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“With sanctions tightened by the Trump Administration (and not repealed by the Biden Administration), Cuban economic mismanagement and the impact of the pandemic and other events, Cuban inflation has soared, basic foods and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 10th 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].