Cuba In Deep Crisis: Is Collapse Of The Communist Regime Looming? – Analysis

On February 28, it was announced that for the first time in history, the Cuban communist regime requested humanitarian aid from the United Nations, specifically from the UN World Food Program (WFP), due to the impossibility of distributing subsidized milk to children under the age of 7.

The UN agency confirmed that they had received an official request from the government of the Republic of Cuba and that supplies of milk had already been sent to the Caribbean island. The WFP recognized the “urgent need” in Cuba’s request due to the “deep economic crisis facing Cuba”, which “significantly affects the food and food security of the population”. The Cuban government recently announced that it will not be able to guarantee the supply of subsidized bread (which is included in the basket of basic foodstuffs co-financed by the government) until the end of March this year due to a lack of wheat flour. Cuba has suffered from shortages for decades, but so far it has somehow worked even in the most difficult times. But it looks like the system is close to cracking.

The Cuban revolution in dire straits

When the government in Havana admits the lack of basic foodstuffs such as milk and bread and publicly asks for international humanitarian aid, it is a prime indicator that the economic crisis is profound that the communist regime is approaching collapse. Cuba has been going through economic crises since the US government imposed a trade embargo on it in 1960. The biggest economic crisis took place during the so-called A special period at the beginning of the 1990s, but even then no help was requested from the UN.

In the last four or five years, Cuba has been going through the worst economic crisis in decades, which has led to record emigration from the island and growing discontent among Cubans who are suffering from severe shortages of food, fuel, medicine and electricity. There is also a lack of other things such as working machines, equipment, raw materials, technology. The situation is extremely difficult and Cuba could turn into a scene not only of a humanitarian crisis, but also of incidents, conflicts and civil war. 

Synergy of adverse processes

The very difficult economic situation in Cuba is the result of several processes that came together and had a negative effect. Firstly, the economic crisis in Venezuela has resulted in Caracas no longer sending large amounts of subsidized oil to Cuba, which is necessary for transportation services and keeping them at low prices. Due to the lack of “hard currency”, Cuba cannot buy large quantities of oil at real prices, and therefore subsidies are more than welcome. The lack of fuel led to the cancellation of last year’s May Day parade – the island’s biggest annual mass celebration, which the left-wing government regularly uses for publicity purposes.

Secondly, the more massive coming to power of Cuba-averse, non-cooperative right-wing governments in Latin America such as Jair Bolsonaro in Brazil, Ivan Duque in Colombia, and Guillermo Lasso in Ecuador. A right-wing conservative wave hit the region from the mid-2010s to the early 2020s. That trend has been largely halted in recent years with the rise to power of right-wing governments like Lula da Silva in Brazil in 2023, but the damage has been done. Even many left-leaning Latin American governments in practice do not want to associate themselves excessively with the Cuban regime despite their rhetorical support. The right-wing governments thus stopped the practice according to which Cuba sent its doctors abroad, whose salaries were paid by the host countries.

US sanctions and the corona effect

Thirdly, the Trump administration tightened certain sanctions against Cuba that were lifted by the Obama administration, which greatly reduced the amount of money sent to the island by the Cuban diaspora from the US. The Trump establishment has banned trade with companies acting on behalf of the Cuban military, Cuban intelligence and security services. It is also forbidden for Americans to travel to Cuba for educational and cultural purposes. The Biden administration eased some restrictions, but not all. After all, the outbreak of anti-government protests in the summer of 2021 and the government’s repressive response drew fierce criticism from the US.

On the other hand, the Cuban government blamed the US for the protests. Fourthly, the negative health and economic consequences of the corona crisis. The coronavirus has exposed all the weaknesses of the Cuban health system, which is known as the greatest achievement of the Cuban Revolution. The health system was shown to be fragile as hospitals ran out of oxygen, equipment and basic medicines. The pandemic caused a 90% drop in foreign exchange earnings as tourism collapsed. Unlike some other Caribbean countries, Cuban tourism has not yet recovered from the pandemic. By October 2022, the number of foreign tourists was still less than half of the total number in the same month of 2019.

