The Need to Modernize Cuba’s Coast Guard

Current US - Cuban Relations

For much of the half past century, US - Cuban relations remained openly hostile. Yet, despite the constant exchange of opprobrious discourse between each power’s major policy making institutions, there were a few notable exceptions to this rule. While the US remained officially hostile to Cuba, important institutions within the defense sector—such as the DEA and the US Coast Guard—developed informal ties with their Cuban peers in order to resolve mutual security concerns. Although these connections were not publicly recognized, they were useful in resolving common security concerns shared by both nations. In fact, to this day many US defense officials hold greater regard for Cuba’s security forces vis-à-vis many of its Latin American counterparts in making genuine strides to combat international narcotrafficking. 

Since Barack Obama’s December 17^th 2014 announcement, the President of the United States formalized a policy of détente with Cuba. However, despite this positive development, influential Congressional Republicans will continue to undermine the efforts toward full rapprochement by maintaining the Cuban embargo in place as enacted under the Helms-Burton Act. Moreover, the long-term goals influencing rapprochement center around diverging aims: President Obama seeks to use the rapprochement as a means to promote a Cuban transition to democracy, while the Cuban government merely seeks to procure economic advantages without undermining the political status quo. Although it will be difficult to make progress over the long term while each side maintains diametrically opposing aims, there is a list of important mutual strategic aims where both sides can foster greater cooperation. According to President Obama’s new policy in establishing diplomatic relations with Cuba, the “United States engagement will be critical when appropriate,” but will be supportive “on matters of mutual concern…such as migration, counternarcotics…and trafficking in persons.” Therefore, the United States and Cuba should actively enhance their collaboration in achieving these regional security goals—especially in antidrug cooperation. Reaching such an agreement would not only improve regional security but also forge stronger US – Cuban cooperation from which other pressing issues could be discussed and compromised in the future. 

Security Implications of Rapprochement 

The increase in US tourism, the easing of Cuba’s travel restrictions on its own citizens, the further liberalization of the Cuban economy to global trade and privatization, and ongoing internal corruption in the Cuban public sector may create opportunities for narcotraffickers to recruit drug runners, bribe public officials or possibly ensconce narcotics in port containers. The increased interstate traffic between the United States and Cuba—though still under restriction due to the Helms Burton Act—will nonetheless pose significant challenges to Cuban and US border security. Finally, in the short run, rumors and misconceptions about an impending annulment of Washington’s “Wet Foot Dry Foot Policy,” which grants Cuban refugees preferential treatment in obtaining US residency, will increase an incentive for illegal migration. Therefore, in addition to enhancing cooperation in international drug interdiction operations, the US Coast Guard (USCG) and their Cuban counterparts—the Tropas Guardia Fronteras—(TGF) must also coordinate a strategy to impede the flow of illegal immigration and human trafficking.

Strategic Location

Cuba’s geostrategic position in the center of the Caribbean allows it to play a crucial role in intercepting narcotic traffickers from any US bound traffickers passing through the Caribbean from Central America, the Greater Antilles or South America. Cuba’s position between the largest distributors of illegal narcotics and the world’s largest consumer drug market—the United States—means that Cuban territory could easily serve the interests of drug traffickers in lieu of law enforcement. Four thousand small Cuban keys and 3500 miles of shoreline offer a stealthy environment to perform their trafficking duties. Fortunately, Cuba’s firm anti-drug policy and informal cooperation with the USCG to actively disrupt drug trafficking demonstrates a resolute decision to satisfy Washington on this specific issue. In its 2015 Caribbean Border Counternarcotics Strategy, the United States seeks to “enhance intelligence, information sharing and interdiction capabilities associated with the” growing drug trade occurring along the “Caribbean border.” Now that Cuba enjoys open diplomatic relations with the US, it can further impress the US on its anti drug commitment by deepening its cooperation and coordination with Washington on the anti drug crusade. This will not only improve regional security, but also serve as a mechanism to enhance US – Cuban relations.

Map Source: The Economist 

Drug Trafficking Capabilities of Organized Crime

Although the quantity of US bound cocaine smuggled through the Caribbean tapered off in the 90s, the flow of traffic has been steadily increasing in the past few years. While not yet reaching the drug trafficking apex of the 1980s, law enforcement pressure in Honduras (the principal stop of US bound cocaine heading to Mexico) and along the US - Mexican border has prompted traffickers to shift a significant portion of their smuggling operations through the Caribbean. Marine General John F. Kelly highlights a 480 percent annual increase of abandoned cocaine and marijuana parcels along Florida’s coasts. Meanwhile, despite the successes of US law enforcement in interdicting 26,823 lbs of marijuana and 12,876 lbs of cocaine, as much as 80 percent of the illegal goods passing through the Caribbean successfully elude law enforcement patrols.  Moreover, despite Cuba’s commendable efforts at interdiction, Jamaican smugglers continually penetrate Cuban waterways and airspace to avoid US surveillance while en route to the Bahamas and Florida. 

