Cuba Business

Cuba’s financial problems getting worse

Posted November 12, 2009 by publisher in Cuba Business.

By Marc Frank | Reuters

Cuba has ordered all state enterprises to adopt “extreme measures” to cut energy usage through the end of the year in hopes of avoiding the dreaded blackouts that plagued the country following the 1991 collapse of its then-top ally, the Soviet Union.

In documents seen by Reuters, government officials have been warned that the island is facing a “critical” energy shortage that requires the closing of non-essential factories and workshops and the shutting down of air conditioners and refrigerators not needed to preserve food and medicine.

Cuba has cut government spending and slashed imports after being hit hard by the global financial crisis and the cost of recovering from three hurricanes that struck last year.

“The energy situation we face is critical and if we do not adopt extreme measures we will have to revert to planned blackouts affecting the population,” said a recently circulated message from the Council of Ministers.

“Company directors will analyze the activities that will be stopped and others reduced, leaving only those that guarantee exports, substitution of imports and basic services for the population,” according to another distributed by the light industry sector.

President Raul Castro is said to be intent on not repeating the experience of the 1990s, when the demise of the Soviet Union and the loss of its steady oil supply caused frequent electricity blackouts and hardship for the Cuban public.

The directives follow government warnings in the summer that too much energy was being used and blackouts would follow if consumption was not reduced.

All provincial governments and most state-run offices and factories, which encompasses 90 percent of Cuba’s economic activity, were ordered in June to reduce energy use by a minimum of 12 percent or face mandatory electricity cuts.

The measures appeared to resolve the crisis as state-run press published stories about the amount of energy that had been saved and the dire warnings died down. The only explanation given for the earlier warnings was that Cuba was consuming more fuel than the government had money to pay for.

The situation is not as dire as in the 1990s because Cuba receives 93,000 barrels per day of crude oil, almost two-thirds of what it consumes, from Venezuela. It pays for the oil by providing its energy-rich ally with medical personnel and other professionals.

Cuba has been grappling with the global economic downturn, which has slashed revenues from key exports, dried up credit and reduced foreign investment.

The communist-run Caribbean nation also faces stiff U.S. sanctions that include cutting access to international lending institutions, and it is still rebuilding from last year’s trio of hurricanes that caused an estimated $10 billion in damages.

In response, the government has cut spending, slashed imports, suspended many debt payments and frozen bank accounts of foreign businesses. It reported last week that trade was down 36 percent so far this year due mainly to a more than 30 percent reduction in imports.

Member Comments

On November 12, 2009, publisher wrote:

Okay, let’s read behind the lines here since we never get the truth from the Cuban government anyway…

1. Cut energy consumption to avoid blackouts? But Cuba is getting all the oil they need from Venezuela, they have efficient Chinese buses and I think most of the country is running on generators since the hurricanes. So, why is the Cuban government forcing the “closing of non-essential factories and workshops and the shutting down of air conditioners and refrigerators”? To save energy? No. It’s because they don’t have any money.

2. The truth: “the government has cut spending, slashed imports, suspended many debt payments and frozen bank accounts of foreign businesses. It reported last week that trade was down 36 percent so far this year due mainly to a more than 30 percent reduction in imports.” All this to save energy? Bullshit.

On November 12, 2009, pipefitter wrote:

Pub, #1 If you start to use more electricity than you are producing the protective devices in the power plants will trip out causing a chain reaction and in turn blackouts just like the problem they had in Brazil a couple of days ago. You can have all the petroleum in the world but you need power plant capacity to convert it to electricity.
#2 The Reuters report says the spending cuts are a result of the 3 hurricanes and maybee also the world recession?

On November 12, 2009, publisher wrote:

Did something happen in Cuba that I didn’t read about that is causing them to use more electricity?

Ah yes. The three hurricanes. Why isn’t Granma even lying to us telling us that they have been rebuilding this and fixing that? Nothing?

World recession? Cuba reports that tourism is up and they continue to get free stuff from China, Venezuela and the EU yet the government needs to make all these cuts to save energy?

As I said before… Bullshit!

Cuba is a sinking ship as it has been for decades.

Pretty soon Cuban citizens will be sitting around in the dark with no food and no way to travel.

