Cuban economy – dwkcommentaries

More Details on Cubans Fighting for Russia in Ukraine

CNN and Time Magazine have provided more details on Cubans fighting for Russia in Ukraine.

CNN’s Report[1]

Family members in Cuba have told CNN, “For months, hundreds of Cubans have quietly left the island to fight for Russia in its war in Ukraine, chasing promises of money and Russian citizenship from shadowy online recruiters.”

These Cubans in the war left the island because of the absolutely desperate economic conditions on the island and the promise of good-paying construction jobs in Russia. Once in Russia, however, they were sent to fight in Ukraine as shields for the Russian troops.

Time Magazine’s Report[2]

A 19-year-old Cuban, Alex Vegas Diaz, said he had accepted an offer on WhatsApp to make good money doing “construction work” for the Russian military. But when he arrived in Russia, he and a Cuban friend were taken to a Russian military base, outfitted with weapons and sent against their will to the front lines of the Ukraine war. Soon, however, he became ill and was sent to a Russian hospital. On an August 31^st video, he said, ““What is happening in Ukraine is ugly—to see people with their heads open before you, to see how people are killed, feel the bombs falling next to you. Please, please help get us out of here.”

This report went viral, prompting other Cubans on the island to seek information about their family members who had gone to Russia, and Time determined that Vegas Diaz and the others had been “caught up in a large, organized operation that has openly recruited hundreds of Cuban volunteers to fight in Moscow’s increasingly depleted army since July. They also suggest that the trafficking allegations may be an attempt by the Cuban government, a longtime ally of Russia, to maintain its stated neutrality on the war in Ukraine, four Cuba experts and former U.S. officials tell TIME.”

This past June posts began to appear on Cuban Facebook groups advertising a “contract with the Ministry of Defense for military service in the Russian army. Recruits were offered a monthly salary of 204,00 rubles, or $2,086 U.S. dollars—an almost unimaginable sum in Cuba, where the average salary is less than $50 per month. On Sept. 5, a Ukrainian hacker group posted what appeared to be a version of the six-page contract that recruits signed once they arrived in Russia, translated into flawless Spanish. It required a one-year commitment and came with benefits that included a one-time enlistment fee of 195,000 rubles (roughly $2,000) and 2 million rubles (roughly $21,000) for their families if they are killed. The contract also asks recruits to fill out a questionnaire about why they are enlisting and how they feel about military service. The terms of the contract match those publicly promoted by the Russian Defense Ministry, including the possibility of Russian citizenship for the recruit and their families per a decree signed by President Vladimir Putin last year.”

According to Time, “It is unclear how many conscripts the recruiting push yielded. The hacked emails reviewed by TIME only document the nearly 200 recruits who passed through the military office in the Russian city of Tula in July and August. Cuban human-rights groups’ estimates range from around 750 recruits to more than 1,000. The Miami-based Foundation for Human Rights in Cuba (FHRC) told TIME that of the 746 recruits they have tracked, at least 62 appear to be part of a highly-trained Cuban special forces outfit known as the Avispas Negras, or Black Wasps. TIME reviewed 199 passports of Cubans, aged 18 to 69, who appear to have enlisted with the Russian army since mid-July, and matched more than 20 to social-media profiles that corroborated their names, faces, and hometowns.”

“Perhaps the clearest indication that the vast majority of these recruits went to Russia willingly, and did not act as though they were engaging in an illegal scheme, comes through their own social-media posts. On Facebook, Instagram and TikTok, many of these recruits posted photos with Russian tanks, smiled with other Cubans in their new Russian military uniforms, and boasted about sending money back home. In Facebook comments, family members openly discussed brothers, husbands, and cousins who were ‘in Russia’ and ‘in the war.’”

“The discovery of the recruiting effort has complicated the delicate line Havana has tried to walk since Russia’s invasion of Ukraine. Cuba has been crippled by a 60-year U.S. embargo, island-wide blackouts, and a hunger crisis. It relies on Russia for food, oil, and economic investment, and recently signed a series of bilateral deals in which Moscow pledged relief for food and oil shortages and investment in the island’s struggling sugar and steel industries in exchange for land leases. At the same time, Cuba can’t afford to further jeopardize its relations with Western nations who have sought to isolate Russia as punishment for its war in Ukraine. The European Union is Cuba’s second-biggest trading partner and largest foreign investor. Ukraine, which has made it clear it believes Havana is involved in the recruiting scheme, has publicly pushed for Western nations to retaliate by “severing diplomatic relations with Cuba.”

Although the Cuban government has tried to deny Russian recruitment of Cuban for the Ukraine war, “dozens of the passports reviewed by TIME had been issued very recently, making it unlikely, experts say, that the Communist government, which keeps close tabs on its citizens, would not have detected the sudden exodus. Cuba analysts reject the possibility that Havana was unaware of the recruiting push. Several recruits told family members who spoke to TIME, as well as human rights groups, that Cuban officials intentionally did not stamp their passports before they exited the country to board their flight to Moscow, in an apparent attempt to maintain deniability.”