Drug traffickers use a variety of means to elude detection while transporting the illegal contraband to its final destination. Smugglers will often use go-fast boats, commercial vessels, cargo containers, cruise ships and small airplanes to push contraband through the Caribbean. Others disguise their intentions by using yachts and sporting vessels to mingle with legitimate maritime traffic near the US coast. Worse yet, some traffickers completely evade visual or radar detection altogether by using Picadu fast-go boats composed of fiberglass material, semi-submersible vehicles or narco submarines. 

Cuban Capabilities 

At present, Cuba’s TGF are the main force in charge of disrupting drug trafficking and preventing illegal immigration. Under the auspices of its counternarcotics strategy, Operation Hatchet, the TGF uses armed helicopters, go-fast vessels—confiscated from traffickers during preceding missions—3 Stenka-class Soviet ships and 18 Zhuk-class Soviet patrol boats—though around half of these have been recently pulled out of service. Due to manpower and resource constraints, the TGF heavily depends upon inland coastal patrols, observation posts, radar systems, and its civilian fishing laborers to report any suspicious maritime activity. Ongoing economic constraints, fuel shortages, dilapidated infrastructure and the disrepair of much of its Soviet era military equipment hinders the TGF’s overall law enforcement capabilities. Although Cuban law enforcement and the TGF are a highly disciplined, motivated and dependable crime fighting force, they are inadequately equipped to expand the fight against regional organized crime. Accordingly, the Cuban government should make a genuine request with the United States for an appropriate allocation of military aid to address these shortcomings, and the United States should seriously consider it.

Recommendations

1. Cuba and the United States should formalize a security agreement focusing on mutual security concerns

Despite the US State Department’s praise for Cuban drug fighting initiatives, in its 2015 Caribbean Border Counternarcotics Strategy it fails to acknowledge the role that Cuba could play in improving security conditions in the Caribbean Basin. Now that political relations have been restored, the United States government should seriously consider engaging Cuba as a key team player in addressing pressing security concerns in the region. Conversely, now that the Cuban government has the capacity to openly negotiate with its peers in Washington, it should attempt to negotiate a security agreement with Washington on its end. This security agreement should formalize intelligence and information sharing programs and enhance regional interdiction capabilities of both parties. As the Cuban TGF expands it cooperation with the USCG and demonstrates its utility in hampering the growing drug trade in the Caribbean Basin, the US can progressively provide aid and assistance to the Cuban TGF.

2. The Cuban TGF should update and expand their surveillance capabilities and fleet of maritime and aerial vessels. 

Economic constraints will obviously prevent Cuba from completely modernizing its fleet overnight, so it should gradually modernize the fleet in a piecemeal fashion. Through apt negotiation, Cuba may be able to acquire limited military equipment, financial aid and training in relation to these efforts from the United States. Overall, this aid should include:

• Tethered Aerostat Radar Systems     • Large Patrol Boats    

• Small Fast-Response Cutters            • Military Helicopters                          

• Reconnaissance Drones                    • Subsidized Fuel                                 

• Joint Training Exercises                    • Cargo Scanning Systems

Because of economic constraints, the Cuban government should prioritize its surveillance capabilities in the short run. It should then seek to improve its long-range interception capabilities in the long run. 

Bibliography

“Border Guard (Tropas Guarda Fronteras)” Global Security. http://www.globalsecurity.org/military/world/cuba/tgf.htm

Cocoran, Kieran. “Drug Cartels Using New ‘go-fast’ Boats that are almost Invisible to Radar on Central American Smuggling Missions,” Daily Mail UK 16 January 2015. 

