{"id":206539,"date":"2019-09-25T18:38:35","date_gmt":"2019-09-25T22:38:35","guid":{"rendered":"https:\/\/oncubanews.com\/en\/?p=206539"},"modified":"2019-09-25T18:38:35","modified_gmt":"2019-09-25T22:38:35","slug":"temporary-problem-or-structural-crisis-in-cuba","status":"publish","type":"post","link":"https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/","title":{"rendered":"Temporary problem or structural crisis in Cuba?"},"content":{"rendered":"

There is an important debate in Cuba about whether the current problems, such as fuel and food shortages, are the result of a temporary situation (that will soon be resolved) or a structural crisis of the economy. There are also speculations about whether there will be a second “Special Period.”<\/span><\/p>\n

President Miguel D\u00edaz-Canel has been characterized for having more contact with the people and meeting more often with the Council of Ministers and other entities, which is an advance. Due to citizen concern, he gave a speech on September 11 in which he explained to the country the current energy situation, the possibility of another Special Period and the measures being taken by the government. [1]<\/span><\/p>\n

In his speech he affirmed that there is no need to be “scared or fear” and that the government had anticipated energy problems and has taken steps to address them. He stressed that the country is in “a temporary situation” and that “the problems are merely related to energy, but not supply….” On the other hand, he denounced Trump\u2019s harmful actions to prevent the arrival of fuel to Cuba and that some shipping companies have withdrawn, [2] which is why \u201cthere is a low in diesel\u201d that would persist until September 14 when a ship with fuel would arrive. There would be others at the end of the month and “the contracts for the month of October have been negotiated.” “Then we will be in a much more comfortable position but we have to continue taking action.” Finally, he said that consumers have the “guaranteed natural gas, without any kind of affectations.” In short, the situation is controlled and temporary.<\/span><\/p>\n

However, in the speech he warned that “this temporary situation can be repeated,” and that if there are blackouts “they would never be as intense as in the special period”; in addition, the minister of energy and mines added that “at some point we might have to paralyze a group of productions that need a lot of energy.” These are glimpses that it is not a unique and temporary problem but something more severe in the medium or long term.<\/span><\/p>\n

Let’s analyze the issue of energy supply. The presidential speech asserts that “the national industry guarantees 40% of the country’s fuel,” that is, “the fundamental basis of the energy system remains stable in its production” and thereby guarantees “the operation of thermoelectric plants.” But according to the National Bureau of Statistics and Information, national oil production decreased 31% between 2003 and 2017, from 3,679,000 metric tons to 2,522,000 tons, while natural gas production between 2007 and 2018 decreased 20% from 1.218 million cubic meters to 970 million; the last one in 2018 decreased 7% compared to 2017 (ONEI does not provide data on oil production in 2018 and it probably decreased as well). [3] Due to the decrease in national production, Cuba\u2019s dependence on fuel imports must have increased; before it was 50% and the quoted speech implies that it is now 60%.<\/span><\/p>\n

With regard to external energy supply, the speech states that “the challenge is to guarantee the [external] fuel that guarantees the operation of our thermoelectric plants.” Venezuela supplies 75% of the total imported fuel, whose value increased from $2.243 million in 2007 to a peak $6.079 million in 2013 and decreased to $1.838 million in 2017, 70% less than at its heighted point; there are no figures for 2018 but, if we measure it in daily barrels of oil, these reached 105,000 in 2013 and decreased to 40,000 in mid-2019, or 62% less. [4] Cuba also receives oil from Russia (partly paid for by Venezuela), Algeria and Angola, but the increase in the price of the barrel after the bombing of the Saudi oil refinery in September makes the supply outside of Venezuela more expensive. Note that, while imports have been reduced, domestic production has also declined, so there is an energy deficit, severe and expanding, which is not temporary but chronic or structural, because there are no feasible options to improve substantially the current situation.<\/span><\/p>\n