According to Chris Simmons, a Cuban spycraft expert and former counterintelligence officer with the U.S. Defense Intelligence Agency, “The idea that the [Cuban] government was not involved is ludicrous. Nothing happens without their involvement.” This view is “widely shared by Cuba experts who spoke to TIME. By pledging to prosecute any ‘illegal’ recruiting, the Cuban government gets the best of both worlds: ‘It supports its ally,’ Simmons says, ‘and because the passports aren’t stamped, there’s no liability of a body count, because there’s no proof they ever left.’”

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[1] Oppmann, Why Cubans are fighting for Russia in Ukraine, CNN.com (Sept. 19, 2023).

[2] Bergengruen, How Russia Is Recruiting Cubans to Fight in Ukraine, Time (Sept. 18, 2023) (even more details are provided in the Time article).

U.S. Needs To Improve Relations with Cuba

Cuba recently has been the subject of many related news reports. First, the island is suffering from many economic problems, including many younger Cubans abandoning the island for life elsewhere. Second, many private enterprises on the island are being successful. Third, this year Russia and China have been increasing their connections with Cuba to support that country and oppose U.S. actions against the island. Fourth, the above developments pose challenges to the U.S., which needs to return to its positive relationships with Cuba that were started in the Obama Administration.

Cuba’s Recent Economic Problems[1]

“With sanctions tightened by the Trump Administration (and not repealed by the Biden Administration), Cuban economic mismanagement and the impact of the pandemic and other events, Cuban inflation has soared, basic foods and medicines have become scarce, and money transfers from Cubans in the U.S. have dwindled. The flow of foreign tourists has also dried up.”

In July 2021, this “economic crisis sparked a wave of protests across the island, which prompted a harsh response from security forces. In the following months the government brought charges against 930 protesters and sentenced 675 of them to prison terms, some as long as 25 years, according to Laritza Diversent, director of human-rights group Cubalex.”

In August 2022 a “fire destroyed 40% of the fuel storage capacity at the port city of Matanzas, leading to increased electricity outages that even before the disaster were lasting up to 20 hours a day in many places.”

Cuba’s economic difficulties also were exacerbated by the Trump Administration’s 2019 imposition of the harshest economic sanctions against Cuba in more than a half-century. It ended virtually all non-family travel to Cuba and placed new limits on the money Cuba-Americans could send to family on the island. This Administration also began implementing an old law aimed at blocking both U.S. and foreign investment on the island that had been on hold because of immense opposition from U.S. allies. This move unleashed a law allowing Cuban Americans to sue in U.S. courts any company that benefits from their property on the island that had been confiscated by Fidel Castro’s regime. More significantly, the Trump Administration re-designated Cuba as a state-sponsor of terrorism.[2]

In response to these problems, as of August 2022, “More than 175,000 Cuban migrants were apprehended in the U.S. between last October and July, six times as many as in the previous 12-month period, according to U.S. Customs and Border Protection. Most are young, single adults, according to government statistics. Many are relatively well educated, say people who work with the migrants.” This “exodus reflects the desperation, the lack of hope, and the lack of future people on the island feel,” said Jorge Duany, head of the Cuban Research Institute at Florida International University.”

Recent Expansion of Cuban Private Enterprises on the Island[3]

According to Miami Herald, “over the past two years . . . [p]rivate businesses, banished from the island by Fidel Castro more than 60 years ago, are making a strong comeback, employing more people than state enterprises, gaining trust from foreign creditors and helping put food on Cubans’ tables at a time of widespread scarcity.” Recently Cuba’s economy minister, Alejandro Gil, in a speech at the National Assembly reported that “the private sector is on track to buy over a billion dollars in goods by the end of [this] year—outpacing the government as the country’s largest importer.”

“[P]rivate grocery stores are taking the place of the empty-shelf government supermarkets, and all sorts of [private] businesses are filling the space once monopolized by the state. Some restaurant owners are now opening chains or franchises. Others are entering partnerships with cash-strapped local enterprises owned by the state and paying in foreign currency for the supplies needed for their production lines.”

“Cuban [government] leaders have long resisted [such a development] because it aims at the heart of the state-controlled Marxist economy.” But “[t]they’ve had no choice but to allow it amid the most severe economic crisis.” As a result, Cuba is looking “less like the highly centralized socialist economy . . . and more like a country in transition, where a nascent business community coexists with inefficient state companies.”

According to Ricardo Herrero, executive director of the Cuba Study Group, a Cuban-American organization that helps train entrepreneurs on the island, who “share similar value sets with entrepreneurs here in the United States.” They “want the government off their backs and want to see better relations between the United States and Cuba, particularly between Cuba and the diaspora.” Moreover, “some Cubans living in Miami are even owners or partners in some of these private companies.”

The Cuban “private sector now employs around 35% of Cuba’s work force, about 1.6 million workers, surpassing the 1.3 million employed by state enterprises, according to Cuban economist Juan Triana, a professor at the Center for the Study of the Cuban Economy at the University of Havana.

These non-state actors through the end of this April were responsible for $270 million of Cuba’s imports or 61% of its total imports according to Pedro Monreal, a Cuban economist who works for the U.N. Educational, Scientific and Cultural Organization.