DeQuattro, Pat, “Misperception of US – Cuba Policy Shift Among Cuban Migrants Threatens Tragedy,” Council on Foreign Relations. 14 January 2015. http://blogs.cfr.org/davidson/2015/01/14/misperception-of-u-s-cuba-policy-shift-among-cuban-migrants-threatens-tragedy/

DeQuattro, Pat. “With Normalized U.S.-Cuba Relations, Border Security Just Got a Lot More Complicated,” Council on Foreign Relations. 18 December 2014. http://blogs.cfr.org/davidson/2014/12/18/with-normalized-u-s-cuba-relations-border-security-just-got-a-lot-more-complicated/

“Full Circle: An Old Route Regains Popularity with Drug Gangs,” The Economist. 24 May 2014. http://www.economist.com/news/americas/21602680-old-route-regains-popularity-drugs-gangs-full-circle

Gibson, William E. “Shifting Drug Smuggling Routes Bring Contraband to Florida,” Sun Sentinel. 5 April 2014. http://articles.sun-sentinel.com/2014-04-05/news/fl-drug-smuggling-routes-20140404_1_central-florida-south-florida-cocaine-shipments

Interest Section of the US. “Government of Cuba Frustration Increases Over Lack of Jamaican Counternarcotics Cooperation,” 08 August 2009. https://wikileaks.org/cable/2009/08/09HAVANA491.html

King, Ledyard, “Obama’s Options on Cuba End at Embargo,” USA Today. 18 December 2014. http://www.usatoday.com/story/news/politics/2014/12/18/congress-cuba-embargo/20598199/

Klepak, Harold Philip. Confidence Building and the Cuba-United States Confrontation. Department of Foreign Affairs and International Trade, 2000.

O’Reilly, Andrew. “Despite Decades of Enmity, U.S. and Cuba Find Common Ground on Anti-Drug Effort,” Fox News Latino. 12 January 2015. 

Partlow, Joshua and Nick Miroff. “In Fighting Against Drugs, Cuba and U.S. on Same Team,” The Washington Post 5 January 2015. 

Robbins, Carla Anne. “US – Cuba Relations: Three Things to Know,” Council on Foreign Relations. 30 January 2015. http://www.cfr.org/cuba/us-cuba-relations-three-things-know/p36063 

Tamayo, Juan O. “Wikileaks: Coast Guard Officer is Key US Man in Havana,” McClatchy Newspapers 07 August 2011. http://www.mcclatchydc.com/2011/08/07/119631/wikileaks-coast-guard-officer.html

US Department of State.  “Country Report: Cuba” International Narcotics Control Strategy Report (INCSR) (2009). http://www.state.gov/documents/organization/120054.pdf

US Department of State.  “Country Report: Cuba” International Narcotics Control Strategy Report (INCSR) (2014). http://www.state.gov/j/inl/rls/nrcrpt/2014/vol1/222869.htm

“US Embassy Cables: Cuba Frustrated by Jamaica’s Lack of Action Over International Drugs Trade,” Wikileaks. 11 March 2013. https://wikileaks.org/gifiles/docs/88/884126_wikileaks-us-cuba-jamaica-ct-us-embassy-cables-cuba.html

White House. Caribbean Border Counternarcotics Strategy. White House Press Secretary. January 2015. https://www.whitehouse.gov/sites/default/files/ondcp/policy-and-research/caribbeanstrategy5.pdf

White House. Fact Sheet: Charting a New Course on Cuba. White House Press Secretary. 17 December 2014. https://www.whitehouse.gov/the-press-office/2014/12/17/fact-sheet-charting-new-course-cuba

Withers, George. “Building Bridges in Unlikely Places: US-Cuban Cooperation on Security Issues,” Washington Office on Latin America. 24 March 2012. http://www.wola.org/commentary/building_bridges_in_unlikely_places_us_cuban_cooperation_on_security_issues

The Militarization of Post-Communist Cuba’s Political Economy

Introduction

At the end of the Cold War, the Soviet economy imploded which also gravely damaged the Cuban economy. In the Special Period that followed, the Cuban government sought ways to improve the vitality of the Cuban economy. As the economy continued to deteriorate, attaining economic security became the chief concern for the Cuban government because the moribund economy undermined the economic viability of the Revolution. Therefore, in order to safeguard the sacred tenets of the Revolution—national sovereignty and los logros—the government suited the Fuerzas Armadas Revolucionarios with the task of improving the economy. To prepare for this task, high-ranking FAR officials learned and mastered the models and techniques of Western business management and organization. While the FAR gained more success and earned a greater role in shaping the countries economic affairs, so too did its share of political power. The rise of Raul Castro further solidified the FAR’s power and influence in Cuba since his power is vested in the FAR. Over the years, the FAR has concentrated its hold over the economic and political apparatuses of the country. This has produced some troubling consequences that include corruption and rent seeking behavior. The militarization of Cuba’s political economy may produce some troubling market distortions and negative externalities, and it will likely continue in the foreseeable future. The elites who sustain this political economy will likely build a consensus with the nation centered on economic growth and political stability as a means to justify their own power. Ultimately, the elites of Cuba in the 21^st century are primarily concerned with safeguarding their privileges and securing regime continuity.