The speech also maintains that “financial tensions have not affected tourism [the third source of foreign currency], which has conserved stable levels, despite the slight decrease due to the impediment of cruise ships arriving on the Island.” However, ONEI figures for 2018 show that the number of travelers increased 1% (compared to 16% in 2017 and 13% in 2016) while gross income decreased 9% in 2018 due to the decline in European travelers and because American cruise passengers spend much less than those arriving by plane. The entry into force of the Trump ban on cruise ships will cause a drop in US travelers that for 2019 is projected in 250,000, as well as a decrease in gross income of $980 million. [5]<\/span><\/p>\n

In addition, the first source of foreign currency is the export of professional services (mostly to Venezuela) which decreased 24% between 2013 and 2017 due to the Venezuelan economic crisis, a loss of $8 billion. The second source is the external remittances that continued to grow in 2018, achieving a record $3.692 billion (cash only, not counting goods), although they could be affected by the cap imposed by Trump of $4,000 per year per recipient.<\/span><\/p>\n

The previous analysis provides evidence that Cuba’s economic problems are not temporary, but that they are based on a customary dependence on a foreign partner and the inability for 60 years of not being able to defray imports with the country\u2019s own exports, all aggravated by the U.S. embargo. [6]<\/span><\/p>\n

Will the current situation culminate in a second Special Period? D\u00edaz-Canel rejects this, as Ra\u00fal Castro had done before, [7] both claiming that there is a greater diversity of trade partners. I agree with that position and provide other reasons to substantiate it, summarized in the following table:<\/span><\/p>\n\n\n\n\n\n\n\n\n\n\n\n\n
Elementos de la dependencia econ\u00f3mica<\/strong><\/td>\nURSS 1987-89<\/strong><\/td>\nVenezuela 2017-18<\/strong><\/td>\n<\/tr>\n
Mayor diversificaci\u00f3n socio comercial
\n(% del volumen comercio)<\/td>\n		72<\/td>\n29<\/td>\n<\/tr>\n
Menor concentraci\u00f3n del d\u00e9ficit comercio
\n(% d\u00e9ficit total)<\/td>\n		82<\/td>\n28<\/td>\n<\/tr>\n
Mayor diversidad en inversi\u00f3n extranjera
\n(inversionistas y US$ millones)<\/td>\n		1<\/p>\n

a<\/sup><\/span><\/td>\n

179<\/p>\n

7.676<\/td>\n<\/tr>\n

Mayor ingreso en divisas exportaci\u00f3n servicios profesionales
\n(US$ millones)<\/td>\n		0<\/td>\n8.881<\/td>\n<\/tr>\n
Mayor ingreso en divisas por remesas
\n(US$ millones)<\/td>\n		0<\/td>\n3.500<\/td>\n<\/tr>\n
Mayor ingreso en divisas por turismo
\n(US$ millones)<\/td>\n		168<\/td>\n2.903<\/td>\n<\/tr>\n
Menor dependencia en importaci\u00f3n de combustible
\n(% del total)<\/td>\n		92<\/td>\n50<\/td>\n<\/tr>\n
Mayor sector privado
\n(% de la fuerza laboral)<\/td>\n		6<\/td>\n26<\/td>\n<\/tr>\n
Dependencia global
\n(% del PIB)<\/td>\n		28<\/td>\n8<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

\u00a0<\/span><\/em><\/p>\n

*Caption<\/strong><\/em><\/p>\n

Comparison of Cuba\u2019s Foreign Economic Dependence with the USSR and Venezuela<\/span><\/p>\n

Elements of economic dependence <\/span> USSR 1987-89 <\/span> Venezuela 2017-18<\/span><\/p>\n

Greater trade partner diversification<\/span><\/p>\n

(% of trade volume)\u00a0<\/span><\/p>\n

Lower concentration of trade deficit<\/span><\/p>\n

(% of total deficit)\u00a0<\/span><\/p>\n

Greater diversity in foreign investment<\/span><\/p>\n

(investors and millions of dollars)<\/span><\/p>\n

Higher income in foreign currency for the export professional services<\/span><\/p>\n