What a great country!

Oh yeah, I almost forgot, this is all the Embargo’s fault. (and the hurricanes and world recession)

On November 12, 2009, publisher wrote:

I guess cutting back on food rations in Cuba is a way to save energy too?

On November 12, 2009, pipefitter wrote:

Pub, just look up the National statistics on energy consumption and you will see that it has increased everywere except Havana. Tourism is only a part of their income, nickel is a big part but no demand now. They have been repairing the grid but have not built any new power plants lately. I don’t know what free stuff has to do with energy consumption anyway. It is evident that you only like to post the negative things about Cuba and leave most everything else alone. Too bad Pub, I don’t think you will be moving into Cuba to take over any time soon.

On November 12, 2009, pipefitter wrote:

Pub, read Pedro Campos Santos (Cuban) on Un Socialismo Participativo Y democratico. a presentation for public discussion at the 6 congress of CCP. It looks like Raul has taken some of his advice. Cutting back on food rations is a transition to more of a free market in agriculture and the eventual elimination of the libreta.

On November 12, 2009, publisher wrote:

No thanks.

I’ll stay an ignorant Capitalist.

NOTHING matters more than freedom. Freedom of speech. Freedom of assembly. Freedom of travel. Freedom to have your own business.

Raul can tweak Cuba’s communist island prison all he wants and it just the same old bullshit just a different day.

Some old “La Revolucion” good brainwashed Communist isn’t going to convince me that Raul is doing this or doing that and making Cuba better when very little that Raul has done actually matters to the every day life of Cubans.

Okay, they can ride in Chinese buses, have cellphones and visit Cuban hotels IF they can afford it.

So, pipefitter, what’s your game? Are you really Fidel Castro trying to convince people that Cuba is some sort of utopia?

Cuba is a disaster and everyone knows it.

The really sad thing is Cuba doesn’t have to be a disaster.

On November 12, 2009, publisher wrote:

While I’m at it… tell me how seizing foreign business bank accounts is conserving energy.

Also, when the Cuban government allows external audits and adheres to international accounting practices, THEN I’ll consider looking at statistics and having a conversation with you about “facts”.

On November 12, 2009, paul wrote:

Dogmatic communist pipefitter trying to tell us to understand the good side of communism LOL.


On November 12, 2009, Yeyo wrote:

Wow, Pipefitter now you are reporting directly from the congress of the CCP.
I start to understand some of your postings.

So, Raul is looking into a more representative Socialism? Nice try.

Cutting back on food rations have nothing to do with going towards free market it is simply an step to save hundreds of millions, and while I feel that the rationing card was wrong from the beginning, I hope that they would take at least some measures to ensure that the extremely low income portion of the society have access to proper food supplies.

On November 12, 2009, pipefitter wrote:

Well Pub, Pedro Santos does, in his paper to be presented to the PCC, talk about needing freedom of the press, not having to apply to leave Cuba, the right to sell ones private property, the necessity to let small buisiness thrive, the Gov. to get out of the market etc. He lives in Havana is retired , was head of the dept. of U.S. studies at Havana University and at one time on the U.N. human rights committee, and I think one time embassador to Mexico and he says he is a communist. So this guy sounds like he is no dummy and what he writes makes a lot of sense.

If you don’t have the plata because you can’t sell your product what else can you do but freeze accounts? (see U.S. financial caos) when you have no money to pay bills? Cuba can’t go running to the IMF like other countries are doing, or just print money like the U.S. is doing can it?

On November 13, 2009, paul wrote:

Even the communist just admitted that Cuba freezes accounts…........

You dummies asking for the credit blockade to be lifted should take note. Cuba will freeze accounts whenever it wants, not pay when it does not want to, and possibly nationalize “cuando les salga del fondillo”.

That’s why communists ask for the credit blockade to be lifted, because they know it won’t “change” Cuban communism, it’ll give them a chance to rip off American companies, and they’ll continue having the power that they have in Cuba.

Por favor psshhh.

On November 13, 2009, publisher wrote:


Interesting about Pedro Santos but forgive me if I’m a bit skeptical. Can you post a link to this paper or more information about it or him?

So he makes a lot of sense? Sounds like he is anti communist and that this type of document would be dead on arrival.

