Cuba on the Brink |
In 2014, after the Obama administration and Cuba’s government announced an agreement to restore diplomatic ties, the world descended on Havana. Everyone from the Rolling Stones to would-be investors rushed to claim a stake in the island’s future. Raúl Castro, the long-serving minister of defense, had assumed power from his ailing elder brother Fidel several years earlier and launched moderate economic reforms: allowing for more small private businesses, loosening rules for foreign investments, and downsizing the state’s payroll. Together, the normalization of relations with the United States and the government’s internal actualización (or “updating,” per the Cuban Communist Party’s preferred euphemism) seemed poised to help bring the island into the twenty-first century.
Unfortunately, Cuba has fallen dramatically short of those expectations. In the last five years, well over a million people—more than one in every ten Cubans—have fled the country, mostly for the United States. Today, under President Miguel Díaz-Canel, the island is enduring its worst economic crisis since the collapse of the Soviet Union. GDP has declined 11 percent since 2020. The electric grid is falling apart. Security forces harshly repress antigovernment protests. In October, Hurricane Melissa devastated the island’s east, damaging or destroying some 90,000 homes and 250,000 acres of farmland. Now, an outbreak of dengue and other mosquito-borne viruses has reached epidemic proportions.
Cuba’s unfolding tragedy is partly the result of external shocks, such as U.S. President Donald Trump’s 2016 election. After taking office, Trump reinstated many of the sanctions his predecessor had lifted. Between 2019 and 2020, for instance, he sharply restricted flights, remittances, and travel to the island, and in 2021, he redesignated Cuba as a state sponsor of terrorism, mainly for harboring a handful of fugitives from U.S. justice. U.S. President Joe Biden only partially loosened these restrictions, and Trump has reinstated some of them in his second term. Meanwhile, the COVID-19 pandemic shattered the island’s tourism industry. And with the second Trump administration mounting an increasingly aggressive pressure campaign to oust Venezuelan President Nicolás Maduro, an already sharp reduction in oil aid from Caracas to Havana in recent years threatens to get worse, and Cuba risks losing its most important economic and geopolitical partner.
But the current emergency is also a mess of the Cuban government’s making. Despite Raúl’s reforms, authorities have been unwilling to break decisively from the country’s sclerotic central planning model. Additional private-sector expansions have been fitful, and bad monetary policy has contributed to severe inflation. The government has, likewise, been averse to any meaningful change to the island’s one-party system. As a result, the island’s economy remains fragile and unresponsive, and past excitement in Washington for greater engagement with Havana has been replaced by skepticism, hostility, or disinterest.
It is hard to be hopeful about Cuba’s future. Raúl, who is 94 and still plays the role of éminence grise, will die soon, along with the last of the generation that forged the 1959 Cuban Revolution. But to get out of the current quagmire, a new generation of leaders would have to seriously commit, at a minimum, to deeper economic liberalization—painful as it might be in the short term. To fully set the country on the right path, they would need to democratize as well. Sadly, after a decade of policy tinkering, Cuba’s current leadership has given few signs that it is ready to tackle the island’s challenges head on or cede control to those who could.
“We reform, or we sink,” declared Raúl in 2010, four years after assuming power. Cuba’s socialist system had survived the immediate post-Soviet period, when aid to the island plummeted and its GDP shrank by a third. But it had only partially recovered from the contraction. To put the economy on firmer footing, Raúl devised a straightforward plan: shrink a bloated state by laying off half a million workers while expanding a tiny private sector of “self-employed” workers running restaurants, homestays, and other small businesses. Authorities would allow foreign investors to hold majority stakes in ventures, and the state would turn over fallow public lands to private farmers to address the country’s dependence on imports for 70 percent of the country’s food.
Cuba’s best economists quickly pointed out the plan’s flaws. The list of 200-plus activities authorized for self-employment was comically micromanaged. Farming a plot of public land and selling most of the harvest in a price-controlled ration system, for example, is not the same as owning property and selling the resulting produce in a market. And state companies still maintained an unfair edge by being allowed to treat one Cuban peso as the equivalent of one dollar, thus artificially overvaluing their assets and lowering the cost of their imports. Private citizens, by contrast, could sell pesos to Cuban state banks for dollars at a rate of 24 to one. Still, many people remained optimistic. To visit Cuba in these years was to feel the winds of change as small businesses opened, tourists from Canada and Europe arrived in droves, and a zone of tolerance expanded for independent journalism, academic analysis, and civic debate.
U.S. President Barack Obama took notice. Even before the normalization breakthrough in late 2014, his administration authorized Americans to travel in group tours to the island if they wished to “support the Cuban people.” Members of the........