On August 2, 2023, however, Cuba’s Central Bank announced new regulations that will require small private businesses to offer their customers ways to make digital payments and promptly to deposit all cash revenue in their bank accounts while banning cash withdrawals to pay operating expenses. This also will ban private enterprises from using their Cuban pesos to buy U.S. dollars in the informal market to pay for goods purchased abroad while the government is unable to provide food and essential goods for the people. As a result, these regulations are another government attempt to regulate the private sector and are expected to cause immense practical difficulties in the state-owned banks and system to implement the regulations and regulate increases in retail prices on the island.

Russian and Chinese Recent Assistance to Cuba[4]

Starting in February 2023, “high-level Russian officials began a steady stream of public visits to Cuba. Barely a month went by without a high-profile Russia-Cuba visit.” And high-level Cuban officials also were visiting Russia. Here is at least a partial list of those visits this year:

“In March, Nikolai Patrushev, secretary of the Russian Security Council and Igor Sechin, the powerful director of the Russian state oil company, Rosneft, met with leaders in Havana.”
“In April, Russian foreign minister, Sergey Lavrov, visited the island as part of a regional tour that included two other American adversaries — Venezuela and Nicaragua.”
“In June, Cuban Prime Minister Manuel Marrero Cruz visited Russia for more than ten days, including a meeting with Putin.
More recently, “Alvaro Lopéz Miera, the Cuban defense minister, traveled to Moscow . . . for discussions with his Russian counterparts — including Sergei Shoigu, one of the notorious architects of the war in Ukraine.” And Shoigu announced that “Cuba has been and remains Russia’s most important ally in the [Caribbean] region.” Shoigu promised that Moscow was “ready to render assistance to the island of freedom and to lend a shoulder to our Cuban friends.”
Similar comments came from “Cuban Deputy Foreign Minister Gerardo Peñalver, [who] described the two countries as ‘strategic allies’ cooperating against ‘unilateral coercive measures’ from Washington.”

These contacts have resulted in a memo of understanding whereby Russia will invest in Cuba’s agricultural lands to produce goods for the Russian market, Russia will increase its commercial flights to Cuba’s eight airports, will modernize Cuba’s major industries and reduce tariffs and costs for Russian exports to the island and will construct an all-Russian hotel, shopping mall and banking facilities in Cuba.

In addition, “Russia pledged to give oil and various industrial supplies to Cuba. By one estimate, Moscow has already sent the island more than $160 million worth of oil this year. And Russian news agencies announced that additional supplies will follow.”

“Cuba now receives direct flights from Russia (flights had been suspended after the invasion of Ukraine), and it has joined the ’Mir’ payment system that Moscow created to facilitate the conversion of rubles to pesos and other currencies for tourism, trade and aid. Over 1,000 Russian oil executives and staff are expected to the visit Cuba by year’s end.”

In early July, “the Russian naval ship, Perekop, diverted to Cuba from the country’s Baltic Sea fleet more than 7,000 miles away. The ship carried approximately 100 Russian naval cadets, humanitarian assistance and various equipment to Cuba. The Russian ambassador and the deputy commander of the Russian Navy attended the ship’s elaborate arrival ceremony, symbolizing that this was the beginning of deeper collaboration.”

China, on the other hand, is Cuba’s largest trading partner, and plays a role in the island’s agricultural, pharmaceutical, telecommunications and infrastructural industries. Beijing also owns a significant measure of Havana’s foreign debt.

In early June 2023, there were reports that China was planning to build an electronic listening station in Cuba in exchange for paying Cuba billions of U.S. dollars and that U.S. officials were concerned that such a station could be capable of spying on the United States by intercepting electronic signals from nearby U.S. military and commercial facilities and could amplify Beijing’s technological capacity to monitor sensitive operations across the Southeastern U.S., including several military bases. This Chinese base is part of what the US intelligence community identifies as a wider Chinese effort to intercept American communications, steal secrets and prepare for increased competition.” However, on June 10^th an anonymous Biden official said that before 2019, the U.S. knew there was an operating Chinese spy base or facilities in Cuba that could intercept electronic signals from nearby U.S. military and commercial buildings.

In any event, Evan Ellis, a Latin America analyst at the U.S. Army War College, saw such an electronics facility as “a sign of the island’s financial desperation. China gives money to Cuba it desperately needs, and China gets access to the listening facility.” However, Michael Bustamante, a Cuba expert at the University of Miami, said aside from Cuba’s financial dire straits, the deal with China may reflect that the Cuban government feels it has little to lose given how poor its relationship is with the U.S.

Moreover, according to the Wall Street Journal, in later June 2023, Cuba and China were negotiating to establish a new joint military training facility on the north coast of the island that would be “part of China’s ‘Project 141,’ an initiative by the People’s Liberation Army to expand its global military base and logistical support network. It also is a sign that China now sees its struggle with the U.S. as global and that it must operate around the world to fend off Washington and protect Chinese interests.

