Communist Cuba’s UN aid plea reveals deepening economic crisis

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In a tumultuous Latin America, Cuba’s plea to the United Nations for aid highlights its dire economic crisis. Struggling with food shortages amidst tightened US restrictions and internal decay, the communist regime faces unprecedented challenges. President Miguel Díaz-Canel’s corruption probe and reliance on age-old excuses like the US embargo underscores a system in collapse. As Cuba navigates uncertain waters, envisioning a modern future requires global support amidst political reticence and economic turmoil.

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By Juan Pablo Spinetto

Almost unnoticed amid the drama and crisis that hit Latin America every week, in the last days of February the Cuban government asked the United Nations for aid to address a growing food shortage.

The unprecedented cry for help from a communist regime that has always prided itself on its social welfare model captures Cuba’s dire economic straits. Hurt by tightened US restrictions, decaying domestic production, a weak post-Covid tourism industry and indifference from its allies, the island is living through its worst economic days since the collapse of the Soviet Union more than three decades ago. A string of blackouts brought people into the streets last weekend, shouting for “food and power” — a rare display of social unrest since the turmoil that shook the island in July 2021, which the regime contained with crushing force.

Today’s economic situation is a huge challenge for the Communist Party of Cuba that has controlled the nation’s life since Fidel Castro’s revolution in 1959. Witness the search for internal scapegoats and distractions: President Miguel Díaz-Canel announced an unusual investigation against an old ally and friend, Alejandro Gil Fernández, for alleged corruption after firing him from the post of Economy Minister.

Lea la nota en español.

Of course, as distractions go, there’s always the US embargo, Cuba’s historic go-to excuse during times of economic malaise. Yes, the embargo is a Cold War anachronism that should have been lifted long time ago, but it’s not responsible for the island’s food shortage: Since 2001, Cuba has been able to import food and other agricultural products from the US, to the tune of over $7 billion. And an embargo imposed 62 years ago can’t explain why the island lost at least half a million citizens, or close to 5% of Cuba’s total population, between 2021 and 2023. These are young, educated Cubans escaping hunger, economic mismanagement and political repression.

Once you get past the finger-pointing, what we’re witnessing is the collapse of Cuba’s socialist regime. This transition could take decades. Or it could happen in much the same way as that great Cuba aficionado Ernest Hemingway once wrote of bankruptcy: “Gradually, then suddenly.” One thing is clear: The crisis can’t be fixed without fundamentally changing the country’s centralized, state-controlled model where bureaucrats rule over every aspect of public life. That political change, which must come from within Cuban society, threatens the survival of the regime and the future of the revolution, an unacceptable risk for the well-fed old guard that still runs the country. That’s the essence of the conflict right now.

This situation also represents a significant test for the region — and an opportunity too. As naïve as it sounds, imagine a functioning and freer Cuba, with its highly qualified professionals and workforce able to tap the country’s potential, from tourism to agriculture and culture or maybe even crude oil.

Yet the most foreseeable scenario now is one of uncertainty and chaos. Some US lawmakers might celebrate a sudden collapse of Cuba’s regime as a policy success. But if that did happen (a massive if, I know), no organized opposition is waiting to take over and correct the ship’s course. We don’t know what the reaction of the Cuban military would be either. As William LeoGrande, a longtime Cuba-watcher and professor of Latin American politics at the American University School of Public Affairs, told me, “the result could be a failed state with mass migration and transnational criminal organizations establishing a foothold. That would be a much bigger problem for the United States — a potential disaster.”

For now, Cuba’s government is trying to fix its economic problems by implementing a deeply unpopular austerity program that includes hiking gasoline prices five-fold — diesel and gasoline went from 25 CUP to 132 CUP or 428% — in an attempt to close a massive budget hole estimated at 18.5% of GDP and contain rampant inflation. It’s seeking new external help (such as the UN food request) and working for the full recovery of its key tourism industry. There’s a chance that an increase in local production to allow for bigger exports, a recovery in remittances and some other “bits and pieces,” as LeoGrande put it, could restart the economy and enable the government to survive the crisis’s immediate effects.

But that would be the best-case scenario for a system long past its sell-by date. Old-school Latin American lefties like Brazil’s Luiz Inácio Lula da Silva, Mexico’s Andrés Manuel López Obrador, Colombia’s Gustavo Petro and of course Venezuela’s Nicolás Maduro, may still look to Cuba for ideological inspiration. But as other commentators have pointed out, younger Latin Americans are at best indifferent. Moreover, notwithstanding all the speculation about Cuba’s strategic relationships with Russia and China (Díaz-Canel visited both in 2022) the reality is that, beyond their geopolitical alignment and rivalry against the US, these nations are reluctant to bankroll a government with a systemic debt default track record.

As the US prepares to pick a president in November, Cuba also seems buried at the bottom of Uncle Sam’s strategic priorities (aside from dealing with the influx of Cubans at the southwest border). Given the number of other geopolitical pots on the boil, and the bad politics of engaging with the Cuban regime after its ugly 2021 crackdown, the Biden administration’s reticence is understandable.

Nonetheless, the US — and Latin America and the world — have strong reasons not to give up on envisioning a modern Cuba and preparing for a transition, whether rocky or smooth. More effort should go into promoting linkages with Cuba’s nascent private sector, which came into being following the legalization of smaller enterprises in 2021; by some calculations, it already employs some 35% of the island’s workforce. That would increase commercial activity and strengthen the island’s economic interdependence.

But as John Kavulich, president of the US-Cuba Trade and Economic Council, told me, that strategy holds risks for the regime: “When you are allowing entrepreneurs to make money, now you have very visually wealthy people in Cuba and not wealthy people in Cuba. How successful can someone be before the government decides to take all this away?”

Still, Kavulich is pushing for the US embassy to approve a list of small Cuban companies with which Americans could do business, fostering trade relationships within existing regulations and bans even as the current political deep freeze with the US continues.

It feels like a century ago that President Barack Obama visited the island — the first US president to do so in 88 years — and the Rolling Stones played for half a million Cubans in Havana’s Ciudad Deportiva. Yet that was as recent as 2016, proving that things can change fast on both sides of the Straits of Florida.

As the great Cuban writer Leonardo Padura recently told a Brazilian outlet, “In Cuba we are currently missing fuel, missing food, missing medicine. But what we are missing the most is hope.” That may remain in short supply under the current government. But for the sake of Cuba’s people, its neighbors should help keep hope alive.