All is calm but problems are on the horizon

11 July – One year later

Queue in Havana. Pic: Adam Cohn:

IISC Research Fellow, Marcel Kunzmann, appraises the situation in Cuba one year after the protests.

17.07.2022: One year after the protests of 11 July 2021, the situation on the streets in Cuba is calm. Cars cruise along Calle 23 in the heart of Havana, families stroll in the parks, queues form at bus stops and in front of some shops. On that date, the flags on government buildings flew at half-mast, after a one-day national mourning was decreed following the assassination of Japan’s ex-prime minister Shinzo Abe. Everything seems to be as usual, but in the background, things are starting to rumble.

Three years of recession

The problems that led to the largest anti-government protests in the recent history of the revolution last year are still unresolved. The supply situation is still extremely tense. Many products are only available for foreign currency or on the informal market, shops in Cuban pesos are mostly empty. Beyond the state ration book “Libreta”, barter, corruption and inflation characterise the distribution channels, which has not least undermined people’s trust in the state’s economic capacity to act. The informal exchange rate of the peso to the US dollar is currently 115:1, almost twice as high as last July’s 60:1. After a brief decline, the exchange rate has returned to the all-time high of early May in recent weeks. After three years of recession and one and a half years after the currency reform, the real purchasing power of wages is now lower than before the pandemic, posing a strain on many families.

Meanwhile, economic reforms continue to move forward “without haste but without pause”. Since last September, more than 4,000 small and medium enterprises have been established, and a major reform to free up pricing is expected to put the retail sector on a new footing this year. The decentralisation of the state sector could gain further momentum in view of the upcoming restructuring of the GAESA military complex. The agricultural reform launched in May 2021 is beginning to show the very first positive results. President Díaz-Canel never tires of renewing his commitment to building a “sustainable and prosperous socialism” based on a science-based system of government. The path towards a more mixed economy that takes the market into account and the introduction of new rights and broader channels of participation is clearly mapped out in several key documents in the form of a long-term perspective plan and the new constitution. In the process, there are quite a few bureaucratic hurdles to overcome and thick boards to drill, especially at the middle level. The colour of the cat still seems to play the most important role in parts of the state apparatus, less whether it catches mice or not.

The shortage of medicines, a side effect of the high investment costs for the development of own corona vaccines, should slowly improve this summer. Transport remains precarious given the shortage of energy sources, despite recent increases in supplies from Venezuela. A major problem continues to be the unstable electricity supply, which was the spark that ignited the protests last year. Due to the lack of foreign currency, the maintenance cycles of the heavy oil power plants, some of which are more than 40 years old, had to be stretched out, which repeatedly leads to accidents. In the meantime, the base load has been reinforced by floating power plant ships, so that many planned maintenance work is to be made up for this year. To solve the problems permanently, however, much larger investment funds are needed, which are not in sight at the moment.

Dancing on the volcano

The sentencing of 381 demonstrators to prison terms, some of them for many years, has caused criticism both inside and outside Cuba. However, the continuing poor economic situation is likely to be the main problem for most on the first anniversary of 11 July. While the repeat of the protests that some had hoped for has failed to materialise, the tension is palpable on the island: In Camagüey in June, dozens of students gathered in the university corridors after hours of darkness, chanting “Turn on the electricity!” loudly. The video unsurprisingly went viral. On 15 July, the opposition news portal “Cibercuba” wrote, alluding to last year’s events, that “Cubans in Pinar del Río are taking to the streets” after some people moved outside the local party office during the night. Again, this was triggered by a power cut lasting several hours that occurred as a result of a lightning strike. For many, the ongoing power supply problems trigger traumatic memories of the heyday of the Special Period, when there were sometimes power cuts of eight hours or more a day. As the local party secretary told Cuban media, immediate action was taken and people were engaged in dialogue. After a Twitterbot campaign abroad helped fuel the protests last year, the internet has again been shut down for several hours as a result of Friday’s events. Governing Cuba, it seems, is currently like dancing on a volcano.

Ration store in Havana. Pic: Helen Yaffe

On the other hand, similar to the Special Period in the 1990s, increasing migration is functioning as a relief valve. According to estimates, some 150,000 people have left the country since October, making this the largest wave of departures in recent history, surpassing even the Mariel boat crisis of 1980. After U.S. President Donald Trump closed the newly opened embassy on flimsy pretexts in 2017, visa processing has been slow. New restrictions on third countries like Panama make orderly migration more difficult, putting the fate of many people in the hands of smugglers and dangerous boat crossings of the Florida Straits. This is a state of affairs that the Cuban government has repeatedly criticized and that the United States has long deliberately allowed for.

The economic blockade, which has been in place for more than 60 years, was tightened to the utmost shortly before the start of the pandemic. As a result of new financial sanctions, the island was almost completely cut off from international payments at the end of 2019. With devastating consequences. According to the Ministry of Economy, imports are currently around 20 percent more expensive for the country than for other states; loans, investors and business partners are staying away, while scarce funds have to be prioritized for maintaining basic services. The economically important flow of foreign exchange in the form of remittances by relatives abroad (about three billion U.S. dollars per year before 2020) has continued to thin out with the closure of Western Union and other providers. The maneuvering room for growth, despite the ambitious target of four percent this year, is massively limited. Even restrained humanitarian easing has long been ruled out by Washington, even though Cuba’s highly effective and inexpensive Corona vaccines could make a weighty contribution to pandemic control in the Global South.

Mediation attempt by the Vatican

After initial, cautious easing of sanctions in May, a change in Washington’s Cuba policy has recently become apparent after six years of ice age. Similar to the approaches under former U.S. President Barack Obama, Pope Francis could again have his fingers in the pie this time. The pontiff caused stir and outrage among right-wing Cuban exiles with his recent remarks: “Cuba is a symbol and looks back on a great history. I love the Cuban people and confess that I also have a human relationship with Raúl Castro,” Francis confessed, continuing, “I was happy when the little agreement under President Obama came about at the time.” At the moment, “further probing talks are underway to fill this gap,” the pope said. A Spanish-language television station in Miami reported Saturday that Boston Cardinal Seán Patrick O’Malley has left for Havana for talks.

The Pope and Raúl Castro. Pic:

One of the demands of the protests last year was for vaccine. While the incidence was in the triple digits, only one third of the population had been immunized with the newly approved vaccines “Abdala” and “Soberana 02” last July. At times, the health care system was on the verge of collapse. Now, 90 percent of the population is fully immunized, making Cuba second only to the United Arab Emirates in the world. The incidence was most recently 4.3, which is why the last remaining Corona measure was lifted in May with the mask requirement. Paradoxically, due to the current world situation, Cuba can hardly reap the fruits of the decision to develop its own vaccines; despite the exemplary control of the pandemic, few visitors return to the island in times of war and inflation. The sobering tourist season, with 987,000 visitors by the end of June, suggests that without a substantial easing of sanctions, Cuba’s economy may not be able to gain sufficient momentum during the current global crisis to allow reforms to take hold and improve living conditions in the foreseeable future. The pope seems to recognize this by trying to clean up the shambles Trump has made in Cuban-American relations. Whether the renewed “attempt at mediation with help from above” will succeed remains to be seen. In any case, one realization continues to crystallize: the key to resolving the current crisis in Cuba lies more than ever in Washington.