The story behind Cuba's economic dysfunction
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On wednesday, a powerful hurricane hit cuba. The cuban nation was pummel with wind and rain. Electricity was cut off nationwide, bringing up memories of a string of recent power failures that have been plaguing the country, even without hurricanes, keep as dramatic power outages back a low point in the country's sharp economic decline.

Food shortages are rife, and inflation is running at thirty percent. So what's going wrong? This is the indicated from planet money I made in .

mar and dan woods to the show why cuba is struggling to keep the lights on. The answer gives us insight into the Angell question of whether cubas rose driven by its communist leadership or U. S. sanctions.

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Marcos is an academic who lives in havana .

with his mother. Yeah, yeah, yeah. We're only using his first name to protect his safety. And Michael says the power going off briefly in certain areas is not especially .

remarkable is animal thing here. We are no new in this kind of situation.

You know, what felt new has been the power shutting off .

without warning. Nativity is for more life, even here in the first world OK. If you don't have electricity, you don't have modern society.

So I understand what's been going wrong in cuba in recent months. We called William leo grand. William is a professor of government at american university.

He's written several books on the country, and he travels there at least once a year. He keeps in touch with the U. S. And cuban officials. Embryon explains that cub's recent big blackouts were caused by the oil birding power plant in a decrepid grid.

It's not being well maintained. The cubans don't have the money to import spare parts means that there is just a constant problem of breakdowns and as a result that you get these unscheduled blackouts yeah .

I as opposed to scheduled blackouts that has actually been common over the last couple of years as the cuban government has not been able to ford enough oil for the generators. He says cuba is caught in a vicious .

cycle because you don't have enough you to keep your domestic industry going and you have to period ally, shut down domestic manufacturing. For example, you have fewer exports. That means you need to import more things at a time when you have even less in the way you for exchange currency. So it's just it's a crisis that builds upon itself.

So why doesn't cuba have enough foreign currency cub's communist policies? Or is that the U. S. Embargo on cuba blocking the island nation off from the global economy?

So it's obviously both factors, and it's really impossible to decent tangle the two of them, and in some ways they interact upon one another.

But lets see if we can disentangle these, starting with cubas economic policies. So following the one thousand hundred and fifty nine revolution, cuba brought in a new era of authoritarian communist leadership that meant russian cards and redistribution and many other characteristics of economic economy .

cube in the soviet union. Strong allies. Basically from the start of the revolution, the soviet union gave cuba a ton novae over the years, keeping its economy of float, but didn't last.

After the collapse of the soviet union, gross domestic products sold by thirty five percent.

The economy had not evolved over time. The vast majority of its export earnings were relying on sugar, followed by some nickel mining. Just like I was back in the one thousand nine hundred and fifties, this stagnation caused enormous hardship. In the early one thousand nine hundred ninety, once soviet aid disappeared.

a system where the government decides who makes watch head shelter, the country's industries. William leo grand says that even row castro, who was president from two thousand and eight to two thousand, admitted some failures.

Row cao acknowledged that the old system of central planning that they adopted from the soviet union really wasn't working and needed to be, in his words, updated.

And while newly legal private businesses have been growing over the last few years that updating towards a market socialism model like china or vietnam has been slow.

there is no doubt that the cuban government has made a lot of economic policy mistakes, and in my judgment, is continuing to make a number of policy mistakes. Today.

cuba is prone to storms, both literally like harricane, but also euphoric ones, like the covered pandemic that shut down tourism to the island of nation. That was a strong source of foreign currency .

category for political storms have been U. S. sanctions. This is another big competing theory for why the economy and cuba has struggled so much.

Yeah, on the moment cuba became a communist country, IT has been at logger heads with the united states. In the revolution, the cuban government seized assets, including taking over factories and oil refineries owned by americans. Cuba also sent out armed forces in funding to rebel groups throughout the americas.

In response, the U. S. Banned most exports to cuba. And when the soviet union ships nuclear weapons to cuba in one thousand nine hundred and sixty two, the U. S. Government scaled up to a full on black ade against the country that has sort of vax and wait ever since this isolated cuba from much of the rest of the world.

yes. So because so many global companies trade with the U. S.

Or use the dollar system, U. S. Sanctions don't just cut off the U.

S. From cuba. Really, in points out a couple of examples like that. Any U. S. Citizen whose had their property taken can sue anybody around the world who does business with cuba that uses that nationalized property.

And so of course, this discourages direct foregone investment from any place uh, going into cuba, fear of litigation also companies .

that make certain goods with more than ten percent U S. Inputs of bad from exporting to cuba.

So there's a whole series of elements of the zimbardo that are actually designed to, in a sense, recruit other countries unwillingly into the embargoes restrictions.

This tension between cuba in the U. S. Did ease under obama, but IT retorted, why higher again? In twenty twenty one, when the trumpet administration tightened sanctions.

cuba was put on the state department's list of state sponsors of international terrorism, which is unfounded by way.

Being on the list of state sponsors of international terrorism had enormous implications from cuban economy, remitted ces from cubans overseas, froze up. Even europeans who visited cuba were barred from the U. S. S. VISA. Waver program discourse ing. Visiting tourists.

So it's difficult to say what's more to blame for cubas words, communist economic policy or the U. S. Embargo, but there is no doubt which one cub's government blames when their government .

points to the fact that the united states has been waging economic warfare against them from within sixty years. It's a fact that the united states has in fact been doing that, and so they have a degree of credibility when they make that claim.

With Donald trump bound for the White house once again, Williams doesn't think cuba will be a particularly high priority, but he thinks trump might reverse some of the slight easing of sanctions that happen under biden by .

militantly and foreign investment that would likely make the situation in cuba even worse. And over the last two years, around one and ten cubans have had enough and theyve left. That's one million cubans leaving macos in havana, says this is hit him personally .

all my life, elong, friends, friends from high a school, or leave the country, all of them.

Marcus stays in havana with his mother, who has an auto mine.

The main thing that why I don't leave the companies about my mom, okay, I am the person who take care of them, not only physically, not only economically.

Michael says that everyone in cuba is debating whether the economic crisis is worse than the big one in the nineteen nineties, you know, the one after the fall of the soviet union. He doesn't have a strong view, but he thinks one thing is different in time.

The people getting hold right now, people doesn't have hope. Ironically.

this pressure campaign from the last trump administration drove a lot more migration to the us, both authorized and unauthorized, something trump is trying to avoid.

The episode .

was produce by curry bridges with engineering by neil road. Was that by petty? Her SHE edited this episode and taking cain edits show. The indicator is a production of npr.

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