The Special Period

During the Cold War, the Cuban government enjoyed special trade and economic privileges with the Soviet Union due to its ideological affiliation with Moscow. Previously, the Cubans enjoyed generous fixed prices for its exports, subsidies on its imports as well as subsidies on consumable goods, inputs for manufactures and lax financial lending agreements. Cuba’s economy was especially dependent on the sugar-for-oil program, which improved the terms of trade for preferentially priced sugar in exchange for heavily subsidized oil. The Soviets also sustained the Cuban economy with fresh flows of investment, endowments of capital inputs, and food to meet the needs of sustaining the Revolution. While this privileged relationship with the Soviet Union remained firmly intact, the Cubans had little incentive to restructure their economy. However, once the Soviet Union and the Comecon trade system collapsed, the Cubans suddenly lost their salient sponsor and were forced to use their own ingenuity to persevere one of the worst crises yet to challenge the Revolution’s sustainability.

In a speech in 1990, Fidel Castro defined the impending economic decline and languid era by stating that Cuba was entering a “special period in a time of peace.” During the Special Period, Cuba suffered from its worst external shock in recent history. Labor productivity—particularly in energy dependent sectors—tanked from a decline in subsidized inputs such as fuel, technology and capital. As a result of this and from a sharp reduction in trade, the GDP plummeted somewhere between 35 and 50 percent. The crisis left an indelible impact on the country’s civilian population. At its apex, there were acute shortages of foreign exchange and basic goods such food, fuel, electricity, water and medicine. US efforts in 1992 to deliver a coup de grace to the Castro regime by increasingly strangling the economy with harsher Embargo statutes further exacerbated the intensity of the crisis. 

During the Special Period, economic insecurity became one of the primary concerns for the regime. In an attempt to increase efficiency and productivity, the government abruptly instituted a series of emergency market oriented reforms that would have been deemed heretical just a few years earlier. In October 1992 the Fourth Congress of the Partido Communista de Cuba proliferated a document that encapsulated the new policy outline. The 18 points, which contain a combination of “liberalizing and state led” elements, were enacted in order to ensure the survival of the regime and to defend two sacrosanct principles associated with the Revolution: national sovereignty and “los logros—the accomplishments in health, education, social equality and full employment.” Therefore, moderate liberalization of the economy was merely a pragmatic means to sustain the Revolution; it was never intended to be an end in of itself. Nevertheless, the government enacted a series of reforms related to employment, private business, and agricultural production. And, as it turns out, the institution within the Cuban government that was in the forefront of promoting these reforms was the Fuerzas Armadas Revolucionarios (FAR).

A New Mission and a New Model: Perfeccionamiento Empresarial

Due to the lack of a functioning civil society or a free entrepreneurial class in Cuban society that would be capable of undertaking such a tremendous burden, the responsibility of managing the economy naturally gravitated toward the only institution that was equally considered both competent and loyal: the FAR. After the onset of the Special Period, the FAR’s chief responsibility, in addition to maintaining national defense, was to respond to the economic exigencies that challenged the sustainability of the Revolution—though Raul’s assertion that “beans are more important than cannons” more thoroughly highlights where the FAR’s strategic lens was primarily focused. 

In preparation for such a grand undertaking, Raul had already started sending high-ranking military leaders to business schools in Western Europe, Latin America and Asia during the late 80s and 90s in order to acquire knowledge in management and business techniques. Many of the pragmatic ideas within these soldiers’ business curriculum inherently undermined many of the inefficient production practices and resource allocations associated with Cuba’s Soviet style command economy. For example, in Peter Drucker’s Management: Tasks, Responsibilities, Practices, Drucker asserts that a “manager has to not only improve what already exists, but he also has to be an entrepreneur; he has to redirect resources from areas of low or diminishing results to areas of high or increasing results.” In contrast to their hard line Marxist comrades in the PCC, these officers—heavily steeped in the language and mathematics of Capitalism—were being transformed into pragmatic “technocrat-soldiers.” After internalizing these pragmatic business methodologies, the officers returned to Cuba ready to implement a new economic model entitled el sistema de perfeccionamiento empresarial (SPE) for the benefit of the Cuban economy. Overall, the system sought to enhance the self-dependence of the FAR, diminish its reliance on the Soviet Union, improve productivity and efficiency in military industries producing military equipment and consumable goods, and, most importantly, to bequeath an effective paradigm that could be utilized throughout the Cuban economy. Using business parlance reminiscent to Peter Drucker’s teachings, the late General Julio Casas Reguiero—a former deputy minister of MINIFAR in charge of economic affairs as well as the former chief of Cuba’s largest state business conglomerate (GAE SA)—asserted that one of the principal goals of the SPE was to apply “market mechanisms” and “new technical and entrepreneurial solutions to [solve] old problems.”

