Russia’s war in Ukraine has created fresh problems for its Caribbean
ally Cuba, already shaken by street protests and facing severe financial stress
amid tighter US sanctions and a pandemic-induced collapse in tourism.
Cubans have contended with chronic shortages of food, medicine and other
basic goods for more than two years, owing to the country’s heavy dependency on
imports and lack of dollars to pay. Now, there are fuel shortages, more
blackouts and less public transport as the island’s communist government
battles to secure costly petrol and diesel supplies.
“It’s the war. We’re already screwed and now it will only get
worse,” said Antonio Fernández as he waited at a petrol station in the Playa
area of Havana, the capital, to fill up his battered Chevrolet, which doubles
as a taxi.
Russia was originally supposed to be guest of honour at this month’s
international tourism fair in the beach resort of Varadero until the closing of
western air space to punish Moscow over its invasion made flights to Cuba
prohibitively expensive. Thousands of Russian tourist bookings were lost. Tourism
minister Juan Carlos García Granda said Cuba was working with Russian operators
to see what could be done. “We want to rescue that market, which was the main
provider during the pandemic,” he said this week.
The worsening situation has fuelled an immigration crisis at the
US-Mexico border, with about 100,000 Cubans crossing since October last year.
That number is already greater than the number that fled in 1994, the last
surge of Cuban migration, and is approaching the 1981 peak. The US has accused
Havana of using migration as a safety valve to limit discontent in Cuba.
On the island, many foreign suppliers and investment partners are
demanding cash on delivery having not been paid for months. Imports are down 40
per cent since 2019. The director of one Cuban company said his business was
“already suffering from cuts in our monthly electricity allocation and last
month our diesel was reduced to almost nothing”.
The Ukraine war threatens to torpedo any recovery in Cuba following a 9
per cent fall in gross domestic product in 2020-21. The country suffers
triple-digit inflation, caused in part by a devaluation of the peso and demand
for scarce goods. Even after the devaluation, the dollar still fetches four
times the official rate on the black market.
Various western businessmen say payment problems in Cuba have worsened
since the Ukraine invasion as the government struggles with high commodity and
shipping costs. Some European traders were being paid via a Russian bank, said
one trader, adding that this had now stopped.
“Ministries are going to all joint ventures asking what the minimum is
they need to stay open,” said one foreign investor, adding that his Cuban
partner had contributed nothing for months.
Economy minister Alejandro Gil admitted recent events were “greatly
affecting economic activities”, citing high fuel prices as an example.
Pavel Vidal, a former Cuban central bank economist now at Colombia’s
Pontificia Universidad Javeriana Cali, said sanctions against Moscow were
weakening Russia’s ability to support Havana and would “add more problems
to a balance of payments that has been in crisis for several years”.
Moscow has sent several cargoes of food and humanitarian aid this
year and did so in 2021, although trade and investment remain only a fraction
of the levels in Soviet times. Russian president Vladimir Putin and his Cuban
counterpart Miguel Díaz-Canel agreed during a phone call in January to deepen
“strategic co-operation”, but past promises of Russian investment on the island
have been slow to materialise.
The Ukraine war has been diplomatically awkward for Cuba, with its
government blaming the conflict on the US and Nato while also calling for the
respect of international borders. Paul Hare, former UK ambassador to
Havana, said Cuba, like other Russia- aligned countries, had been embarrassed
by the invasion, noting how the island’s government had wanted to deepen
relations with the EU. “That perhaps explains why Cuba didn’t vote against the
UN General Assembly on March 2 condemning the Russian invasion but abstained,”
Hare, now a senior lecturer at Boston University’s Pardee School of
Global Studies, said the war had forced Cuba to pick the wrong side in what the
EU considered a strategic threat. Relations with Brussels were already strained
because of the draconian prison sentences imposed on hundreds of participants in
last year’s anti-government protests. “Cuba
will be seen as complicit in Putin’s attempt to redraw the map of Europe and
upend the world order,” he said.
Hal Klepak, a Canadian military historian who has written two books on
Cuba, said the island’s armed forces remained heavily dependent on old Soviet
equipment and Russian support. The first had been discredited in the Ukraine
war and the second was now in doubt because of the invasion’s cost.
Despite the problems, political change in Cuba 63 years after the
revolution that brought the Castro brothers to power seems unlikely. “Emigration serves as a safety valve for
discontent,” said Bert Hoffman, a Cuba expert at the German Institute of Global
and Area Studies. “As long as there are no signs of major elite splits then
regime continuity is the most likely scenario.”
The Biden administration is restoring flights to Cuban
cities other than Havana and reestablishing a family reunification program
suspended for years, following recommendations of a long-anticipated review of
U.S. policy toward Cuba, senior administration officials told McClatchy and the
Miami Herald on Monday. The administration will also allow group travel for
educational or professional exchanges and lift caps on money sent to families
on the island.
The policy changes come after a months-long review
that began in earnest after a series of protests roiled the island nation on July
11, prompting a new round of U.S. sanctions on Cuban officials.
Cuba is facing the worst economic crisis since the
Soviet Union collapsed, with widespread shortages of food and medicines, and
thousands of Cubans trying to reach the United States. One senior
administration official said the new policy measures allow the administration
to continue supporting the Cuban people and guarding U.S. national security
“Our policy continues to center on human rights,
empowering the Cuban people to determine their own future and these are
practical measures intended to address the humanitarian situation and the
migration flows,” the official said, adding that labor rights will also be at
the center of any talks with the Cuban government.
As promised in his campaign for the White House,
President Joe Biden will reverse several of the measures taken by his
predecessor, including by allowing commercial and charter flights to
destinations outside the Cuban capital. Currently, American airline companies
can only fly to Havana, leaving Cuban Americans with few options to visit their
families in other provinces.
The Cuban Family Reunification Parole Program, which
has not taken new cases since 2016 and left 22,000 pending applications in
limbo, will also be reinstated, the officials said, following bipartisan calls
to address the issue. An administration official said the United States intends
to uphold migration accords with Cuba from the 1990s, under which the United
States committed to issuing 20,000 immigration visas to Cubans annually, a
request made by a Cuban government delegation that recently traveled to
Washington to discuss an ongoing wave of Cubans trying to reach the U.S.
mainland by land and sea. One senior administration official also said the
State Department will increase visa processing in the embassy in Havana, which
resumed this month.
Other measures include lifting the cap on family
remittances, currently $1,000 per quarter per person, with an eye on
supporting the emerging private sector. The officials said the administration
will encourage more electronic payment companies to work in Cuba to facilitate
remittances. Official remittance channels were shut down after the Trump
administration sanctioned Fincimex, the financial firm run by the Cuban
military, and the Cuban government refused to pass the business to a
non-military entity. Fincimex will not be removed from the Cuba sanction list,
one senior official said, but the administration “has engaged” in talks with the
Cuban government about finding a non-military entity to process remittances.
The administration will also expand travel to
Cuba by once again allowing group travel under the “people-to-people”
educational travel category, which was created under former President Barack
Obama to allow Americans to visit the island on organized tours to promote
exchanges between the two countries. The Trump administration later restricted
most non-family travel to Cuba and eliminated the category in 2019. The U.S.
officials said there will be more regulatory changes to allow certain travel
related to professional meetings and professional research, but individual
people-to-people travel will remain prohibited.
Other measures aim at supporting independent Cuban
entrepreneurs by authorizing access to expanded cloud technology, application
programming interfaces and e-commerce platforms. The officials said the
administration will “explore” options to facilitate electronic payments and
expand Cuban entrepreneurs’ access to microfinancing. Last week, the Treasury
Department for the first time authorized an American company to offer a
microloan and investment to a small Cuban private business.
