Cuban President explains economic crisis
Cuban President explains economic crisis
Chronicle of a blockade intensified and an arbitrary list
The Spanish professor and journalist Ignacio Ramonet interviewed Cuban President Miguel Díaz-Canel on May 14, 2024. The two-hour interview was broadcast in its entirety on May 15 in a special two-hour edition of the Mesa Redonda nightly news program in Cuba. The interview was covered in Le Monde Diplomatique of France as well as international media in Latin America and the Caribbean. The interview included discussion of the Cuban economy as well as Cuban foreign policy. Ramonet is well known in Cuba for his extensive interview of Fidel in 2006.
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The intensified blockade and its consequences
Ramonet began the interview by noting that in Cuba today there are food hardships, inflation, and inadequacies in public services. He asked why, if the U.S. blockade of Cuba has been in place for six decades, such difficulties emerge in recent times. Diaz-Canel explained that in recent times there has been an intensification of the blockade supported by the inclusion of Cuba on a spurious list of countries that supposedly support terrorism, such that today the blockade has qualitatively different characteristics.
Díaz-Canel reported that Cuba up to the first half of 2019 had suffered from the limitations and adverse consequences of the blockade that had been in place for six decades, and therefore, its level of development was much lower than it would have been without the blockade. However, Cuba had developed a capacity for resisting the blockade, which enabled the country to advance in development to a certain degree. Cuba up to 2019 had a determined level of economic activity, exportation, and support for social programs of high impact for the population. Up to 2019, the country received income from the exportation of products that were competitive in the international market, reflecting the vitality of economic activities in the country. And Cuba had income from tourist activities—the number of international tourists in the country had reached four and one-half million. In addition, Cuba received an important quantity of foreign currency from remittances from Cuban citizens living abroad and Cuban families in other countries. Moreover, Cuba had programs of credit through a variety of financial institutions and governments with which the Cuban government had good relations, which included development projects. During the period prior to 2019, Cuba also had a stable supply of fuel as a result of agreements with sister countries, which included the providing of medical services as a form of payment, reducing the amount of foreign currency paid for fuel.
Therefore, “under such conditions, we had sufficient foreign currency income to permit the importation of raw materials that were necessary for our principal productive processes, to the extent possible with the limitations of the blockade. We were able to buy food to supply the basic food basket, and we even were able to buy food that we sold in state stores, either in the stores with transactions in the Cuban convertible peso in use at that time or in the national money stores. Thus, our national market had a determined level of supply.” We had sufficient foreign currency to attain a legal currency exchange controlled by the state, which enabled us to buy and sell foreign currencies with an equivalent amount of national money. We had an acceptable capacity to pay our debt obligations with countries or companies that had invested in Cuba. And we had a level of money that enabled us to buy necessary parts for the maintenance of our transportation and energy systems and to buy the inputs necessary for our productive processes.
All of this meant that we had a low rate of inflation. “We arrived to a situation, I would say, of stability, although still not attaining the prosperity to which we aspired.” This was the situation up to the second half of 2019.
During the second half of 2019, the Trump Administration applied more than 240 measures involving the intensification of the blockade, introducing a new concept of blockade, that of a blockade intensified. This included the application for the first time of Title III of the Helms-Burton Law, which never before had been applied. This had a tremendous impact, because it enabled pressure on foreign investors, present and future foreign investors, since Title III gives support to all those who seek compensation for confiscations that had been undertaken with full justice by the Revolutionary Government in the first years of the Revolution. [Title III permits U.S. citizens or entities whose property was “confiscated” by the Cuban government to file suit in U.S. courts against companies in third countries that have engaged in commercial activities related to the confiscated properties].
Díaz-Canel reported that “with these intensification measures, all our sources of foreign exchange income were cut off.” International tourism declined notably, inasmuch as the new measures eliminated the looser restrictions of the Obama administration on the right of the North American people to travel to Cuba. Cruise ships, which had become an important part of the influx of tourists to Cuba, were eliminated. Remittances were reduced.
