Mexico City In Cuba, everyone knows what the expression “Cola fantasma” means. It’s like queuing just in case. If there’s gas, or chicken, or toilet paper, or anything that every Cuban needs but is sometimes as rare as a snowflake on the communist-ruled Caribbean island.
Standing in line has become almost a full-time job for most of the eleven million islanders. But often enough the announced delivery doesn’t happen – a phantom.
Cuba is suffering from the worst socio-economic crisis since the collapse of the Soviet Union almost a quarter of a century ago. This certainty, held since the pandemic, continues to get worse.
Power cuts, fuel shortages and food shortages are increasingly reminiscent of the early 1990s, when revolutionary leader Fidel Castro proclaimed the “Período especial” after the collapse of the Soviet Union.
Back then, it was time to buckle your belt to the last hole. That’s how it is again a good three decades later. But today the people on the island no longer have patience – and even less understanding for the government.
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This week, parliament confirmed incumbent President Miguel Díaz-Canel in office for another five years with almost 98 percent of the vote. The first head of state on the communist Caribbean island of the post-Castro era has not fulfilled the hopes placed in him by a reformer. In his inaugural speech, the President expressed understanding for the frustration of his compatriots. He is aware that the situation is particularly serious for young people.
In the past five years or so, a tenth of the population has left the country, especially young, educated people who no longer see any prospects on the island.
(Photo: AP)
To overcome the crisis, Díaz-Canel wants to “boost food production, make investments more efficient and the ailing socialist state-owned companies more competitive”. Inflation should be fought as a priority. “We must accept the gigantic challenge without being discouraged,” said Díaz-Canel.
Hardly any oil from Venezuela
But fewer and fewer believe the President’s words that everything is just a temporary bottleneck. The crisis in Cuba has long been chronic. Many problems come together: inflation, reduced oil supplies from Venezuela, currency and food shortages as well as a lack of vacationers, mismanagement and the US economic embargo, which continues to apply.
The UN Economic Commission for Latin America and the Caribbean (Cepal) calculates the island’s economic growth for this year at 1.8 percent. The government in Havana, however, insists that gross domestic product will grow by three percent. The country is on the brink of collapse.
Above all, the galloping prices and less and less energy aid from the cash-strapped brother from Venezuela worsen the situation. Last year, Venezuela’s oil supplies to Cuba fell again by six percent to 53,600 barrels per day. Caracas used to send more than twice as much.
After Easter there was once again no petrol. And so local traffic and transportation almost completely collapsed. Car owners and above all taxi drivers stood and stand in line for days and nights in front of the gas stations in the capital Havana in the hope that one day a tanker truck will come with the longed-for fuel.
Due to the bad situation in the provinces, many people are moving to the capital, Havana, but internal migration has led to overpopulation there.
(Photo: AP)
Inflation is high, the euro now costs 190 pesos on the black market instead of the 122 at the official exchange rate. You can’t even fill the fridge for a government salary. More and more people have enough and leave the island. In the past year alone, a good 300,000 Cubans are said to have entered the USA via Mexico without papers. In 2021 there were still 39,000.
“It’s worse for us than ever,” is a complaint that is heard again and again on the island. “If there’s no shortage of fuel, then there’s no electricity; once it’s there, there’s nothing to buy. It’s cyclical and infinite,” says a young man who asked not to be named.
The number of Cuba tourists is far behind the plans
It looks even darker in the provinces than in the capital. That’s why people move to Havana. But internal migration has led to overpopulation there. Those for whom the government cannot provide housing live in ‘albergues’, abandoned buildings that have been converted into temporary housing. Others in the old socialist tenements, some of which are threatened with collapse.
The situation in spring 2023 is particularly complicated for the people on the island, because the long-awaited and promised recovery does not materialize. This is shown by a look at tourism, the island’s second most important source of foreign exchange. In 2022, 1.04 million foreigners visited Cuba, just over a third (38 percent) of the visitors in 2019. However, the government’s goal was to attract 2.5 million foreign tourists.
The sector was hit particularly hard by the almost complete lack of Russian vacationers since the Ukraine war and the significantly reduced number of US tourists. Most visitors still come from Canada.
For 2023, the Ministry of Tourism is aiming for 3.5 million visitors. The number seems illusory, also in view of the tense supply situation and the constant power cuts and fuel shortages, which often turn a planned luxury holiday into an adventure. Word has gotten around to tour operators as well.
Economists call for drastic reforms in Cuba
Economists agree that the Cuban crisis is structural, not cyclical. It’s a systemic crisis, says Pavel Vidal, who teaches at the Catholic Javeriana University in Cali, Colombia. Like the economist Omar Everleny, he calls for real reforms – above all economic liberalization. Patching up the system of planned economy and state-owned companies in central sectors will bring no relief in the long term. “It’s a matter of life and death, it’s a matter of the highest priority,” warns economist Everleny.
For Vidal, the way out of the crisis is via a far-reaching macroeconomic stabilization program to halt inflation and thus create a more favorable scenario for economic growth. “This must include austerity measures and changes in monetary and exchange rate policies, but also structural and institutional changes.”
Many problems come together in Cuba: inflation, reduced oil supplies from Venezuela, currency and food shortages as well as a lack of vacationers, mismanagement and the US economic embargo, which is still in force.
(Photo: Reuters)
According to Everleny, two years ago “the law was finally passed” that made it possible to set up more than 7,000 small and medium-sized private companies, which have meanwhile brought almost 200,000 people to work. But for these small-scale private initiatives to become a dynamic factor, obstacles such as high taxes and excessive bureaucracy would have to be removed. There is also a need for an official foreign exchange market that would enable new entrepreneurs to raise the money they need to run a business.
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Other experts, on the other hand, believe that the “Cuba system” cannot be reformed and is doomed – either through social protests like in the summer of 2021, which could eventually lead to a regime change, or through emigration. In the past five years alone, a tenth of the population has left the country. And it’s not the old and sick who go, but the young, the well-educated, who no longer see any prospects on the island.
Cuba is suffering from the worst socio-economic crisis since the collapse of the Soviet Union almost a quarter of a century ago.
(Photo: AP)
At least there is a short-term remedy for the energy supply in sight. In Venezuela, a mega tanker is being loaded with crude oil and fuel for Cuba. This is an unusually large amount to help the political ally overcome its energy crisis. The Panamanian-flagged supertanker Nolan is scheduled to leave for Cuba by the end of the month at the latest with 400,000 barrels of fuel oil for power generation and 1.13 million barrels of heavy fuel oil.
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