The changes were announced later on Monday but will be
implemented in the coming weeks. The Biden administration has fielded criticism
for so far keeping in place most measures taken by President Trump, who vowed a
“maximum pressure” campaign against the communist government over its role in
Venezuela. But some Cuban exiles, Cuban American Republican politicians and
activists on the island have expressed concern about any easing of sanctions at
a time the government has cracked down on protesters and handed down harsh
sentences to July 11 demonstrators. A senior administration official said the
administration consulted the policy options with members of Congress and Cuban
Minutes after the official release, Sen. Bob Menéndez,
a powerful Cuban American democrat who chairs the Foreign Affairs Committee,
said the timing of the announcement risks “sending the wrong message” as Cuban
authorities continue the crackdown on Cubans critical of the government. “I am
dismayed to learn the Biden administration will begin authorizing group travel
to Cuba through visits akin to tourism, Menéndez said in a statement. “To be
clear, those who still believe that increasing travel will breed democracy in
Cuba are simply in a state of denial. For decades, the world has been traveling
to Cuba and nothing has changed. A senior administration official told
reporters on Monday evening that the Treasury Department can audit these trips
and the administration will ensure that group travel takes place according to
the law. In a statement released Monday evening,
Cuban foreign affairs ministry called the policy changes
a “limited step in the right direction” but not enough in modifying the U.S.
Relations between Washington and Havana soured over
the island wide anti-government demonstration last July. President Biden
ordered sanctions against the military, police and security forces involved in
the crackdown. And Havana responded by saying the demonstrations were financed
by the United States. The more recent spat involves the invitations to attend
the Summit of the Americas, a meeting of leaders from nations in the hemisphere
to be held in Los Angeles in June. The U.S. government has said Cuba will
likely not receive one. A senior administration said the invitations have not
been issued yet. But the current wave of Cuban migrants reaching the U.S.
southern border got the two governments to sit down for the first time since
president Biden took office. The Cuban diplomat leading the talks, Carlos
Fernández de Cossio, said he left with the sense that the talks could be the
first step to improving relations. A senior administration official said the
U.S. delegation did not address policy topics beyond migration.
The UN General Assembly, meeting in emergency session, voted 141 to 5, to condemn Russia’s invasion of Ukraine. To the surprise of many, Cuba abstained, despite its close relations with Moscow and its belief that the West instigated the crisis by expanding NATO right up to Russia’s borders, ignoring its legitimate security concerns.
This is not
the first time Cuba has been caught between loyalty to its most important ally
and bedrock principles of its foreign policy — non-intervention and the right
of small states to sovereignty, even in the shadow of Great Power adversaries.
To understand Cuba’s position on Ukraine, we need only look back at previous
occasions when Cuba had to walk the same diplomatic tightrope.
Roots of Cuba’s and Russia’s Friendship
friendship with Russia dates back to the 1960s, when the Soviet Union embraced
the Cuban revolution, providing the arms Cubans used to defeat the
U.S.-sponsored exile invasion at the Bay of Pigs, as well as the financial aid
Cuba needed to survive the U.S. economic embargo. Soviet aid was “a matter of
life and death in our confrontation with the United States,” Fidel Castro
acknowledged. “We alone against a superpower would have perished.”
with Moscow broke down after the Soviet Union collapsed, when Boris Yeltsin
abruptly cut off economic assistance, plunging the island into a decade-long
depression. But in 2000, President Vladimir Putin visited Havana to begin
rebuilding relations. Over the next two decades, a series of trade deals deepened
economic ties. Then, in 2009, Raúl Castro visited Moscow and the two countries
agreed to a “strategic partnership” to include tourism,
economic, scientific, and diplomatic cooperation, and renewed “technical
military cooperation.” Five years later, Putin canceled 90 percent of Cuba’s
$32 billion Soviet-era debt.
President Miguel Díaz-Canel went on an extended diplomatic tour shortly after his inauguration,
Moscow was his first stop. When Cuba was reeling from the impact of the
coronavirus pandemic in 2021, in desperate need of humanitarian assistance, Russia sent tons of food and medical supplies.
Just days before Russia launched the invasion of Ukraine, Putin dispatched
Russian Deputy Prime Minister Yuri Borisov to Havana to ”deepen” bilateral ties, and Russia agreed to postpone until 2027 payments on Cuba’s
new $2.3 billion debt.
Cuba is nowhere near as dependent on Russia today as it was dependent on the
Soviet Union, Russia is once again Cuba’s principal ally among the major powers
at a time when the United States has returned to a policy of hostility and
Soviet Union and other Warsaw pact powers invaded Czechoslovakia on August 20,
1968, to depose the reform communist government of Alexander Dubcek, the Cuban
government was silent for three days. Cubans were generally sympathetic to
Dubček’s attempt to plot a course independent of Moscow because Cuba itself was
in the midst of deep disagreements with the Kremlin over both foreign and
domestic policy. In January, Fidel Castro had accused Moscow of delaying oil
shipments as a warning about Cuba’s apostasy.
Castro finally spoke out, people were shocked that instead of condemning the
invasion of this small country by its larger neighbor, he justified it backhandedly as a “bitter necessity”
to preserve socialism in Czechoslovakia and the integrity of the socialist
bloc. But, he asked rhetorically, would the new Brezhnev Doctrine apply to Cuba? “Will they send
the divisions of the Warsaw Pact to Cuba if the Yankee imperialists attack our
country?” He knew the answer was no. Cuba was too far away, and in Washington’s
sphere of influence.
Brezhnev Doctrine’s implicit assertion of a Soviet security sphere in Eastern
Europe, overriding the sovereignty and territorial integrity of other
countries, posed an obvious problem for Cuba because of the doctrine’s uneasy
similarity to the Monroe Doctrine. In the aftermath of Czechoslovakia, voices
on the Latin American right were clamoring for Washington to invade Cuba in
reiterated the importance of the principle of non-intervention, calling it a
“shield” for weaker nations against the depredations of Great Powers. He
acknowledged that the Soviet invasion was “unquestionably a violation of legal
principles and international norms. From a legal point of view, this cannot be
justified,” he admitted. “Not the slightest trace of legality exists. Frankly,
speech marked a turning point in Cuba-Soviet relations. Moscow’s gratitude for
Cuba’s support eased bilateral tensions and led to deeper political and
military cooperation and increased economic assistance.
September 1979, Cuba hosted the Sixth Summit of the Movement of Nonaligned
Nations and began its term as chair — the culmination of Fidel Castro’s
ambition to become a leader of the global south. Just three months later, the
Soviet Union invaded Afghanistan, a nonaligned member. The invasion dealt a
fatal blow to Cuba’s argument that the Soviet Union was a “natural ally” of the
nonaligned, tarnishing its leadership of the Movement.
Security Council called the General Assembly into emergency session to consider
a resolution condemning the invasion. Cuban ambassador Raúl Roa denounced the United States for “rolling
drums of a new cold war,” but admitted that Cuba faced an “historical dilemma”
because many of its friends saw the resolution as a defense of national
sovereignty and peoples’ right to independence. “Cuba will always uphold that
right,” Roa insisted, but Cuba would “never carry water to the mill of reaction
and imperialism.” He made no effort to justify the Soviet action and said not
one word in its defense. Nevertheless, Cuba voted no on the resolution, which
was adopted 104 to 18.
later, Fidel Castro hosted three U.S. diplomats who had come to implore him to
speak out publicly against the Soviet invasion. Cuba did not support the Soviet
action, Castro acknowledged. “Anything which affects the principle of
non-intervention affects us, and we know it.” But whatever disagreements Cuba
had with Moscow, it would not side publicly with the United States. “We have
always had a friend in the Soviet Union and we have always had an enemy in the
United States,” he said. “Therefore, we could not possibly align with the
United States against the Soviet Union.”
Russia launched its invasion of Ukraine, the Cuban government’s public
statements blamed the West for creating the conditions that led to the crisis
by ignoring Russia’s repeated warnings about NATO expansion. Yet despite
echoing Russia’s rationale for the attack, Cuba never endorsed it. On the
contrary, in the UN General Assembly debate, Cuba’s representative. Pedro Luis
Pedroso Cuesta, noted Russia’s “non-observance of legal principles and
strongly endorses and supports those principles and norms,” he went on, “which
are, particularly for small countries, an essential reference to fight
hegemony, abuse of power and injustice.” He repeated Cuba’s earlier call for a
negotiated solution to the conflict “that guarantees the security and
sovereignty of all and addresses legitimate humanitarian concerns…. Cuba will
always defend peace and unambiguously oppose the use or threat of use of force
against any State.” On the resolution condemning Russian aggression, Cuba,
along with 34 other countries, abstained.
