CubaBrief: The main reason behind Cuba’s economic debacle

Hundreds of boxes of mangoes rotted in the fields of Camagüey in the current harvest of 2021. (14ymedio)

Main reason for economic disaster

Former University of Pittsburgh professor Carmelo Mesa Lago, dubbed “the dean of Cuban economists,” in two interviews over the past week has succinctly explained the cause for Cuba’s economic disaster.

In this paragraph, interviewed by Andres Oppenheimer for his June 17, 2024 Miami Herald column “Russia’s warships in Cuba are more than a tit-for-tat for Biden’s support for Ukraine” Professor Mesa Lago said that Havana has maintained its communist economic model.

The main reason behind Cuba’s economic debacle is that, unlike other communist-ruled countries like China and Vietnam that follow the “socialist market” model, a code work for a hybrid economy, the Cuban regime has not allowed a sizable private sector.

Cuba has to import sugar, poultry and several other foodstuffs because private farmers have no incentive to produce, Mesa Lago said.  “In Cuba, farmers have to sell up to 70% of their crops to the state, and their products’ prices are set by the state below the market price.”

Consequently, the Cuban dictatorship seeks to place the blame for its failures elsewhere, but the official argument collapses when scrutinized.

Collectivization of agriculture and the end of self-sufficiency

Firstly, according to the Cuban Studies Institute between 1952-1958 there was “a successful nationalistic trend aimed to reach agricultural self-sufficiency to supply the people’s market demand for food.” Despite the efforts to violently overthrow the Batista regime in the 1950s, “the Cuban food supply grew steadily to provide a highly productive system that, in daily calories consumption, ranked Cuba third in Latin America.”

Secondly, this ended when the Castro regime seized and collectivized properties, and prohibited farmers selling their crops to non-state entities, in the early years of the revolution. Farmers no longer decided how much to produce, or what price to sell. The Cuban government established production quotas and farmers were (and are) obligated to sell to the state collection agency, called Acopio. Most recent law on agriculture in Cuba ( Decreto Ley 358 de 2018) continues to prohibit private sales of agricultural products to non-state entities. The dictatorship began rationing food in 1962 as a method of control and continued the practice over the next six decades. Rationed food is not free, but sold at subsidized prices. Rationed items are not enough to feed a person.

After that, Marc Frank of Reuters reported on August 10, 2010 that “in Cuba’s long-centralized agriculture system, farmers must produce certain crops or livestock to sell back to the state at fixed prices in exchange for state-assigned supplies.” In the same article he divulged how “farmers and consumers complain the cumbersome system sometimes results in rotting crops and farmers going without timely supplies of animal feed, pesticides and fertilizer.”

Let the food rot, or get into trouble if you try to sell it

Rotting crops cannot be blamed on economic sanctions, but inefficient centralized communist agricultural practices that prohibit market mechanisms to increase efficiency and deliver more food to Cubans. Diario de Cuba (DDC) ( March 18, 2021) and 14ymedio (June 15, 2021) have reported on rotting food crops due to the failures of the state enterprise, Acopio in picking them up on time.

Worse yet, farmers have no other option but to allow them to rot or risk fines and prison.

For example, DDC’s March 18, 2021 article described how tomatoes, onions, cabbage and other vegetables were rotting, and efforts by farmers and other independent actors to get the crops to sell to Cubans resulted in detentions and fines. DDC interviewed Esteban Ajete Abascal, president of the League of Independent Farmers of Cuba in the article who said that “one of the farmers, in recent days, left with a truck of onions to try to sell them, and they stopped him at the checkpoint, just outside of San Diego de los Baños, and the head of the sector seized the entire truck of onions. Every time they try to leave, they are intercepted and the merchandise is taken away.”

As a result, between 70% and 80% of Cuba’s food is imported today. This included the years when Cuba was heavily subsidized by the Soviet Union, and was part of the East Bloc. Since 2000, much of the food purchased by Havana has been imported from the United States. Despite this, rationing continued during the peak years (2011 – 2014) when the Cuban government received massive amounts of assistance from Venezuela’s Chavez regime.

