Nationwide power outage has paralyzed Cuba’s economy — but crisis may get even worse

Andres Oppenheimer

The massive Oct . 18 power outage that virtually paralyzed Cuba’s economy for several days and the subsequent hurricane that hit the island days later have worsened an already severe economic crisis. But the worst may be yet to come.

Tourism, a major source of the country’s income, is poised to collapse in coming months. Although power has been restored in parts of the island in recent days, who will go to a country with intermittent blackouts that last days at a time, where people are seeing their food rot in their refrigerators and where ATMS — like almost everything else — are often shut down until further notice?

Even before the power outage, the Cuban dictatorship was projecting that only 2.7 million tourists would visit the island this year, a 16% decline from its previous projection. That’s way below the 4.7 million tourists that visited the island before the pandemic in 2018

Now, with no end in sight to power outages that experts attribute to an ancient power grid that hasn’t been upgraded in five decades, the number of foreign visitors is expected to fall further. Tourism accounts for more than 10% of Cuba’s economy, and is one of its few sources of hard currency.

This is Cuba’s worst crisis since the 1991 collapse of the former Soviet Union, when the generous Soviet subsidies to Cuba came to an abrupt end. Havana residents say that, much like in the early ‘90s, the city was once again in the dark at night, and there have been widespread shortages of food, water and medicine.

Already, more than 1 million Cubans — over 10% of Cuba’s population — have left the country over the past two years, according to government figures. Independent economists say the figure may be much higher, and amount to 18% of the island’s population.

To make things worse, China has canceled a major contract to buy more than 400,000 tons of sugar annually from Cuba. China made that decision because of Cuba’s failure to implement market reforms to revive its moribund economy and pay its debts to Chinese companies, The Financial Times reported Oct. 13.

“Chinese officials have been perplexed and frustrated at the Cuban leadership’s unwillingness to decisively implement a market-oriented reform program despite the glaring dysfunction of the status quo,” the British newspaper said.

Russia and Mexico may provide some help. But Venezuela, which had replaced the former Soviet Union as the island’s biggest economic benefactor, has been reducing its oil shipments to Cuba in recent years because of its own economic crisis.

Predictably, Cuba’s dictator Miguel Diaz-Canel blamed the U.S. trade embargo for the power outages. But after 65 years of listening to the same excuse for the island’s backwardness, few Cubans are buying that story anymore. They know that Cuba can import goods from Europe, Latin America and almost anywhere else, and that its main problem is the regime’s ineptitude.

There have been scattered “cacerolazos,” or pot-banging protests, across the island in recent days, witnesses say.

It’s too early to say whether these protests will grow, or rise to the level of the nationwide street demonstrations that shook the island in 2021. At the time, thousands took to the streets demanding food and freedoms, and more than 700 people were sent to jail with long prison sentences, according to human rights groups.

But things are only likely to get worse. Havana-based journalist Yoani Sanchez, editor of the independent 14 y Medio digital newspaper, wrote on X, formerly Twitter, that the Cuban regime’s efforts to blame the United States for the crisis won’t work.

“People’s anger is on the rise and there is no official plan, short-term or long-term, to make everybody’s life easier. More difficult, darker days are ahead of us,” Sanchez wrote.

Indeed Diaz-Canel will probably try to weather the storm with a new round of repression and a new mass exodus of younger Cubans. But that will only accelerate the long descent of Cuba into an impoverished island of old people who used to live on state subsidies, but who no longer will be able to take care of their basic needs. As Sanchez says, darker days are ahead.