Venezuela failed to vote on the UN resolution, senior U.S. officials traveled to Caracas to discuss with
President Nicolás Maduro the possibility of lifting U.S. sanctions on
Venezuelan oil sales to offset the shortage of global supply induced by the
impending boycott of Soviet oil and gas. Heretofore, the Biden administration
had refused to even recognize Maduro’s government. Cuba, with no oil to offer,
received no such overture.
West’s sanctions against Russia are likely to hurt Cuba, too, making it even
harder for Havana to conduct international financial transactions through
Russian banks, and harder for Russian tourists to get to Cuba. At the dawn of
the new cold war, Cuba is once again caught in the crossfire.
longer has any special ideological affinity for Russia and is far less
dependent on it economically than it was on the Soviet Union in 1968 or 1979.
But neither can Havana afford to spurn the one major power that has stood most
consistently by Cuba’s side through decades of U.S. efforts at subversion.
Realpolitik dictates that Cuba cultivate good relations with major powers like
Russia and China so long as it lives in the shadow of a hostile United States.
“Our isolation by the United States has forced us to ally with the rest of the
world,” Castro told U.S. diplomats in 1979, explaining his refusal to denounce
the Soviet invasion of Afghanistan.
again, Cuban diplomats are called upon to thread the needle, expressing
sympathy and understanding for the indefensible actions of Cuba’s principal
ally without actually endorsing them, and simultaneously trying to uphold the
international principles of state sovereignty and non-intervention that their
ally has violated — principles essential for the defense of Cuba’s own
sovereignty. As Castro told the U.S. diplomats in 1979, “We are playing two
roles…It’s not easy.”
So once again, Cuban diplomats are called upon to thread the needle, expressing sympathy and understanding for the indefensible actions of Cuba’s principal ally without actually endorsing them, and simultaneously trying to uphold the international principles of state sovereignty and non-intervention that their ally has violated — principles essential for the defense of Cuba’s own sovereignty. As Castro told the U.S. diplomats in 1979, “We are playing two roles…It’s not easy.”
This paper makes a renewed case for engagement with Cuba as the best way for the United States to advance its national interests, reassert its regional leadership, reduce resistance to reform within the Cuban government, and promote a freer, more prosperous future for the Cuban people. It also argues that the United States should continue to highlight Cuba’s democratic failings and support actors across the spectrum of Cuban society who work to ensure that greater economic and civic freedoms are guaranteed on the island.
The United States and Cuba must learn from both the successes and missed opportunities of their last period of détente. As President Joseph R. Biden Jr. looks to fulfill his pledge to return to a policy of engagement with Cuba, both countries must strive to make the normalization of relations resilient in order to insulate progress from unpredictable political cycles. Getting there will require both governments to negotiate cooperation agreements and facilitate private sector economic arrangements that can sufficiently cement diplomatic relations and socio-economic integration between the two countries. In many instances, progress may only be achieved through individual but parallel policies that both reduce exposure to codified U.S. embargo sanctions and generate the political space necessary for the U.S. Congress to lift them. For Cuba, this means taking advantage of the next four years to advance meaningful economic liberalization and guarantee greater rights for Cubans both at home and abroad. For the United States, it means abandoning its centerpiece policy of regime change and allowing Cuba’s future to be determined by and among Cubans themselves.
This may seem like a daunting task, but circumstances are still conducive for meaningful diplomatic breakthroughs between the historic Cold War adversaries. The devastating effects of the Covid-19 pandemic have prodded Cuba to finally overhaul its dual-currency system and commit to further market liberalization. Cuban authorities have an opportunity to signal to their citizens, the Cuban diaspora, and Washington that they are finally willing to bring their country into the 21st century. But effective follow-through is less likely if the United States continues to be seen as attempting to exploit the crisis by maintaining blanket sanctions under the illusion that further pressure will cause the Cuban government to break.
Thus, we recommend that the Biden administration pursue a multi-pronged approach to get bilateral relations immediately back on a more constructive track, regain control of the narrative, and incentivize further reforms in Cuba. Prioritizing early moves that have a clear and visible impact on the lives of Cubans on the island and abroad will help restore public support for engagement among Cuban-Americans. The new administration should also place equal emphasis on addressing some of the more intractable issues that divide both governments early on.
Track 1: Restore Support for the Cuban People as a Policy Priority and Rebuild Trust a. Reverse policies that have unduly harmed the Cuban people. This includes, but is not limited to, lifting restrictions on commercial and charter flights, ending remittance caps, restoring consular services in Cuba, restarting the Cuban Family Reunification Program, reinstituting the five-year multiple-entry visa for Cuban nationals, and revising banking and finance regulations to ensure the continuity of formal remittance transfers and correspondent banking in Cuba. b. Restore support for the Cuban private sector as a policy priority. c. Resume and bolster public health cooperation with Cuba to combat Covid-19. d. Restore and strengthen working-level diplomatic ties by appointing an ambassador to lead U.S. Embassy Havana (or a chargé d’affaires with ambassadorial rank if the Senate is unlikely to confirm an ambassadorial appointment), initiating bilateral talks to fully re-staff the U.S. and Cuban embassies with security guarantees, and resuming bilateral cooperation on national security issues. e. Implement additional confidence-building measures—like ordering an immediate apolitical review of Cuba’s re-designation as a State Sponsor of Terror, updating and restoring the 2016 Presidential Policy Directive “United States-Cuba Normalization”, and once again waiving Title III of the Helms- Burton Act—that improve the climate for success on higher-profile, longer- term impediments to normalization, such as those identified under Track 2. f. Create, through recurring public events, private consultations and official visits to South Florida, feedback mechanisms whereby the Biden administration can engage the Cuban American community on Cuba policy and gain input from a diversity of Cuban American community leaders and members in return.
Track 2: Tackle the “Tough Stuff” and Make Normalization Stick Through High-Level, Direct Diplomacy a. Designate a Special Representative for Cuba or other high-level administration official(s) to negotiate cooperation agreements, private sector economic arrangements, and roadmaps for resolving long-standing disputes between the United States and Cuba, with the aim of deepening socio- economic ties between both countries. Breakthroughs in negotiations on U.S. property claims, the Venezuelan crisis, and private sector trade can build momentum and shift the calculus for normalization on Capitol Hill.
Track 3: Respond to Openness with Openness a. As the Cuban government moves to recognize greater rights for its citizens and nationals, and opens opportunities for U.S. and diaspora direct investment, respond with U.S. economic openings allowed by executive authority. b. In tandem with progress made under Track 2 and/or Track 3(a), seek congressional support for repealing counterproductive codified Cuba sanctions, as well as for other targeted initiatives that broaden forms of U.S. assistance and support to the Cuban people beyond democracy promotion alone.
Cuba, for its part, must overcome internal resistance to a more open relationship with the United States and be willing to make changes that will safeguard bilateral relations regardless of which U.S. political party is in power. The Cuban government has long opposed demands for concessions involving their internal affairs or foreign policy. Yet normalization would benefit from less emphasis on process and more emphasis on results. Whether Cuba takes steps toward guaranteeing greater economic and civic freedoms as a result of bilateral negotiations or internal reforms, the fact remains it must take them if it wishes to free itself from the vicissitudes of U.S. politics.
Meaningful progress in state-diaspora relations, legal investment in the island’s private sector, and guaranteeing greater rights for all Cubans to participate in their county’s economic, political, and public affairs would materially reduce Cuba’s exposure to the dynamics of the Helms-Burton Act and other embargo laws. It would also help to generate the political momentum needed for the U.S. Congress to repeal these statutes once and for all. While standing on principle that it will not compromise its sovereignty, Cuba can and should make internal reforms that are in the interest of the Cuban people and have the corollary benefit of paving a sustainable road to full normalization with the United States. Reality requires movement and energy on both sides to achieve a more lasting rapprochement that can withstand further stress tests in the relationship that are bound to emerge along the way.
After 2020, the window for achieving significant progress toward full normalization may be finite, and the costs of not doing so could be severe. Failure to make relations stick this time around could entrench another generation of Cubans and Cuban Americans on both sides of the Florida Straits in prolonged patterns of mutual suspicion and hostility.
has agreed to postpone some debt payments owed to it by communist-run Cuba
until 2027, its lower house of parliament said on Tuesday, just days after the
two countries announced they would deepen ties amid the spiraling Ukraine
The loans, worth $2.3 billion and provided to Cuba by Russia between 2006 and 2019, helped underwrite investments in power generation, metals and transportation infrastructure, according to a statement from the lower house, or Duma.
