Mistakes in the 21st Century and Cuba’s Current Debacle
HAVANA TIMES — This article is a bit Machiavellian: I am not writing “from below,” as I always try to do, but rather from what I imagine to be their perspective. Assuming they are rational people capable of recognizing mistakes. But we know that many elites, blinded by their power and their desire to accumulate ever more money and influence, fall into what the ancient Greeks called hubris: irrational excess. And in the framework of Greek tragedy, every hubris has its nemesis: the response of fate, which in today’s popular culture is often called by the Hindu term “karma.”
Only in Cuba, that karma is falling upon an entire people, not just those who brought it about.
I will begin at the start of the current century and proceed in chronological order.
This is exclusively my personal opinion, and I claim no “expert” credentials; I am simply relying on my ability to interpret events as an ordinary Cuban who has read the history and the news as they unfolded.
1. Tourism as the Main Engine of the Economy
At first reluctantly, and later with increasing enthusiasm, the Cuban government chose tourism, beginning with the post-Soviet crisis of the 1990s, as a stable source of income, both in hard currency and foreign investment. The idea was not bad at all for a country like Cuba. I remember a Spanish economist arguing that tourism was a type of service people in developed countries preferred to purchase for their vacations, even when cutting back on other consumer goods. In other words, it was a goose that laid golden eggs, not subject to market fluctuations like commodities.
Yet at the beginning of the 21st century, we were surprised by the 9/11 terrorist attacks in the United States. International travel sales declined, but the worst came twenty years later: COVID.
Result: The pandemic caused Cuba’s tourism market to collapse, and we have not recovered. All because the risks of what economists call “black swans”—unpredictable, high-impact negative events—were not taken into account.
2. “Resizing” the Sugar Industry (2002–2004)
“No sugar, no country,” went an old slogan from Cuba’s capitalist era. The Communist Party tried to take that idea to the extreme in 1970, when it believed that producing ten million tons of sugar would propel Cuba into development. It did not, and instead we became economically dependent on the Soviet Union and Eastern Europe, remaining an underdeveloped state.
The final decades of the 20th century were not favorable for sugar, Cuba’s main product for two centuries, and meanwhile the aging sugar mills continued to deteriorate. Then Hugo Chavez came to power in Venezuela and supported Cuba with fuel and purchases of professional services.
Fidel Castro made the unfortunate decision to side in a debate between Chavez and Brazilian President Lula. Lula defended what Brazil had been doing for decades: replacing petroleum with biofuels, specifically ethanol, which is widely used in Brazil as automotive fuel. Developing such an option would have been excellent for Cuba. But because Chavez’s hydrocarbons were available, the government voluntarily dismantled most of Cuba’s sugar industry. At the same time, they launched an international propaganda campaign arguing that biofuels were harmful to global food supplies.
Result: Chavez is gone, Venezuela’s oil industry entered crisis long before Maduro’s “removal,” and Cuba was left without Venezuelan fuel—and also without its historic mass-export product: sugar, which it now has to import.
3. The “Energy Revolution” (2004–2006)
In the same context of Chavez-era prosperity, “someone convinced” (as the story goes) Fidel Castro to invest in diesel-powered generating units that require high-quality—and expensive—fuel, rather than repairing the country’s traditional power plants.
At the same time, Cuba made what seemed like a great deal with China: purchasing modern household refrigerators while selling off old but durable Frigidaire and Minsk refrigerators as scrap. Those older models had served Cuban families for decades.
Result: The Chinese refrigerators are now scrap, the thermoelectric plants (including those adapted by Cuban engineers to run on domestic crude oil) constantly fail due to lack of maintenance, and there is no money available to buy the fuel consumed by the generating units.
4. Monopolization of State and Para-State Enterprises
At the beginning of the century, there were numerous separate state companies in hotels, taxis, internet services, and retail trade. Most operated in dollars, yes, but competition existed and none was powerful enough to impose its own rules. Competition improved service quality.
During the first two decades of the 21st century, all of this gradually passed into the hands of the enormous military conglomerate GAESA, which, according to estimates, came to control around 60% of the Cuban economy.
Result: We now have a powerful economic-political-military actor dictating the rules of the system, while, as with any monopoly, service quality declines and prices rise.
5. “Banking Modernization”: Replacing Cash with Electronic Financial Services
Result: With today’s blackouts, the system stops working. Most ATMs are broken, and in the end there is neither cash available nor widespread acceptance of bank transfers for payments (even though they are legally required).
6. The “Ordering Task” (Tarea Ordenamiento)
In 2020, the worst year for the Cuban economy because of the pandemic, the government finally decided to carry out a monetary reform, “unifying” the two Cuban currencies then in circulation (the CUP and the CUC). The measure was implemented on January 1, 2021.
Result: Today, Cuba has CUPs, US dollars, euros, MLC and Clasica cards, and even Russian rubles circulating, and we are experiencing the highest inflation in Cuban history.
7. Technology Transfer Instead of Research and Development
Cuba has an excellent biotechnology industry, though one limited by resources. There are relatively few specialists compared to any major multinational pharmaceutical company, and many eventually emigrate. The sector has produced original discoveries and research, with products that compete internationally.
However, since 2000, the main strategy seems to have been exporting Cuban technological solutions to countries such as Iran and China instead of expanding production, research, and commercial capacities within Cuba. For Cuban scientists, it is often more advantageous to travel abroad and transfer knowledge than to remain conducting research at home.
Apparently, this is a faster and more profitable way of obtaining hard currency, but:
Result: A steep decline in original research and production. There are fewer new discoveries than when the industry was getting started in the 1980s. Older research is being used to generate revenue today, while new breakthroughs are increasingly scarce. Science is becoming less attractive as a life project for young Cubans, except when it involves transferring technologies developed decades ago.
You learn from mistakes. But when there are too many mistakes, there is a danger that no one will remain who is capable of learning from them.
A brief additional note: I am not discussing the famous “Battle of Ideas” (2000-2006) here, which was Fidel Castro’s great swan-song project. The reason is that I believe it was something far more complex than a simple mistake and evaluating it properly would require a separate article.