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North Korea is often touted as a sui generis system. But interesting comparative lessons can be drawn from other Communist systems, even from paths not taken. We have posted before on some studies of Cuba that we thought were of interest, including an explicit Cuba-North Korea comparison by Jose Luis Leon-Manriquez.
My colleague Richard Feinberg has now weighed in with a new report for the Brookings Institution called Reaching Out: Cuba's New Economy and the International Response. Numerous parallels struck us, but some obvious differences as well:
- Unlike North Korea, the Cuban regime invested more aggressively in human capital, although as Feinberg notes the regime “left its citizens without the tools or incentives to fully employ their acquired talents.”
- As in North Korea, the collapse of the Soviet Union was a huge shock. The collapse in trade initially generated modest reforms, but these were reversed by Castro, who accused the emerging private sector of being “parasites” breeding injustice and inequality. Similar concerns have given rise to the oscillating pattern of reform in North Korea.
- But Cuba now appears to be cautiously breaking out. One possible explanation: a functioning Politburo that is at least somewhat more diverse than anything visible in North Korea. While still dominated by the military and party, it at least includes members with economic and social policy portfolios. Marino Murillo, the senior official most associated with economic reform, was elevated last year to the Politboro; although his precise views are unknown and he comes from the state bureaucracy rather than academe, there is no parallel at the center of power in North Korea that we can see.
- A particularly interesting comparison comes in the pattern of Cuba’s foreign economic relations. The opening to foreign direct investment has always been tentative. As in North Korea, the Castro regime proved too clever by half in taking tough negotiating positions with investors that only deterred investment. But despite their reputation as relentless engagers, the Europeans also balked at the regime’s human rights record and the EU only officially re-engaged in 2008. How did Cuba respond? By turning to emerging markets that did not exhibit the same squeamishness including—you guessed it—China. As we argued in a monograph on economic statecraft with North Korea, sanctions often have the perverse effect of increasing reliance on exactly the wrong parties.
However, the most interesting chapter to us was on the international financial institutions. Feinberg provides a wide-ranging introduction to the possibilities for engagement with non-members, and while some of it is Cuba specific (Helms-Burton) there are general lessons.
Contrary to what is often believed, Feinberg notes that there are numerous precedents for extending technical assistance and even financial resources to non-members, for example through the establishment of trust funds administered and financed by third parties. Feinberg is also more bullish on the politics of re-engaging Cuba, noting that Cuba itself might be ready and the legal constraints on the IFIs posed by American legislation are not as binding as is often thought. The study closes with interesting comparisons to Nicaragua and Vietnam.
The politics of North Korea is not exactly the same, of course; Japan has a say with respect to the ADB and remains preoccupied with the abduction issue. And the US continues to see access to the IFIs as a reward, a position with which we strongly disagree. Getting North Korea to talk to the ADB, World Bank and IMF would be a sobering education for both sides.
But the biggest constraints are within North Korea itself. We have yet to see the kinds of political signals in the Cuban Politburo noted above; to the contrary, the early signals pointed to a regime dominated by all the wrong people. But if the Cuban reforms develop, then a study group from Pyongyang to Havana could be a less threatening approach than lectures from American economists.