Tuesday, Russian lawmakers ratified an agreement, originally signed with Cuban
counterparts in Havana in 2021, that amended the loan terms, the statement
week expressed support for Russia in its showdown with Western powers over
Ukraine following a visit from Russian Deputy Prime Minister Yuri Borisov, and
accused long-time rival the United States and its allies of targeting Moscow
with what it called a “propaganda war” and sanctions. read more
decision to soften the loan terms comes as Cuba wrestles with a dire social and
economic crisis that has led to severe shortages in food and medicine, and it
follows protests last year believed to be the largest since Fidel Castro’s 1959
revolution, the two countries have had a long history of economic and military
collaboration, though in recent decades those ties have faded.
has, however, continued to deliver humanitarian aid and provide loans to the
last decade, Cuba has also restructured debt with China, Germany and Mexico, as
well as with Japanese commercial debt holders.
In October, Cuba reached a deal with the Paris Club of creditor nations
to postpone an annual debt payment due in November until later this year. read more
chairman Vyacheslav Volodin is expected to visit Cuba and Nicaragua on Feb. 23
decades ago the Kennedy administration imposed an embargo on Cuba. A dozen
American presidents have enforced the island’s economic isolation,
substantially tightening controls in recent years. For a time Washington even
cited Havana as a state sponsor of terrorism. The U.S. campaign, observed Mauricio Vicent of El
Pais, is “without doubt the longest punitive measure ever imposed on a
country in modern history.”
efforts were reinforced by the collapse of the Soviet Union, which ended
outside subsidies for the island. Cuba’s GDP shrank by more than a third during
what was called the “Special Period.” Venezuela’s Hugo Chavez later stepped in,
but Caracas’s economic collapse ended its bountiful subsidies as well. Through
it all U.S. policymakers, Florida Cuban expatriates, and vote-seeking
Republican politicians collaborated to wage economic war on the island.
finally, the communist government has fallen. Political prisoners have been
released. Castro family and friends have fled. Elections have brought to power
officials promising to dismantle the socialist economy. The incoming government
even proposed expanding Guantanamo Bay for the U.S.
policy has completely and utterly failed.
Castro has died and Raúl Castro has retired, but the communist government
remains and includes several Castro family members. The jails are bulging after
protests in July, with hundreds arrested and many simply disappeared without
notice to their families. Trump administration sanctions, left in place by
President Joe Biden, continue to cripple the private economy, which had been
expanding and undermining government authority.
was expected to at least roll back the Trump administration’s measures, which
hurt private entrepreneurs in Cuba more than government apparatchiks, the Biden
administration has done nothing. Some Democrats speculate that the
administration is waiting for the midterm elections to pass, or perhaps even
for Biden’s reelection, just as President Barack Obama held off until his
second term to act. Of course, Biden may not get a second chance.
embargo may be the most complete, longest, and most enduring policy failure in
American history. In 1959 Fidel Castro led a revolution against a U.S.-backed
strongman, Fulgencio Batista. Castro proved to be even more despotic and turned
to the Soviet Union for support. Washington imposed an embargo, which has
metastasized through subsequent regulations and
laws. The embargo was proposed, the outgoing Eisenhower
administration admitted, to impoverish the Cuban people.
The State Department’s Lester Mallory urged action that
“while as adroit and inconspicuous as possible makes the greatest inroads in
denying money and supplies to Cuba, to decrease monetary and real wages,
to bring about hunger, desperation and overthrow of government.”
later, Fidel Castro is dead and brother Raúl is formally retired. The
presidency and party leadership have devolved upon the colorless functionary
Miguel Díaz-Canel, who retains the founders’ willingness to suppress dissent
and enforce obedience. Alas, the reality of Cuban communism does not reflect
the rosy assessments of the happy lefty tourists who wander the island in
search of a collectivist paradise.
its remarkably good public relations, Cuba remains a dictatorship. Last year
Freedom House rated Cuba toward the bottom of its global freedom rankings,
deeming the country “not free” and giving it just 13 of 100 available points
for its political and civil liberties. Explained Freedom House: “Cuba’s one-party
communist state outlaws political pluralism, bans independent media, suppresses
dissent, and severely restricts basic civil liberties. The government continues
to dominate the economy despite recent reforms that permit some private-sector
activity. The regime’s undemocratic character has not changed despite a
generational transition in political leadership between 2018 and 2019 that
included the introduction of a new constitution.”
government continues to repress and punish virtually all forms of dissent and
public criticism. At the same time, Cubans continue to endure a dire economic
crisis, which impacts their social and economic rights. … The government
employs arbitrary detention to harass and intimidate critics, independent
activists, political opponents, and others. Security officers rarely present
arrest warrants to justify detaining critics. In some cases, detainees are
released after receiving official warnings, which prosecutors may use in
subsequent criminal trials to show a pattern of what they call “delinquent”
despite six decades of the U.S. generally increasing economic sanctions. Only
President Barack Obama broke that pattern, rolling back some penalties and
reestablishing full diplomatic relations. The Cuban people loved him for it.
When I visited in 2017, cars still sported decals with Obama’s picture from his
visit the previous year. The government underestimated his popularity. Foreign
Minister Bruno Rodriguez complained about Obama’s
“deep attack on our ideas, our history, our culture, and our symbols” and
desire to use economic appeals to force political change.
President Donald Trump cared more about Cuban-American votes than Cuban lives
and imposed additional sanctions, even adding a new twist, allowing U.S.
lawsuits against foreign investors in Cuba. Human-rights activists long had
criticized the embargo as counterproductive, used by the regime to excuse its
failings and justify its crimes. Cuba’s small businesspeople and their
employees, who invested or worked in tourist-friendly industries—restaurants,
Airbnbs, and taxis—were even more critical. By discouraging U.S. visitors,
Trump wrecked the nascent public sector, which at its height provided 40
percent of the island’s jobs.
owner Julia de la Rosa complained to me that “So many people opened businesses
for American tourists” who then were prohibited from coming. Workers had to
return to unproductive state employment, strengthening the Castro
regime’s control. In short, sanctions worked no better in
Cuba than in Venezuela, Syria, Iran, North Korea,
and Russia, whose governments refused to abandon their most important political
objectives despite U.S. economic pressure.
expected Biden to return to the reform path. After all, he had pledged to “try to reverse
the failed Trump policies that inflicted harm on Cubans.” Instead,
after the July protests, he added new sanctions “to
bolster the cause of the Cuban people.” And that was just a start, he warned:
“There will be more, unless there’s some drastic change in Cuba, which I don’t
anticipate.” Biden matched Trump in
pious hypocrisy, announcing “we hear the cries of freedom coming from the
island. We’re holding the regime accountable.”
Díaz-Canel government did not fold. In fact, the invincibly ignorant Cuba
hawks—most notably Marco Rubio, Ted Cruz, and Robert Menendez—did the communist
regime a favor by discouraging contact with America. Collin Laverty of Cuba
Educational Travel, which develops trips to conform with U.S. law (and
organized my second visit), observed: “If you want to create more space for
debate, expanding the entrepreneurial class is one way.” Indeed, after encouraging
the development of private business in a desperate attempt to spur the economy,
the regime came to fear the rapid increase in private sector firms and cracked
the left agree. Antoni Kapcia, who has
written sympathetically of the Cuban revolution, noted:
argued that if an American president really wanted to destabilize the Cuban
system, they would get rid of the embargo, or promise to get rid of the
embargo. To some extent, this is what Barack Obama did, at least in the sense
of saying the established policy had failed and slightly easing some
restrictions, although he certainly didn’t lift the embargo altogether. But
most of the US presidents have done precisely the opposite, and tightened it,
or at least continued the involvement. That gives the system and the leadership
an alibi in Cuba. But it also plays into nationalism.
John F. Kennedy might be excused for not knowing any better when he embargoed the new revolutionary state. Joe Biden has no such excuse. Cuba’s continuing oppression of its people is a tragedy. However, after six decades of futile economic warfare, the U.S. should stop punishing the Cuban people for the sins of their government. Biden should live up to his campaign promise to empower “the Cuban people to freely determine their own outcome, their own future.”