Most chicken eaten in Cuba is imported from the United States, not grown in Cuba

The Blockade

Havana calls United States economic sanctions on the Cuban dictatorship a “blockade.” This is not true as the State Department (and U.S. – Cuba trade statistics over the past 25 years) demonstrate. A meme appeared on Twitter in Spanish that outlines this reality, and Cuban scholar and journalist Carlos Alberto Montaner gave a July 15, 2021 commentary on it. The first two lines of the meme translated below to English reveal the blockade imposed by Cuba’s communist regime on Cubans.

“The blockade does not prohibit fishermen in Cuba from fishing, the dictatorship does;
The blockade does not confiscate what farmers harvest, the dictatorship does;

The Cuban government’s internal blockade can be seen in action in its messaging on fishing.

Fishing

Firstly, the Vice Minister of Cuba’s Food Industry, Mydalis Naranjo Blanco, said on the radio and television Mesa Redonda   program that the seas that surround the island do not have enough fish for Cubans to consume.  “In terms of fishing, it is appropriate to say  that although we are a country that is surrounded by the sea, our  waters do not have the levels of fish that we need to cover the demand  of the population,” Naranjo Blanco responded to Randy Alonso’s question  about the fishing situation in Cuba, reported Diario de Cuba on June 22, 2023.

Secondly, Deputy Prime Minister Jorge Luis Tapia, during a speech before the National Assembly of People’s Power on July 21, 2023, assured that “family aquaculture” was successful during the Special Period, the acute economic crisis of the 1990s.

“In the years of the Special Period there was a movement at the level of the popular council that many families made the tank and that exists in the world. But here in Cuba it was made. A pond, four meters around and they raised fish there after they had it. they caught”, he emphasized hitting the podium, according to images transmitted by the official Canal Caribe.

Therefore, the message to Cubans: no fish in the surrounding ocean waters, and if you want to  get your own fish you will need to cultivate it in improvised man-made  fresh water ponds. Furthermore, Yoani Sanchez wrote a column that exposes Tapia’s  failed scheme within the existing Cuban reality.

Tapia, who has left the worst of reputations – for being inefficient, corrupt and oppressive – wherever they have placed him as leader of the PCC, has not the slightest idea of what he is ordering us to do.

 

An island without fish

Cubans “joke bitterly about being an island without fish” since they consume only “a quarter of the seafood they did at the end of the 1980s, according to official data,” and “a fraction of the global average fish consumption per capita,” according to a Reuters report published on August 27, 2019.

On the other hand, compare and contrast the fishing experience of Cubans in the video above, to foreign tourists in the video below.

Furthermore, these are not the messages sent to visiting international tourists. VisitCuba.com offers a typical message addressed to tourists that contradicts what is being told to Cubans on the island.

“Largely unspoiled and mega-diverse, Cuba is one of the most  fascinating destinations for fishing in the Caribbean. Although located  in the heart of the Caribbean, Cuba is also right next to deep oceanic  trenches, which hide hundreds of different species. No wonder the  legendary writer Ernest Hemingway ended up staying here  for over 20 years: fishing in Cuba is something else! During this time,  not only did he write some of his masterpieces, but he also explored  the coast aboard the Pilar, his very own custom-built fishing boat.  Cuba’s waters, rivers, and lakes are full of Atlantic tarpons,  bonefish, pomfrets, Atlantic bass, and trout. However, if you want to  find the biggest banks and the rarest species, make sure you check out  the places on the list below.”

Saltwater Sportsman in their 2016 article described permits and mutton snappers that were found in good numbers  in an area called Cuba’s Zapata Peninsula, and provided some  photographic evidence of their catch.

Let Cubans fish

Mary Anastasia O’Grady in her September 7, 2021 column in The Wall Street Journal titled “A Sanction Worth Lifting in Cuba” highlighted  the obstacles placed by Cuba’s military dictatorship on Cubans in the  island. In it she mentioned the Center for a Free Cuba’s July 29, 2021 CubaBrief  that made the request to “Let Cubans Fish” and outlined the existing reality.

