Caribbean & Central America - March 2024

Cuba’s economy minister, Alejandro Gil, was replaced as part of a ministerial reshuffle announced on 2 February, which also involved changes in the ministries for the food industry and for science, technology, and the environment. Gil’s departure came amid rising tensions over government austerity plans, which include five-fold increases in fuel prices.

President Miguel Díaz-Canel dismissed Gil and appointed Joaquín Alonso, who had been serving as head of the central bank (BCC), to replace him. New ministers were also appointed in charge of the food industry (Alberto López, governor of Santa Clara province) and science, technology, and the environment (Eduardo Martínez, president of a state-owned pharmaceutical company). There was no official explanation for the changes, but they are likely linked to the country’s deep economic crisis and an internal conflict over the latest austerity measures. Official newspaper Granma said only that Gil had been “released from his duties”.

In December and January Gil, who was also deputy prime minister, had announced controversial plans to drastically cut back energy, transport, food, and medicine subsidies in an attempt to narrow the country’s fiscal deficit, which according to some estimates by experts cited by Spanish daily El País in a piece published on 12 February, is as large as 18.5% of GDP. A five-fold increase in petrol prices had been scheduled for 1 February. However, the authorities claimed a cyber-attack from abroad had forced a delay, shifting the date forward to 1 March, when the price for regular petrol surged to CUP132 (US$1.10) from CUP25. Gil’s dismissal suggests the plan remains hotly contested.

Gil had been economy minister since 2018 and was seen by many as the architect of failed policies, including tinkering with currency reforms and exchange controls, and banking restrictions. He had promised an economic recovery for 2023 but GDP is believed to have fallen by an estimated 2%-3% after earlier coronavirus (Covid-19)-related fluctuations (2020-2022). Inflation is running at around 30%. The outlook for this year is grim. Agriculture and food production has slumped. In the last week of February, the government said 34% of the power grid was offline and that it could not guarantee supplies of flour for bread.

Omar Everleny Pérez Villanueva, a former director of studies at Havana university, was cited by El País as saying Cuba in 2018 was “a better place” than now: “Cuba was receiving almost four million tourists, the purchasing power of the population was greater, there were no difficulties with fuel, the fiscal deficit was 8% with respect to GDP, and the basic food basket was accessible” he noted.

A 5 February briefing for World Politics Review by Robert Looney, a Cuba expert at the Naval Postgraduate School in Monterey, California, says efforts to reform the Cuban economy date back to 2010 when then-president Raúl Castro (2008-2018) sought to scale back the bloated state sector and introduce a limited form of “market socialism”. However, reform policies were inconsistent and resisted by the political elite. Growth averaged only 1% per annum in 2010-2022. In a more recent period (the three years to 2022), GDP has contracted by an average of 2% each year. Without bigger political changes it is hard to see a sustainable and successful outcome.

Looney says that the political old guard aims simply “to restore some semblance of macroeconomic stability in order to maintain the Communist Party’s grip on power in the face of recent signs of popular discontent, including the mass protests that spontaneously erupted in July 2021”.  

Probe announced into Gil

On 7 March, the Partido Comunista de Cuba (PCC) government announced an investigation into Gil. State mouthpiece Granma reported that he is accused of “serious errors in the performance of his duties”. While no further details were given, Granma says “the leadership of our party [PCC] and government has never allowed, nor will it ever allow, the proliferation of corruption, simulation and insensitivity”.

Emulating Vietnam

Interestingly, in the briefing for the World Politics Review, Robert Looney suggests Cuba might have tried to emulate the successful Vietnamese Communist Party economic reforms which began in 1986, but that would have involved granting a bigger role to the private sector, offering better conditions for foreign investment, and accepting greater domestic inequality of income – all steps that are resisted by the party leadership.