U.S. and Cuban Exchanges About Chinese and Russian Connections with Cuba[5]

On June 20, 2023, U.S. Secretary of State Antony Blinken said that the U.S. would “have deep concerns” about Chinese military activity on Cuba, and that he made this message clear on his recent visit to Beijing.

The next day at the June 21 State Department Press Briefing, , the Department’s Principal Deputy Spokesperson, Vidant Patel, said, “The Secretary raised the serious concerns the U.S. would have about any intelligence or military facility in Cuba, saying that we will continue to defend our interests here.” Then in response to a reporter’s question, Patel added, “[W]e we are monitoring and responding to any PRC attempts to expand its military or security presence around the world, and we watch how potential PRC actions may impact the United States. Our experts assess that our diplomatic efforts have slowed the PRC down, and there of course continue to still be challenges, but we continue to be concerned about the PRC’s longstanding activities with Cuba. The PRC will keep trying to enhance its presence in Cuba and we will keep working to disrupt it.”

These U.S. assertions were strongly denounced by Cuba’s Minister of Foreign Affairs, Bruno Rodriguez Parrilla, in the following statement:

“The assertions made by the US Secretary of State about the presence of a Chinese spy base in Cuba are false, totally false. Cuba’s standing on this subject is clear and unequivocal.”
“These are unfounded allegations.”
“The [U.S.] aim is to use them as a pretext to maintain the economic blockade against Cuba and the measures of maximum pressure that have strengthened it in recent years, and which have been increasingly rejected by the international community, as well as inside the United States. The rejection includes the demand to remove Cuba from the arbitrary list of States Sponsors of Terrorism.”
“Cuba is not a threat to the United States or any other country. The United States implements a policy that threatens and punishes the entire Cuban population on a daily basis.”
“The US has imposed and owns tens of military bases in our region and also maintains, against the will of the Cuban people, a military base in the territory that it illegally occupies in the province of Guantánamo.”
“We are witnessing a new disinformation operation, similar to the many others in the United States throughout its long history of hostility against our country.”

On August 2, Granma, the official organ of Cuba’s Communist Party’s Central Committee, reiterated Cuba’s denunciation of the U.S. embargo (blockade) of Cuba, with the following words:

“The Ministry of Communications (MICOM) is the target of the brutal blockade of the United States against Cuba, according to confirmation of damages that only in the period August 2021-February 2022 caused economic damages and losses that exceeded 104 million dollars.”
“This was denounced by the first deputy minister of the sector, Wilfredo González Vidal, who specified to the Cuban News Agency (ACN) that the cruel economic, commercial and financial monstrosity reduces the dynamism and speed of the digital transformation process of our country.”
“The set of actions developed by the United States, he said, ‘continues to be the main impediment to a better flow of information and broader access to the Internet and Information and Communication Technologies (ICT) for our people.’”
“However, in Cuba the expansion of access to the network of networks and knowledge continues, and today it has 7.8 million mobile phone users and of them almost seven million access the Internet through this important channel, he noted.”
“This, he asserted, is due to the effort and will of the State to advance in the information society, creating a responsible culture on the use of new technologies in favor of the economy and society.”
“The official pointed out that the economic damages and losses caused to the Communications System, as a consequence of the blockade, are evident throughout the sector, that is, in Telecommunications, Information Technologies and Postal Services.”
“Likewise, according to the ACN, it described as significant the effects due to the limitations of supplies of technologies and equipment produced under license, or using North American components, which forces it to go to other markets, much further away, an obstacle for which the greatest effects are quantified to sector.”

In July 2023 the U.S. went beyond words by sending “a nuclear-powered submarine, the USS Pasadena, to the American-held base at Guantanamo Bay. Officially a ‘logistics stop,’ this was a warning and a show of strength. The Cuban Ministry of Foreign Affairs condemned the submarine visit as a ‘provocative escalation.’ The US Navy said the move was ‘not without precedent.’”

U.S. Should Return to Positive Engagement with Cuba[6]

Only a few years ago, the government of Cuba was pursuing closer ties to Washington. According to William LeoGrande, a Latin America expert at American University, “Every major component of Cuba’s economic strategy in the last two decades had been premised on long-term expectations that the relationship with the U.S. would improve.”

In December 2014, this Cuban effort paid off when the two countries presidents (Barack Obama and Raul Castro) announced that their countries would be pursing efforts to improve relations, and that effort produced positive results for the rest of Obama’s presidency ending in early January 2017. Everyone from Conan O’Brien to Andrew Cuomo to Steve Nash began showing up in Havana. As a University of Miami’s Cuba expert, Michael J. Bustamante, noted at the time, “the American flag has even become the most stylish national standard, appearing on Cubans’ T-shirts, tights and tank tops.”

However, the Trump presidency (2017-21) and the Biden presidency since early 2021 have been engaged in U.S. policies of hostility toward Cuba.