Inadequate economic policies

Fifthly, the inadequate economic policies that fueled inflation are the result of the decisions of the economically inept President Díaz-Canel, who came to power in 2018 thanks to his loyalty to Raul Castro, not because of his skills. Although the government allowed some forms of small private enterprises in 2021, progress on market reforms has stalled.

That same year, Díaz-Canel ended the nearly two-decade-old dual currency system, producing one of the sharpest currency devaluations in the world. Inflation was a whopping 77% in 2021, 39% in 2022, and 30% last year. Although the fall in inflation is stable, these are large numbers that destroy the already shallow wallets of ordinary citizens. The jump in food prices was meteoric since Cuba imports about 70% of food for its population. Last year, food prices increased by 78%.

Export earnings were $9.1 billion in 2023, compared to $9.9 billion expected and $12 billion realized in pre-crisis 2019. Cuba’s public debt stood at $19.7 billion in 2020 when the government issued its latest report. In the meantime, it has increased.

“We are paralyzed… We have to look for new ideas, new ways of doing things,” said Esteban Lazo, president of the National Assembly. Economic dysfunction is one of the primary reasons why hundreds of thousands of Cubans left the island between 2021 and 2023. It is estimated that during that period, about 400-500 thousand Cubans fled to the United States, which is about 4-5 percent of the country’s population. The flight of Cubans to the US became easier after the government of Nicaragua announced in November 2021 that it was canceling visas for Cuban citizens. The move was apparently arranged with the Cuban regime to allow dissidents to leave. According to the US Department of Homeland Security, in 2023 more than 6,200 Cubans arrived by sea in Miami.

Shortage of bread – an indicator of the inefficiency of the system

The current food shortage is the result of poor management. Bad management of the food industry – bread production – can be taken as an example. Of the five mills on the island, only the one in Cienfuegos is operational, but it is producing far below the required capacity to meet demand.

Despite the Russian government’s large donation of 25,000 tons of wheat in mid-January, which could theoretically cover the island’s needs for more than a month, the shortage is still present. This leads to the question of how the donated wheat is used.

Furthermore, efforts by the Cuban government to replace bread with alternatives such as cassava, squash or rice have been insufficient, meeting only 15% of demand. Attempts to secure imported flour through non-state channels also failed, only 3,000 tons of flour was provided per month, which is insufficient to meet the needs of the population. Cubans blame US sanctions for bread shortages, while at the same time the government pumps foreign currency revenues into the construction of luxury resorts and hotels for tourists.

The historic rebellion of the Cuban people

As previously mentioned, in July 2021, massive anti-government protests broke out across Cuba. They were the biggest protests since the communists came to power in 1959 and seriously shook the regime. The protesters were motivated by the poor state of the economy, the government’s failure to implement promised economic and political reforms, resentment at the authoritarianism of the government, the restriction of civil liberties, as well as the introduction of quarantine due to the pandemic.

The protests lasted a week. The government responded by cracking down on protests, making hundreds of arrests and indicting at least 710 Cubans for crimes including sedition. Some protesters received long prison terms in trials that international organizations have deemed unfair. Despite widespread popular revolt, like his predecessors, the Castro brothers, Díaz-Canel has shown no affinity for political liberalization. Instead, the president enacted a new criminal law in May 2022 that further criminalizes dissent with the government.

However, this did not discourage the dissidents, and protests flared up again in October 2022 after Hurricane Ian damaged the Cuban power grid and led to prolonged blackouts. energy. In May 2023, new protests broke out in the isolated town of Caimanera, near the infamous US prison Guantanamo. Dozens of protesters took to the streets demanding better living conditions and freedom. The group protested in front of government buildings, before riot police arrived and violently arrested several protesters. The US embassy in Havana condemned the moves of the Cuban government.