Regarding Cuba getting money from the IMF, I believe that was Fidel’s decision not to accept money from the IMF.

Cuba should print money. The people need toilet paper.

On November 13, 2009, pipefitter wrote:

This is the link to his paper, Yeyo could probably read this without too much red rubbing off on him but I don’t think Paul could stand that amount of democracy in one sitting.

On November 13, 2009, pipefitter wrote:

This is an update Oct/09

On November 13, 2009, paul wrote:

Participatory Socialism LOL

If they really cared about social welfare, they’d turn the country into a social democracy AT MINIMUM.

Reforming a system created and run by military officers and nomenklatura…with no civil accountability, because it doesn’t exist.

Another reminder that people like pipefitter are dogmatic communists. He lives in Canada, but actively supports a military authoritarian system. Funny that communists like him cry when other countries have strong militaries, considering that countries like Cuba have military systems that hold absolute power over the population.

On November 13, 2009, Yeyo wrote:

If that is certainly what Mr. Santos paper is about, I’m 100% for it.

I just want to know how much of it would be implemented and where he is right know.
Kind of sad that his paper surfaced when he is retired.

Funny that he says he is communist, because I happen to know many old fellows from that generation that all claim to be good Communists but in their cases between them (muy bajito) comment that Castro is a traitor to the Communist ideal, that Castro is a tyrant and a dictator. Somebody that put in jeopardy the wellbeing of the very own foundation of the Communist system, the people, in order to perpetuate himself in power himself.
This guys are not average guys, but many have been and some still are in high positions in government, some were disillusioned and retired or simply vanished, other are still there holding and hoping that the natural solution comes soon.

It is really Communism the system in Cuba? That’s kind of strange discussion but one that would be nice to have one day.

Going back to the initial point , my feeling is that Raul like Fidel wants to hold on power no matter what and do not care about anything else. And obviously his actions during last year have done nothing but substantiate my feelings.

On November 13, 2009, pipefitter wrote:

Yeyo, If you take the time to read Mr. Santos paper (print it and read it as I did) right through you will see that he seems to be for real and has a lot of good ideas. He believes that Cuba must reform it’s system or it will collapse. The paper says he lives at Calle Zapata 1401 apto C-13 e/ C y Cespedes Vedado.  Aparently his paper has been in wide circulation in Cuba And on the net for a year now and it has sturred up a lot of discussion even up high in Cuba. Read his 2009 comments also as they explain the type of top down gov. Cuba has now and the one that it needs, bottom up control of gov..
Paul, I don’t support the Cuban gov. unconditionaly, but I do want the Cubans to find a better way to govern themselves and live a better life and that doesn’t mean adopting the suedo democracy of North America.

On November 14, 2009, Yeyo wrote:

Pipefitter I would read it. Looks like the guy has good intentions, the problem that everybody is attacking him. The right because he is Communist and the old Castro cronies because he is kind of bending to Capitalistic ideas. Probably many of them, in both sides, do not have what is needed in order to do what he is doing, publicly writing his opinions.
I bet that many people within the PCC have similar ideas but are so afraid that found nothing better that attack him.

On November 14, 2009, paul wrote:

“Paul, I don’t support the Cuban gov. unconditionaly, but I do want the Cubans to find a better way to govern themselves and live a better life and that doesn’t mean adopting the suedo democracy of North America.”

Anything is better than authoritarian socialism. You can have decent social welfare like in Canada and Western Europe without a military police state.

Pretty sad that you live in Canada, call it a “pseudo” democracy, yet it’s not “good” enough for Cubans (in your opinion). Authoritarian communist is what you are, no better than a right wing fascist.

On November 15, 2009, pipefitter wrote:

In Canada, we have no real say in what happens. We just get taxed to hell and what is done by government is most always done for some friends financial or political gain. Friends are put in high places and paid rediculously high wages. What we have is the out house system, Politicians in the upper out house, the rest of us in the bottom out house. You know that crap follows the laws of gravity don’t you? At least in Cuba they have the chance to come up with some form of government that is more just.
I think I would align myself more with this Mr. Santos as it seems to me he has a better idea of what democracy and government should be.
Pub, can you get Mr. Santos paper translated to english and do a post on it so that Paul and others can see what his ideas for Cuban government are?