February 3, 1962, marks the sixtieth anniversary of President John F. Kennedy’s Presidential Proclamation 3447 imposing an “embargo on all trade with Cuba” to punish Fidel Castro’s revolutionary government for its “alignment with the communist powers,” the Soviet Union and China. Despite having failed to bend Havana to Washington’s will over the past six decades, the embargo remains the centerpiece of the U.S. policy of “regime change.” Deputy Assistant Secretary of State Lester D. Mallory explained the strategy in 1960: “Every possible means should be undertaken promptly to weaken the economic life of Cuba…denying money and supplies to Cuba, to decrease monetary and real wages, to bring about hunger, desperation and overthrow of government.”
anniversary of the embargo offers an occasion to delve into its complexities in
order to better understand what Fidel Castro once called “a tangled ball of
exactly is the embargo against Cuba?
embargo” is shorthand for a complex patchwork of laws and regulations that
comprise the oldest and most comprehensive U.S. economic sanctions against any
country in the world. Although President Eisenhower imposed some economic
sanctions on Cuba in 1960, the current embargo began when President Kennedy
proclaimed a ban on all trade with Cuba in 1962, and a year later invoked the Trading with the Enemy Act to extend the embargo
to prohibit all transactions (trade, travel, and financial) unless licensed by
the Secretary of the Treasury (at the president’s direction). Regulations
governing implementation of the embargo and the licensed exceptions are
codified in the Treasury Department’s Cuban Assets Control Regulations (CACR).
other statutes govern elements of the embargo:
The Cuban Democracy Act of 1992 authorizes
humanitarian donations of food and medicine, and the sale of telecommunications
services and medical supplies, albeit subject to detailed restrictions. It also
prohibits trade between the subsidiaries of U.S. companies abroad and Cuba.
— The Cuban Liberty and Democratic Solidarity Act of 1996
inscribed the embargo into law until Cuba becomes a multi-party free-market
democracy and pays compensation for property nationalized by the revolutionary
government. It also gives U.S. citizens, including naturalized Cuban Americans,
the right to sue in federal court anyone, in the United States or abroad, who
is “trafficking in” (benefiting from) nationalized property, and blocks the
officers of foreign trafficking companies from entering the United
the Trump and Biden administrations have imposed sanctions on Cuban individuals
under the Global Magnitsky Human Rights Accountability Act of 2012,
which freezes the U.S. assets and denies entry to the United States of persons
guilty of corruption or serious human rights abuse.
the United States impose the embargo?
embargo is sometimes justified as a response to Cuba’s nationalization of U.S.
property in 1960, which amounted to over $1 billion in investment. However, the
embargo was not imposed until 1962 as part of President Kennedy’s policy to destabilize the
Cuban government through a combination of economic sanctions and covert
paramilitary attacks. Since then, U.S. presidents have cited various rationales
for continuing the embargo, ranging from Cuba’s partnership with the Soviet
Union, to its support for revolutionary movements in Latin America and Africa,
its human rights record, and its socialist system.
the embargo changed over time?
president has modified the embargo by using his licensing
authority to loosen or tighten aspects of it. Take travel,
for example. President Jimmy Carter lifted all limits on travel to Cuba in
1977. President Ronald Reagan reimposed a ban on most types of travel in
1982. President Bill Clinton loosened travel restrictions by creating the
people-to-people educational travel category in 1999. President George W. Bush
eliminated people-to-people travel, President Barack Obama restored it, and
President Trump abolished it again. Congress has also modified the embargo by
statute. The most important change was the Cuban Liberty and Democratic Solidarity Act which
inscribed the embargo into law. At present, the embargo’s impact is especially
severe because President Trump added a series of new, expanded sanctions and President Biden has
left those additional sanctions in place.
Cuba call it a “blockade” rather than an embargo?
government calls the embargo a blockade (el bloqueo) because its
extraterritorial provisions restrict Cuban commerce with other countries. The
United States tried to make the embargo multilateral from the beginning. In
1964, President Lyndon Johnson pressured the OAS into formally adopting a commercial and diplomatic embargo against Cuba,
which lasted until the mid-1970s. Most European countries also limited their
commercial ties with Cuba in response to U.S. pressure. Although the embargo
cannot prevent other countries from trading with Cuba, it makes such commerce
embargo prohibits the subsidiaries of U.S. companies that operate in other
countries from trading with Cuba.
prohibits other countries from exporting to Cuba any product with more than 10
percent U.S. content.
prohibits foreign financial institutions from handling any U.S. dollar
transactions that involve Cuba (so-called U-turn transactions).
allows U.S. citizens who lost property after the Cuban revolution to sue in
U.S. federal court anyone, including foreign companies, who do business with
Cuba involving that property.
prohibits entry into the United States of any officers of foreign companies and
their family members if those companies are doing business with Cuba that
involves property previously owned by U.S. citizens.
International financial institutions are required to conduct costly “enhanced
due diligence” before engaging in transactions involving countries designated
as state sponsors of international terrorism, which currently includes
Multilateral international financial institutions cannot provide assistance to
Cuba without losing a portion of their U.S. funding.
embargo legal under international law?
Supporters argue that the embargo is legal
because the United States has the right to decide whether or not it wants to
trade with another country, and the embargo is justified by Cuba’s
nationalization of U.S. property without compensation. Opponents argue that the embargo constitutes
coercion intended to force regime change in violation of the OAS Charter and the UN Declaration
on the Inadmissibility of Intervention and Interference in the Internal Affairs
of States. The UN Declaration recognizes “the sovereign and inalienable right
of a State freely to determine its own political, economic, cultural and social
systems,” and imposes on all states the duty “to refrain from any action or
attempt in whatever form or under whatever pretext to destabilize or to
undermine the stability of another State.” The consensus of international
opinion is that the embargo is not consistent with international law, as
reflected by the fact that last year, for 29th time, the UN
General Assembly voted overwhelmingly in favor of an annual resolution
calling on the United States to lift the embargo. In 2021, the vote was 184 in favor, 2 opposed (the United States and
Israel), with 3 abstentions.
the embargo override U.S. citizens’ constitutional right to travel?
the Supreme Court has recognized a right to travel in Kent v. Dulles (1958), it is not absolute. In two
cases, Zemel v. Rusk (1965) and Regan v. Wald (1984), the Court rejected
challenges to the embargo’s restrictions on travel to Cuba, holding that the
president has the authority to limit travel on grounds of national security. If
you are a “person subject to U.S. jurisdiction” (i.e., a U.S. citizen,
resident, or other person within the United States regardless of your
nationality) you can only travel to Cuba under one of the 12 categories of travel licensed by the U.S.
Department of the Treasury.
buy food and medicine under the embargo?
not freely or easily. U.S companies can export agricultural commodities to Cuba
only if the Cuban government pays cash up front. No credit-based sales are
allowed, which is not the way international trade normally works. U.S.
companies can sell medical supplies to Cuba “only for the use and
benefit of the Cuban people,” only if they are not used for biopharmaceutical
purposes (for example, manufacturing vaccines), and only if the U.S. government
certifies these requirements are met. These requirements are so onerous that
many companies decide not to sell to Cuba rather than comply with them—a recent
example being the company that decided to cancel a contract to sell
Cuba ventilators during the COVID-19 pandemic.
embargo responsible for Cuba’s economic problems?
yes. The Cuban economy suffers from a number of chronic structural problems stemming from its adoption of
a Soviet-style central planning model in the 1970s. Although it is pursuing
market-oriented reforms, its structural weaknesses persist. They make Cuba
especially vulnerable to external economic shocks and pressures, of which the
embargo is the most significant and persistent. The Cuban government estimates
that the embargo costs it over $3 billion annually in extra expenses it incurs
trading with other partners. The UN Economic Commission for Latin America estimated that the embargo has cost $130 billion
(in current prices) since it was imposed, or roughly $2 billion annually on
embargo end automatically if the president failed to renew it every year?
statutory authority for the embargo under the Trading with the Enemy Act would
lapse if the president failed to extend it every September as required by law, but
the codification of the embargo under the Cuban Liberty and Democratic
Solidarity Act would still remain in place.
president lift the embargo unilaterally?