Distancing the people from the regime

That the dissatisfaction of the population is high is shown by the low response to the elections and referendums organized by the government. In the one-party parliamentary elections in March 2023, 24% of voters did not go to the polls, which is a record number. Since the Communist Party of Cuba had no opponent, this was the only way for voters to show their displeasure despite the potential penalty from the regime.

Likewise, the referendum in September 2022 on a new family law legalizing same-sex marriage and local elections in November 2022 led to new high abstinence rates. These are signs that Cubans are more willing to defy the regime and deny it the legitimacy it seeks. This is not surprising since various non-governmental organizations estimate that about 80 percent of the Cuban population lives in poverty, and about 62 percent “survive with the minimum.”

Government efforts to resolve the crisis

In late December, the Cuban government announced a series of measures, including hikes in fuel and public transport prices, in an attempt to reduce its widening fiscal deficit. Critics attacked these policies as generators of inflation, enacted at the wrong time and without incentives for domestic production.

“The measure itself has an inflationary effect; however, there is a group of decisions that mitigate its effect”, said Minister of Finance and Prices Vladimir Regueiro. At the beginning of February, Economy Minister Alejandro Gil was dismissed, which is an indication that the regime is showing that something new needs to be done.

Gil’s recovery plans, which he launched from 2018 onwards, did not turn out well. Plan Tarea ordenamiento in 2021 promised Cubans a better standard of living by ending the dual currency (convertible peso) and revising prices. Cuba established a dual monetary system in 1994 after the shock of the fall of the USSR, its main economic patron. In addition to its currency, the peso (CUP), the government then established the convertible peso (CUC) in order to introduce a substitute for dollars that were traded on the black market. Instead of recovery, the 2021 plan resulted in rising inflation and a deepening of the crisis.

Changes of ministers, price increases and diplomatic efforts

Along with Gil, some other officials were also removed from their positions, such as Food Industry Minister Manuel Santiago Sobrino Martínez and Science Minister Elba Rosa Pérez Montoya. Although no one predicted layoffs, at the beginning of the year Raúl Castro called on all leaders who are not achieving results to leave their positions: “Those who, due to insufficient capacity, lack of preparation or simply because they are tired, are not up to the job, must leave their jobs to another comrade who is willing to take on the task,” he said. The firing of Gil and the others is an attempt by Díaz-Canel (and in the background by Castro) to shift responsibility to the ministers who did everything under their auspices.

The communist government decided to implement the previously announced increase in the price of electricity for large users on March 1, but decided to postpone the increase in the price of liquefied gas for small consumers, which is widely used on the island for cooking. Government officials revealed that they decided to limit the March 1 fuel price hike to the retail sector (fuel went up fivefold!), leaving unchanged wholesale prices applied to public services such as transport to soften the blow to consumers.

In order to alleviate the difficult economic situation, the authorities turned to diplomacy and establishing better bilateral relations with some powerful countries of the world. One of them is South Korea, and there are also attempts to seek more fruitful relations with the European Union, India, China… Despite the country’s openness to direct foreign investments, it will be difficult to attract them considering that no investor wants that his company’s assets to be destroyed in some popular uprising. 

The possibility of a popular uprising

Although a communist regime is endangered, it will not be easy to carry out an Arab Spring-style revolution. The main reason is that the regime’s repressive apparatus is still effective. A dense state intelligence network has entwined local institutions and civil society, and there are threats of long prison sentences for political activism. These are all factors that make it difficult for dissatisfied Cubans to organize politically. This is exactly why disaffected people mostly leave the country instead of staying in it and trying to stage a coup.

However, if the economic situation continues to collapse, the repressive apparatus will not preserve the regime because the elements of the ruling structures will sooner or later be more seriously affected by the crisis. They already are. Empty shelves, shortages of medicine and fuel were what drove the anti-communist movements in Eastern Europe in the late 1980s more than any political idealism. Despite the crisis, the regime will not dissolve voluntarily. Reaching the point of collapse is still possible because no one eats ideology but food products that the government fails to deliver.