Cuba’s Economic Cataclysm: From Obama’s Openness to Biden’s Sanctions and the Impact of COVID-19

2023-10-31 08:00:00

The last times we visited Cuba were during the euphoric years which followed the openness shown by the then American president, Barack Obama, then during the return of the economic sanctions of his successor Donald Trump, maintained by Joe Biden. A real economic cataclysm. The COVID-19 pandemic caused a second cataclysm: the race to create vaccines was costly, as was the collapse of tourism, a major source of income.

In 2023, the island is no longer the same, the people we met there tell us.

But Cuba is seeking to open up again.

A series of three reports:

The worst crisis in 30 ansInternet for everyoneThe Russians are back

The last major crisis took place during what was called the Special Period in peacetime, at the time of the fall of the Soviet world, at the beginning of the 1990s. We lacked everything at the time.

Now you can get almost anything in Cuba – as long as you can afford it.

7:12

On January 1, 2021, in the midst of a pandemic, Cuba finally resigns itself to unifying its currencies: no more CUC (convertible peso) aligned with the American dollar, the CUP (Cuban peso) becomes the only national currency. But it is also the legal return of the American dollar to the Cuban market. From 24 pesos for 1 dollar at the beginning, in mid-October we went to 250 pesos for 1 dollar on the street, on the black market, theoretically illegal.

Inflation is galloping. Terrible for perhaps half of the population who receive salaries or pensions in pesos (CUP), which are not indexed. A monthly retirement pension is now worth only around twenty dollars. Those who receive dollars from family abroad or who own a business are doing much better.

Another major reform, in August 2021: shortly after the large repressed demonstration of July 11 throughout the island, small, medium and micro-enterprises (MIPYME) are authorized. They can have up to 100 employees and directly import their products.

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The return of U.S. economic sanctions and the COVID-19 pandemic have hit the Cuban economy hard.

Photo: Radio-Canada / Jean-Michel Leprince

Thus, Martin Nizarane can grow Clamanta, his family yogurt and ice cream business. The problem is that he has to import his basic products in dollars, while he sells his yogurt and ice cream in pesos, accessible to Cuban consumers.

These two major reforms combined have undesirable effects. Inflation and the rush on pesos to buy dollars. ATMs are often empty or they limit withdrawals.

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The value of Cuban pesos plummeted.

Photo : Radio-Canada / Fred Tremblay

The government then wants to impose digital payments – what it calls banking – while state banks are not equipped for that and the population resists.

Added to this are power outages and occasional lack of gasoline at gas stations. American sanctions against Cuba (but also against Russia, Iran and Venezuela) are disrupting the arrival of oil which supplies power plants.

There is discontent in Cuba.

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Raul Castro raises the arm of the new president-elect, Miguel Diaz-Canel, at the National Assembly, April 19, 2018.

Photo : Getty Images / Adalberto Roque

President Miguel Diaz Canel resumes the series of reforms initiated by Raul Castro in 2011 then suspended without explanation around 2015 (during the Obama period).

Lack of consensus in the Cuban Communist Party, perhaps?

Carlos Arzugaray, ex-Cuban diplomat and political analyst, does not mince his words.

If the reform had ended before Diaz Canel became president, he probably would have been a good administrator. But he is not a reformer, he does not have the necessary makings of reformers, he believes.

A reformer must take risks. And Diaz Canel doesn’t like to take risks.

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A former diplomat, Carloz Arzugaray is now a political analyst.

Photo : Radio-Canada / Fred Tremblay

But circumstances force his hand.

Many government measures are taken at the last moment, in times of crisis, underlines Mr. Arzugaray. And improvisation comes up against bureaucracy. Bureaucrats do not want changes because they will lose power and privileges.

Economists are stamping their feet, because they have the impression of having preached in the desert for the last 20 years.

We feel the fear, the doubts, the fears, the absence of leadership like in the time of Fidel Castro.

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Ileana Diaz Fernandez teaches at the University of Havana.

Photo : Radio-Canada / Fred Tremblay

This leadership no longer exists and this creates fears. Fear of the concentration of property, of wealth, adds Ms. Diaz Fernandez. All this has an effect on the population, we have seen it [lors des manifestations] July 11 [2021]. Because there is a concern to protect the population. The problem is that when the necessary measures are not taken, we no longer protect it.

And the Cuban population, these days, is much better informed.

No, Cuba is no longer the same.

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