While the need to abandon the inefficient Soviet style command economy was fairly evident, Fidel, and many other high-ranking socialist ideologues in his inner circle, were still reluctant to unconditionally accept the new SPE paradigm as part of a new development strategy. However, soon the FAR had ample opportunities to test and prove the value of its new economic model in prodding the moribund Cuban economy back into a state of productivity. Using the SPE, the FAR was expected to apply its managerial skills to the agricultural sector in order to boost output and provide food for its own troops. The FAR’s agricultural operation was so successful that it not only made the FAR increasingly more self-sufficient, but it also produced surplus output for sale in local agricultural markets. These gains in self-sufficiency would eventually allow the military to pay for 50 percent of its own operational costs with money earned from its own production of goods and services. To further prove the worthiness of the new system, the FAR was given permission to test the SPE model on one of the largest industrial conglomerates—the Military Industrial Union (UIM). With the supervision of Division General Julio Casas Reguiero, an assortment of experts affiliated with the Grupo de Perfeccionamiento Empresarial began to employ managerial reforms and changes in production methods in the factory. Since the outcome proved to be so successful, the SPE paradigm was universally applied to the rest of the Military Industrial Union’s 230 industries, which engage in biotechnology, sugar production, pharmaceuticals, the production of military hardware and consumable goods. In the following years, the majority of these factories have vastly boosted their output and profitability. The success of this model led to its adoption throughout all of the large state owned enterprises—especially those firms, such as tourism and natural resource industries, with an immense foreign exchange earning potential. Consequently, the prestige and power of the FAR soared as a result of its increased participation and success in the economy.

Curtailment in the Late 90s

Fidel and his loyalists viewed the reforms of the Special Period as mere emergency measures. They were always suspicious of the reforms and thought they were undermining revolutionary ethics and the social achievements of the revolution. Throughout the Special Period, Fidel tenuously vacillated between pragmatic officer corps and anti-market ideologues operating within the upper echelons of the PCC—though he tended to side with the latter during critical moments. With the support of Venezuelan oil subsidies buoying the economy, Fidel believed the Revolution could afford to turn its back on the economic reforms of the Special Period. 

Raulismo: Reforms Under Raul Castro

In 2006, the year the ailing Fidel Castro partially ceded the reigns of power to his brother Raul, the GDP growth rate had reached the peak of a business cycle: 12.1 percent. Since 2006, the Cuban economy sharply contracted to a growth rate of 1.4 percent by 2009. According to the CIA World Factbook, it now obstinately rests at 1.3 percent. Fidel’s curtailment of the Special Period’s liberalization, it seems, not only lacked the prescience to foresee another looming economic crisis, but also failed to acknowledge the economic limitations of socialism under a command economy. The advent of a fresh economic crisis, required a swift change in strategy. There were now no doubts. Under the leadership of Raul Castro, reform is seen as an inescapable necessity. “Either we reform,” proclaimed Raul in the National Assembly in 2010, “or we sink.” Ultimately, this Raulista coalition seeks to embrace and formally enact a series of structural changes because its political legitimacy and regime survival depends on attaining long run economic prosperity and sustainability. Now, according to Raul, there will be no more backtracking: the “updates” will occur “sin prisa pero sin pausa.” In order to build a like-minded consensus of pragmatic reformers to back this process of actualizacion, Raul replaced all of Fidel’s close aids and personal advisors with Raulistas—mostly technocrats and business elites from the military. The power of the FAR, an institution that has long been inextricably linked with Raul, and the pragmatic officer corps is now more entrenched then ever. 

