The historic event that is almost a political no-event

Among the several ways to look at Castro's decision to step down as Cuba's president and commander in chief of the armed forces, I would like to add an entry that looks forward, to whether this is means a real political change in the short term and some of its implications. I am posting here a piece that I wrote as part of my Latin America Analysis for Eurasia Group, the leading political risk analysis consulting firm in the US, a few days ago.

The 18 February announcement from Fidel Castro that he was stepping down as chief of state and head of the armed forces is a historic event, but does not presage major political or economic changes in the near term. It instead marks the end the political succession process that began 19 months ago when Fidel’s illness was first publicized. The announcement does, however, open the door to some changes in the style and substance of governance, Fidel’s younger brother Raul is more pragmatic, and lacks Fidel’s charisma and political authority.

The Castros have staged a peaceful and controlled transfer of power. Raul is set to be confirmed as head of state and the military by the National Assembly on 24 February, although he may not take all the political positions that Fidel held, including head of the Communist Party. Nevertheless, Raul will have a strong grip on the key political and security structures.

Unlike Fidel’s individual approach to governance, Raul will continue to incorporate other important political actors into the decision-making process. This power sharing has included prominent members of the armed forces and younger cadres. Carlos Lage, who is a key actor in economic policy and acts as the effective prime minister, is a clear example of the latter.

Raul’s apparent pragmatism will help him address the government’s main challenge: improving the population’s material conditions, while maintaining political control. Raul is no reformer,
but he has already publicly recognized the shortcomings of the Cuban economy, called for an improvement in wages and food distribution, and launched a new debate over the economy. He also established a salary-based incentive scheme to improve the efficiency of some state-owned companies the military controls. These steps have raised expectations and will probably require
some policy action in the short to medium term, such as addressing the dwindling
food supply.

Raul will face constraints that will prevent major short-term economic liberalization. While Fidel is ceding day-to-day control, his personal authority will continue and he is expected to play an important behind-the-scenes role. If recent speeches are any indication, he will oppose major changes. Moreover, the government—in conjunction with the military—still controls all key areas of the economy. The military controls at least 30% of state-owned firms, including those that dominate the tourist, agricultural, and construction sectors. Younger cadres, including Lage, meanwhile control the oil and mining sectors. Finally, there is little pressure on the government to modify policies in order to attract foreign investment, as long as current investment from Venezuela, China, Canada, and the EU brings in enough hard currency.

In short, the post-Fidel power structure in Cuba will be stable in the near term. But the distribution of portfolios in the government will signal the extent to which the new leadership will modify its policies to address the current social, political, and economic circumstances.