Now the emergence of an important private enterprise sector of the Cuban economy has provided the opportunity for the two countries to return to better relations that improve the living conditions of the people on the island. This argument was well put in an op-ed article in the Miami Herald by Miguel “Mike” Fernandez, the Chairman of Coral Gables, Florida’s MBF Healthcare Partners, who said the following:

“It is time to shift our focus toward uplifting the Cuban people, primarily by supporting and empowering the emerging private sector, to restore hope and a bright future for the nation.”
“By promoting and facilitating engagement and collaboration with Cuba’s emerging private sector, the United States can foster positive change, enhance regional stability and tap the vast potential of Cubans’ entrepreneurial spirit, while reducing the vast numbers of Cuban immigrants arriving at the southern border.”
“A notable, and not so quiet, course change has begun as the Cuban government has had to accept the reality that it’s broke. Hence the emergence of a private sector, which can use our support because of our know-how and capital resources as a viable alternative to a punitive strategy. . . . [This private sector] is providing solutions for Cubans where the government no longer can. . . . [and] presents an opportunity to transform the country’s economic landscape.”
“It is crucial for the United States to support and engage with Cuba’s private sector to reduce emigration to this country and promote stability and prosperity within the island. . . . By redirecting our efforts toward supporting the growth of entrepreneurship, small businesses and foreign investment, we can foster an environment of economic independence for Cubans.”

At the top of the “to do” list for the U.S. is cancelling (1) the U.S. embargo [blockade] of Cuba; (2) the U.S. designation of Cuba as a state sponsor of terrorism, which the Obama Administration had done in 2015; and (3) the ban on U.S. tourist visas for Cuba. The U.S. should also initiate diplomatic discussions with Cuba regarding many issues, including U.S. positions on Cuba set forth in U.S. annual reports on world-wide trafficking in persons; religious freedom; and human rights.[7]

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[1] E.g., Cordoba, Cuban Migrants Head to the U.S. in Record Numbers, W.S.J. (Aug. 24, 2022)

[2] Trump declares economic war on Cuba, the Conversation (April 18, 2019); Communications sector severely damaged by the US blockade, Granma (Aug. 2, 2023).

[3] Torres, Capitalism makes strong comeback in Cuba after six decades of socialism. Will it last?, Miami Herald (June 23, 2023); Torres, How Miami companies are secretly fueling the dramatic growth of Cuba’s private businesses, Miami Herald (June 23, 2023); Fernandez, Transforming U.S.-Cuba relations: From dominating to elevating/Opinion, Miami Herald (July 19, 2023); MF Healthcare Partners, Rodriguez, Evaluate new proposals for measures in commerce to promote payment through electronic channels, Granma (Aug. 3, 2023); Torres, Sudden banking cash-withdrawal limit threatens private sector and food imports to Cuba, Miami Herald (Aug. 4, 2023).

[4] Demirjian & Wong, China to Build Station That Could Spy on U.S. from Cuba, Officials Say, N.Y. Times (June 8, 2023); Strobel & Lubold, Cuba to Host Secret Chinese Spy Base Focusing on U.S., W.S.J. (June 8, 2023); Cordoba, Cuba’s Spy Deal With China Has Echoes of Cold War Tensions, W.S.J. (June 8, 2023); Gale & Ramzy, Cuba Base Would Help China Identify Strike Targets in U.S., W.S.J. (June 9, 2023); Hutzler & Vyas, Cuba Spy Station Brings China Closer to America’s Doorstep, W.S.J. (June 9, 2023); Demirjian & Wong, China Has Had a Spy Base in Cuba for Years, Official Says, N.Y. Times (June 10, 2023); Lubold & Strobel, White House Says China Has Had Cuba Spy Base Since at Least 2019, W.S.J. (June 11, 2023); Strobel, Lubold, Salama & Gordon, Beijing Plans a New Training Facility in Cuba, Raising Prospect of Chinese Troops on America’s doorstep, W.S.J. (June 20, 2023); Editorial, China’s New Military Footprint in Cuba, W.S.J. (June 20, 2023; Yu, China Plans With Cuba for Global Dominance, W.S.J. (June 29, 2023); Suchlicki, The Russians are coming back to Cuba, prepared to challenge U.S. on its doorstep/Opinion, Miami Herald (June 23, 2023); Bihart, America’s Foes Are Joining Forces, N.Y. Times (July 3, 2023); Torres, China has had a spy base in Cuba for decades, former intelligence officer says, Miami Herald (July 5, 2023).Suri, Opinion: In tough times, Russia turns to a Cold War comrade, CNN.com (July 20, 2023).

[5] Editorial, China’s New Military Footprint in Cuba, W.S.J. (June 20, 2023); U.S. State Dep’t, Department Press Briefing—(June 21, 2023); Cuba Foreign Minister Parrilla, Cuba is not a threat to the United States or any other country, Granma (June 13, 2023). Communications sector severely damaged by the US blockade, Granma (Aug. 2, 2023);

[6] President Obama Rescinds U.S. Designation of Cuba as a ‘State Sponsor of Terrorism,” dwkcommantaries.com (04/15/15); U.S. Rescinds Designation of Cuba as a “State Sponsor of Terrorism, dwkcommantaries.com (05/29/15) U.S. State Dep’t, U.S. Relations with Cuba (Nov. 22, 2019).

