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Ox-drawn carts and Russian-made machinery collect cut sugar cane in Cuban fields as part of an all-out effort to reach a record six-year sugar production through 1970. (AP Photo)

A Cuban 'bici-taxi' driver pedals a tourist through the Chinese quarter of Havana in 1997. (Reuters Photo)

By Aileen S. Yoo
Washingtonpost.com Staff
Updated December 1998

Green stalks of sugar cane, like those lining the Holguín province, stand as reminders of the bittersweet role sugar has played in Cuba's economy, history and its relationship with the Soviet Union.

As the world's demand for sugar increased in the late 1700s, so did Cuba's sugar plantations and the demand for more laborers. Spaniard colonists imported tens of thousands of slaves to the country already thriving on the slave trade. At the turn of the century, sugar surpassed tobacco's importance for the first time, and by 1820 Cuba was the world's largest producer of sugar. Yet even after Cuba was freed from Spanish rule, Cubans enjoyed little of sugar's profits. By the mid-1900s when world sugar prices soared, the United States owned more than half of Cuba's sugar industry.

The 1959 revolutionary government changed the face of Cuba's economy. Under Fidel Castro's communist regime and their slogan "Socialism or Death," the state seized all U.S.-owned businesses, declared ownership over the entire industrial and manufacturing sector and became virtually the sole employer. Two years after Castro seized power, as Cuba engaged in a massive education program, it embraced the Soviet Union model and implemented a centralized political and economic system.

Revolutionaries sought to reduce Cuba's dependence on sugar, which remained the country's main source of income but also made Cuba vulnerable to its price and production fluctuations. Hoping to break Cuba free of its sugar shackles, Castro announced in 1961 a four-year plan – based on the Soviet model – to diversify agriculture and expand in industrialization. The results were disastrous: Sugar production and export earnings dropped, forcing the government to impose rationing in 1962.

In the meantime, Cuba became increasingly isolated with the U.S.-imposed embargo, its ouster from the Organization of American States (OAS) and the 1962 crisis over Soviet missiles in Cuba. The missile crisis and failed economic policies based on the Soviet model strained Cuba's relationship with the communist superpower. Cuba increasingly looked toward China, where Mao Zedong's philosophy had inspired Che Guevara, Castro's revolutionary partner who shaped Cuba's economic and political policy.

After the disastrous economic policies of the early 1960s, sugar became king again. Faced with a crumbling economy, Fidel Castro abandoned the economic plan and signed a 1964 trade pact with the Soviet Union, under which Cuba would produce 10 million tons of sugar in six years, which the Soviets promised to buy at premium prices.

The revolutionaries began a mass mobilization effort, using Guevara's socialist ideals for the "hombre nuevo" (the new man) as a guiding doctrine by which the people would live and work. To reach the sugar goal, productivity needed to increase. And to do that, Cuba needed to espouse moral over material incentives and inspire the people to work for the good of the society. Cuba fell 1.5 million tons short of its goal and paid a heavy price for the sugar drive that over-cultivated the soil and caused the production decline of other basic agricultural crops.

Growing economic pressure from Moscow pushed Cuba into adoption of a Soviet economic and political model by the 1970s. Cuba moved toward institutionalized leadership, more-orthodox politics and a highly centralized economy. Cuba joined the communist trading bloc association by 1972, paving the way for more financial and military assistance. The demise of the Soviet Union in the 1990s signaled the end of billions in annual aid and the beginning of economic crisis for Cuba. Between 1989 and 1993, the GDP declined 35 percent, made worse in 1992 by stiffer trade sanctions tacked on to the decades-old U.S. economic embargo.

The embargo has been a cornerstone of U.S. policy used to undermine Castro's regime. Since 1962, U.S.-based companies have been banned from commerce with the communist country. In 1992, the U.S. Congress passed the Cuba Democracy Act, making it illegal for foreign subsidiaries of American companies to sell goods to Cuba. It also prohibits ships that land in Cuba from using U.S. ports for 180 days. After Cuba shot down two planes belonging to a Miami-based anti-Castro group in 1996, President Clinton signed into law the Helms-Burton Act designed to discourage foreign investment in Cuba.

To boost their crippled economy, the Cuban government has permitted limited private business ownership, hiked up taxes and encouraged foreign investment. In 1993, Castro lifted the 30-year ban on foreign currency in Cuba, which legalized the U.S. dollar (actively traded in the black market) and was designed to attract large amounts of foreign currency and encourage remittances from Cuban exiles.

The government is also encouraging tourism, which flourished until the revolution and slowly rebounded in the 1970s. Tourism has become Cuba's main source of income, surpassing money made from its traditional agricultural sources such as sugar and tobacco and nickel exports. The Cuban government estimated 1.4 million tourists in 1998, bringing in gross revenue of 1.8 billion.