On November 15, 2009, publisher wrote:

“In Canada, we have no real say in what happens.”

So Canada is a Dictatorship? There is more election freedom in Cuba? Shocking.

pipefitter, I think you need to move from Canada to Cuba so you’ll be more happy.

I’ll look into getting translated but I am still VERY skeptical that he or the paper has any validity and with good reason of course.

On November 15, 2009, Yeyo wrote:

Wow Pipefitter so now the Cuban system is “more just” than Canada’s?

Apretates socio !!! Come on, in Canada (and don’t give me bullshit because I live in Canada) we have the opportunity to choose our own elected officials, politicians or whatever, but at least they are elected. In my opinion Canada is among the more democratic countries in the world and has been elected consistently among the 10 best countries to live on for the over 20 years now. I guess that why you live here, right? This is about opportunities and believe me there are lots and lots of equal opportunities for every single person in Canada, the problem is if you choose the opportunities or the crap.

Certainly also in Canada elected politicians favor a number of friends for nice positions, but my friend, that is the nature of the human being and let me refresh your mind about the “justice” of the Cuban system, what about all the cronies that had been in power for over 50 years now, mysteriously their sons and daughters are promoted to nice jobs in high positions within the government or nice foreign firms while the average Cubans do not have any opportunity.

Is not strange to you that none of the sons and daughters of the big bosses in Cuba area all nicely positioned??

Let’s not go directly to Raul, who his sons are all in extremely high positions: mysteriously his son is Colonel of the Interior Ministry and is now assigned to work with the new President but his grandson is Major of the Interior ministry and is also assigned to work with the President. His daughter Mariella is President of the Cuban Center for Sex Education, a Center that was nothing until she got the job, obvioulsly now the center works very well because the direct connection. His older daughter, Deborah Castro Espin husband is Major Luis Alberto Rodriguez Lopez-Callejas, is the Chief Executive Officer of Grupo de Administración Empresarial (GAESA), GAESA is probably the largest commercial holding in Cuba today controlling vast companies like, Gaviota (with hundreds of hotels, marinas, rent a cars etc), Aerogaviota with (charter planes) Ternotex, Antex, Almacenes Universales etc, etc.

What would you say about it?

On November 15, 2009, pipefitter wrote:

We may have the “freedom” to elect the people that run, but the people that run have to have a lot of money and party backing to do that or it’s a no go. This in turn greatly limits the quality of the candidates. Most are self- serving party hacks or serving some other interest.
As you may know I have lived in Cuba and don’t think you can fairly compare it with the industrialized countries. If you want to compare it with other countries you would have to do so with other third world countries and on this level it has done well in several areas.
I wonder if anyone posting here would be capable of translating Pedro Campos paper? I can read it and understand it but am not at a level to do a proper translation. He says it has been fairly widely distributed in Cuba and outside Cuba through internet, memory sticks and printed material and has stimulated a lot of discussion.

On November 15, 2009, pipefitter wrote:

Yeyo, if you read Senor Campos’s paper you would see he is against top down power in government as in Cuba now or for that matter here in Canada.

On November 16, 2009, paul wrote:

In Canada, we have no real say in what happens.

**Yes, evil and oppressive Canada. A Cuban citizen has more of a “real say” in Cuba LOLOLOL!!! you must be a fake poster.

We just get taxed to hell and what is done by government is most always done for some friends financial or political gain.

**My head just exploded. This makes it sound like you think that Cuba is not run this way, are you for real? the Castros stick their family members in high positions of government, and they reward obedient nomenklatura with good jobs too. Don’t forget that the military runs the economy.

Friends are put in high places and paid rediculously high wages.

**All I can say is .............................................................................

What we have is the out house system, Politicians in the upper out house, the rest of us in the bottom out house.

**Again, “eviiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiil” Canada. Poor you. The government in Cuba is entirely run like a strict military society. Average Cubans have no voice outside of Cuban socialism, and are abused and harassed if they step out of line.

You know that crap follows the laws of gravity don’t you? At least in Cuba they have the chance to come up with some form of government that is more just.