The Militarization of Cuba’s Political Economy

The military’s involvement and influence in the economy continued to grow from the 1990s to the present. The implementation of the SPE has vastly increased the FAR’s concentration of economic and political power in Cuba. At present, analysts predict that the military controls up to 60 percent of the island nation’s total economy. The power of the FAR is further highlighted by how large their aggregate activity is to the economy: “89 percent of exports, 59 percent of tourism revenue, and 69 percent of hard currency wholesale transactions to name a few. A brief list of some of the industries and organizations under FAR’s managerial sway gives one a true idea to the almost ubiquitous extent of their economic clout. These industries and institutions include various governmental ministries—such as the Ministry of the Sugar Industry, the Ministry of Transport and Ports, the Ministry of Fisheries and Merchant Marines—special development zones such as the Mariel port, as well as a variety of SOE’s like the Cuban Civil Aviation Corporation, the Metropolitan Bank, Habanos SA (a cigar industry) and Gaviota SA (Cuba’s enormous tourist conglomerate) just to name a few more. In general, any large-scale joint venture endowed with foreign capital inevitably involves dealing with a military managed state owned conglomerate. 

Nowadays, the political sway of the FAR is so vast that some commentators refer to the Cuban military as a “state within a state.” In addition to its domination of economic institutions and enterprises, military generals also coopted many of the primary civilian political institutions of the central government including the Politburo of the PCC, the State Council and the Council of Ministers. As a result, every aspect of policymaking in Cuba bears the influence of the FAR. Indeed, the FAR also enjoys a large degree of political independence in economic activity that can be corroborated by an ex-Canadian ambassador who now provides consulting services for foreign enterprises operating in Cuba. According to Mark Entwistle, the FAR can circumvent the inhibiting bureaucratic framework that hinders most other enterprises from doing business. For example, while trying to open a soybean operation in Cuba, he hit a dead end with the ministry of agriculture. However, once he got in contact with the military, all the bureaucratic hassling disappeared. The FAR is indubitably one of the most influential institutions in modern Cuba today. But this begs a few questions: what are the implications of the concentration of so much economic and political power by an elite cadre of military officers? And how does this concentration of power affect the economy and the society at large?

Future Challenges: Corruption and Rent Seeking

Business in Cuba is rife with corruption, and with a recent effort to reduce fastidious government oversight over business management of SOEs, it will likely increase. In 2009 Raul began sending government agents to examine the accounting books the SOEs. Shortly thereafter, more than a few business managers were incarcerated. For instance, Rogelio Acevedo—a loyal revolutionary who fought with the Castros in 1959 and managed a state aviation company—was fired for “leasing the state’s airplanes off the books.” In another case, a Canadian executive was implicated with fraud, corruption and tax evasion with over a dozen Cuban state officials working in the ministry of sugar and in large SOEs. Finally, 19 employees at an egg factory stole 356,000 dollars worth of eggs for sale in Cuba’s black market. Indeed, the temptation for corruption runs high as business managers and their subordinates manage multimillion dollar enterprises, while earning a mere few dollars per month. In the past five years, there have been myriad corruption cases involving high level military and business elites on the island, and this problem will likely continue to pose a challenge to the state. While economic reforms grant large SOEs greater autonomy, allowing them more leeway in microeconomic decisions, productivity gains will be attained. However, as the government relaxes its authority, business managers “steeped in graft tend to get even greedier.”

Meanwhile these large SOEs also give rise to market distortions that incur enormous costs to society at large. The monopolistic behavior of these large industries may give rise to rent seeking behavior. State bureaucrats who manage these enterprises bear no loss, burden or disincentive for risky or poor decision-making because it is the taxpayers’ money that is wasted, not the bureaucrats. Business elites in the SOEs have ample opportunities to exploit “foreign direct investment and marketization” for their own personal gain. Worse yet, the process of gradual reform could possibly exacerbate these existing market distortions—or possibly create new ones for rapacious opportunists to exploit. This will undoubtedly expand the widening gap between the winners and losers in Cuban society.

FAR in the Post-Raul Future

Many commentators predict that Miguel Diaz Canel, the current vice president who is being groomed for the presidency once Raul steps down in 2018, will face many challenges as the next in line. Although the military is nominally subordinate to the civilian apparatus of the PCC, the majority of its member stem from the FAR. Indeed, many Cuban analysts seem to believe that the military will be the true power that Diaz Canel will answer to. In truth, the military has very powerful interests it will seek to jealously protect. In any event, any post-Raul leader will not want to take any measures that alienate the economic interests of the military. Therefore, he must ingratiate himself with the military, though those who know Diaz Canel say he has already nurtured constructive relations with provincial military leaders who have recently ascended to key positions in the government. In all, the military will continue to be a significant political power in Cuban society, and, as power transfers to a new civilian leader, it will ultimately attempt to form a transition that is favorable to its economic interests.