In addition, “an enormous energetical and financial persecution was organized.” Some 92 banks or international financial entities have ceased their relations of financial interchange with Cuba, as a result of sanctions or pressures applied by the government of the United States. Moreover, they have applied pressure and have sanctioned friendly and sister nations that had provided a stable supply of fuel to Cuba. Therefore, Cuba began to experience a deficit in fuel and a deficit in the availability of foreign currency.
The deficits in fuel and foreign currency have destabilized the national electric energy system. The President explained that Cuba is able to ensure the functioning of the thermoelectric system with Cuban national crude oil. But these thermoelectric power plants do not cover the national demand for electricity, especially in moments of high demand, so the country must put into operation other generating plants that run mainly on diesel and refined oil. When the country does not have these fuels, a deficit in the generation of electricity occurs.
In addition, in having less foreign currency available, the country is not able to buy in sufficient time the parts necessary for the maintenance of the national electric system, which is a system with a certain level of technological obsolescence. In these conditions, annoying blackouts occur. With respect to the issue of parts and maintenance, the President noted that Cuban crude oil is a heavy, high-sulfur oil, the use of which generates the need for a higher-than-normal level of systematic maintenance.
And in order to diminish the blackouts, the government is obligated to close or limit somewhat the productive activities of the economy. In general, as a result of limitations in foreign currency, the country began to lack certain inputs and raw materials necessary for important production processes. These dynamics with respect to the impact of the intensified blockade on Cuba were unfolding in the context of the multidimensional crisis of the world, which has included the rise of prices in the international market.
As a result of these factors, a very complex situation has emerged, characterized by shortages in medicines, food and fuel, and difficulties in transportation. “We cannot develop economic activities with all the intensity and capabilities that we possess and need to offer goods and services; so a tremendous imbalance is created between supply and demand, resulting in price increases and a high level of inflation.” And since the government does not have sufficient foreign currency available to operate a regulated currency exchange, an illegal and parallel black market in currencies emerges.
In addition, with many banks and financial institutions ceasing to give credit, the government does not have the same capacity to attain time to cover and honor its commitments. With the money that comes this week, priorities have to be decided upon, the President noted.
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Let us speak of solutions
Cuban President Miguel Diaz-Canel observed that Cuba intends to overcome the energy crisis through renewable energy sources, primarily photovoltaic, because it can be assembled in less time. Cuba is now beginning to mount and put into operation photovoltaic energy parks for the generation of electricity. Cuba already has signed a group of agreements that are going to account for 2,000 megawatts, which is going to place the country in a different situation with respect to energy in less than two years. Cuba plans to have 20-25% renewable energy by the year 2030. All of this has been well defined and programmed.
With the turn to renewable energy as a partial source of the nation’s electricity within two years, Cuba is going to consume less fuel in the generation of electricity, which means that the country will have more fuel available for the production of food, for agriculture, and for national productive processes, which today are very limited by the fact that most of the available fuel goes to generate electricity. And it will mean reduction of Cuba’s costs for the importation of fuel.
In addition, Cuban crude oil is exportable, even though it is a heavy, high-sulfur crude oil. Cuba is taking steps to increase its production, which in conjunction with the decline in consumption due to a partial turn to renewable energy, will enable the exportation of Cuban crude oil. Cuba is looking for foreign investments that will facilitate the exportation of Cuban crude oil as well as the improvement of Cuban refining processes, so that Cuban oil can be exported as a processed or refined oil for exportation.
The Cuban President stressed that the Cuban government gives a high priority to stimulating national production in agriculture and food production, with emphasis on local production. Each of the municipal territories and provinces has a program of food self-sufficiency, providing the foundation for the food sovereignty of the nation. Since January, the members of the government have been visiting and inspecting places of work throughout the country. Díaz-Canel reports that the governmental visiting teams have observed collectives of workers, with the leaders that they have, who are doing things in a different manner, taking into account the conditions created by the blockade intensified.