he probably could. Politically, he probably wouldn’t. Attorney Robert Muse and others have argued that because there are no
limitations on the president’s licensing authority specified in either Trading
with the Enemy Act or the CACR, the President could license the embargo out of
existence in its entirety by simply authorizing a general license for all
transactions with Cuba. The argument against this interpretation is that such
an exercise of authority would violate the clear intent of the law since the
Cuban Liberty and Democratic Solidarity Act places specific conditions on
lifting the embargo. Muse responds that the law is an unconstitutional
infringement on the president’s authority to conduct foreign policy, which
President Clinton suggested in his signing statement. Politically, a president would
have to be willing to risk a confrontation with Congress to take this step and
thus far, every president has accepted the interpretation that the embargo can
only be lifted under the terms of the Cuban Liberty and Democratic Solidarity
Act or after its repeal.
will the embargo last?
embargo’s longevity suggests, there is no sunshine provision that would
automatically end it. The Cuban Liberty and Democratic Solidarity Act prohibits
lifting it until the Cuban government has become a multi-party, free-market
democracy, and until all the property of U.S. citizens, including Cuban Americans,
nationalized after 1959 is either returned or compensated. The continuing
influence of conservative Cuban Americans in the Republican Party and their
electoral strength in Florida has transformed the embargo from a foreign policy
issue into a matter of domestic politics. Consequently, Congress is
unlikely to repeal the embargo in the foreseeable future.
realist president willing to declare openly what most foreign policy analysts
acknowledge—that the embargo is a counterproductive failure—could use his (or
her) executive authority to license broad categories of commerce and exchange,
leaving the statutory embargo an empty shell.
Este estudio evalúa la sensibilidad de las series históricas del crecimiento del PIB cubano y de otros indicadores macroeconómicos a los giros (flexibilizaciones/endurecimiento) del esquema de sanciones estadounidenses en las últimas tres décadas, empleando como fuente de información las variaciones en los flujos de comercio de bienes, visitantes y remesas e indicadores financieros del período 1994-2020. Si bien se evidencia que un endurecimiento de las sanciones reduce el crecimiento del PIB cubano, también se ve que los impactos afectan significativamente el consumo de las familias y las dinámicas de las ventas y el empleo del sector privado, sin apreciarse un efecto significativo en los indicadores de la economía estatal. Las remesas son el fujo de mayor peso dentro del intercambio económico total Cuba-EEUU (el 8,3% del PIB cubano), con un impacto estadísticamente significativo en la trayectoria del consumo de hogares y mercados privados.
sanciones económicas se definen como acciones que uno o más países toman para
limitar o poner fin a sus relaciones económicas con un país objetivo en un
esfuerzo por persuadirlo de que cambie sus políticas. Las sanciones pueden
adoptar muchas formas: aranceles, controles de exportación, embargos,
prohibiciones de importación, prohibiciones de viaje, congelación de activos, ayudas,
cortes y bloqueos (Morgan, Bapat y Krustev, 2009).
literatura sobre el impacto económico de las sanciones es amplia y heterogénea,
tanto en metodología, presupuestos teóricos, estrategias empíricas y bases de
datos empleadas como en resultados y conclusiones (Özdamar y Shahin, 2021). Si
bien la mayoría de los estudios encuentra que las sanciones tienen un impacto
negativo sobre la tasa de crecimiento del PIB del país sancionado, los flujos
de inversión extranjera y sus finanzas internacionales, los efectos varían
dependiendo del tamaño y dependencia entre los países involucrados, de la
naturaleza unilateral o multilateral de las sanciones, de la participación de
EEUU y/o de Naciones Unidas, entre otros factores. Algunos ejemplos recientes
de esta literatura son Caruso (2003), Neuenkirch y Neumeier (2015), Besedeš,
Goldbach y Nitsch (2017), Gurvich y Prilepskiy (2015), Hatipoglu y Peksen,
(2018), y Bayramov, Rustamli y Abbas (2020).
países que imponen sanciones también incurren en costes económicos, al
restringir sus transacciones, aunque pueden ser relativamente pequeños,
especialmente en casos de sanciones unilaterales para economías grandes como la
de EEUU (Farmer, 2000). Otra literatura intenta entender la probabilidad de
permanencia de las sanciones (McGillivray y Stam, 2004) y encuentra que los
cambios de liderazgo en los países involucrados son el mejor predictor de la
duración de una política de sanciones. En cuanto a su naturaleza multilateral o
unilateral, Miers y Morgan (2002) concluyen que el primero no es más efectivo
que el segundo, como usualmente tiende a pensarse, sobre todo por lo difícil
que resulta la coordinación entre varios implicados. Özdamar y Shahin (2021) llaman
la atención que algunos temas como las criptomonedas y el flujo de emigrantes
todavía no han sido debidamente estudiados dentro de la literatura sobre el
impacto económico de las sanciones.
menciona a Cuba en los estudios internacionales sobre
sanciones, casi siempre se la usa como ejemplo de fracaso de estas políticas.
El mismo consenso existe en la mayoría de la literatura que aborda el caso
cubano detenidamente (LeoGrande, 2015; Von Burgsdorff, 2009; Lopez-Levy, 2011;
Dominguez, Hernandez y Barbería, 2017; Alzugaray, 2017; Zimbalist, 2021;
Mesa-Lago, 2021; Rodriguez, 2021).
Zimbalist (2021) concluye que: “el
embargo y el esfuerzo de Estados Unidos para derrocar al gobierno de
Castro han estado vigentes desde 1960 y han fracasado en todas las formas
posibles. Obligaron a Cuba a arrojarse en brazos de la URSS, proporcionaron una
excusa para los fracasos económicos de su revolución y para su control político
estricto de la población, elevaron la reputación de Castro como nacionalista y
líder de los países del tercer mundo que buscan una relación más justa e
independiente con las superpotencias. Y fracasaron, por supuesto, en deshacerse
de él. Si ha tenido éxito en algo, ha sido en hacer más difíciles las vidas de
los cubanos. Y es aborrecible decir que tal resultado es un éxito, aunque
muchos políticos norteamericanos parecen pensar de esa manera”.
(2011) destaca que, históricamente, dos argumentos principales han justificado
la política de sanciones contra Cuba. Durante la Guerra Fría, Washington afirmó
que la alianza del gobierno de La Habana con Moscú y su comportamiento
internacional constituían una amenaza para su seguridad nacional. Tras la caída
del Muro de Berlín el argumento principal ha sido que el régimen cubano viola
los derechos humanos de sus ciudadanos, si bien ello no siempre ha coincidido
con la política exterior hacia China, Rusia o Arabia Saudí. El embargo refleja
en gran medida la influencia de una facción del exilio en apoyo a esta política
para lograr un cambio de régimen.
(2021) señala sobre el controvertido tema de las indemnizaciones cuyo monto, de
acuerdo con el valor en libro de las propiedades norteamericanas
nacionalizadas, ascendía a 1.800 millones de dólares, pero que el cálculo del
gobierno cubano sobre el perjuicio económico causado por el bloqueo a la isla
se calculó hasta 2018 en unos 134.499 millones de dólares. El gobierno de La
Habana reconoce las reclamaciones de EEUU por las propiedades nacionalizadas,
pero no las de los cubanos emigrados.
parte, Mesa-Lago (2021) apunta que “el embargo, aunque importante, no es el
mayor problema que sufre Cuba, ya que posee relaciones comerciales con al menos
70 países e inversiones de muchos de ellos, en especial de Canadá (en los
sectores turísticos o minero: explotación de níquel y petróleo), España
(turismo también), China (diversos campos) y Venezuela (crecientes hasta 2014).