Conclusion

The Special Period was the worst economic disaster in the history of Revolutionary Cuba. The severe economic malaise challenged the sustainability of the Revolution. As a result, economic security became a salient national security principle, and, the FAR, was tasked with the duty of improving the economy. During the late 80s and 90s, Raul sent hundreds of high-ranking officers to master the skills and techniques of business management. These market-oriented methods were almost immediately put to use to augment the efficiency and productivity of State Owned Enterprises all over Cuba. The FAR’s role in the economy continually expanded as the state formally adopted its techniques in these SOEs. The power and influence of the FAR steadily grew and crystallized under the reign of Raul Castro. Upon his rise to power, Raul purged most of the remaining hard-line anti-market ideologues and built a Raulista consensus with loyal army technocrats. Consequently, to this day, the military is the most powerful institution in the Cuban political and economic apparatus. This concentration of power is producing an elite with special privileges vis-à-vis ordinary Cubans. It is also producing rampant corruption and rent seeking behavior—especially as the government decreases its oversight over monopolistic state companies. Ultimately, this elite cadre of army officers will seek to protect the privileges and benefits they enjoy as the economic overlords of Cuba. Since they wield so much political clout, it is unlikely that Raul Castro's appointed successor would seek to directly challenge their interests. On the contrary, Miguel Diaz Canel will most likely work with the business elites to continue with the national reform agenda. In the Cuba of the 21^st century, charisma and revolutionary rhetoric by itself cannot sustain socialism. Ultimately, the political legitimacy and stability of any Cuban government will rest upon its ability to improve the material prosperity of its citizenry. For that reason, the military elites will seek to promote a gradual, yet practical national growth strategy that produces tangible economic progress, while ensuring regime continuity—and their positions within it. 

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The Socio-Economic Impact of Organized Crime in Tamaulipas

• The arrest of top tier drug kingpins and the ongoing fragmentation of the Zetas into localized cells will weaken many gangs’ drug dealing capabilities and lead to an acute increase in parasitic forms of income generation—especially kidnapping and extortion—as well as territorial conflicts.

• The rise of violence and predatory crime will cripple local economies and engender brain drain. Foreign investors may be deterred by the insecurity.

• Censorship of the press, political corruption and co-optation of local law enforcement will further erode the rule of law and allow impunity to reign supreme. 

• The state should respond to these problems by sending a large military force to dismantle Zeta cells and improve security while investing in more sustainable solutions: strengthening the rule of law and building strong communities.

Problem 

The Zetas, once Mexico’s most powerful organized crime group (OCG), pioneered a new vicious business model to Mexico’s organized crime landscape. Unlike traditional Mexican OCGs that focused specifically (or at least more intently) on transnational drug trafficking, the Zetas economic model relies on terror, violence and brute force to control territory and to then engage in a variety of parasitic rent seeking activities (such as kidnapping, extortion, theft, human trafficking and taxation) to generate income. Because of its decentralized structure, the organization quickly fractured into a multitude of competing localized cells after the government decapitated the top leadership in a number of high profile arrests and shootouts. 

As the Zetas continue to fragment under the pressure of law enforcement, succession struggles and turf wars, the level of violence and parasitic crimes in the Zetas strongholds (Veracruz, Nuevo Leon and particularly Tamaulipas) will skyrocket—especially since they will face off against a similarly fragmented Gulf Cartel that will mirror their brutality and business tactics. Increasingly, because these groups are losing their capacity to engage in international drug trafficking, they are focusing more on exploiting economic opportunities in their local turf and growing more dependent on kidnappings, extortion and theft to produce steady profits. Current statistics and incidents corroborate this looming trend. Kidnappings rates in Tamaulipas surged to 6 per 100,000 citizens—the highest rate in all of Mexico. Meanwhile, Mexico’s state oil company, Pemex, reported a 58 percent increase in illegal oil pipeline taps since last year. Moreover, indiscriminate armed robberies and cases of extortion continue to plague businesses, buses, and citizens of all social classes. Lastly, the cartel carries out these crimes with virtual impunity because it actively corrupts policemen and politicians while stifling the freedom of the press. Those public servants or citizens who are brave enough to speak out or oppose the cartel are met with swift, and often deadly, retribution.