“This is no joke. A Caribbean sea teeming with marine life contains abundant  protein. Yet it’s nearly impossible for Cubans legally to reel in dinner  to feed their families. This is more proof, as if we needed it, that  socialism is for morons.”

Nora Gámez Torres in her August 6, 2021 column,”Once again, Cuba blames the U.S. embargo for its domestic problems. It’s not that simple.” published in the Miami Herald makes the case that Cuban government policy is responsible for the lack of food.

After six decades of socialist centralization, the country still does not produce enough to feed its population. Farmers can not freely cultivate and sell their crops. Its fishing fleets – and individual fishermen, are not allowed to sell fish – as the Center for a Free Cuba recently reminded readers in its response to a paid advertisement that appeared in the New York Times with the title “Let Cuba Live!” The Center titled its retort: “Let Cubans fish!”

The mirage of the SMEs

Finally, there is a lot of buzz in foreign policy circles about new small and medium-sized enterprises (SMEs) in Cuba, but Carmelo Mesa Lago described it in the June 16, 2024 interview Carmelo Mesa-Lago: ‘Today’s Cuba is a catastrophe’ published in El Pais English  by Carla Gloria Colomé citing an article in The New York Times that the claims made were “exaggerated.”

Firstly, “the Communist Party says that the private sector is the Trojan horse that imperialism uses to try to destroy the Revolution. The New York Times published an article in which it exaggerated, and I will give you two or three examples. They say that 10,200 new jobs in the private sector have been opened up since 2021, when SMEs began to be approved, and they say that in 2023, between the private sector and the government, imports of each totaled $1 billion.”

Value of imports to Cuba is 62% less than in 2013

“I went to the Cuban statistical yearbook, and looked at the imports of the previous year, 2022, and they were $2.17 billion. In other words, what they are quoting for 2023 is 8% less than the previous year. It is not an increase, it is a decrease in imports. Not only in terms of volume, money, amount, but these imports buy less due to the problem of rising food prices. That is a distortion of reality. That figure was given by the government, but the government does not say that they were less than the previous year.”

Moreover, “If you compare 2023 with 2013, the drop was 62%. That is, the value of imports in 2023 is 62% below that of 2013. And, if you compare it with 1989, the drop is 67%. This means that, despite SMEs, imports are reduced not only in amount, but in purchasing power. You’re giving me that as a demonstration of something successful, but, according to the numbers, it’s quite the opposite. They also say that the private sector provides half of the total employment, that is not true. Using 2023 figures, it is a third of total employment.” .

Improved relations did not translate to economic liberalization

The extension of military control over the Cuban economy accompanied President Obama’s 2009 – 2017 detente with Raul Castro.

In contrast, Cuba’s agricultural sector was liberalized during times of crisis.

For example, in the 1980s there were “free farmers’ markets“. Afterwards, during the Special Period, in the 1990s, the “free agricultural markets.” Both demonstrated the ability of Cuban farmers to produce large quantities of food, but were later overturned after the emergency that caused them to be enacted ended.

In conclusion, Cuban farmers are penalized by the Castro regime’s communist agrarian policies, which place a higher priority on retaining power than on solving the island nation’s low level of domestic production. If Cuban farmers are given the freedom to grow and sell their produce in markets to other Cubans, the communist dictatorship fears losing control of the island.

El Pais English, June 16, 2024

Carmelo Mesa-Lago: ‘Today’s Cuba is a catastrophe’

By Carla Gloria Colomé

On the verge of turning 90, the Cuban economist analyzes with data why this is the worst crisis the island has ever faced and reflects on the apparent arrival of capitalism to the last communist bastion of the West

On the verge of turning 90, as he publishes what appears to be his last book, renowned Cuban economist Carmelo Mesa-Lago has promised his wife Elena and his two daughters that he will stop writing. He has made that promise before but was not able to keep it. “I stopped writing for a month and I thought I was going crazy,” he says from his apartment in Pittsburgh, a city where he loves everything except winter, and where he is an emeritus professor at the University of Pittsburgh.

