Cuba regime ‘backed into corner’ by shortages, protests and US embargo

Recent protests a visible sign of anger caused by economic collapse and dwindling food supplies

A march in support of the Cuban revolution passes through the Malecon  in Havana on August 5th. Photograph: Ernesto Mastrascusa/EPA

A march in support of the Cuban revolution passes through the Malecon in Havana on August 5th. Photograph: Ernesto Mastrascusa/EPA

 

The Cuban regime is facing the biggest threat to its authority in decades, just four months after President Miguel Díaz-Canel consolidated his power on the communist-run island.

Mass protests last month, the largest since the 1959 Cuban revolution, were a visible sign of the anger caused by economic collapse, dwindling food supplies and a surge in coronavirus cases.

A tightly controlled, one-party system and centrally planned economy gives Díaz-Canel few options for tackling a spiralling emergency, a task complicated by the unexpectedly tough line from President Joe Biden’s US administration.

“The protests had a level of legitimacy which protesters in the past didn’t have,” said Christopher Sabatini, senior fellow for Latin America at the Chatham House think-tank. “These were really about bread and butter issues such as healthcare, food, agriculture and inflation.”

He added that Díaz-Canel’s “options for all-out repression are limited. He’s really backed into a corner.”

The July 11th protests were quickly snuffed out as thousands of police officers were deployed and access to the internet was cut, but dealing with the problems behind the demonstrations will be much harder.

Artists and intellectuals who previously supported the government are now asking questions. In a blog post Silvio Rodríguez, Cuba’s most famous singer, demanded to know the names of “the comrades responsible for not having changed everything that should have been changed”. He added: “For them, is everything the fault of the blockade, imperialism and social media? Not one little failing on our part?”

Cubalex, the human rights group, estimated that 705 demonstrators were arrested, of whom 189 were freed as of July 30th. Closed-door trials have begun – instilling fear into the population – and state-run media has regularly denounced the protesters as vandals. The regime labelled the unrest part of a US-backed attempted coup.

Bureaucracy

Since taking over as president in 2019 and succeeding Raúl Castro as leader of the Communist Party of Cuba in April this year, Díaz-Canel has tried to replace the remaining octogenarian revolutionaries, tackle an entrenched bureaucracy that has stymied reforms and handle the powerful military and security services.

Two homegrown coronavirus vaccines have been deployed, although official claims about their efficacy have not been verified. The government has also pursued – albeit timidly – market reforms to nudge Cuba in the direction of more prosperous communist nations such as Vietnam.

An overturnd police car in the wake of an anti-government protest in Havana, Cuba, on July 11th. Photograph: Yamil Lage/AFP via Getty Images
An overturnd police car in the wake of an anti-government protest in Havana, Cuba, on July 11th. Photograph: Yamil Lage/AFP via Getty Images

Restrictions on travellers bringing in food and medicine in their luggage when returning from abroad have been dropped. This is a tacit recognition of the importance of the “mules” who resell such goods in easing shortages, which have worsened dramatically since the virus-related collapse in tourism cut the supply of hard currency.

The July 11th protests led Biden to batten down on the policy of tougher sanctions imposed by his predecessor Donald Trump, dashing hopes of the revival of Barack Obama-era detente.

Biden called Cuba a “failed state”, imposed sanctions on the head of the military and the interior ministry’s special force and pledged to explore ways of providing internet access to help circumvent the government blackout.

Cuba’s allies have sent help, with Mexico and Russia providing diesel and essential goods. Venezuela also continues to ship fuel to Cuba, despite its dire shortages at home.

But this falls far short of what is needed. Economists and western business people have said only serious economic reforms and a resumption of tourism can restore Cuba’s fortunes.

“Cuba was already almost excluded from the international financial system to the point that it is difficult to bank, let alone get credit,” said a western businessman with years of experience of the country. “Now, it can only get worse.”

State of emergency

After stagnating since 2016, the Cuban economy slumped last year as the virus hit. Gross domestic product fell 10.8 per cent in 2020 and an additional 2 per cent from January to June this year, compared with the same period in 2020, according to official figures. Imports have fallen 40 per cent over the past 18 months.

Since a state of emergency was declared a year ago, an expansion of the private sector has been decreed, some additional autonomy has been granted to state companies and a big devaluation carried out, but these have failed to relieve the shortages.

“If something good can come of all this, it’s that it could give more political capital to those within the [Communist] party, the government and the military who support an acceleration and deepening of the economic opening,” said Pavel Vidal, a former Cuban central bank economist who teaches at Pontificia Universidad Javeriana Cali in Colombia.

He forecast an even harsher second half of the year for Cubans, after which there could be some respite. “Immunisation should make possible the lifting of internal restrictions on movement, the resumption of tourism and travel and also revenues from the export of vaccines. The opening to the private sector will also begin to take hold and some benefits could be seen from the devaluation,” Vidal said.

A European investor said state companies in Cuba faced endless rules and directors feared breaking them, gumming up decision-making. He gave the example of a factory director not ordering parts because they were not in the budget, which crippled production. “They do not have time or the bandwidth to prune all those rules,” he said.

Inside Cuba, there is a consensus that more could be done now. Ricardo Torres, a Cuba-based economist, said the government should “support the private sector and co-operatives, especially in agriculture” plus decentralise planning, restructure state companies and control triple-digit inflation.

Orlando, who runs a café in Havana, said the regime “needed to let go” and help people such as himself. “The government recently said the private sector could import and export, but only through the state. Why not add the option of importing and exporting directly as well?” – Copyright The Financial Times Limited 2021

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