Azicri, ‘The Castro-Chávez Alliance’ in Latin American Perspectives, 36:1, January 2009, pp. 99-110, pp.107 and 109.161 Yaffe: Cuban Development
[22] Arachu Castro, ‘Barrio Adentro. A Look at the Origins of a Social Mission’, ReVista: Harvard Review of Latin America, Fall 2008,
[23] ‘Operation Miracle Keeps Opening Eyes Around the World’, 12 March 2009, .
[24] Laurie Guevara-Stone, ‘La revolución energética’, Renewable Energy World Magazine, April 9, 2009,
[25] Raúl Castro, speech, 15 October 2007, Juventud Rebelde (Havana), 16 October 2007, p. 3.
[26] Hugo Chávez, interview with Cuban television, 14 October 2007,
[27] Partido Socialista Unido de Venezuela, Article 4, Draft Program and Principles, 23 January 2008,
[28] In 2004 China signed an agreement to invest $500 million through a joint venture for a nickel processing plant with anticipated future investment of $1.3 billion to assist Cuba in exploiting untouched reserves. ‘Cuba’s International Economic Strategy Pays Off’, Cuba Policy Report, Issue 14, Lexington Institute, 4 February 2005, In 2005, the Netherlands received 30% of Cuban exports, Canada 22% and Venezuela 12%. Twenty-five per cent of imports came from Venezuela, 12% from China (rising to nearly 17% in 2006) and 9% from Spain, see Oficina Nacional de Estadísticas, Anuario Estadístico de Cuba 2006, La Habana, 2007, cited by Jorge F. Perez-Lopez, ‘Recent Cuban Foreign Trade Patterns’, in Nueva Sociedad, 7, julio-agosto 2008, p. 7. In July and August 2007 alone, joint enterprises and investments were made between Venezuela’s PDVSA and state oil and gas companies in Nicaragua, Argentina, Uruguay, Ecuador and Bolivia. See ‘Venezuela and Nicaragua create joint state oil company’, in Granma International, 29 July 2007, p. 8; ‘Chavez signs historic agreements with Argentina’s Kirchner’, in Granma International, 8 August 2007 (via website); and Nidia Diaz, ‘Energy on the Road to National Construction’, in Granma International, 19 August 2007, p. 14.
[29] Karl Marx and Frederick Engels, Manifesto of the Communist Party,
[30] China is now Brazil’s primary export partner and has offered Venezuela $10bn to exploit the Orinoco oil fields, a sum just short of recent U.S. annual foreign direct investment (FDI) in the country. Between 1997 and 2008, net flows of FDI into Brazil saw the United States’s 21% eclipsed by that of four European countries (Netherlands, Spain, France and Italy) at 43%. For Argentina, between 1997 and 2006, the U.S. share of FDI inflows was 27%, Spain’s 43%, and France, The Netherlands, and Italy together, a further 19%. Argentina and Bolivia have relieved themselves of U.S. debt with help from Venezuela and China. Vince McElhinny observes that the proportion of the IMF’s loan portfolio to Latin America fell from 80% in 2005 to 1% in 2007, see Bank of the South, Bank Information Centre Info Brief, November 2007,
[31] Cuba News Agency, ‘ALBA changes it name to Alliance’, 25 June 2009.
[32] Declaration of Cumana, April 2009,
[33] ‘Cuba and Venezuela Launch ALBA Fishing Company’, Cuba News Agency, 2 June 2009.
[34] From Philip Brenner and Marguerite Jimenez, ‘US Policy on Cuba beyond the Last Gasp’, NACLA report on the Americas, 39:4, January/February 2006, cited in Kirk and Erisman, Medical Internationalism, p. 109.
[35] Tamara Pearson, ‘Venezuela Helps Strengthen Regional Unity and Sovereignty at Petrocaribe Summit’, 15 June 2009,
[36] Raúl Castro, speech in the 5th Extraordinary ALBA Summit, Cumana, 16 April 2009, Granma International (Cuba), 26 April 2009, p. 9.
[37] Rogelio Polanco, email interview with author, 18 June 2009.
[38] Guevara, ‘Algeria’, p. 575.