(Millions of dollars)\u00a0<\/span><\/p>\n

Higher income in foreign currency from remittances<\/span><\/p>\n

(Millions of dollars)\u00a0<\/span><\/p>\n

Higher income in foreign currency from tourism<\/span><\/p>\n

(Millions of dollars)\u00a0<\/span><\/p>\n

Less dependence on fuel imports<\/span><\/p>\n

(% of total)\u00a0<\/span><\/p>\n

Larger private sector<\/span><\/p>\n

(% of the workforce)\u00a0<\/span><\/p>\n

Global dependence<\/span><\/p>\n

(% of GDP)\u00a0<\/span><\/p>\n

The USSR was virtually the only investor, although there were some joint projects with other Eastern European countries and there were no investments from capitalist countries; the direct investment of the USSR could not be calculated. Source: Mesa-Lago, \u201cThe Cuban Economy\u2026,\u201d 2019.<\/span><\/p>\n

That the crisis is of a less degree than that of the 1990s doesn\u2019t mean it isn\u2019t a serious problem. Between 1990 and 1993, the GDP fell 35%, and we have estimated that between 2012 and 2017 economic relations with Venezuela decreased from 22% to 8% of Cuba\u2019s GDP; in the worst case of a disappearance of all relations with Venezuela, there would be a loss of another $8 billion, and a possible drop in GDP between 4% and 8%. [8]<\/span><\/p>\n

The difference between temporary and structural is not only conceptual, but it also has an impact on the policies to face the crisis. For many years, Cuban economists have emphasized Cuba\u2019s economic dependence and have proposed policies to reduce it, but they have fallen in deaf ears and have not been followed, it is time to pay attention to experts to avoid the recurrence of crises.<\/span><\/p>\n

\u00a0<\/span><\/p>\n

Notes:<\/span><\/em><\/p>\n

[1] \u201cPresidente de Cuba anuncia medidas para la coyuntura energ\u00e9tica del pa\u00eds,\u201d Granma, September 11, 2019.<\/span><\/p>\n

[2] It has also been reported that many shipping companies, taking advantage of the situation, are charging PDVSA around $12 million for delivery of oil to Cuba, triple what they charged before (Agencia Venezolana de Noticias, cited by Cuba y la Econom\u00eda, September 11, 2019).<\/span><\/p>\n

[3] ONEI, Statistical Yearbook of Cuba 2003 (Havana: 2004) Statistical Yearbook of Cuba 2018 (Havana: 2019)<\/span><\/p>\n

[4] Carmelo Mesa-Lago and Pavel Vidal, \u201cEl impacto en Cuba de la crisis venezolana y las pol\u00edticas de Trump,\u201d Madrid, Working Paper of the Elcano Institute for International Studies, June 2019; Mesa-Lago, \u201cThe Cuban Economy after 60 Years of Revolution,\u201d Association for the Study of the Cuban Economy, Cuba in Transition, Vol 29, 2019<\/span><\/p>\n

[5] Miguel Figueras, \u201cApuntes en septiembre 2019 sobre el turismo en Cuba,\u201d Cuba y la Econom\u00eda, September 7, 2019.<\/span><\/p>\n

[6] Mesa-Lago, \u201cThe Cuban Economy\u2026,\u201d 2019.<\/span><\/p>\n

[7] Ra\u00fal Castro, \u201cDiscurso en la Segunda Sesi\u00f3n Extraordinaria de la XI Legislatura de la ANPP,\u201d Vanguardia, April 11, 2019.<\/span><\/p>\n

[8] Mesa-Lago and Vidal, \u201cEl impacto en Cuba de la crisis venezolana\u2026,\u201d 2019.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