Societal Impacts 

While the ongoing insecurity has already undermined the local economy of Tamaulipas, the increase in violence, kidnapping and extortion will exacerbate the region’s economic descent. Coastal towns along the Gulf such as Tampico and border towns such as Nuevo Laredo, Reynosa and Matamoros used to thrive from tourism and commercial ties with local residents from Texas. For example, the used car industry in Matamoros flourished from its proximity to the United States. Mexicans would often haul broken vehicles, fix them, and entice Mexican consumers from the interior with good deals on used cars. Now these buyers are too afraid to travel to the border and the entire industry is suffering. Worse yet, after a recent three day surge in violence in a section of Tampico, many residents gave up on the city altogether. In one major business district, a wave of shop owners immediately signaled their despair by posting “for sale” and “for rent” signs. Meanwhile, overall matriculation rates at the Tamaulipas Institute of Superior Studies fell by 20 percent while foreign student enrollment plummeted by 90 percent. Indeed, many affluent victims of organized crime, who can afford to do so, choose to move their families and their businesses to the United States. The exodus of upper and middle class business owners, entrepreneurs and professionals is not only creating a destabilizing brain drain but also stimulating capital flight and a reallocation of financial investments across the border in the United States. Finally, as the Mexican government hopes to attract foreign investors to revive Mexico’s oil industry, the insecurity of the oil rich Tamaulipas state could compromise Mexico’s capacity to lure investors.

By means of bribery and terror, the Zetas corrupted or intimidated the local and state politicians, police, and judicial officials into a state of tacit submission. A recent confidence test sanctioned by the state government and administered to the state’s police force reveals that close to half the police force may have links with organized crime. When gangsters with links to organized crime are actually arrested, 98 percent of them are eventually released. The Zeta’s infiltration of the police and judiciary seriously undermines the rule of law. Consequently, many victims of serious crimes fail to report crimes to the authorities because they fear the possibility of reprisals from their attackers. Even public spirited citizens telephoning anonymous crime tips to the authorities have been traced and targeted by criminals. Although the media seeks to increase government accountability by highlighting Mexico’s political-criminal nexus, at the moment, it faces insurmountable dangers from organized crime. Even a citizen journalist, who protected citizens by providing real time information about the location of shootouts, was brutally murdered for breaking the cartel’s code of censorship. As long as political, judicial and law enforcement institutions remain under the control of organized crime and fail to protect citizens’ right to free speech, the Zetas will continue to reign with impunity. In all, this represents a political failure of the Mexican government in its duty to serve and protect its citizens. 

Recommendations 

The following recommendations seek to address the short and long term problems underpinning criminality in Tamaulipas. In order to reduce the power of organized crime, safeguard the economy and develop sustainable security at the local level, the Mexican government should:

1. Dismantle Zeta cells and create an anti-kidnapping and extortion commission.

First and foremost, the state must send a large contingent of several thousand Mexican armed forces and intelligence agents to disrupt and dismantle Zeta cells in Tamaulipas. The state should create an anti-kidnapping commission that encourages citizens to safely report kidnappings and extortions to security officials. Security officials should aggressively pursue and detain kidnappers. Federal justice officials should then create kidnapping tribunals with harsh prison terms. 

2. Increase patrols of federal troops over business districts, highways and vital economic interests. 

A portion of the military should also provide surveillance in the business districts of large urban areas as well as interstate highways. If security can be guaranteed in cities and highways, business owners will keep their stores open and consumers will return to these industrious border towns. Eventually, so too will tourists. Finally, the military must maintain patrols over the state’s oil pipelines in order to maintain the confidence of foreign investors. 

3. Reform and strengthen local law enforcement and judicial institutions.

While the military maintains security, the Mexican government will cooperate with the United States with the aim of transforming local law enforcement and judiciary into effective and trustworthy institutions that serve and protect citizens and uphold the rule of law

4. Build strong communities and foster an alliance between civil society and government.

Community and business leaders, civil society institutions, the media and local governance must collaborate in order to foster mutual trust and to sustain the rule of law. The federal government should invest money in social programs aiming to empower citizen groups to take an active role in community policing and development. Since law enforcement’s best source of intelligence against organized crime are its citizens, developing and sustaining trust between citizens and the police must be a top priority. Finally, the free media must be ardently protected in order to help civil groups improve government accountability and transparency. 

Conclusion

Although these latter two reforms will take time to bear fruit, they will not only provide sustainable solutions to security problems in Tamaulipas, but also serve as a security template for other troubled regions in Mexico. Therefore, the federal government should contribute a steady wave of financial aid and security support to Tamaulipas state until these community institutions are ready to stand on their own feet.  

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