Forget Cuba opening up to the US, watch out for Venezuela

Sovereign Man – by Simon Black

When the Soviet Union was dying out and privatization schemes and free market measures were being implemented, it was like the Wild West out there.

With a bit of street smarts, insights, the right contacts, information, and access to capital, you could grab or build a fortune.

That’s how most Russian billionaire tycoons amassed their wealth. By being in the right place at the right time and taking action.  

This recent bit of history came to mind when news broke out that the Obama administration plans to normalize relations with Cuba and start loosening its long-standing economic embargo on the country.

As I predicted 4 years ago Obama has been saving this move as his ace in the hole.

His approval ratings are at an all time low and we can see this as political maneuvering to win over voters for his party in the upcoming presidential election.

But while this move is a step in the right direction, things in Cuba itself won’t fundamentally change much. Lifting the 54-year old embargo will do little to improve the situation and prospects for regular Cubans.

Those in charge and the politically well connected will be the major benefactors.

But until the government takes more serious steps to reduce its control over the economy I don’t see much changing for regular people in Cuba.

I visited the island a few years back. While the place is nice, with rich culture and history, it’s certainly a bit depressing. People don’t really have many chances to progress and improve their lives. The government controls practically everything.

Without private employment, private business and private ownership it’s just too risky for investors to put their money in the country as well.

So while this development will now mean that more Americans will have the opportunity to smoke cigars, drink rum and dance salsa, most Cubans won’t experience much benefit from it.

A more interesting country that I’m keeping my eye on in the meantime is Venezuela.

Think about it—it has a massive population and tremendous natural resources.

And yet, the place is a real mess… Years of mismanagement and utopian socialist policies mean that the country is facing shortages of basic necessities such as food and toilet paper.

Heck, even with some of the largest reserves of oil in the world they have to import the stuff themselves!

You have to imagine that when a place is in such turmoil, significant regime change isn’t far off. In fact, this year’s parliamentary elections will be an important indicator of what will happen in Venezuela.

Peacefully or not, things in Venezuela simply have to change. The country is reaching its day of reckoning.