There is an important debate in Cuba about whether the current problems, such as fuel and food shortages, are the result of a temporary situation (that will soon be resolved) or a structural crisis of the economy. There are also speculations about whether there will be a second “Special Period.” President Miguel D\u00edaz-Canel has been […]<\/p>\n","protected":false},"author":3297,"featured_media":206540,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[13902],"tags":[14816],"ppma_author":[34040,25401],"class_list":["post-206539","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cuba","tag-cuban-economy"],"acf":[],"yoast_head":"\nTemporary problem or structural crisis in Cuba? | OnCubaNews English<\/title>\n<meta name=\"description\" content=\"That the crisis is of less degree than that of the 1990s doesn\u2019t mean that it\u2019s not a serious problem.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Temporary problem or structural crisis in Cuba? 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Licenciado en Derecho Universidad de La Habana. M\u00e1ster en Econom\u00eda por la Universidad de Miami. Doctor en Derecho por la Universidad Madrid. Doctor en Relaciones Laborales y Seguridad Social por la Universidad de Cornell. Catedr\u00e1tico Distinguido Em\u00e9rito de Econom\u00eda y Estudios Latinoamericanos de la Universidad de Pittsburgh. Profesor o Investigador Visitante en once universidades o institutos de investigaci\u00f3n en Alemania, Argentina, Chile, Cuba, Estados Unidos, Espa\u00f1a, Reino Unido y Uruguay. Ha impartido conferencias en 39 pa\u00edses. Ex-presidente de la Asociaci\u00f3n de Estudios Latinoamericanos. Premio Internacional de la OIT al Trabajo Decente, compartido con Nelson Mandela. Premio Alexander von Humboldt. Autor o editor de 94 libros y 303 art\u00edculos o cap\u00edtulos en libros sobre econom\u00eda cubana, sistemas econ\u00f3micos comparados y econom\u00eda de la seguridad social, publicados en 7 idiomas en 34 pa\u00edses. Libros m\u00e1s recientes sobre Cuba: \\\"Buscando un modelo econ\u00f3mico para Am\u00e9rica Latina \u00bfMercado, socialista o mixto?\\\"; \\\"La econom\u00eda y el bienestar social en Cuba a comienzos del siglo XXI\\\"; \\\"Cuba en la era de Ra\u00fal Castro: reformas econ\u00f3mico-sociales y sus efectos\\\"; \\\"La protecci\u00f3n social en Am\u00e9rica Latina y el Caribe: Cuba\\\". Co-autor: \\\"Cuba\u2019s Aborted Reform\\\"; \\\"Cuba Under Raul Castro: Assessing the Reforms\\\", y \\\"Voces de cambio del emergente sector no estatal en Cuba.\\\"\",\"url\":\"https:\\\/\\\/oncubanews.com\\\/en\\\/author\\\/carmeloml\\\/\"}]}<\/script>\n<!-- \/ Yoast SEO plugin. -->","yoast_head_json":{"title":"Temporary problem or structural crisis in Cuba? | OnCubaNews English","description":"That the crisis is of less degree than that of the 1990s doesn\u2019t mean that it\u2019s not a serious problem.","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/","og_locale":"en_US","og_type":"article","og_title":"Temporary problem or structural crisis in Cuba? | OnCubaNews English","og_description":"That the crisis is of less degree than that of the 1990s doesn\u2019t mean that it\u2019s not a serious problem.","og_url":"https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/","og_site_name":"OnCubaNews English","article_published_time":"2019-09-25T22:38:35+00:00","og_image":[{"width":750,"height":481,"url":"https:\/\/oncubanews.com\/en\/wp-content\/uploads\/2019\/09\/cuba-2019-fotos-kaloian-53-1.jpg","type":"image\/jpeg"}],"author":"Carmelo Mesa-Lago, carmelo","twitter_card":"summary_large_image","twitter_misc":{"Written by":"Carmelo Mesa-Lago","Est. reading time":"7 minutes"},"schema":{"@context":"https:\/\/schema.org","@graph":[{"@type":"Article","@id":"https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/#article","isPartOf":{"@id":"https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/"},"author":{"name":"Carmelo