**Yes, a non elected leader has been running the country to the ground for decades and decades.  What a “just” society. They can continue trying to “reform” socialism, but it will always be authoritarian, oppressive, and with power concentrated around nomenklatura and military officers.

On November 16, 2009, Australian opinion wrote:

Sorry guys, but I have to agree with pipefitter.

Australia (where I live), along with Canada (a fellow Commonwealth country) and the US, do indeed function on an outdated system called democracy. Democracy is meant to mean free choice for the people i.e. you get to vote a party in or out. The only problem with these three countries, as with many ‘democratic’ countries, is that there are usually only two parties.  I don’t vote because both major parties here are useless and it is often a case of that old adage ‘the lesser evil of two evils’.  In fact, both parties, though commonly fight against each other, are almost a mirror reflection of each other.  There is no dominant left nor is their a dominant right.

The real problem with the U.S. - and no offence meant - is that you rely on what your media say, as do people in our country.  The majority of the US media is owned by Jewish interest or people like Rupert Murdock who is a neoconservative.  This man also owns a great share of the media in Australia including 90% of the papers and they ARE biased towards his conservative views. 

You think that the US is a true democracy?  Do you think your President just comes to power because of popularity?  No, they are funded by self serving interests who ‘donate’ hundreds of millions of dollars to get them into power.  For George Bush it was big business, like Halliburton who profited extensively out of the Iraq war.  For Obama it is the Jewish interest - led by his own Chief of Staff who’s father belonged to a Jewish terrorist group.  This is why we now see people like Hilary Clinton agreeing with the Israeli Government in regards to building settlements in Palistinian areas. 

But please don’t me wrong.  I am not just accusing the US Government of its practices, because the same happens here, and in Canada, and in other so called Western countries.  In Australia you will find the same individuals (rich Jews) and same business, donate hundreds of thousands to both major parties.  Is it because they love politics and that they love both parties?  No, its because they can then use leverage over whoever does get into power, be it Labor or Liberal.  And yes, these politicians are all mostly self serving and certainly do not listen to the people.

I laugh how a word like ‘socialism’ is such a dirty word in the US, mainly because it is always equated with Communism, though they are two very different things.  This has come up with the recent debate on free Health Care in the US.  Is it any wonder that the US is virtually the only western country that does NOT have free health care?  Is there any reason why Americans would not want free health care?  Yes, its your taxes that go paying for it, but would you prefer to have it go to free health care or wasted on two wars that end in nothing.  Having said that, I have watched as things have gone backwards in my own country in regards to this.  Things get more expensive and things that were free in regards to health are now not, because of cost.  I would rather have free health care - because I know I am going to use it one day - rather than put into our so called Defence Force.  Like pipefitter says, we don’t have any say in this and usually tax payers money is ‘pissed against the wall’ as we say here. 

You complain about what Cuba has to resort to?  Maybe that is just being responsible.  Take a look at how many TRILLIONS of dollars the U.S. is in.  It should technically be a bankrupt country by now but somehow, they keep on finding the money.  Cuba is not able to borrow from the IMF.  And no, it was not their choice.  Same with the embargo’s they have - all because the US still has a grudge because they did not get their way. 

And it is because of your greedy capitalist system that we now have a Global Economic Crisis, that has had a ripple effect around the world and help destroy the economies of many Western countries. 

So would I like to live in a nice democratic country like Australia where I don’t get to have a say anyway, or a country like Cuba that has FREE health care, FREE education and FREE care for the elderly?

You can say what you want about Fidel, but I would not believe everything you read in the propaganda media. And remember, the Government before him was just propped up by the US, at least Castro had the guts to do something about it, instead of just whinging about it.  Would you guys ever have the courage to stand up for what you believe in? Have the courage to start a REVOLUTION, knowing that you will probably die for your cause?  Tell me how many ‘politicians’ would do that.  They might only have one Government, but at least that means they can only move forward, instead of the pendulum swinging back and forward, with nothing ever getting done. 

Just something to think about.

On November 16, 2009, publisher wrote:

Thanks Fidel. Keep up the good work with the propaganda but I’ll continue living in this “democracy”.

