What Will It Take to Salvage Cuba’s Economy?

Main photo: Piqsels

On March 9, 2021, the Inter-American Dialogue hosted the online event “What Will It Take to Salvage Cuba’s Economy?”. The event featured opening remarks from Michael Shifter, president of the Dialogue, who also served as the moderator. The panel of experts included Pavel Vidal Alejandro, professor of Economics at the Pontificia Universidad Javeriana de Cali, Colombia; Ted Henken, associate professor for the department of Sociology at Baruch College, CUNY; and Vicki Huddleston, retired US Ambassador & former chief of the US Interests Section in Havana. The panel explored what effect the Cuban’s government 2021 economic reforms will have on the economy, the private sector, and Cuban foreign relations.

Vidal Alejandro started by highlighting the Cuban government’s historical resilience in terms of getting through the hardest of economic and political times. He compared the current moment to the Cuban government’s economic decline after the collapse of the Soviet Union in the early 1990’s. Although the contemporary and historical struggles are different, he was confident that the Cuban government will eventually figure out how to navigate their economic reforms and all that comes with it, as they once did three decades back.

Both Vidal Alejandro and Henken recommend expanding the private sector and allowing businesses more freedom as a strategy to revive the Cuban economy. Henken stated that “Cuba went from a situation where the government told you what you could do to now the Cuban government telling you what you can't do.” He further affirmed that while it is positive that the Cuban government is listening and changing things based on feedback, the slower the reforms come to place, the more the people that will leave the country. All the panelists agreed that only time will tell if the Cuban government carries through with its promises and enforces its new policies.

Huddleston suggested that the Biden administration should allow for higher levels of remittances, Covid-19 cooperation, and humanitarian assistance. She also emphasized on the importance of reviewing Cuba policy in order to remove sanctions, which have hurt the Cuban people. According to Huddleston, there are multiple avenues for the United States to capitalize on Cuba’s economic reform and forge a renewed relationship with the Cuban people.

Overall, panelists were optimistic about the future of the Cuban economy and the prospects for foreign investment. The new single national currency and official exchange rates will make it easier to calculate return on investments and to understand financial risks around projects in the island. In closing, it was mentioned that what remains to be seen is whether or not the government will continue to let go of some of its control: banning less and less activities and taking constructive criticism from the entrepreneurial sector, a previously unheard-of act. The speed at which the Cuban government makes these reforms is critical due to the growing impatience of Cuban professionals who are deliberating whether or not to leave the country.

WATCH THE FULL RECORDING OF THE EVENT HERE: