The Perfect Storm: An Analysis of the Multidimensional Crisis in Cuba 2019-2022

I

Since the end of 2019, humanity has been devastated by a terrible pandemic. Among its consequences, a collapse of the most solid health care systems, seemingly entrenched governments fallen like houses of cards, and countries famous for their stability experienced social upheavals. Cuba was no exception. The pandemic proved a severe test for the island’s political system and, especially, for the people, who are facing a crisis only comparable to that of the early 1990s.

According to the deputy prime minister Alejandro Gil, 2022 began with a 13% drop in GDP over two years and a deficit of more than three billion dollars.[1] Added on to this is a 40% drop in the industrial production; a marked drop in food production; a 65% loss in the value of exports; a deficit in the commercial balance of goods that grew by 187%; as well as one of highest inflation rates in the world.[2] The previous indicators are reflected in problems such as shortages, a revitalized black market, an increase in crime, inequality (the Gini index has doubled in the last thirty years), poverty, and a declining quality of life. Right now, the country is experiencing a migratory wave heading to the United States, while new migration routes have also opened toward Europe. 

Politically, the trials of 11J protestors have been criticized for their excessive convictions of minors since the end of last year.[3] [4] The protests, which took place from July 11 to 14, were a culminating moment in the political crisis that the country had been experiencing since November 2020. This has led to severe polarization, a complex relationship with the diaspora, and has damaged the image of the government, including in its relations with the European Union.

II

This complicated reality is the result of many factors, whose common denominator is the difficult economic situation on the island prior to the start of the pandemic, and its worsening throughout. It should be noted that the three most important economic activities—the export of medical services, remittances, and tourism—were all affected. The country has suffered heavy losses in Venezuela, where Cuban professional hires fell by 24% in recent years. This is in addition to the exit from markets in Ecuador, Bolivia, and Brazil. 330 million dollars have been lost annually form the latter alone, a monetary figure greater than that produced by tobacco exports.[5] Remittances were affected by Trump policies, decreasing by 35% in 2020 compared to the previous year. And tourism lost 80% of its gross income in 2020. The number of tourists between January and May 2021 fell to only 11% of the total from the previous year.[6] Additionally, the economic crisis in Venezuela meant a 62% decrease in oil shipments to our country, as well as the loss of eight billion dollars in direct investment.[7]

The U.S. embargo, with its historic impact on the country, contributed to that effect. One year after the change in government in the United States, the more than two hundred and fifty measures that were strategically designed and imposed by the Trump administration pummeled sectors like foreign investment, tourism, foreign trade, the banking and financial sector, and fuel. [8] Add to this the effect of COVID-19, which along with its impact on tourism and the world economy, led to an increase in public spending: more than 13 billion pesos were allocated to public health and social assistance alone in the first year of the pandemic, as well as tens of millions of dollars.[9]

Chronic structural problems in the Cuban economy must also be factored in, such as inefficient centralized planning, broad state predominance over the market and property, insufficient national production, and the unintended results of the “Tarea Ordenamiento” (TO).[10]

The latter had been postponed for years. Among its objectives were eliminating the dual monetary system, consolidating internal finances, eliminating subsidies, and included a profound reform of prices, wages, and pensions. From the beginning, the measure was harshly criticized by experts. One of its greatest risks was that inflation would exceed the initial calculation, and it happened: in September 2021, the increase in consumer prices, which includes 90% of household spending and is an important indicator to measure inflation, was 59.66%. In November it had reached 69.48%, mainly at the expense of food and non-alcoholic beverages. On October 27^th, 2021, Marino Murillo acknowledged that inflation had grown more than expected and that the basket of goods and services, initially calculated at 1,528 CUP, reached 3,250 CUP, well above the lowest levels of the salary scale and for retired persons.[11]

The country was not exempt from the health drama caused by COVID-19. The first two waves were stemmed, and the government sent medical brigades to various continents, including Europe. At the same time, they accelerated work on five nationally produced vaccine candidates, of which three were fully developed. However, the combination of the delta variant, economic suffocation, and problems in production scaling led to last summer’s perfect storm: almost a million diagnosed patients, thousands of deaths, and the collapse of a health care system already worn down by years of scarce investments and supplies. At its height, this phenomenon took dramatic overtones with the lack of means of production, hospital capacity, oxygen and medicines, the appearance of speculative prices, and poor social communication. This generated significant social unrest. It was a particularly delicate moment.

