Cuba’s Worsening Economic and Political Crisis 

Emilio Morales, a Cuban who has had wide-ranging marketing experience on the island, is now the President and CEO of Havana Consulting Group, a Miami-based consulting firm specializing in market intelligence and strategy for U.S. and and non-U.S. persons doing business in Cuba.[1]

Morales has provided a detailed analysis of Cuba’s worsening economic and political crisis.[2] The following is part of that analysis.

“The multi-systemic crisis that overwhelms Cubans and that has been caused by the ineptitude and mediocrity of those in power (shielded by lunatic ideological fanaticism and the ambition to control all the country’s wealth, leaves no room to make structural changes that are required to get out of the crisis) has generated a chaotic situation that seems to have no way out.”

‘The country is bankrupt, it has no lines of credit, its energy matrix is ​​collapsed, the three main areas of income have fallen precipitously: tourism, remittances and exports of medical services. The agricultural system is practically paralyzed, the sugar industry is destroyed. The health system, the education system and the transportation system suffer the same fate. There is nothing left to destroy. The only thing that is increasing is poverty and citizen anger, which so far in the last two years more than 600,000 Cubans have resolved by leaving the country.”

“Faced with this reality, the ruling leadership has postponed any forum for debate that exists in the political structures authorized in the country to address the economic, political and social issues that affect the country and its citizens. Months ago, the party apparatus suspended the Second National Conference of the Party, invoking the need to ‘be consistent with the economic situation of the country.’ Some time later, the Council of State announced the suspension for the second consecutive quarter of the so-called Accountability Assemblies of the delegates to his voters, an activity through which the Castro regime has tried for decades to illustrate its alleged model of ‘popular democracy’.”

“In other words, Cubans are mired in poverty, and the regime has closed the forums where they can channel their complaints, even though these have never really worked and have always been pure circus. But the leadership no longer even dares to put on its circus.”

“In this sense, the call for unity made by Raúl Castro on January 2, meant a strong alarm signal. At such a crucial moment, when what the people need is a message of hope, the nonagenarian dictator used his speech to instill fear in the already decimated partisan troops and in the military who no longer believe in the obligatory loyalty and obedience for which They once swore an oath to which they have been subjected for decades. Raúl Castro knows that this is the last bastion that apparently keeps them in power. It is what he has left before leaving this world, in his last-minute fight to avoid the collapse of the legacy that the revolution has kept alive with the historical generation.”

“Without a doubt, the country is not only experiencing a great multisystem crisis, it is also experiencing a great leadership crisis. In the ranks of the PCC and in the Armed Forces themselves there is a great feeling of discontent, and a high level of fatigue that manifests itself in apathy, harsh criticism of the system and the actions of the country’s leaders. This explains Raúl’s defeatist speech on January 2, calling for unity that no longer exists, and remembering that he will get out of the way of anyone who opposes the changes they order.”

“It is obvious that Counterintelligence has deeply penetrated the unrest that exists right now in the military and partisan ranks themselves . Hence, the sudden operation to reverse the package. A rebellion like the one on July 11, 2021 with the accompaniment of dissatisfied soldiers and militants of the party in rebellion would be the end of the dictatorship, and that reality is taking a toll on Saturn in these crucial moments.”

“GAESA collapses and the Russian bailout evaporates.”[3]

“The manifest insecurity at the top of power is related, among other factors, to two key factors: the lack of financial resources and the absence of a patron to keep it afloat at this stage of such political vulnerability. In this sense, the financial collapse of GAESA and the evaporation of the Russian bailout have suddenly triggered an increase in the level of vulnerability that the Cuban regime presents today. Certainly the largest it has had in more than six decades of communist dictatorship.”

“GAESA’s financial collapse is a key factor. In this sense, it should be noted that the death of General Luis Alberto Rodriguez López Callejas, CEO of GAESA, has generated a great disaster in the megaholding of the Cuban oligarchs. The verticality in decision-making and the management of the country’s finances and investments at its own convenience has turned out to be an indecipherable riddle for the substitutes that Raúl Castro has placed in his replacement strategy. Apparently no one gives a clue about how GAESA is managed.”

“At first glance, internally there is disorder, abandonment, undersupplied stores, and management personnel setting up their own MSMEs . A kind of mafia stampede is taking place, trying to create new small fiefdoms. The loss of suppliers, the company’s large debts with them, and the Government’s immobility in making decisions have generated an internal piñata that does not seem to be controlled. The level of control that existed in the company when López Calleja was there has disappeared. This is a very strong sign of internal collapse, of breaking the chain of command.”

