In the early 20th century, Cuba was on a promising path, with a growing economy fueled by sugar exports and a thriving tourism industry. By 1950, Cuba had a per capita income similar to Panama’s and higher than Brazil’s. However, today, around 72-90% of Cubans live in poverty.
The shift began in 1952 with Fulgencio Batista’s military coup, which increased corruption and led to widespread discontent. Fidel Castro’s revolution rise to power in 1959 brought significant changes, including rent reductions, lower electricity rates, and land redistribution. These measures nationalized large U.S. investments in the sugar industry, leading to strained relations with the United States.
In 1962, the U.S. replied expanded its embargo to prohibit nearly all trade with Cuba, pushing the country to depend heavily on the Soviet Union. The nationalization of industries and centrally planned economy led to inefficiencies and a massive migration of skilled professionals to the U.S., further affecting productivity.
With the Collapse of Soviet Union in 1991 caused Cuba’s GDP to fall by more than 30%, returning to 1953 levels by 1993. Periods of decline and stagnation ensued, with widespread food shortages and blackouts. Economic liberalization in the 1990s allowed some private enterprise and foreign investment, but the relationship with Hugo Chávez’s Venezuela was crucial for survival.
Despite attempts at economic reform under Raúl Castro, Cuba remains impoverished, with tourism declines exacerbated by the pandemic. In 2022, Cuba experienced the largest migration wave in its history, with more than 153,000 irregular entries into the U.S. and another 67,000 arriving legally through a parole program initiated by the Biden administration.
The current economic crisis surpasses even the hardships of the 1990s, prompting the declaration of a war economy. This term coined by Díaz-Canel is used to describe the dire state of the country, operating under the severe constraints imposed by the powerful U.S. government.
According to official estimates, the Cuban economy contracted by 2% in 2023, while inflation reached 30%.
The situation has become so critical that by the end of February, the government officially requested aid from the United Nations World Food Programme to maintain the distribution of subsidized milk to children under the age of 7.
The suffocating measures are likened to bombs intended to break Cuban resistance. Díaz-Canel has introduced the concept of “Creative Resistance,” which involves creating more with fewer resources, finances, and investments. This includes efforts to confront the impacts of an intensified blockade, the global crisis, and pandemic aftermaths.
Cuba is adjusting its plans to a war economy and has announced a uniform price policy. This involves combating illegality and addressing the poor performance of state entities. The government aims to save the revolution and socialism, emphasizing the need for awareness and personal transformation.
However, this approach does not seem to focus on saving society as a whole. The repression of small businesses, potentially benefiting the proletariat, highlights the tension between private property and the state-controlled economy. The Minister of Finance and Prices, Vladimir Regueiro Ale, states that Cuba does not believe in the market, but rather in a fiscal observatory to monitor prices and maintain control.
The debate centers around whether these measures will have long-term adverse effects, especially given the centralization of financial decisions and the postponement of non-essential investments like tourism. The government plans to implement maximum price policies for basic products to mitigate price fluctuations, but structural issues such as power cuts and poor food distribution remain significant concerns.
https://www.bbc.com/mundo/articles/c4ng2qgzggno
https://www.wfp.org/operations/cu03-cuba-country-strategic-plan-2021-2024