Increasing national production, among other benefits, will make possible control of inflation and of the currency exchange market. Cuba has a long-term program, Díaz-Canel noted, for the attainment of macroeconomic equilibrium by the year 2030.
In addition, Cuba stresses science and innovation, with the conviction that the responses to the problems will find solutions through scientific innovation. The importance of science can be seen in the Cuban capacity to develop and distribute vaccines for the control of COVID-19, which was accompanied by honest, clear, opportune, and systematic communication with the people. The development of vaccines was possible because of the vision of Fidel in creating a network of scientific research centers, which now has become “a powerful closed-loop business system for the production of medicines, and in particular biotechnological medicines.”
At the present time, Cuba is expanding its use of digital technologies to facilitate communication between the government and the people and to improve efficiency in the delivery of services to the people. The digital transformation of the society has already been accomplished. Cuba has 7.7 million users of mobile telephones, and approximately eight million have access to Internet. Digital transformation and artificial intelligence can be important not only in public administration, but also in improving the efficiency of the productive processes. These processes are being developed with attention to cybersecurity, in order to avoid cybernetic attacks. And they include the use of applications and equipment that have been developed entirely by Cubans, especially the youth.
At the same time, Cuba maintains its commitment to persons and families most in need, in conditions of vulnerability. Every measure that is implemented has to include attention to persons in situations of vulnerability that will be adversely affected.
The Cuban model for social and economic development, Daiz-Canel explains, is that of a planned economy that takes into account the signals of the market. It is not a pure market economy. It includes a concept of social justice, such that the laws of the market are not the laws that drive economic development. Cuba has a planned economy that recognizes and takes into account the signals of the market and the laws of the market.
Cuba since 2012 has stimulated the development of small and medium enterprises, both state owned and private. The private sector always has existed in Cuba, Díaz-Canel notes, but recently it has been amplified. An important part of the production in agriculture and animal husbandry is in the hands of cooperatives and private farmers. And some independent workers in trades and occupations have converted themselves into small enterprises.
Díaz-Canel stresses that the state enterprises ought to play the fundamental role in socialist construction, but complemented by the economic activity of the private sector. In the Cuban concept of socialist construction, the principle means of production are in the hands of the state, represented by the state companies. There are in Cuba approximately 10,000 small private enterprises, but the great weight of the economy is in the state sector, although the non-state sector is important.
Díaz-Canel noted that the recent expansion in the number of small private enterprises has occurred without sufficient integration between state and non-state enterprises. Therefore, a priority at the present time is to strengthen the integration between the state and private sectors, such that the non-state entities contribute to and are included in the National Economic and Social Development Plan. Cuba is now developing norms in this regard.
Díaz-Canel observes that the U.S. government has had the intention of trying to convert the non-state sector into the social base of opposition to the Revolution. However, today there has emerged a contradiction within the U.S. Congress, with some proposing the investment of money to convert the small and medium private companies into agents of change; while others maintain that the private enterprises form a façade created by the Cuban state, so that financing them from outside Cuba should be blocked. This disagreement, he notes, was not generated in Cuba, where the small and medium private enterprises are seen as a business fabric necessary to continue advancing in socialist construction in accordance with the national plan of development.
Díaz-Canel does not find credible the U.S. rationales for the blockade.
“If we are wrong, if we are so inefficient, if we are such failures, then do not apply any sanction, and simply let us fall. But no. We know that the example of Cuba, and I say it without boasting and without any Cuban chauvinism, we know that we represent an example for Latin America, the Caribbean, and the world, because one constantly sees so many people in the world that have placed solidarity with Cuba at the center of their lives, having trust and seeing a light that guides. For this reason, we assume a tremendous commitment; we cannot let them down. That is the only thing that explains why such a powerful government has to resort to such practices in order to bring a small country to its knees.”
