Cuba is out of supplies and out of ideas

Cubans used to look back at what Fidel Castro called the “special period” after the end of the Soviet Union and its largesse and think that was as bad as things could get. They were too optimistic. Today officials talk of a “war economy”. The consensus on the street in Havana, the capital, is that shortages are worse than in the early 1990s. Cuba produces little in sufficient quantity: not sugar, which it once supplied to the world; not eggs, which it recently imported from Colombia; not milk powder, which it gets from the UN; not power, as worsening blackouts reveal. The government lacks foreign currency for imports. Inflation is rampant; a dollar’s worth of Cuban pesos at the official exchange rate is worth seven cents at the unofficial one. The price of a carton of eggs outstrips the monthly minimum wage.

The economic crisis is accelerating two recent trends. First, the communist government is losing control of the country—which is not to say the regime is about to fall. “All of us are here to save the revolution and save socialism,” Cuba’s president, Miguel Diaz-Canel, said this month. But few believe the ideological rhetoric. The government is unable to provide even the basic canasta (basket) of goods for its people, let alone anything else. The result is growing inequality, unrest and emigration. In the two years to the end of 2023 a tenth of the population of 11.2m left (see chart).Second, in search of succour the government is moving even closer to China and Russia. These growing economic and security ties come at a time when American officials are worried by those countries’ growing influence in Latin America.

Cuban officials like to blame American sanctions for the island’s plight. They certainly don’t help. After an opening under Barack Obama was not reciprocated by Cuba, Donald Trump tightened sanctions, slashing how much money Cuban Americans could send to relatives. Joe Biden’s administration has loosened this, but left almost all Mr Trump’s other Cuba measures in place. Adding to the difficulties, Venezuela’s collapse in 2014 cut shipments of subsidised fuel to the island, and the pandemic shut off the flow of tourists and their vital foreign exchange.

But the regime’s commitment to central planning and state control is the root cause of the woes. For a communist government, not being able to provide for its people is wounding. “The basic stuff is missing and when it comes it is dodgy: eggs without yolks that are yellow,” says one woman who asked not to be named. Thanks to the nascent private sector, everything from Lindt chocolate to Philadelphia cheese is available, but at prices far beyond the reach of the vast majority. Because of inflation, officially running at 30%, Cuba is in effect dollarising—but with few dollars. Restaurants in Havana barely disguise their delight at being paid in greenbacks.

Cubans are increasingly restless. Big protests in 2021 were met with stiff prison sentences for over 700 people. Subsequent ones have been smaller and have tended not to call for the regime’s overthrow. In March some Cubans took to the streets to complain about power cuts, which outside the capital last for hours, and a lack of food. “Fear has started to recede,” says Carolina Barrera, an exiled activist.

The official response has been timid and unimaginative. Fidel Castro died in 2016 and his younger brother Raúl is 93 and in poor health. The Communist Party’s collective leadership veers between reform and reaction. In 2021 the government allowed private businesses to expand and employ up to 100 people in a limited range of activities. But they find it difficult to get hard currency. The government has recently further restricted their scope and raised taxes on them, says Marta Deus, who runs a food-delivery firm. Business owners have been denied permission to travel abroad; some have been aggressively audited.

Tourism could help, but Cuba faces fierce competition from the likes of the Dominican Republic and Cancún in Mexico, says Omar Everleny, an economist. Tourist arrivals have picked up recently, but remain far lower than the 4m in 2019. Russians, who mill around army-run hotels in Havana, and Latinos tend to spend less than Europeans, or the Americans who flocked there after Mr Obama loosened sanctions. Few Chinese come.

The regime is looking once again to its friends to bail it out. There is talk of Russian investment in sugar production and the pharmaceutical industry. Security ties are growing, too. Last month, Cuba received a visit by Russian ships in Havana for the first time since the full-scale invasion of Ukraine. It is looking at becoming a member of the BRICS, an increasingly China-dominated group of emerging countries. The Centre for Strategic and International Studies, a think-tank in Washington, claims that China is expanding four installations that it may be using to spy on the United States.

The Biden administration has played down concerns over these developments. Cuba’s ties with Russia tend to wax and wane. American officials are more worried about Chinese influence in their backyard. And neither country is offering much. Both like to be paid back, which Cuba is not good at. Russia and China appear to be frustrated by the rigid ineptness of a regime that refuses to contemplate even state capitalism on Vietnamese lines. Last year Oleg Deripaska, a Russian oligarch subject to Western sanctions, set up a think-tank in Havana that is said to be promoting his country’s model of selling off state-owned enterprises to a small circle.

The United States could do more to offer an alternative to those ties. American officials say they want to. In May the administration changed its rules to allow Cuban businesses access to American digital financial services, including bank accounts. But the underlying problem has long been the Cuban government’s mistrust of the private sector. That reflects the unease of some Cubans who see unprecedented wealth in their country, but in a few hands. At night, while many loll idly on the Malecón, Havana’s coastal promenade, others park their Teslas in front of clubs and bars. “All the new businesses are linked to the regime,” grumbles one woman. In fact, of the more than 11,000 of them, perhaps 5% are, says Ric Herrero of the Cuba Study Group, a pressure group in Washington. That is still a lot.

Many Cubans have long dreamed of the regime’s collapse. But that is unlikely, and would bring other problems. The opposition lacks structure, a programme or people, inside or outside, says Carlos Alzugaray, a former Cuban diplomat. “The best chance of change is coming from the current government.”

But it is not happening. “We’re working with a regime with no plan, no way forward, no way out,” says Ricardo Zúñiga, a former American official. “It is enabling not just economic collapse but social collapse too.” Emigration is at record highs. “Our neighbourhood is emptying out of young people,” says Juneir, who lives in a Havana suburb. “If this country had [land] borders, there would be nobody left.”

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