Cuba: Embargo, Yes? Embargo No? Exposing the Eternal See-Saw

Cuban Minister of Foreign Affairs Bruno Rodriguez

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, October 21, 2022–It takes just a small step to go from  the sublime to the ridiculous. Bruno Rodríguez, Minister of Foreign Relations of the Cuban communist regime, who just a day before publicly thanked the U.S. State Department for the $2 million in assistance for hurricane damages, the following day, in a speech widely covered by the state press, stated, “the world would be better without the blockade against Cuba.” I insist, from the sublime to the ridiculous.

With this blockade jargon, the Cuban communists have won the propaganda and misinformation battle. That there is no taro root in Cuba, is the embargo’s fault. That there is no electricity, the embargo’s fault. That tourists don’t go, the embargo’s. That financial markets do not lend Cuba money, the embargo’s fault. And so it is; every part of life in the nation are influenced by contentions with its neighbor to the north, the solution of which, on the other hand, is within reach of the communist regime. If it doesn’t do so, it must have its reasons.

And in reality, if there is no food in Cuba, one can observe serious shortages, stockouts, long queues, anxiety, among the population faced with difficulties to secure even the basic food basket, the only embago/blockade responsible for this situation is the internal one; the one imposed on the population by the regime and its economic model. Cuba can purchase food on the market of 192 countries around the world, and it also does in the United States. The problem is the availability of financial resources to make those purchases, which, due to non payment of its debts, are not easy to obtain. What deprives Cuba of access to financial markets is data on its failure to responsibly make payments on its debts. No one, under normal circumstances, is willing to lend to those who do not honor their commitments.

In any case, the blockade/embargo is one of the communications points the communist regime, devised by Fidel Castro, masterfully played in international fora, alarmingly obtaining alignment of countries with theses and arguments that do not fit within any basic economic analysis.

Such is the effort that a national report was promoted at the United Nations, under Resolution 75/289 of the U.N. General Assembly, titled “Necessity of ending the economic, commercial and financial embargo imposed by the United States of America against Cuba” (August 2021-February 2022), to which the Cuban communists dedicate special attention each year. The referenced document will be discussed for the thirtieth time on November 2nd and 3rd. They are already campaigning.

Moreover, each year, the regime takes advantage of any external factor to dress up the content of the report with a dramatic tinge. This year, why not, it’s Ian’s passage through Pinar del Río. It aggravated the effects of the serious international economic crisis, which is already being felt on the Island though ECLAC barely touches on it in its most recent forecast. The regime’s partners are not in a position, for example, to give away money.

And, since one thing cannot occur without the other, in this year’s report, Rodríguez Parrilla went on to explain that the blockade has taken on new forms, more detrimental if that was possible, in its attempt to accentuate the impact on daily life. Although for that they need to revert back to historic dosuments from 1960, such as that Memorandum of Assistant Secretary Lestor Mallory, who 62 years later continues to give opportunities to the Cuban communists to attack. C’mon it was not that long ago.

To this point, and with history’s rancid analysis, arrives a new estimate of the losses caused by the blockade, which according to the regime, between August 2021 and February 2022 were 3.806 billion dollars, a historic record during a period of only six months. It is as if the Cuban economy depended solely on the economy of the United States, a sort of anexionist focus or something similar.

The regime does not spare any effort. In six decades, at current prices, the cummulative damages total 154 billion, 217 million dollars. At the current price of an ounce of gold, taking into consideration depreciation, the cummulative damages amount to 1 trillion, 391 billion 111 million dollars. And clearly, the political conclusion is always the same: imagine what Cuban could have done if it had had access to those resources. What Cuba would be like if the country had used those resources.

Well, nothing. And everything. An economy doesn’t function better just by having access to money. Just the opposite. The key is how the money is used and whether the resources are allocated in ways that are profitable. And it does not seem that the Island’s prevailing economic model would allow it to reach such profitability with the resources. The blockade/embargo only goes so far, and no further. Everything else is science fiction.

In reality, the United States is the second largest tourist market for Cuba, it sends over 8 billion dollars in remittances per year and allows commerce and imports of 200 million dollars per year. No one sees the embargo anywhere, except for those who have a political interest in it being so. Going from the quantitative calculations of losses, be they the 3.806 billion dollars mentioned or the 6.364 billion dollars of the Biden era, the estimates in terms of GDP is risky and sets a bad precedent.

There is something in the estimates of losses in the report that merits attention for its novelty. The regime maintains that the GDP growth could have been 4.5%, had the blockade/embargo not existed during the period between August 2021 and February 2022. One cannot make heads or tails of this 4.5% and it forces a reflection on the cummulative economic magnitude, how they were calculated and what they really mean.

To begin with, it is convenient to really know how much the Cuban economy has grown in the period mentioned. Data on GDP growth are provided by the ONEI by quarter. Given the dates, it covers from the third quarter of 2021 to the first quarter 2022.

According to data from ONEI, the 2021 inter-annual growth in GDP was -1.4% in the third quarter, then it reached 10.9% in the fourth quather and another 10.9% in the first quarter of 2022. A simple mathematical calculation suggests that, in this period, the GDP grew by 6.8%, clearly more than the 2021 median, which was 3.2%. Then, what is the regime talking about with that 4.5%, which they say could have been achieved without the embargo?

Beware of unfounded statements, and with the calculations that are not adequately justified. Now it so happens that, even with the embargo/blockade, the Cuban economy grew faster than the rate desired by the regime if this dispute did not exist. Who do you believe?

The regime blames the embargo for: the lack of fuel; the obstacles in acquiring replacement parts and other resources based on American technologies; and the difficulties with regard to financial banking matters; commercial, financial or investment transactions; in the direct persecution of producers, transporters, shipping companies, insurers and freight forwarders; problems with the electrical energy system; and medicine. But in reality much of these claims have to do with existing obstacles that prevent the economy from functioning freely. That’s the real embargo.

Translated by Silvia Suárez


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