In 1961, at the age of 23, he left Cuba for Spain. He then settled in the United States. Mesa-Lago, a lover of cinema and travel, is a member of the U.S. National Academy of Social Security, the Latin American Academy of Sciences (ACAL), a professor at several universities around the world, and the author of dozens of books. He has also witnessed all the historical, economic and social events in Cuba since the triumph of the Cuban Revolution until today.

Question. What do you consider to have been Cuba’s worst and best moments, economically speaking?

Answer. The worst time is now. There are some ways in which the crisis of the 1990s was worse, but, overall, this crisis has surpassed it. And the best moment was in the 1980s, particularly in the first half, when the Soviet Union (USSR) was subsidizing the Cuban economy. I have calculated that the USSR gave Cuba $65 billion between 1960 and 1990. Of that aid, two-thirds were price subsidies. The USSR paid the country seven times the world market price of sugar. It bought nickel at 50% above the world market price, and sold oil below the established price. It was a huge transfer of resources, and when the USSR fell the blow was brutal.

[ Full article ]

https://english.elpais.com/international/2024-06-16/carmelo-mesa-lago-todays-cuba-is-a-catastrophe.html

Miami Herald, June 15th, 2024

Russia’s warships in Cuba are more than a tit-for-tat for Biden’s support for Ukraine | Opinion  

By Andres Oppenheimer

The arrival of four Russian warships, including a nuclear submarine, in Cuba on June 12 got world attention because it was seen as a defiant response by Russian leader Vladimir Putin to America’s military aid to Ukraine.

But there may be much more to it than that.

While Putin probably tried to send the message to Washington that “if you step into my backyard, I’ll step into yours,” he may also have sent the warships as a show of support for Cuba’s dictatorship at a time of growing street protests amid the island’s worst economic crisis in recent memory.

There have been protests over food and electricity shortages in Santiago and other Cuban cities in recent months. In March, for the first time since the 1959 Cuban revolution, Cuba admitted it had requested food from the United Nations’ World Food Programme (WFP,) and that it received a shipment of powdered milk for children .

[ Full article ]

https://www.miamiherald.com/news/local/news-columns-blogs/andres-oppenheimer/article289277910.html

The Wall Street Journal, September 6, 2021

A Sanction Worth Lifting in Cuba

Under the island’s military dictatorship, it’s illegal to fish for dinner.

By Mary Anastasis O’Grady
Sept. 6, 2021 11:41 am ET

Reprisals carried out by storm troopers and secret police against participants in Cuba’s July 11 uprising have been widely condemned, including by President Biden. But the international left is trying to help Cuba’s military dictatorship recover from this public-relations disaster by blaming the U.S. for the island’s misery.

A petition circulating among supporters of the regime calls on Mr. Biden to lift sanctions imposed by President Trump. The petition alleges that shortages of food and medicine are the fault of the sanctions, which have restricted the flow of dollars to Cuba. But the real reason for Cuban privation is totalitarianism.

The petition, titled “Let Cuba Live,” is aimed at recovering dollar flows to the regime. But it’s not a solution aimed at helping the Cuban people. “Let Cubans Fish”—as recommended by the Center for a Free Cuba in a July 29 brief—would be infinitely more beneficial.

This is no joke. A Caribbean sea teeming with marine life contains abundant protein. Yet it’s nearly impossible for Cubans legally to reel in dinner to feed their families. This is more proof, as if we needed it, that socialism is for morons.

[ Full article here ]

https://www.wsj.com/articles/sanction-cuba-fishing-communists-protests-dollar-remittance-let-cubans-live-petition-emily-mendrala-biden-administration-11630938612

 

U.S. Department of States, July 23, 2021

Fact Sheet: Provision of Humanitarian Assistance to Cuba

FACT SHEET, BUREAU OF ECONOMIC AND BUSINESS AFFAIRS  U.S. Department of State  JULY 23, 2021

As Cuban protestors are calling for respect for their fundamental freedoms and a better future, they are also criticizing Cuba’s authoritarian regime for failing to meet people’s most basic needs, including food and medicine.  We are concerned for the well-being of the Cuban people.  The embargo remains in place, but U.S. law and regulations include exemptions and authorizations relating to exports of food, medicine, and other humanitarian goods to Cuba.  The U.S. embargo allows humanitarian goods to reach Cuba, and the U.S. government expedites requests to export humanitarian or medical supplies to Cuba.  Through the Departments of Commerce, Treasury, and Transportation, there are many options available for expediting the provision of humanitarian goods to Cuba.  We actively encourage those seeking to support the Cuban people to use these options and contact us if there are issues.