Mesa-Lago","@id":"https:\/\/oncubanews.com\/en\/#\/schema\/person\/80b711e6d56744202249a792da3ca408"},"headline":"Temporary problem or structural crisis in Cuba?","datePublished":"2019-09-25T22:38:35+00:00","mainEntityOfPage":{"@id":"https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/"},"wordCount":1458,"commentCount":1,"image":{"@id":"https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/#primaryimage"},"thumbnailUrl":"https:\/\/oncubanews.com\/en\/wp-content\/uploads\/2019\/09\/cuba-2019-fotos-kaloian-53-1.jpg","keywords":["Cuban Economy"],"articleSection":["Cuba"],"inLanguage":"en-US","potentialAction":[{"@type":"CommentAction","name":"Comment","target":["https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/#respond"]}],"copyrightYear":"2019","copyrightHolder":{"@id":"https:\/\/oncubanews.com\/en\/#organization"}},{"@type":"WebPage","@id":"https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/","url":"https:\/\/oncubanews.com\/en\/cuba\/temporary-problem-or-structural-crisis-in-cuba\/","name":"Temporary problem or structural crisis in Cuba? 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Licenciado en Derecho Universidad de La Habana. M\u00e1ster en Econom\u00eda por la Universidad de Miami. Doctor en Derecho por la Universidad Madrid. Doctor en Relaciones Laborales y Seguridad Social por la Universidad de Cornell. Catedr\u00e1tico Distinguido Em\u00e9rito de Econom\u00eda y Estudios Latinoamericanos de la Universidad de Pittsburgh. Profesor o Investigador Visitante en once universidades o institutos de investigaci\u00f3n en Alemania, Argentina, Chile, Cuba, Estados Unidos, Espa\u00f1a, Reino Unido y Uruguay. Ha impartido conferencias en 39 pa\u00edses. Ex-presidente de la Asociaci\u00f3n de Estudios Latinoamericanos. Premio Internacional de la OIT al Trabajo Decente, compartido con Nelson Mandela. Premio Alexander von Humboldt. Autor o editor de 94 libros y 303 art\u00edculos o cap\u00edtulos en libros sobre econom\u00eda cubana, sistemas econ\u00f3micos comparados y econom\u00eda de la seguridad social, publicados en 7 idiomas en 34 pa\u00edses. Libros m\u00e1s recientes sobre Cuba: \"Buscando un modelo econ\u00f3mico para Am\u00e9rica Latina \u00bfMercado, socialista o mixto?\"; \"La econom\u00eda y el bienestar social en Cuba a comienzos del siglo XXI\"; \"Cuba en la era de Ra\u00fal Castro: reformas econ\u00f3mico-sociales y sus efectos\"; \"La protecci\u00f3n social en Am\u00e9rica Latina y el Caribe: Cuba\". Co-autor: \"Cuba\u2019s Aborted Reform\"; \"Cuba Under Raul Castro: Assessing the Reforms\", y \"Voces de cambio del emergente sector no estatal en Cuba.\"","url":"https:\/\/oncubanews.com\/en\/author\/carmeloml\/"}]}},"authors":[{"term_id":34040,"user_id":3297,"is_guest":0,"slug":"carmeloml","display_name":"Carmelo Mesa-Lago","avatar_url":"https:\/\/oncubanews.com\/en\/wp-content\/uploads\/2019\/09\/carmelo2-96x96.jpg","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""},{"term_id":25401,"user_id":0,"is_guest":1,"slug":"cap-carmeloml","display_name":"carmelo","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/?s=96&r=g","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/posts\/206539","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/users\/3297"}],"replies":[{"embeddable":true,"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/comments?post=206539"}],"version-history":[{"count":0,"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/posts\/206539\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/media\/206540"}],"wp:attachment":[{"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/media?parent=206539"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/categories?post=206539"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/tags?post=206539"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/oncubanews.com\/en\/wp-json\/wp\/v2\/ppma_author?post=206539"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}