Cuba's economic strategy in the fight against sanctions

04.04.2022
The experience of the Island of Freedom can be useful for the Russian Federation.

Immediately after the revolution in 1959, Cuba faced unprecedented pressure from the United States. In the early years, attempts at military aggression were carried out and planned, but after the deployment of Soviet missiles in 1962 and the presence of our military specialists there, the belligerent fervour in Washington cooled down somewhat. The White House switched to covert operations and an economic blockade.

Until 1991, with direct support from the USSR, Cuba had no problems with economic regulation, but after the collapse of the Soviet Union, it became much more difficult to bear the burden of economic and political confrontation with the United States. However, despite the measures of the blockade and sanctions, Cuba did not succumb to blackmail and threats from the United States. In the new conditions, it was necessary to reform the country's economic system, find more effective methods of work and look for ways to interact with other countries.

In 2010, Raul Castro announced economic reforms that allowed private entrepreneurship and transformed state-owned industries. Since sanctions against Cuba were somewhat relaxed under Barack Obama, this was encouraging.

But after the arrival of Donald Trump in the White House, the policy of hard pressure returned, and it was continued under the administration of Joe Biden. To circumvent the sanctions, the Cuban leadership had to resort to a number of forced measures. In 2014, the Mariel Free Economic Zone was opened in Cuba.

In July 2020, the government of the Republic of Cuba adopted a socio-economic strategy to strengthen the economy and mitigate the consequences of the crisis caused by the coronavirus pandemic. At the same time, work continued on the National Plan for Socio-Economic Development until 2030. [i]

According to President Diaz-Canel, a strategy that brings results was adopted, where the situation in the world and the country is taken as a starting point, public debates in social networks and academic circles are analysed.

It is significant that the Cuban leadership applied a comprehensive approach to understanding threats to society and the state.

"At the global level, we are witnessing a profound crisis as a result of the impact of COVID-19, the final collapse of neoliberal paradigms of imperialism and the abusive actions of imperial hegemony revealed in John Bolton's book," the Cuban leader said.

The President noted that Bolton's book raises the question of how the US government exerts pressure on other countries. He talks about his support for coup attempts, their intervention, violence, military intervention, and deployment of bases around the world.

The Cuban head of state noted that the US administration is concerned about the prestige and results of our country. "This explains why it is increasing its aggressiveness in the current circumstances, as evidenced by the increase in financial harassment, the freezing of Cuban accounts in third countries, various actions aimed at discrediting Cuban leaders, the reduction of money transfers, the application of restrictions on companies that do business with Cuba and in constant attempts to create conditions for a social explosion."

In his strategy to counter American interference, the Cuban President stressed the need to be able to anticipate media manipulation aimed at discrediting the government, as well as to avoid provoking potential disagreements on sensitive issues such as equal marriage, racism, violence against women, animal protection, etc.

The Cuban leader also noted that since the United States has a lot of funds, as well as ideological laboratories, they are applying new media models. Therefore, it was decided in Cuba to develop an adequate communication strategy that can cope with such challenges. At the same time, the need to update communication methods, that is, its de-bureaucratisation and digitalisation, was emphasised.

After the new program was announced, priority was given to food production and food sovereignty, which led to changes in the system of the Ministry of Agriculture.

In addition, work has begun to improve the work of the non-governmental sector, monetary and currency unification.

Since January 2021, Cuba has abolished the parallel circulation of two types of pesos and left only one type of national currency. And since July 2021, it was necessary to abandon the use of cash dollars in circulation, which was due to the tightening of sanctions by the United States.

Recently, Deputy Prime Minister Ricardo Cabrisas Ruiz, in the annual report of the work of the Ministry of Foreign Trade and Foreign Investment, said that it is also necessary to take into account the diversification and search for new niche markets in alliance with non-state forms of management and be able to restore those traditional industries that are viable. [ii]

In this regard, Rodrigo Malmierca Diaz, head of the Ministry, noted that the new portfolio of opportunities, coordinated with the main strategic directions of the National Plan of Economic and Social Development until 2030, has 678 projects, 130 of which are a priority.

According to the Minister of Economy and Planning Alejandro Gil, the new Cuban strategy to deal with the economic crisis was based on centralised planning. "This feature is a strong point of our system, which does not mean centralised resource allocation. We are taking steps to decentralise the administrative allocation of resources,” he said.

Secondly, as in Russia, Cuba also practices import substitution to protect its own production. Then there is the regulation of the market, mainly by indirect methods. The fourth principle of this strategy is related to the integration of various economic actors in both the state and non-state sectors. The fifth point concerns the stimulating role of domestic demand. This makes it possible to create jobs and ensure that domestic demand is used depending on the productive growth of the country.

