Cuban storm transcends blockade – 07/28/2021 – Latinoamérica21

Under the slogan “Patria e Vida”, thousands of Cubans took to the streets to demonstrate against the government. These protests are the result of a set of variables that transcend the long economic embargo established by the United States and are more related to the economic structure, the authoritarian context and the decisions made by the government of Miguel Díaz-Canel.

Politically, it is only under an authoritarian regime that a president can believe that his country can be self-sufficient and control the pandemic, while refusing any agreement, whether with China, Russia or through Covax – an agreement of UN – for access to vaccines. On the contrary, the government is inoculating the population with a national vaccine which is currently being tested and without proof of its effectiveness. And although the Covid-19 death rate is one of the lowest in the region, this is largely due to the strict containment applied on the island.

On the economic front, the indicators for 2019 already showed a deceleration of 0.5% of GDP and in 2020 the decrease was 8.5%, according to ECLAC. The collapse of the economy has been catastrophic, especially in the tourism sector – which contributes 10% of GDP – where more than 200,000 jobs have been lost as tourism in 2020 fell to a quarter of that recorded in 2019. And in the first five months. by 2021, the number registered less than 1% of visitors in 2019, when the island surpassed four million tourists despite restrictions imposed by the United States that prohibited cruises from docking in the port of La Havana.

in addition to the embargo

It is very difficult to calculate the impact of the embargo. This may have exacerbated the crisis, but other factors contributed to the formation of this storm. The inflow of foreign currency for internationally provided medical services has declined, as has access to fuel in Venezuela.

On the other hand, Cuba continued to export basic products such as cigars and cigarettes, sugar cane and sucrose, alcohol and metals such as nickel, while importing foodstuffs. and other high value-added products such as machinery, vehicles and electronic components. However, with the pandemic and the contraction of international trade, the situation has become dramatic, despite the fact that with the exception of the United States, the island maintains normal trade relations with almost every country in the world.

The Cuban trade balance has historically been in great deficit, like that of many countries. But it wouldn’t be a big deal if the island had a sound monetary policy and sufficient resources to correct the distortions and cushion the effects of the crisis.

Although the United States has imposed stricter rules on American businesses, which have increased trade costs and restricted access to foreign credit, forcing Cubans to pay in cash and in advance through third-country banking entities , Cuba managed to escape the blockage.

The structural problems of the island

Cuba’s fundamental problem is that the productive sector, monopolized by the state, has not been able to make a relevant qualitative leap to improve its exchange relations. Cuba is one of the countries with the least technological sophistication, even below most Latin American countries.

Another aspect is the economic distortions which contribute to greater speculation and inflationary processes. In an attempt to resolve it, the government opted for monetary unification from January 1 of this year. Since 1994, Cuba has had three legal rates: the Cuban peso, the Cuban convertible peso or CUC, and the US dollar.

But official politics is one thing and the real world is another. The move to this monetary correction triggered a process of uncontrolled speculation and the parallel market strengthened, which led to a further devaluation of the Cuban peso. Speculation forced Cubans to take refuge in the US dollar, but in the absence of tourism, the dollar has all but disappeared.

In the absence of dollars, the government has managed to sell dollar merchandise in 72 supermarkets of the more than 5,000 stores under its control, a move that has benefited few Cubans as few receive remittances from the government. foreigner. And the state, given the lack of foreign exchange to buy essential goods abroad, ended up abandoning thousands of stores where goods were purchased with Cuban pesos.

In short, the crisis in the Cuban export sector, the impact of the embargo imposed by the United States and the monetary correction, added to the shortage, unemployment and confinement, ended up suffocating the authoritarian regime and, above all, ordinary Cubans who can ‘don’t take any more.

The crisis has no sign of resolution in the short term and the equation could apparently only be resolved with international help. Meanwhile, public discontent may continue to take to the streets, seeking – more than a way out of a health crisis – to prevent a humanitarian crisis linked to the severe nutritional deficit from taking hold.

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