Indudablemente tiene efectos negativos, como los requisitos que ha de cumplir
la banca extranjera en sus transacciones para evitar sanciones de EEUU, el
sobreprecio en la compra de mercancías de ese país, que se realiza a través de
terceros, y los mayores costes de flete. El mayor problema que afronta Cuba es su “ineficiente
sistema económico e incapacidad de generar bastantes exportaciones para pagar
A pesar del esquema de sanciones, un cierto flujo de comercio, remesas y visitantes se ha venido produciendo entre EEUU y Cuba, sobre todo desde los años 90, con mayor presencia en las dos décadas siguientes, con diferentes intensidades dependiendo del momento político. En relación a las remesas, Duany (2021) refiere que los cubanos residentes en EEUU han financiado buena parte de la modesta recuperación de la economía cubana desde la década de 1990. Los datos disponibles sugieren que éstas constituyen una fuente de ingresos fundamental en Cuba, quizá tan importante como en la República Dominicana, México, El Salvador y otras naciones latinoamericanas y caribeñas. En cuanto al sector turismo y viajes, Perez y Perelló (2021) resaltan que la reducción de las prohibiciones a los viajes de norteamericanos en el período de Barack Obama permitió mostrar el posible escenario de las visitas y turismo desde EEUU hacia Cuba en un clima de distensión política.
información sobre la trayectoria cambiante de los flujos de comercio,
visitantes, remesas y finanzas son el punto de partida del presente estudio
para aproximar el impacto económico de las sanciones sobre el crecimiento
económico cubano y sobre otros agregados macroeconómicos. Con las estimaciones
no se busca aproximar el coste total de las sanciones. Tampoco se intenta
valorar todo el beneficio que pudiera traer a la economía cubana el
levantamiento futuro de todas las sanciones.
La estrategia empírica busca examinar la sensibilidad de las series históricas del crecimiento económico y de otros indicadores macroeconómicos a los giros (flexibilizaciones/endurecimiento) del esquema de sanciones en las últimas tres décadas, empleando como fuente de información las variaciones en los flujos de comercio de bienes, visitantes y remesas y de indicadores financieros. Además de estimar el efecto sobre el crecimiento del PIB, se desagregan los impactos específicos a través del canal comercial, de visitantes y de remesas, y se separan los impactos para indicadores de la economía estatal y del sector privado. Este último resultado contribuye al debate en cuanto a la posibilidad de diseñar acciones de sanciones económicas que sólo impacten al gobierno sin dañar el sector privado y las familias o, en cambio, diseñar acciones que beneficien al sector privado sin beneficiar al gobierno.La segunda sección de este trabajo resume los principales eventos políticos y legislativos que han implicado giros en el esquema de sanciones desde los años 90. La tercera sección examina los acontecimientos e indicadores más relevantes de la coyuntura económica actual. La cuarta sección describe los datos usados para las estimaciones y examina la trayectoria del valor del intercambio económico entre ambos países, presentes a pesar de las sanciones. La quinta sección explica los modelos econométricos y su especificación bajo la lógica de restricciones de balanza de pagos. La sexta sección discute los resultados relacionados con el impacto de las sanciones en el crecimiento del PIB, los canales de transmisión y el impacto diferenciado entre el sector estatal y el sector privado de la economía cubana. La séptima sección evalúa la robustez estadística de los resultados, empleando como alternativa a los modelos de vectores autorregresivos (VAR). Las conclusiones comentan las implicaciones fundamentales de los resultados econométricos para el debate actual sobre la política de sanciones estadounidenses contra la economía cubana.
The Cuban regime struggles to reconcile its ideological commitment with a populace that has few ties to the revolution. The likely consequence is enduring state repression.
In a nutshell
Cubans are increasingly removed from the revolution
Reforms are unlikely to come from anywhere but the military
Increasing state repression is most likely
six decades Cubans have lived under two ideological stipulations: that they owe
the revolution and its leaders total, undivided loyalty; and that they accept
socialism, not capitalism, as the reigning economic system, now and forever.
But today’s regime struggles to uphold these mandates. Though governed by a
Leninist elite, only 15 percent of Cubans experienced the enthusiasm of the
Revolution’s early days, times that are now a distant memory.
The erosion in the revolutionary spirit is evident in the estimated million and a half Cubans who have self-exiled, and the continued search for visas to the United States or Spain. Most fundamentally, it is clear in the repeated explosions of public protests, such as the “Maleconazo” protest of 1994, the November 2020 “sit down” of artists before the Ministry of Culture, and the recent, massive “Patria y Vida” demonstrations in several major cities. A social mobilization program for November 15 of this year was quashed by the repressive actions of military, police, and armed members of the Communist Party.
further evidence of this erosion is found in the posture of the majority of
intellectuals who reject Marxist economic organization and opt for opening the
society to private enterprise and international trade.
Cubans in the diaspora have been quick to identify the growing agitation for
reform as an inevitable social movement. Arguably, among the earliest observers
of this shift toward demands for greater freedom of economic activities is the dean of exiled economists, Carmelo
Mesa-Lago, who sees the reform process as “unstoppable” and predicts that if
the leadership tried to reverse it, “people will simply ignore them … [and] the
possibility of revolt will increase.” In a similar tone, veteran
researcher William LeoGrande predicts that “how Cuba’s
institutions adapt to this new reality will be the principal determinant
shaping the future of Cuban politics.”
then, to unravel in an intelligible way the probable future of this paradoxical
socialist system? Three scenarios are suggested, each with the degree of
probable occurrence indicated.
Resistance to reform
likely scenario is enduring and increasing state repression, as opportunistic
economic reforms move along at a snail’s pace.
time will these reforms be allowed to threaten the existing political establishment.
It took 10 years to implement the timid legalization of private occupations (cuentapropismo)
of February 2021; and, even then, the most profitable occupations, such as
doctors, lawyers and engineers were excluded.
ability of the dictatorship to overcome challenges to the system has been amply
this hesitancy, some experts maintain that there are at least five factors that
make it impossible to retain repressive policies: the domestic economic crisis;
the absence of any significant guarantees by a foreign geopolitical ally such
as the Soviet Union or Venezuela; the loss of the monopoly over social media;
what Fidel and Raul Castro repeatedly identified as the sclerotic
self-preservation of the bureaucratic class; and, contextualizing all the
above, the pressures exerted by two generations exhausted from decades of food
shortages and a lack of liberties.
And yet, all of that said, the ability of the dictatorship to overcome innumerable challenges to the system has not only been amply demonstrated, but stiffens the spine of these heavily invested in its survival. Of course, it also motivates those determined to reform the system.
outcome with a low probability over the short-to-medium term hinges on whether
the U.S. Congress modifies or abolishes the Helms-Burton Act, which governs
American relations with Cuba, and the Cuban government
changing its prohibition of investments from the Cuban diaspora. Should these
events take place (regardless of which comes first), there exists in the Cuban
community abroad a real nostalgia for their erstwhile country and arguably more
capital – through remittances and direct foreign investments – than could be
available from U.S. foreign aid or international lending agencies.
changes in the sugar sector are one prominent, potential outcome. The
traditional Cuban saying, “sin azucar no hay pais” – without sugar,
there is no country – describes one of the great ironies of the nation
divided between island and diaspora.
of the Fanjul family is illustrative. With their sugar holdings expropriated by
the Revolution, the Fanjuls invested what they managed to get out of Cuba in
Florida sugar. By 2019, the Fanjul Corporation was worth $8 billion and
produced 7 million tons of cane – six times what Cuba as a whole produced that
year. The senior Fanjul, Alfonso (“Alfy”), traveled to Cuba in 2012 and 2013
and, “with tears in his eyes,” visited his family’s colonial-era home. He
told the Washington Post
that “under special circumstances” he would be willing to invest in Cuba:
namely, Cuba would have to roll back many of its baked-in, anti-free trade and
private property laws and take a more positive attitude toward the Cuban
American community. Partly because of the opposition of powerful Cuban American
politicians, chances of either happening in the near or medium term at the
moment seem very slim.
scenario with very long odds but one that is not to be ignored would see the
rise of a modernizing Cuban military.
government is certainly conscious of the possibility. Most telling is their
reaction to the recent seminar held at the University of St. Louis campus in
Madrid where the role of the Cuban military was discussed. In a presentation to
the conference, former Spanish President Felipe Gonzalez described the role of
the Spanish armed forces in making possible the transition to democracy. Other
cases discussed were those of Peru, Venezuela, and Turkey. Among the Cubans
present were Yunior Garcia Aguilera, the main leader of the Archipelago
Movement, and veteran oppositionist Manuel Cuesta Morua.
former was later forcefully confined to his house before going into exile; the
latter incarcerated. Meanwhile, in a subsequent Cuban television program, a
“secret agent” called Leonardo revealed that he had been present at the
conference, which he described as “a training seminar on how to subvert the
percent of the Central Committee of the CCP’s Political Bureau belong to the
military. They are managing an estimated 75 percent of the economy. The
military, with its 35,000 members – and not the 800,000 members of the Communist
Party – is now the leadership institution in Cuba. (Bloomberg published a
revealing report on General Luis Alberto
Rodríguez, chairman of the largest business empire in Cuba, a conglomerate that
comprises at least 57 companies owned by the military.)
going to manage affairs if the command structures of the state are dismantled?