[7] This post does not comment on the multitude of issues regarding U.S.-Cuba relations. However, this blog has published a list of many of these posts about many of these issues, which has not been recently updated, (See, e.g., List of Posts to dwkcommentaries—Topical: CUBA [as of 5/4/20].

Cuba’s Aging, Declining Population Continues

Cuba continues to experience low birth rates and an aging and declining population that were discussed in previous blog posts.[1]

The latest statistic on live births on the island is 116,333 for 2018, which was a 19% decline from 143,528 in 2000.[2] Now Cuba has one of the world’s lowest gross birth rates, 10.4 per thousand (compared to 33.4 per thousand registered in 1965). Coupling this with the island’s increasing life expectancy, Cuba is facing “a demographic time bomb.”

According to an author in Diario de Cuba, Elijah Love, “the social and economic conditions in Cuban society are the main obstacle to the growth of birth rates.”

In short, the low birth rate “demonstrates the failure of the Cuban economic system and the need to “return to a market economy system, in which productive capital and wealth, savings and investment, are the axes of the economic system.” This would include policies “aimed at effectively promoting economic growth, prosperity and the improvement of the standard of living of all Cubans, the accumulation of capital and wealth, savings and investment.”

This analysis surprisingly did not discuss the additional negative impact on Cuba’s population and economy of the emigration of younger Cubans seeking greater opportunities elsewhere.

However, on December 11, the Cuban Government announced that in April 2020 it would hold a conference in Havana about emigration. The stated purpose is to strengthen relations with the emigrants although the Government’s statement emphasized improving relations with Cubans born abroad and those “who do not have a position that is openly against the island’s government.”[3]

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[1] See these posts to dwkcommentaries.com: Projected Cuban Population: Stabilizing and Aging (Sept. 6, 2016); Cuba Addresses Its Aging and Declining Population (Oct. 17, 2016); Cuba’s Success and Problems with an Aging, Declining Population (Mar. 10, 2019).

[2] Love, A new policy is needed to reverse the birth crisis in Cuba, Diario de Cuba (Dec. 13, 2019).

[3] Cuban Government announces 4^th The Nation and Emigration Conference, On Cuba News (Dec. 12, 2019).

Cuba’s Negative Population Trends Continue

On May 10 Granma, the official newspaper of the Communist Party of Cuba, reported that for 2018 the country continued to have a declining and aging population.[1]

For the second consecutive year, Cuba registered a reduction of total population. For 2019 it was 11,432 with a total population of 11,209,628.

According to the National Office of Statistics and Information, this was due to the fourth lowest number of live births in the last 60 years and a net negative foreign emigration.

The only population segment to increase was those 60 years and older, now 20.4% (2,286,948) of the total population. This is good news in that people are living longer.

On the other hand, this government agency projects that in 2030 those 60 years and older will constitute 29.3% of the population while there will be “ a significant reduction in the economically active population, which will have a significant impact on various sectors of the economic and social life of the nation.” This will call for “an increase . . . in the demand for geriatric and gerontology services, in addition to those related to safety and social assistance.” And who will provide such services?

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[1] Peláez, Cuba Near the Threshold of a New Demographic Era? Granma (May 10, 2019). See also Cuba Addresses Its Declining and Aging Population, dwkcommentaries.com (Oct. 17, 2016); Cuba’s Success and Problems with an Aging, Declining Population, dwkcommentaries.com (Mar. 10, 2019.

Cuba Facing Shortages of Basic Foodstuffs and Other Products

In recent weeks Cuban shop shelves increasingly have been empty with scarcity of basic products such as eggs, flour and chicken, causing massive, hours-long queues for them whenever they come into stock.[1]

On May 10, in response, the Cuban government announced that it is launching widespread rationing of chicken, eggs, rice, beans and other basic products. Every Cuban receives a ration book that allows them to buy small quantities of these basic goods each month for payment equivalent to a few U.S. cents.

Cuba imports 60 to 70 percent of its food because of poor domestic output. Now such imports economically are more difficult due to a reduction in aid from its key ally Venezuela, lower Cuban exports and tightening of the U.S. embargo. Another reason for the current shortages is Cuban hoarding because of fear of products disappearing and speculators hoping to re-sell goods at higher prices in the black market.

Cuba’s Commerce Minister Betsy Díaz Velázquez said that the aim of these measures is “achieving equity in the distribution of some products” and was not rationing.

She also said that in March Cuba produced 900,000 fewer eggs than the 5.7 million needed daily to satisfy national demand. That deficit shrank to 600,000 by mid-April, she said. The production of pork, the most-consumed meat in Cuba and a normally affordable staple of most people’s diets, is hundreds of tons below target.

A Cuban small business owner said, “What the country needs to do is produce. Sufficient merchandise is what will lead to shorter lines.”

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[1] Reuters, Cuba to Ration More Products Due to Economic Crisis, U.S. Sanctions, N.Y. Times (May 10, 2019); Asssoc. Press, Cuba launches widespread rationing in face of crisis, Wash. Post (May 10, 2019); Measures for the purpose of fair distribution in the domestic market, Granma (May 10, 2019).

