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How can Cuba solve its energy crisis despite the US blockade?

For economist Aline Miglioli, the alternatives lie in seeking out other international partners, such as China and Russia.

The population of Cuba has demanded that the government of President Miguel Díaz-Canel take steps to solve the energy crisis in the country, which is experiencing shortages of electricity and fuel, a scenario that the Cuban Presidency points to as a consequence of the US economic blockade.

The scenario, for economist and researcher on the Cuban real estate market Aline Miglioli, is that these protests "don't always mean demands for the end of the socialist regime, the end of the revolution or a change of government".

Miglioli said that, in fact, the demonstrations are essentially "against the solution given by the government", in this case the rationalization of electricity, with long cuts in the main Cuban cities, such as Havana and Santiago de Cuba.

In the researcher's analysis, these demonstrations are taking place because the Cuban people "are very critical", especially on an issue that affects people's daily lives, such as electricity.

Miglioli believes that all the alternatives for solving the energy crisis on the socialist island are to look for other international partners. One of these would be China, which is "emerging with renewable and clean energy technologies", instead of the classic oil used by the country.

The economist also suggests Russia, but considers that the country's energy comes from oil and gas, products which - considering the distance between Moscow and Havana - would encounter logistical difficulties or make transportation impossible in the case of gas.

For this reason, she highlighted China as a key player at this time, since it is a "moment" for Xi Jinping's country "to make massive investments and further strengthen friendship with Cuba".

"And I believe they are on this path. I don't have any information other than what's in the media, but I believe that they are moving towards strengthening these relations," he said of the possible suggestions within the reality of a Cuba that has been blockaded for more than 60 years and which is unlikely to have its situation reversed by the United States.

"Cuba has an energy dependency on oil in a situation where it is not easy to get oil. Today, the country not only faces the high cost of oil, the difficulty of finding commercial partners, but also logistical difficulties," said Miglioli.

This is because the blockade imposed by the United States on the island has "unknown dimensions" and one of them involves logistical issues.

"Ships that dock in Cuba must be quarantined for months and cannot dock in the United States afterwards. But Cuba is 200 kilometers from Florida in the US. In what logistical plan does it make sense for a ship doing foreign trade to pass through Cuba and not pass through the United States?" she explained, pointing out that oil, as well as being expensive and heavy to transport, still faces this logistical imposition of the blockade in order to reach Cuba.

If oil can't get to the island, why not open a hydroelectric plant, a solar or nuclear energy facility? And the answer is simple: Cuba doesn't have the rivers or the technological and financial capacity to import the inputs needed to promote alternative forms of energy.

As for the last option, the Soviet Union donated a nuclear power station to Cuba in 1976, but the USSR collapsed and the project was never completed. "Cuba has not been able to revive these investments on its own and the structure has deteriorated so that today it is much more expensive to finish this work," said Miglioli.

So, even with the difficulty of barrels of oil reaching Cuba, the country still depends almost exclusively on this type of energy, according to the expert.

But, according to Miglioli, the island hasn't always had this difficulty in maintaining its energy matrix: "when Venezuela was in a better situation, bilateral agreements allowed oil to enter Cuba. And when the island was in the bloc of socialist countries, the logistics of oil were very easily solved because the Soviet Union supplied it".

However, when the supply of oil from the Soviet Union ended, Miglioli pointed out that private industry either had no interest or was unable to trade with Cuba, so a "Day Zero" was estimated in which there would be no electricity in the country.

In the midst of blackouts, power cuts and popular protests, the island's socialist government is trying to manage the situation and points to one culprit: the US economic blockade.

"As part of its genocidal blockade, the US government is determined to deprive Cuba of its fuel supply, an unconventional war measure that violates international law and cruelly harms Cuban families," accused Cuban Foreign Minister Bruno Rodríguez at the beginning of April.

The foreign minister's statement is not unprecedented on the part of the Cuban government. President Díaz-Canel has said that the shortages in the country are caused "by the economic, commercial and financial blockade imposed by the United States".

Miglioli criticized the fact that "traditional, right-wing and conservative media blame the Cuban political system, the Revolution and its leaders, saying that Cubans blame everything on the blockade" whenever demonstrations take place in the country.

"Not everything is a blockade," the economist acknowledges. "It has to be said that there were decisions that didn't work out and failures, as in any economy. However, these mistakes have happened in a very aggravating situation, which is the economic blockade imposed by the US," she said.

The Covid-19 pandemic was another factor that directly interfered with Cuba's economy, affecting one of the drivers of the island's economy, which is tourism. In addition, the war in Ukraine has a direct impact on Cuban primary production, which is dependent on fertilizers.

Miglioli also explained that Cuba has a planned economy, a model characterized by state administration, which takes into account the country's scarce resources - whether because of the economic blockade imposed by the United States since 1962 under John Kennedy, or even because of the country's natural location (devoid of natural resources and far from what could be its political allies, such as India, China, Vietnam and Russia).

"The blockade is much more than a trade blockade. We sometimes think that the blockade means that Cubans can't buy anything from the United States, like an iPhone. But that's not the case. The blockade is very extensive and determines that Cubans cannot trade with US companies. But not only that, it says that the United States cannot trade with any foreign company that also trades with Cuba," she said.

The economist gave an example to make it easier to understand: "If a company sells a chicken to the United States and that chicken has consumed a product that came from Cuba, US companies can no longer trade with it," she explained, highlighting the dilemma of companies that could trade with the island, but "would close a very big door" with the US.

Another dimension of the US blockade is monetary transactions and the dollar, says Miglioli: "Cuba is a country that doesn't have a dollar. It can't transact in dollars because there is an imposition by the United States and this makes it difficult for the economy to operate," which worldwide is centered on the US currency.

"Since the 1990s Cuba has been trying to deal with this lack of dollars in order to be able to trade on the international market. And in order not to dollarize the economy, the country decided to adopt two currencies: one currency became convertible into dollars and the other was the national currency. This created a problem in the economy because there were elements bought in the national currency and others in the convertible currency, causing each to have an exchange rate between them and between the dollar, which was complicated to operate," he argued.

Faced with this duality in the currency, the expert said that during the pandemic Cuban government economists put in place a long-term plan to unify the Cuban currency, making it necessary to choose only one of the exchange rates.

"They devalued the Cuban currency and that shocked the economy. It started a very high inflationary process because there is an exchange rate being traded on the parallel market and the scarcity that is natural to the Cuban economy, which today is an economy without a currency and without the possibility of foreign trading to obtain international credit," he concluded.