The sixth principle concerns greater autonomy in the management of the business sector, which is an element that is widely demanded by the population and entrepreneurs themselves. The seventh element includes the implementation of approved and planned key aspects in the renewal of management and ownership forms.

The eighth point concerns the promotion of competitiveness by ensuring the efficient use of material and financial resources, as well as savings as a way to increase efficiency. And the last principle of the strategy is related to respect for environmental policy and sustainable development.

As for the latter, Cuba is actively introducing renewable energy sources. It is assumed that the conclusion of contracts by individuals and legal entities for obtaining solar photovoltaic energy in the near future will have an economic effect.

The Ministry of Agriculture said on its website that cash savings from renewable energy sources show a reduction in electricity consumption by 2% per year. [iii]

The National Energy Union is implementing new systems that generate electricity using solar panels. Achieving 37% replacement of electricity consumption from renewable energy sources by 2030 is a priority in all sectors of the country.

In general, we can say that the transition to green energy in Cuba is a rather promising process due to the large number of sunny days, as well as the possibility of using tidal energy.

Attracting foreign companies to the Cuban economy is also one of the priorities of the new strategy.

It is known that seven foreign firms from seven countries will interact with 51 domestic companies during the 13th edition of the international food agro-industrial fair Fiagrop 2022, which will be held from April 4 to 8 at the Rancho Boyeros exhibition area. [iv]

The fair, organised by the Agricultural Holding Company under the auspices of the Ministry of Agriculture, the Ministry of Food Industry, the Sugar Company Azcuba and the Chamber of Commerce of the Republic of Cuba, promotes the development of business relations through exhibitions of goods and services, seminars, conferences, product presentations, a business forum, auctions and an exhibition of 1,000 species of cattle.

Obviously, this event will be of great importance for the Cuban economy after two years of suspension due to quarantine restrictions in the country.

However, there are certain risks of falling under US sanctions in international cooperation. For example, on March 21, 2022, a federal judge in Miami ruled against the cruise ships Carnival, Norwegian, Royal Caribbean and MSC, which, according to her statement, conducted tourist operations in Cuba prohibited by US law between 2015 and 2019. [v] In her ruling, Judge Beth Bloom said that although these companies were granted licenses by the federal government to bring citizens to Cuba, they were not allowed to use them for tourism.

In addition, compensation payments were requested to the descendants of an American businessman for using the Havana terminal, which “was confiscated after the Cuban Revolution for trips made outside the categories allowed by law”.

Tourism is one of the sectors most affected by the unilateral US blockade. Since it generates a significant income for the treasury of the Republic of Cuba, Washington is constantly looking for new reasons to restrict the visits of foreigners who come as tourists.

Donald Trump has taken 243 enforcement measures against Cuba, which are still in force. Between May and June 2019, Trump activated Title III of the Helms-Burton Act (passed in 1996 by Bill Clinton), which reinforces the extraterritorial nature of the economic, trade and financial blockade, and announced restrictions that led Cuba to cancel cruise ship calls to the island.

This allows Americans to sue virtually any company that Washington believes is doing business or profiting from property confiscated by the Cuban government.

In response, on December 24, 1996, Cuba passed Law No. 80 "On the Affirmation of the Dignity and Sovereignty of Cuba", which declared the Helms-Burton Act illegal and unenforceable.

The Cuban authorities have stated that no foreign law can prevent the use of property that was once nationalised on the basis of regulations that fully comply with international law in the interests of their people.

However, according to official figures, between April 2019 and March 2020 alone, more than $880 million in damage was caused to Cuba as a result of these persecutions. This forces the Cuban government to actively apply various forms of solidarity with other countries in order to weaken the impact of US sanctions.

Of course, joint strategic initiatives in this area with other states that are also under sanctions and pressure from Washington will benefit all participants and be another practical step towards ending US hegemony and establishing a multipolar, more just world order.

Notes:

[i] http://www.minrex.gob.cu/es/node/2987

[ii] https://www.granma.cu/cuba/2022-03-14/que-falta-para-incentivar-mas-la-inversion-extranjera-y-vincular-a-los-actores-economicos-14-03-2022-23-03-47

[iii] https://www.granma.cu/cuba/2022-03-27/destacan-beneficios-de-las-fuentes-de-energia-renovable-27-03-2022-09-03-04

[iv] https://www.granma.cu/cuba/2022-03-26/abrira-fiagrop-2022-las-puertas-para-el-intercambio-de-firmas-extranjeras-con-empresas-nacionales

[v] https://www.prensa-latina.cu/2022/03/24/cruceros-en-la-mira-del-bloqueo-de-eeuu-a-cuba