Cuba’s Current Dire Economic Situation

In the midst of the flurry of recent commentary about the new U.S. policies regarding Cuba, including this blog’s current exploration of the many facets of those policies, it is easy to ignore or forget Cuba’s very difficult current economic situation, which only will be made worse by these U.S. policies. Here is some information about that economy.[1]

According to the Associated Press, “After two decades of relative stability fueled by cheap Venezuelan oil, shortages of food and medicine have once again become a serious daily problem for millions of Cubans. A plunge in aid from Venezuela, the end of a medical services deal with Brazil and poor performances in sectors including nickel mining, sugar and tourism have left the communist state $1.5 billion in debt to the vendors that supply products ranging from frozen chicken to equipment for grinding grain into flour, according to former Economy Minister José Luis Rodríguez.”

“That economy is afflicted by deep inefficiency and corruption. Many state employees demand bribes to provide services to the public. Others spend only a few hours a day at their jobs, spending the rest of their time doing informal private work or selling supplies stolen from their office, warehouse or factory. Despite a highly educated and generally well-qualified workforce, Cuba’s industrial sector is dilapidated after decades of under-investment. The country produces little of value on the global market besides rum, tobacco and the professionals who earn billions for the government working as doctors, teachers or engineers in friendly third countries.”

“The agricultural sector is in shambles, requiring the country to import most of its food. Economy Minister Alejandro Gil said Saturday that Cuba would spend $5 billion on food and petroleum products this year.”

“Over the last 20 years, many of those billions came from Venezuela’s socialist government, which has deep ties to Cuba’s and sent nearly 100,000 barrels of oil daily for years. With Venezuela’s economic collapse, that has roughly halved, along with deep cutbacks in the economic relationship across the board. And the news has been bad in virtually every other sector of the Cuban economy. Nickel production has dropped from 72,530 metric tons in 2011 to 50,000 last year, according to Rodríguez, the former economics minister. The sugar harvest dropped nearly 44%, to a million tons. The number of tourists grew only 1%, with many coming on cruise ships, a relatively unprofitable type of visitor. Overall GDP growth has been stuck at 1% for the last three years.”

“Meanwhile, under agreements Castro struck to rehabilitate Cuba’s creditworthiness, the country is paying $2 billion in debt service to creditors such as Russia, Japan and the Paris Club.”

“Stores no longer routinely stock eggs, flour, chicken, cooking oil, rice, powdered milk and ground turkey, among other products. These basics disappear for days or weeks. Hours-long lines appear within minutes of trucks showing up with new supplies. Shelves are empty again within hours.”

“No one is starving in Cuba, but the shortages are so severe that ordinary Cubans and the country’s leaders are openly referring to the ‘special period,”’the years of economic devastation and deep suffering that followed the collapse of the Soviet Union, Cuba’s Cold War patron.”

“‘It’s not about returning to the harshest phase of the special period of the ’90s,’ Communist Party head Raul Castro said last week. ‘But we always have to be ready for the worst.’”

“Two days later, President Miguel Díaz-Canel said cutbacks were necessary because: ‘This harsh moment demands we set clearly defined priorities in order to not return to the worst moments of the special period.’’”

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[1] Assoc. Press, Shortages Hit Cuba, Raising Fears of New Economic Crisis, N.Y. Times (April 18, 2019).

Economist Critiques Cuban Economy

Carmelo Mesa-Lago, a professor emeritus of economics and Latin American studies at the University of Pittsburgh and the author of 45 books on Cuba, recently delivered his critique of the Cuban economy in the New York Times.[1]

He opens with the assertion, “For the past 60 years, Cuba has been unable to finance its imports with its own exports and generate appropriate, sustainable growth without substantial aid and subsidies from a foreign nation. This is the longstanding legacy of Cuba’s socialist economy.” These foreign nations were Spain in the colonial era, the U.S. (circa 1903 -1958), the Soviet Union (circa 1959-1988) and Venezuela (21^st century). Yet “despite the staggering foreign aid subsidies it has received, [Cuba’s] . . . economic performance has been dismal.”

“In the past seven years, growth has been a third of the officially set figure needed for adequate and sustainable growth, while investment has been one third of the required rate. Industrial, mining and sugar production are well below 1989 levels, and the production of 11 out of 13 key agricultural and fishing products has declined. Cuba is now facing its worst economic crisis since the 1990s.”

According to Mesa-Lago, “Cuba’s woes are a result of the inefficient economic model of centralized planning, state enterprises and agricultural collectivization its leaders have pursued despite the failure of these models worldwide. In his decade in power, President Raúl Castro tried to face his brother Fidel’s legacy of economic disaster head on by enacting a series of market-oriented economic structural reforms. He also opened the door to foreign investment, but so far, the amount materialized has been one-fifth of the goal set by the leadership for sustainable development.”

Although Cuba has adopted some reforms to allow some private enterprise, Mesa-Lago says Cuba needs “to accelerate and deepen reforms. China and Vietnam’s market socialism model under Communist Party rule could provide a way forward.”