All of the above coincided, according to the official version, with months of high electricity consumption, breakdowns in several of the eight thermoelectric power plants in the country, and failures in the distribution system due to postponed maintenance and a lack of spare replacement parts. With the system’s limited margin for generation, which when installed was only capable of producing half of 6,500 MW/h, it was impossible to satisfy the max demand of 3,300 to 3,500 MW/h. Blackouts lasted more than seven hours, recalling some of the hardest moments of the special period.[12]

III

From a political point of view, the scenario continues to be complex. The long-awaited generational transition took place with the arrival of Miguel Díaz-Canel to the presidency of the Republic in April 2018. However, this did not mean a complete transfer of royal power to the hands of new authorities. The president’s lack of charisma or popularity, and his mistakes at key moments, such as on July 11, have further complicated his management.[13]

The government outlined its priorities during this stage: contain the health emergency; alleviate shortages and curb speculation, redirect the sale of sensitive products such as chicken, cooking oil, and detergent to the regulated monthly stipend; organize the queues and prioritize the delivery of modules to strategic sectors. Earning foreign exchange was also a priority. The unpopular decision to open and then expand stores in MLC has come at a high political cost. At the same time, the economic reform plan has continued. In addition to the regulation, a package of 63 measures was adopted for the agricultural sector, more than forty to renew the socialist state company, including strengthening its relationship with the private sector.[14]

Among the most important decisions in recent years was increasing internet access. It was essential to achieve desired levels of development and competitiveness, but it also meant that the State would lose partial communicational hegemony and control of information. This was of paramount importance in the political crisis that began with the enactment of decree 349 and lasted from November 2020 to the same date in 2021. A “new intellectual dissidence” emerged that had support, wide dissemination in foreign and non-state media, and a constant following on social networks. The pulse between these sectors—grouped into the San Isidro movement, 27N, and the Archipelago platform—and the State put the country in tension several times (I address this issue extensively in: The Rebellion of applause: history and evaluations of a crisis politics*).[15]

However, the climax of the crisis were the July 11 protests. Led by the most disadvantaged sectors of society, the protests spread to fifty cities in the country and left one dead, dozens injured, and hundreds of people subject to legal proceedings. During that time, the president, on a live national network, called for loyal groups to take to the streets. This, coupled with the images of police violence that flooded social media and the internet shutdown, put the government and the head of state in a delicate position.

As a result, in the days after the unrest, the government adopted a more conciliatory position. They implemented measures like eliminating the limits and tariffs for the importation of food products, medicines, and cleaning products. They legalized MSMEs, of which there are already more than 1,600 in the country; granted more autonomy to the socialist state company. They launched a public works campaign in the poorest neighborhoods, and a dialogue was initiated with some sectors of the country, publicized as much by the official media as criticized by the independent press and related groups for not having included the opposition. In addition, the capped price policy was temporarily abandoned, which, although it contributed to the rise in inflation in the second half of the year, also favored a greater supply of agricultural products and alleviated shortages.

IV

As of November 15, 2021, after the failure of the marches announced for that day by the Archipelago platform, the country began a “new normality.” This implied the beginning of an economic recovery through renewed tourism, the arrival of visitors and products, and a reactivation of industry, commerce, and services. Through political and mass organizations, the government recovered several of its tools to influence key sectors, such as students and young people. Although there is not a climate of total control, there also hasn’t been any force with the mobilizing capacity to destabilize the situation.

As for the United States, while President Biden does not seem to want to return to Obama’s policies, nor has he eliminated many of those adopted by Donald Trump, he is also not expected to make new decisions that would affect the economy. This grants the government time, which it could use to consolidate its change model without the participation of the “historical enemy” and maintain the discourse of a country under siege.

The current migratory wave has broad implications. Beyond the human drama, from the demographic point of view, it implies a worsening of the already difficult situation of an aging population. Making matters worse, many of those who are emigrating are professionals, which also implies a loss for the country. However, from the government perspective, it could also be positive. In the first place because it reduces internal pressure—most of the leaders of the “new intellectual opposition” having emigrated. On the other hand, remittances are already the second source of foreign currency inflows to the economy, and the country has taken steps to convert the diaspora into a source of direct investment.

