Behind the Mass Protests in Cuba: The Misery of Covid and US Economic Sanctions
Like other tourism-dependent economies, Cuba has suffered a severe shock following the border closures due to COVID-19. In 2019, tourism accounted for 20% of all foreign exchange earnings and the border closure in March 2020 resulted in a 75% drop in international arrivals for the year.
But Cuba’s current economic difficulties are not just the result of the pandemic: they are also the result of American policy.
Thanks to the hostility of the United States, Cuba still does not have access to emergency international financing from multilateral financial institutions (including the IMF, the World Bank or the Inter-American Development Bank) which help cushion the shock for its countries. Caribbean neighbors. The country is also suffering from a series of measures introduced under Donald Trump’s administration to toughen US sanctions.
As of 2017 and accelerating towards the end of his term, these had reduced the number of international visitors and reduced the flow of remittances. They also halted deliveries of oil imports, hampered (and added significant costs) international trade, and deterred foreign investment.
Perhaps the most damaging measure, heralded as a coup by Trump just ten days before he left office in January 2021, was the decision to put Cuba back on the US State Department’s list of ” States sponsors of terrorism â. At the time, that had received little attention. American allies, such as Canada, the EU or the UK, who see the US allegations as baseless, continue their official engagement and fruitful collaboration with the Cuban government.
But, for international companies, including financial institutions, the inclusion of Cuba on the list has triggered red flags in compliance departments, which have a responsibility to minimize the risk of falling under international sanctions. . In line with the ârisk reductionâ process that has intensified in recent years as the ability of regulators to identify suspicious transactions has increased, most companies have refused to engage in transactions involving Cuba.
As a result, since January, it has become increasingly difficult for all Cuban entities (including those sourcing medical supplies and food) to trade, and almost impossible to organize funding.
In 2020, Cuba’s performance in terms of controlling the spread of Covid-19 has been exceptionally positive. But the economic contraction, disease prevention measures and the diversion of public funds into this effort were already creating serious difficulties, with queues growing for commodities and prices rising.
Then, in January, Cuba experienced a second wave, with daily cases averaging around 1,000 through June. And finally, they soared alarmingly in July, to about 6,000. As of July 14, the cumulative death rate of 14.2 per 100,000 remains well below that of the United States (now at 182), but the daily number of deaths has reached 50.
One of the vaccines made in Cuba was found to be over 90% effective in phase 3 trials and the rollout of the vaccine began to bring down the number of cases in the capital, Havana, but the pace of production is being held back by US sanctions and the spread of the virus virus nationwide remains exponential.
The combination of renewed COVID restrictions and dwindling resources have made people’s hardships worse. In addition, the inflationary effect of a major currency reform, which aimed to eliminate the dual currency system, on January 1, 2021, added to the feeling of insecurity. Added to this were power outages caused by fuel shortages and technical problems.
The suffering has been particularly acute for those who depend on private sector activity. Between 2011 and 2017, around 1 million people – 15% of the working-age population – entered the non-state sector, registered either as self-employed or as informal workers.
Public sector workers received substantial wage increases in 2020 and continued to receive wages (albeit reduced) during the pandemic. But many of those working in the private sector, which depended mainly on spending by foreign visitors, saw their incomes decline due to the tightening of US sanctions, then disappear altogether due to the pandemic, leaving them only social security. minimal.
The government has tried to protect vulnerable people and ensure that the basic needs of all Cubans are met, but its ability to do so has eroded. He tried to control the prices of essential items, but growing shortages and rising prices in black markets added to the atmosphere of fear and despair. At the same time, attempts by local authorities to respond to complaints about profiteers by suppressing black markets have sparked conflict. Resentments among Cubans have grown and moods are unraveling.
The protests in Cuba were born out of genuine economic suffering, frustration and daily resentment. Since July 11, the government has introduced new measures to try to appease protesters and has signaled its willingness to listen to complaints, although with its limited resources there is little it can do to improve conditions. short term.
But the US government could do it, simply by reversing Trump’s measures – a policy that was promised during the election campaign but has yet to be implemented.
Emily Morris is Research Associate at the Institute of the Americas, University of London.
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