If such reforms are carried out and foreign investors are allowed to hire and pay a full salary directly to their employees, he concludes, “there will be a significant improvement in the economy and the government can undertake the desperately needed monetary unification that will attract more investment and eliminate the economic distortions that plague the economy.”

As noted in a recent post to this blog, the Cuban economy also faces the challenges of an aging, declining population with the latter being caused, in part, by the limited opportunities for economic success, especially for younger Cubans. [2]

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[1] Mesa-Lago, Cuba Can Move From Foreign Economic Dependence, N.Y. Times (Mar. 28, 2019).

[2] See also posts listed in the “Cuban Economy” section of List of Posts to dwkcommentaries—Topical: CUBA.

Announcements of Cuba’s “Pillars of Management“ and Strategy for 2019

Cuba President Miguel Diaz recently announced what he called “Pillars of Management” and the Government’s strategic objectives for 2019.[1]

Pillars of Management

In September 2018 Diaz-Canel stated the following four “pillars” for future management of the country:

Respond to the mandate of the people and for the people by having responsible government officials account for their management to the people.
Establish a connection, debate and permanent dialogue with the people, especially when there are more complications.
Take into account that the solutions to these problems are very complex. Therefore, we always have to face each complexity with several alternative solutions.
Use social communication as a working tool.

Strategic Objectives for 2019

At the end of the year Diaz-Canel said that the Cuba Council of Ministers had adopted the following strategic objectives for 2019:

Disaggregate the 2019 Plan of the Economy in an orderly and agile manner, with the participation of the workers and their leaders.
Advance the process of computerization, not only with the fundamental leaders of the country in social networks, but with the updating of the websites of the agencies.
Continue to offer information to the media and start a television program to systematically address issues related to the government’s agenda.
Integrate universities in the search for solutions to the problems of the country and enhance the interaction between ministers and faculties.
Defend the ethics that should characterize the work of the leaders and the permanent contact with the people.
Maintain the atmosphere of order, harmony and cleanliness that must prevail in State institutions.
Comply with the regulations for the work of the non-state sector.
Support from all the institutions the broad legislative process that will be deployed after the approval of the new Constitution.
Strengthen the sources of tourism with the other sectors of the economy.
Encourage exports, including new sectors of the economy, while defending Cuba’s main economic and financial processes.
Prioritize, within the actions of the General Comptroller of the Republic and the National Auditing System, the follow-up of investments and exports, the substitution of imports and the productive linkages.
Establish as part of all audits, the use and destination of energy carriers, contracting, cost analysis, strengthening of accounting and the use of inventories.
Make the National Territorial Planning Scheme a working tool, which includes a score of policies aimed at the development of the country.
Develop a process for responding to the issues formulated by the people in the boards of directors of the Central State Administration Organisms and the Provincial Administration Councils.

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[1] Rivera, Government Management in Cuba: from pillars to strategy, Granma (Jan. 2, 2019).

Criticism of Cuba’s New Regulations for Private Enterprise

Cuba’s 126 pages of new regulations for private enterprise (cuentapropistas), which were published on July 10, have been criticized by U.S. economist Richard Feinberg, a professor at the University of California San Diego’s School of Global Policy and Strategy and a Fellow at the Brookings Institution. He calls them “the revenge of the bureaucrats,” who are jealous of those in the private sector who are making much more money than employees of struggling state enterprises.[1]

The new regulations contain details about potential violations, penalties and fines, oversight and performance requirements. For example, an operator of a private day-care facility must devote at least 21.5 square feet per child plus provide a detailed inventory of personal toiletry items.

These regulations also are designed to virtually guarantee that most private businesses will not grow beyond 20 employees. For example, once a private employer hires more than 20 employees, the 21^st employee must be paid six times the average wage for the first 20 employees.

In short, private enterprise is fine so long as they “don’t get too rich, diversify their businesses, open branches, try to evade taxes, resort to the black market, or provide too much competition to the state sector.” Indeed, a major motivation for the regulations is to halt growing inequities between ordinary Cubans and those in the private sector.

Moreover, the new regulations do not allow “for white-collar professionals to work for themselves, . . . private entrepreneurs to directly import for their businesses, and there is no recognition of their businesses as legal entities” and no provision for the creation of wholesale markets for the private sector.

These criticisms of the regulations were echoed in a recent Cuban public opinion poll carried out by the CubaData Project with a team of academics from Cuba, Mexico and Venezuela. 87.6% believe that Cuban professionals should be able to establish businesses and businesses within their professions. In addition, a high percentage of those surveyed believe other political parties should be permitted and that the election of the island’s president should be direct.[2]

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[1] Whitefield, New Cuba regulations for private enterprise on the island have a long list of don’ts, Miami Herald (Aug. 2, 2018). See these posts to dwkcommentaries.com: Cuba Announces New Regulations for Private Business (July 10, 2018); More Details on New Cuban Regulations for Private Business (July 11, 2018); Comment: Yet More Details on Cuba’s New Regulations for Private Business (July 13, 2018).

[2] Survey: Cubans want more autonomy for their business, political pluralism and elect president, Diario de Cuba (July 30, 2018).