“What happened recently at FINCIMEX on the eve of the package, with the issue of computer systems that control banking connections and the issuance of magnetic cards, is a good example of the breakdown of order within GAESA. As a result, the Western Union company has had to suspend remittance shipments to the Island until further notice and the issuance of cards for the sale of gasoline in dollars has stopped.”

“Obviously, something big is happening internally at GAESA . The last-minute problems that arose with their computer systems paralyzed the operations of stores, gas stations and remittance shipments. This unusual misfortune “coincided” with the abrupt abortion of the package, which has generated countless speculations. The truth is that a big sinkhole has suddenly occurred in GAESA and this further stirs up the uncertainty of what may happen in the coming days.”

“On the other hand, the announced Russian rescue has been much ado about nothing. Apparently the Russians do not trust the twisted Cuban legal system and have contained the investment drive that initially seemed to encompass several of the most important sectors of the Cuban economy. However, nothing is moving in the direction of investments.”

“Given the little movement seen so far, it is understandable that the Russian side is being very cautious when it comes to making decisions about million-dollar investments on the Island . The Russian side knows perfectly well that the Cuban regime is not a reliable partner in economic terms. On the other hand, it has realized the precariousness of the Cuban model and the primitive mentality when doing business on the part of the Cuban nomenclature. In that sense, the old and obsolete Cuban economic model does not fit with the Russian model. This disparity does not allow for faster progress in the negotiations. That is why everything remains speculation and promises that do not seem to be fulfilled. In reality, the true rapprochement has been on the military geopolitical level, in the game of the new Cold War unleashed by the Russian invasion of Ukraine, and proven in practice with the support that the Cuban regime has given to Russia by sending mercenaries. Cubans to war and making Cuban territory available to receive visits from Russian bombers and submarines carrying nuclear weapons.”

“Very little has happened, however, in the economic and commercial sphere. A company has been created in Mariel for the storage and distribution of merchandise, but so far nothing moves in that warehouse. Russian banks have been connected with Cuban banks to allow the use of Russian cards on the Island. The most significant thing has been the increase in the number of flights from Russia to Cuba, which has meant an increase in Russian tourism by 3%. compared to the previous year. There have been approaches to explore investments in the energy sector, but nothing concrete so far. Not even Russian oil reaches Cuba anymore . Outside of that, from a commercial point of view nothing significant has transpired.”

“The current situation in the country is extremely critical. Without a doubt, the current crisis far exceeds that of the Special Period, at the beginning of the 90s. This is a multi-systemic crisis for which the Government has not yet found a way out. The incompetence of the ruling leadership that holds power, added to the lack of existing leadership in the country, the state of bankruptcy in which finances find themselves, the deterioration of the main industries, the 75% decrease in the income of the economy compared to 15 years ago, have buried all hope in Cubans for a solution to this crisis. As a consequence, more than 80% of the Cuban population today lives in poverty.”

“At a time when GAESA, the oligarchic octopus that controls 95% of the finances and more than 70% of the main sectors of the country’s economy, is collapsing internally and the Russian financial bailout evaporates, everything indicates that the country It is heading towards total collapse. Faced with this reality, the Cuban people must understand that the sudden abortion of the package was a desperate action to avoid an imminent large-scale social outbreak, which would surely be joined by dissatisfied partisan militants and a large number of dissatisfied military personnel. Something very different from what happened on July 11, 2021.”

“The fear that the ruling leadership has of the people’s anger is evident . The nonagenarian dictator is very clear and knows that, given the current circumstances, the probability that the system will break down before his own death is real. That is why he has launched a plan B, removing ministers to try to clean up the face of the Government. However, the Cuban people no longer swallow this type of makeup as solutions to appease emergencies, which can only be overcome with a change in the system.”

“Meanwhile, the uncertainty of what may happen on the Island in the coming days increases to the extent that blackouts, shortages of fuel, food and medicine, as well as inflation, continue to increase.”

“Not one, but several black swans flutter over the sky of the dying revolution, at a time when the internal fissures within the ranks of power are increasing and putting the Palace oligarchs in maximum tension. The Cuban people and the living forces of society must be alert to events that may occur at any moment. When the river sounds it is because it brings stones.”

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[1] Emilio Morales, Biography, Linkedin.

[2] Morales, Why is the Cuban regime aborting the package with such urgency?, Diario de Cuba (Feb. 17, 2024).

[3] “Grupo de Administración Empresarial S.A. (GAESA) is a Cuban military-controlled umbrella enterprise with interests in the tourism, financial investment, import/export, and remittance sectors of Cuba’s economy. GAESA’s portfolio includes businesses incorporated in Panama to bypass CACR-related restrictions.” (U.S.Treasury Dept., Press Release: Treasury Identifies Cuban State-Owned Businesses for Sanctions Evasion (Dec. 21, 2020).)