Castro's rule was severely tested in the aftermath of the Soviet collapse, with effects such as food shortages as a result of a drastic loss of aid. Assistance from the Soviet Union since the revolution came to roughly $65 billion dollars, and the loss of that assistance was felt harshly. Cuba’s ability to import disappeared and production skydived. This forced the government to implement further austerity measures, the standard of living in Cuba fell as did employment rates. With an economic crisis preoccupying Russia Cuba had no where to obtain its oil from, leaving the country with energy shortages and creating further obstacles for production. This influenced Castro to further constrain the country, reductions in consumption and expenditure. Rather than change the central planned economy he had built, Castro felt that this was the short term solution whilst the nation bore the force felt by the collapse of the USSR and searched for new partners. The effect on Cuba’s economy and the future decisions of the government that the breakup of the Soviet Union had was extremely severe, causing a fall in GDP of 35% from 1989 to 1993. With the insulation that Cuba had been afforded by its relationship with the USSR gone the country entered into a period of extreme austerity, recession and famine, from which it is still recovering today.
After this period the government felt compelled to introduce many reforms to many different sectors of the economy. The isolation Cuba had experienced led the government to look towards attracting foreign direct investment (which had been essentially zero since the nationalisation of all foreign holdings) and a new emphasis on tourism was established. As the decade progressed regulations were further liberalised, reforms made it more attractive to invest in Cuba and the old laws born of a more severe ideology were amended. In Cuba today tourism is one of its most important industries and, although it was shunned post revolution due to the negative influences on society it was perceived to have caused beforehand, it is expanding more and more every year. It is fast becoming a key sector in Cuba’s economy and “no other sector has shown the potential to replace sugar as the main producer of hard currency or to grow rapidly at such a sustained rate.” (Leogrande, Thomas, 2002)
The government did not accept American donations of food, medicines, and cash until 1993. “By legalising dollars the government hoped to undercut the burgeoning black market, encourage an expansion in the flow of remittances, and capture some of this much-needed hard currency. These goals were accomplished – remittances rose, however, the social cost of this policy was the creation of a two-tier system of stratification. Cubans with access to dollars and those without.” (Leogrande, Thomas, 2002) Cuba found a new source of aid and support in the People's Republic of China, and new allies in Hugo Chávez, President of Venezuela and Evo Morales, President of Bolivia, both major oil and gas exporters. On July 31, 2006, Fidel Castro temporarily delegated his major duties to his brother, First Vice President, Raúl Castro, while Fidel recovered from surgery. In February 2008, Fidel Castro announced his resignation as President of Cuba, and on 24 February Raúl was elected as the new President. In his acceptance speech, Raúl promised that some of the restrictions that limit Cubans' daily lives would be removed. In March 2009, Raúl Castro removed some of Fidel Castro's officials.
As it stands today, once totally reliant on the United States and consequently on its great alliance with the Soviet Union, Cuba is now without a sponsor and is in the world market alone. It is still an economy founded on production of goods and services and in which its trade is vital to its survival. Without the subsidies and assistance of the USSR it has no option but to buy and sell at world prices. To survive it needs to become competitive in its industries and obey the severities of a world market. “This subordination of the Cuban economy to the rigors of the international market is Cuba’s new dependency, the dependency of the twenty-first century – subject not to the political whims of other nation states but only to the implacable rhythms of global capitalism.” (Leogrande, Thomas, 2002) From a state in political and economic turmoil at the start of its new chapter in 1959 Cuba has been affected by a host of changes and forces which have shaped its development. Both domestic and overseas influences have governed the way in which the island has been operated for the past half a century, incredibly the revolutionary rule has survived unlike many other similar regimes around the world. It has necessitated world attention and is still undergoing swift change from a previously authoritarian state to a much more liberal place. Without being enslaved to the wishes of a higher power, Cuba is able to now grow and prosper.
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