As is the
case in all modernizing militaries, they manage their holdings under a rigid
set of financial benchmarks – a decidedly capitalist administrative
mode. This veritable military-economic oligarchy fits a category, the
“modernizing oligarchy,” that is well known in the sociology of development as
defined by Edward Shils: political systems controlled by bureaucratic and/or
military officer cliques, in which democratic constitutions have been suspended
and where the modernizing impulse takes the form of concern for efficiency and
oligarchies,” says Mr. Shils, “are usually strongly motivated toward economic
development.” Samuel Huntington also notes that multiparty systems which
promote freedom and social mobility lose the concentration of power necessary for
undertaking reforms. “Since the prerequisite of reform is the consolidation of
power, first attention is given to the creation of an efficient, loyal,
rationalized, and centralized army: military power must be unified,” he writes.
a long shot, it cannot be disregarded that it might be the military that will
set the developmental priorities and enforce them in the initial stages of the
reforms most of Cuba seem to yearn for.
facing any prospective reformers is an enormous one, since all economic sectors
were placed under state control in 1976. In addition, key preconditions for a
modern capitalist economy – such as a proper legal system or tax code, and
capital markets – do not exist. The punitive U.S. embargo does more than just
cut them off from international lending agencies; it is one of the most
all-around onerous embargoes ever imposed by the American government.
this, who is going to manage affairs if the command structures of the state are
dismantled? In particular, who is going to limit the grabbing of major parts of
the privatized structures by criminal gangs – as occurred when the Soviet
system was dismantled? Scholars such as the Canadian military historian Hal
Klepak and the exiled Cuban sociologist Haroldo Dilla argue that only the
military can pull this off. Interestingly, Messrs. Klepak’s and Dilla’s
conclusions mirror those of two RAND scholars, who decades ago made a
recommendation that flew in the face of the “gambler’s fallacy” that has governed
Washington’s approach since the beginning of this conflict.
they argued, should be prepared to shift policy tracks or possibly recombine
different elements from two or more options. One of the options recommended was
to explore “informational exchanges and confidence-building measures” between
the American and Cuban armed forces. Their reasoning is based on sound
sociology: “Of all the state institutions, the military and security organs
remain most critical to the present and future survival of the regime.” And,
one might counterintuitively add, the only ones capable of reforming it.
The third scenario might indeed be a long shot, but the military is the only institution that, if the situation arises, has a chance to pull off reform of that calcified regime
TIMES – Figures published by the Cuban Government place inflation at 77%.
Calculations by other economists have set it much higher. The complexity of
giving a number proves just how complicated the Cuban economy is, where
different markets coexist, alongside each other yet completely divided, each of
them with their own prices and currencies.
stick to the basic concept of “inflation”, which is the widespread increase of
average prices in a country over a certain period of time, then we need to
calculate it bearing in mind a basic basket of products and services essential
to keep an average household going.
a basic basket that is available to every household every month, and it is no
longer subsidized today. However, it isn’t enough to cover the monthly needs of
a family. It’s estimated that this basket only lasts approximately ten days, on
must turn to sketchy markets in either Cuban pesos or the USD priced products
with foreign currency (MLC) cards to make up for the rest of the month, or to
free supply or demand markets, both agricultural and industrial, or to the
illicit market even to satisfy certain needs. Prices of food and other products
have shot up by 500% on these markets.
rate of inflation distorts market signals and generates inefficiency, while
driving up Cubans’ cost of living.
Causes and prediction of Cuba’s informal exchange
rate in 2021
and more demand for foreign currency has prompted a tendency for the
devaluation of the Cuban peso on the illicit market, almost all year round.
inflation crisis today isn’t news though. The country experienced the Special
Period, which was the result of the disappearance of the Socialist market, when
the national GDP dropped by over 35% in the early nineties, at the same time
there was a setback in exports, going hand-in-hand with shortages of monetary
resources because of the cancelation of credit that Cuba received from
Socialist economies. However, times are even more testing today.
that prices shot up in the early nineties because of shortages of products and
wages remaining the same, even though companies were paralyzed. This is why the
population had 73% of liquidity compared to the GDP. This liquidity dropped
when Cuban began to reap the benefits of its economic reform. Liquidity stood
at 58.9% in 2018.
the Special Period, the exchange rate for the dollar was 160 Cuban pesos given
the non-existence of a formal market – very few people were receiving or
earning in dollars. This currency was also needed to buy at new stores created
for this end: there were products being sold only in dollars. With the creation
of CADECAs (bureaus de change, the exchange rate stabilized at 24 Cuban pesos:
1 dollar, despite fluctuations. The Government decided to set this fixed
The inflation domino
how much they say inflation can’t exist, it doesn’t answer to bureaucracy, leaders
or their followers. The only way to control it is to apply appropriate measures
at the right time and place; which takes us back to science, historic
experience, studies and analysis, never a political agenda.
Reform (January 2021) brought with it a significant pay rise. Quite a
considerable group of workers are receiving higher wages via profit sharing at
their institutions; although, in most cases, public sector workers’ monthly
wages have less purchasing power today than they did in previous years, as a
result of prices skyrocketing.
basket anticipated by the Reforms Process was to be sold for 1528 CUP. This
calculation must have been based on the official exchange rate of 1 USD : 24
CUP. However, it was recently reported that this basket shot up to 3250 CUP in
Havana and to 3057 CUP in the eastern provinces, while average wages in the
country only stand at 3838 CUP. Our friend Pedro Monreal recently said that the
cost of the basic basket represented 46.6% of wages in 2019, but according to
Cuban authorities, it now represented almost 85% in 2021 and in 2022, this
figure will surely continue to grow.
higher wages or incentives given to a part of the population is socially just,
it implies more money in the population’s hands, without this returning to the
State as revenue in sales or taxes, because there is very little supply on the
market and services running.
way to calm down current inflation rates is by producing more. Solutions have
been contemplated and the Government has announced a national plan. However,
the only thing we’re seeing up until now is their insistence on getting rid of
red tape that grinds production to a halt, without seeing any results. While
they continue to bet on gradual results from their decisions, the economy will
continue to roll backwards.
The following are possible actions that could be taken, but they aren’t
the only ones:
Getting rid of red tape and
decisions that come from “superior bodies” to guide state-led companies. The
Government keeps saying that they need to decentralize, but results in
companies’ production aren’t being seen because they don’t have any real
Get rid of appeals to “make an
effort”, “sacrifice” to increase production and substitute this with concepts
such as “benefits” and “profits” and others that can be expressed in concrete,
measurable statistics, and not aspirations belonging to the metaphysical
Allowing MSMEs to import without
Allowing private owners or
foreign companies to invest in the retail market, getting rid of the State’s
monopoly on retail stores; that is to say, go from direct control of commercial
activity to indirect control via taxes and other control instruments.
Proposing a more encouraging
official exchange rate for MSMEs and other private figures, so they don’t have
to turn to the informal market to buy MLC, which the State then demands they
purchase their supplies in.
Encourage business owners to sell
in CUP, giving tax breaks to those who sell in this currency.
the reforms economists have been proposing for decades are finally set into
motion. However, if they continue to disregard them, decision-makers should
remember that there is a menu of options still, even in these circumstances,
and despite some options on this menu clashing with firmly rooted political and
ideological beliefs among the leadership circle.
Reforms Process and foreign situation with foreign currency is leading to
society’s reduced purchasing power, with the corresponding nuisance that this
goes hand-in-hand with from a political standpoint. The population is
questioning political decision-makers and their questions are growing every day
that inflation grows. On the whole, economists point out two reasons for the
downfall of a government: high inflation and high unemployment rates.
has already reached Cuba, and it needs to be reduced. But this implies bold
decisions and the courage to break with dogmas. Clearly, will power and appeals
won’t fix this problem. These are economic problems that can only be overcome
with economic solutions. Cubans emigrating because they’ve lost hope shouldn’t
be the solution. The number of people emigrating has shot up exponentially in
January 2022 alone, even with the travel restrictions that exist today and the
need for foreign currency to go ahead with this decision.