For the ruling party, the greatest challenges  today revolve around resolving the economic crisis. The economist Juan Triana Cordoví proposes a series of ideas on how to assume and manage the costs of the structural adjustment required: learning to live with the blockade/embargo; renegotiate commercial debt; attract and materialize foreign direct investment; generate a favorable business environment for the business sector; and promote agricultural and food production.[16] However, grounding this in a complex Cuban reality, in the context of a post-world crisis and the war in Ukraine, is not easy, especially without further deteriorating social indicators that could threaten political stability and control.

From the point of view of civil society, any vestige of false unanimity has been erased. This has been demonstrated in all of its complex diversity, often antagonistic and which goes beyond the political dispute between some groups and the State, although it ultimately includes it. Channels for dialogue and agreement have opened up between different social sectors and the government around specific issues. For example, between Protestant churches and conservative groups around gender education, as well as dialogues between animal activists and the State. The emergence of social networks has enhanced freedom of expression, and access and exchange of information. However, it has also fostered polarization and made it difficult to reach consensus. Finally, 11J showed that the rulers do not have a blank check extended for an unlimited amount of time. An institutional framework is necessary and should continue to be strengthened in the coming years with greater popular participation.

In my opinion, the government and the system have shown signs of strength, with the ability to adapt and maneuver in a new and adverse climate at a time of maximum weakness. Its greatest victory has been surviving “the perfect storm” that these years of crisis have represented in order to continue implementing its change model. However, it has suffered significant wear and tear, so that if the current order of things is maintained, or if some catastrophic event occurs, social outbursts and political instability can no longer be ruled out.

Carlos Alberto González Carvajal, Bayamo, 1980. He is a doctor, graduated in 2005, as a graduate in intensive care, he was a member of the Henry Reeve brigade that served in Guatemala; Later, he worked in the Barrio Adentro II Mission in Caracas, Venezuela, from 2006 to 2009. Specialist in Comprehensive General Medicine and Intensive and Emergency Medicine, since 2012 he works in the emergency service of the Lucía Íñiguez Provincial Hospital, in Holguín. Poet and narrator, he founded the literary group “Vortice”, he is a graduate of the Narrative Techniques Workshop “Onelio Jorge Cardoso”. In recent years he has developed an intense work as a columnist on issues of Cuban reality for media such as La Joven Cuba, Luz noche, OnCubaNews…

llustration by Maikel Martínez Pupo. You can find him @MaikelStudio @maikelmartinezpupo.

[1] Figueredo O. Alejando Gil: The Cuban economy has lost 13% of its GDP between 2020 and so far in 2021. Cubadebate. 2021. [Cited October 27, 2021]

[2] Mesa-Lago C. The causes of the protests and the magnitude of the economic crisis in Cuba. Columbia Law School. 2021. [Cited August 5, 2021]

[3] Kurmanaev A. Mass trials in Cuba deepen repression. The New York Times. 2022. [Cited January 14, 2022]

[4] Information on the criminal proceedings derived from the disturbances of July 11, 2021. Office of the Attorney General of the Republic of Cuba. 2022 [Cited January 25, 2022]

[5] Serna R. The million dollar impact that Brazil’s withdrawal from the More Doctors program in Brazil will have for Cuba. BBC News. 2018. [Cited November 19, 2018]

[6] Mesa-Lago C. The causes of the protests and the magnitude of the economic crisis in Cuba. Columbia Law School. 2021. [Cited August 5, 2021]

[7] Ibid.

[8] Trump’s more than 240 measures against Cuba. Cubadebate. 2021.

[9] What was the fate of the state budget in the first year of the pandemic in Cuba? Comptroller General of the Republic of Cuba. 2022 [Cited October 27, 2021]

[10] Mesa-Lago C. The causes of the protests and the magnitude of the economic crisis in Cuba. Columbia Law School. 2021. [Cited August 5, 2021]

[11] De Miranda M. The “Ordering Task” and exchange distortions Columbia Law Shcool. 2021. [Cited October 29, 2021]

[12] Brizuela L. Electricity crisis in Cuba reinforces the need to accelerate the energy transition. INTER PRESS SERVICE. 2021 [Cited September 30, 2021]

[13] Gratius S. Change of power in Cuba: A mere formality? CIDOB Barcelona Center for International Affairs. 2022 [Cited April, 2018]

[14] Triana J. The urgency of the sense of urgency. Oncubanews. 2022. [Cited January 24, 2020]

[15] González C. A. “The applause rebellion” history and assessment of a political crisis. Luz Nocturna. 2021. [Cited December 21, 2021]

[16] Triana J. The urgency of the sense of urgency. OnCuba News. 2022. [Cited January 24, 2020]