By Bryan Campbell Romero (El Toque)
HAVANA TIMES – Going into the third year of the COVID-19 pandemic, Cubans continue to look to the future with a great deal of despair. The ups and downs of the global health situation are confusing and limiting everyone’s options. Economic reforms are not gaining momentum and right now, inflation plus an increasingly dollarized economy, are causing serious damage to Cuban families’ pockets.
Memories of those intense days of protest in July 2021 are also lingering over the dawn of this new year. Cuban authorities have insisted on going ahead with trials against many of the arrested protestors, who are being charged with crimes ranging from contempt to sedition, and are calling for disproportionate sentences of up to 30 years in prison.
Life in Cuba in 2022 brings significant risks for everyone. From ordinary Cubans, the diaspora community, government authorities, to investors and international creditors that are anticipating Cuba missing its next payment deadline.
What are some of these risks?
Two trends are in the spotlight. The first is the lack of a clear approach to guide economic policy. As 2022 draws on, it will be very hard to hold onto the pandemic narrative as a dominant economic phenomenon in Cuba and the rest of the world. The health emergency situation won’t be the same as the country makes progress with its immunization campaign with national vaccines (which have yet to be backed by the World Health Organization) and the rapid transmission of the Omicron variant, which has led us to a kind of herd immunity.
Within this context, “continuity” proposed by the Communist Party will continue to dominate Cuba’s public policy agenda. That’s right, we will hear the odd bit of news about small and medium-sized enterprises (SMEs) or local development projects, and even relaxed measures for foreign investment. However, the reality is that the system is bogged down in an ideological and bureaucratic apparatus that doesn’t allow structural transformations in the Cuban economy and society. Despite these changes being paramount.
Economic policy needs a clear narrative that is encouraging in regard to the future. However, the Cuban Government seems to have resigned itself to the current dynamic:
“It’s the blockade’s fault; a call to work harder; socialist state-led companies at the heart of the economy; centrally-planned economy,” and other well-known phrases that politicians and public officials chant to death.
Lack of creativity and a political will for change represent a significant risk for the success of reforms the Government says it wants to implement. While Cuban politicians repeat that “Cuba isn’t giving up on progress,” there’s no real chance of reaching this progress under the guidance of current policies.
Without a clear direction, that takes responsibility for repeated economic failures and includes productive forces and market dynamics at the heart of the economy, 2022 will be another year of failure and unmet plans.
The second trend that conditions the Cuban context is spaces for political dialogue constantly closing down. The July 11th protests, and the Government’s disproportionate response, created a new landscape for every public actor. This broadened many Cubans’ perception what is possible when it comes to bringing about change, while it clearly showed others what is needed to keep hold of the status quo. The country is a lot more polarized and divided today, without any real opportunities for political dialogue between these different groups.
The polarization trend will continue throughout 2022 and the politicians will continue with their monologues. Government authorities might still forcefully impose their view of reality, in which case there will be very few opportunities for a dialogue, especially when those responsible for engaging in a dialogue increasingly think of it as a moral offense to the purity of their political ideals. Dialogue in itself signifies some kind of defeat for many.
Beyond these two trends, there are specific risks that mark Cuban economic and political life, which deserve to be mentioned.
Post-pandemic economic recovery in Cuba will be slow and problematic. Given the current situation, we can predict high inflation rates for the rest of the year. The renowned political risk analysis platform “The Economist Intelligence Unit” calculates an average inflation rate of 89% in Cuba in 2022. This situation has only gotten worse given global inflation levels and the country’s own macroeconomic deficit. The danger inflation poses is great and economic actors need to take measures to protect themselves.
Failure to meet foreign debt payments
The Cuban Government reached an agreement with the Paris Club, which allowed the Caribbean country to skip its debt repayments this year. However, 2022 revives the ghost of obligations in a context where the national economy continues to deteriorate. The likelihood of the Cuban Government falling into new arrears would further sediment the distrust foreign creditors and partners have in Cuba’s ability to meet its commitments.
Slow recovery of tourism
The Government is setting all of its bets on the sudden recovery of the tourism industry. Right now, a significant number of hotels are being built and investments in the sector continue to roll in. The effects of the “pandemic” narrative will fade over the year.
Even though this doesn’t mean to say that COVID-19 will disappear as a disease, it’s not totally absurd to think more visitors will come. The Cuban Government are expecting a total of 2.5 million tourists in 2022. However, in the past two years, Cuba has suffered a big blow to its image as a holiday destination in the eyes of consumers. The political situation, shortages and economic crisis have made it impossible to spin a positive narrative about Cuba in the rest of the world. Nor is it crazy to think that it’ll be hard for “Cuba the destination” to recover.
Rapid brain drain
“The last one turns off the Morro (lighthouse)”. This is a phrase that summarizes most of Cuban reality. Since borders reopened on November 15th last year, a significant number of Cubans have emigrated. Young professionals are leading the way with migration. The continuous brain drain that Cuba is suffering is perhaps the greatest danger in the long-term that the island faces.
Mid-term elections in the US
Mid-term elections in the US are normally easy to predict. This year, it’s expected that the Republican Party will win back seats in both chambers of the US Congress, in November. Given this landscape, we can’t anticipate any rapprochement from Joe Biden’s Administration towards Cuba. The island’s relationship with the US continues to be key, but it continues to be stagnant, along with Cuban officials receiving sanctions from the White House.
For ordinary Cubans, the remittances issue – which the US Government is revising – and consular services are of great interest. There could be movements on both those fronts, even if bilateral relations continue to be driven by a stalemate.