Inasmuch as the U.S. government under both major political parties has maintained the blockade with the support of the U.S. military-industrial complex, Díaz-Canel does not believe that the policy will change under the present administration. “My conviction is that we have to overcome the blockade by ourselves, with our ability, with our work, with our talent, with our intelligence and with our effort.”
Nonetheless, Cuba remains disposed to sit at a table of dialogue under equality of conditions, without impositions or preconditions, to speak of all issues pertaining to Cuban-US relations. Díaz-Canel emphasizes that Cuba has taken no action against the United States, whereas the blockade is unilaterally imposed against Cuba by the United States. The end of the blockade “is simply a right of the Cuban people, a right to develop in an environment of peace and equality, without coercive measures or impositions.” He maintains that Cuba and the USA are always going to have ideological differences, but a “civilized relation between neighbors” would be possible, characterized by “cooperation and economic, commercial, scientific, financial, and cultural interchanges in all areas of life. It could be a normal relation.”
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A New International Economic Order
Díaz-Canel maintains that the world situation today provides “a very conducive environment for South-South relations,” opening up new possibilities for a New International Economic Order, which is necessary.” BRICS, for example, “opens an expectation of rupture with North American hegemony in international relations.” BRICS has displayed a will to establish relations with the countries of Africa and Latin America and the Caribbean, based in equality, consensus, and respect. BRICS, moreover, is proposing an alternative to the dollar and is giving potential to commercial transactions in national currencies as well as commercial transactions involving the interchange of products.
Cuba, Díaz-Canel observed, has excellent relations with the five founding nations of BRICS (Brazil, Russia, India, China, and South Africa), which enabled Cuba to participate in the BRICS Summit of South Africa as a country and as President pro tempore of the Group of 77 and China. For these reasons, Cuba aspires to enter BRICS, and has communicated as much to the leaders of the BRICS countries.
Díaz-Canel also described the scenario with respect to Latin America and the Caribbean. There is a group of countries that have maintained revolutionary processes, namely, Cuba, Venezuela, and Nicaragua. And there is a group of progressive governments, including Bolivia, Brazil, Mexico, Honduras, Chile, and Colombia. Together, these governments represent a correlation of forces favorable to the Left, facilitating stability, cooperation, and interchange in the region. But the United States has not remained silent, and it is constantly trying to mobilize forces of the Right with mechanisms that seek to undermine the possibilities for leftist government to maintain themselves in power and to install the Right, which is a Right that is “totally subordinate to the Government of the United States and to the design of the United States.”
Thus, the United States feeds divisions and provokes disunity in the region, with the consequence that there are some governments that facilitate U.S. policies for the region, including governments that support NATO troops in the region. Díaz-Canel observed that Cuba will always defend the sovereignty of the countries of Latin America and the Caribbean. “Cuba will always maintain and defend, with the countries of Latin America and the Caribbean, respect for the sovereignty and independence of said countries, and respect for self-determination over their socio-political systems.” Cuba will always seek “respectful, supportive, and cooperative relations with any of these countries, regardless of systems and ideologies, as we presently have with the majority.”
Díaz-Canel further observed that, if the Latin American continent were to attain an integration, it would be an example for the entire world.
“I am convinced that with all these virtues, with all that richness—this is what I dream—the Latin American continent could have an integration that could be an example for the whole world, showing what it can contribute to the human condition, to the future, to the dreams of emancipation, to the placing of the human being at the true center of everything that is done for the world. I believe that this moment will come sooner rather than later, because our peoples demand justice, because they have lived through many difficult situations: they have experienced aggression, they have experienced contempt, they have experienced interventions, they have experienced practices of inequality, they have been excluded from processes, they have been excluded from possibilities.
“There is still much illiteracy in Latin America and the Caribbean that must be resolved; there is need to advance on gender issues; there is much to achieve for the emancipation of Latin American and Caribbean women; and there is much to attain with respect to equality and social justice for all our peoples. But there is historical and cultural potential.”
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