U.S. Department of the Treasury, Office of Foreign Assets Control (OFAC), General Licenses (GLs) and Specific Licensing

OFAC maintains several general license authorizations designed to allow for humanitarian relief and assistance to the Cuban people.  The following GLs are related to humanitarian travel, trade, and assistance with Cuba pursuant to the Cuban Assets Control Regulations  (CACR), as outlined in OFAC’s Fact Sheet: Provision of Humanitarian Assistance and Trade to Combat COVID 19 .

  • § 515.206(b) of the CACR stipulates that the prohibitions in the CACR do not apply to transactions incident to the donation of food to nongovernmental organizations or individuals in Cuba.
  • § 515.533 of the CACR authorizes all transactions ordinarily incident to the export from the United States, or the reexport from a third country, to Cuba of items licensed or otherwise authorized by the Department of Commerce (Commerce) subject to certain conditions.
  • Persons providing carrier services for authorized travelers going from the United States to Cuba may transport cargo and baggage accompanying an authorized traveler provided that the export of the cargo and baggage is authorized by Commerce, and other cargo or unaccompanied baggage whose export to Cuba is authorized by Commerce.
  • § 515.572(a) of the CACR authorizes persons subject to U.S. jurisdiction to provide carrier services by vessel or aircraft to, from, or within Cuba, in connection with authorized travel, without the need for a specific license from OFAC. Note: (1) the export or reexport of certain vessels or aircraft providing carrier services under § 515.572(a)(2) requires separate authorization from Commerce, and (2) the Department of Transportation currently limits passengers and cargo air services to and from Cuba as set forth below.

[ Entire document ]

https://www.state.gov/fact-sheet-provision-of-humanitarian-assistance-to-cuba/

Center for a Free Cuba, July 29, 2021

Let Cubans Fish

It is encouraging that President Miguel Diaz Canel has listened to the pleas of the Christian Liberation Movement, the Ladies in White, the Patriotic Union of Cuba, Cuba Decide, and the San Isidro Movement and others that for over a year called on Havana to lift limits and tariffs on food, medicine, and hygiene items brought to Cuba. Prime Minister Manuel Marrero announced on July 14th they would temporarily be lifted until December 31, 2021 following the July 11, 2021 Cuban cry for help, freedom, and an end to the dictatorship.

We are pleading with your excellency for an additional concession. This is a time of great suffering. We ask you to intercede with President Diaz Canel and General Raul Castro. to urge all restrictions on fishing by Cuban citizens be immediately lifted.

Cuba is an island surrounded by a bountiful sea.

The most common fish are snapper, grouper, and mahi mahi. For many years most Cubans have been unable to eat these ubiquitous fish. The reason for the absence of these fish in the diets of most Cubans is the same reason for general food shortages: the policies of the Cuban government.

Cuba’s central military- communist governing entities authorize only regime-profiting fisheries to deliver fish from its territorial island waters to its state-run and/or state partnered restaurants and hotels. Those not authorized by the regime cannot fish. There are restrictions in place limiting Cubans from fishing both in fresh and saltwater. A Cuban who tries to sell fish, shrimp, or lobster is fined or sent to prison if he is not authorized to fish by the government, which takes all fish for state-sanctioned purposes.

We urge governments with diplomatic relations, the Food and Agriculture Organization (FAO) of the United Nations to immediately send observers on how to come to the aid of Cuban families, and to let Cubans fish. That an island nation’s people are unable to feed their families with fish from the seas around them is beyond comprehension.

[ Source ]