Cuba, the pandemic on the island is the economy not the virus

Cuba, the pandemic on the island is the economy not the virus

Share Button

Cuba, the pandemic on the island is the economy not the virus

The pandemic is strongly undermining the resistance of the Cuban people but, perhaps, the Coronavirus is the least of the problems on the Caribbean island. The protest of the people, which continues in the country, arises above all from the economic situation.

The two big boulders are in fact of an economic nature and are called: bankruptcy policies of the government and the continuous confrontation with the United States. The latter has the only result of the tremendous “bloqueo”.

The whole upheaval began with a decisive overhaul of agriculture, continued with the drop in demand for Cuban doctors in allied countries, the cut in aid from Venezuela in severe crisis and the new financial restrictions (even cruises blocked) and on immigration to the States.

Result: the worst economic crisis in 30 years.

In 2020, Cuba’s gross domestic product fell by 11%. The second worst decline ever recorded in history, following the collapse of 14% in 1993.

During the first quarter of this year, GDP recorded a second decline of 2%. The Economic Commission for Latin America and the Caribbean (ECLAC) is convinced that in 2021 Cuba will recover but only by 2.2%.

Why did Cuba come to this situation?

In 2002 Fidel Castro changed economic policy by closing the less productive sugar factories to strengthen the more productive ones. Production thus dropped to levels never seen before. Last year Cuba produced less than 800,000 tons of sugar (half paid for its debts to China). For domestic consumption there are thus very few tons left.

Another source of money is and was the professional services sold to allied countries. First of all, the services of Cuban doctors appreciated all over the world. But the new administrations of Ecuador, Bolivia and Brazil have drastically reduced demand.

And yet the rich Venezuela contributed to cover 22% of the Cuban GDP. Now poor Venezuela cannot even support itself.

During the Donald Trump administration, the United States tightened sanctions and restrictions on Cuba and limited the sending of remittances, a major source of income for the country. Even the restrictive policies of Trump continued by Biden have certainly not favored growth.

Another dramatic voice is that of tourism, the main source of income. Tourism dropped from $ 3 billion a year to less than $ 1 billion. At the moment, the few tourists are forced to quarantine in hotels chosen by the government before they can roam the country.

In Cuba, as in Venezuela, there is no shortage of luxury goods, there is no shortage of basic goods such as toothpaste, milk for children and babies, oil and toilet paper.

In recent years, with Castro’s brother Raúl, the government has tried to offer citizens greater economic freedoms.

For the first time, for example, Cubans can legally rent their homes as an alternative to hotels and create micro-businesses in the tourism sector.

The president, Miguel Díaz-Canel, also announced that the creation of small and medium-sized enterprises between 35 and 100 employees will be allowed. We then tried to develop markets, but the hand of the state has always been heavier and the changes so slow as not to be felt by the population.

If there is no profound change in Cuba’s economic policies, it is easy to predict a worsening of the already dramatic situation.

The government must understand that it is not necessary to enter a capitalist market system but only to follow the best economic practices of governments such as China and Vietnam, which have managed to decentralize themselves with the law of the market by successfully “mixing” private and state ownership. This has raised the level of social well-being of the population.

But all of this does not seem to be what the Cuban government wants now.

Share Button