On November 16, 2009, manfredz wrote:

Think anyone who has gone to Cuba, and spent any time outside their resort, can tell you that Cuba’s socialism has many major shortcomings.  While I agree that our democtatic system also has shortcomings, I will say, that although I enjoy vacationing in Cuba, and even interacting with some of these shortcomings, give me our system with its shortcomings anyday.

On November 16, 2009, Yeyo wrote:

Hey Australian, everybody is entitled to their own opinion but not everybody is being brainwashed by the western media, in fact I feel that you are being brainwashed by the Castro propaganda.

Firstly there is no such thing like FREE health care. Cubans are actually paying with their miserable lives. Furthermore they are attended for free at the hospitals but have to pay for the drugs. Cubans joke that they may get a free extremely complicated heart transplant but die of simple headache because lack of aspirins. It is a joke that represents the lack of medical drugs in Cuba. Average Cubans do not have easy access, not even to the most common drugs. In fact many drugs being manufactured in Cuba are exported to Venezuela, Bolivia, Ecuador etc but are not available in Cuba and if they are, they are available at the tourist pharmacies in hard currency and not open to average Cubans.

One dollar a day is considered the poverty line by the United Nations. Well…the average salary in Cuba is around $ 15.00 per month or $ 0.50 per day, … which is from any point of view substantially under all levels of poverty.

You vehemently speak about control on the media. What about in Cuba where all the media is owned by the government and every single word written or said by newspapers, radio or TV stations is previously edited and approved by the political apparatus directly under the Castro personal supervision.

On November 17, 2009, paul wrote:

I wonder if these Castro trolls are just Cuban agents posting as if they are from other countries, to make it look like there is pro Castro global opinions.

No wait…left wing fascists really do exist. The blockade is here to stay, cry about it.

On November 17, 2009, pipefitter wrote:

No, we are Chinese agents tryng to bolster up Cuba’s economy so we can put a base there nice and close to the U.S. so we can collect the billions of dollars we lent them to bail them out.

On November 18, 2009, Yeyo wrote:

If you are a chinese agent you should try to convince Raul to at least follow the chinese model, which while not perfect is thousand times better than the Cuban model if there is such thing like Cuban model.

On November 18, 2009, pipefitter wrote:

No Yeyo, I think that Pedro Campos has a much better model and it looks like some of it is being tried already, like in the agricultural sector.

On November 19, 2009, Yeyo wrote:

What I can see is that Pedro Campos published his article over two years ago and all he has gained is lots of attacks from the front and center of the party.

On November 19, 2009, pipefitter wrote:

Yeyo,As you know things take a long time to come about in Cuba. Some of the things that have taken place are the changes in the agricultural sector implemented in August freeing up idol land to whoever want’s to work it, letting private farmers plan their own crops, hire their own workers, pay them what they want, arrange their own transport etc.. Another may be the one in I think Bayamo were the markets are using Cuban pesos as cash with the same value as CUC’s. Another may be the freeing up of the restrictions on people doing private work for other people. Another could be the push to get rid of the Libreta. Another could be the increase in teachers wages, the dropping of restrictions on the amount of hours of paid work a person can do etc.

On November 25, 2009, chuck bailey wrote:

Last year there was some talk of Chavez going to build some low cost housing from plastics in Cuba. Did anything come from this idea?
Are the emergency electric generators still operating?

On November 28, 2009, pipefitter wrote:

Chuck, they have built some houses in Cuba I think in Cienfuegos and in Santiago. They are going to put up a plant to produce the white plastic interlocking forms that are then filled with concrete and end up producing a 2 bed one bath house. See Petrohouses

On December 06, 2010, student wrote:

I am not saying that I like Communism or anything,but I read a comment that said that nothing matters more than freedom.
Call me crazy, but I would rather live longer without political freedom than die sooner and have complete freedom.
To put it bluntly, I would rather live than have political freedom.

On December 07, 2010, chuckdaplumber wrote:

Folks - I watched and followed developements in Cuba for a couple of years. It is now firmly entrenched in my mind that all public info on Cuba is and will continue to be true.
Fidels real problem started when he didn’t pay for the agreements that he entered into. Thereby forfeiting his rights to outside help. I do not have time or desire to relate to the individual acts that have followed. Had his plan worked in any fashion the people of Cuba would be better off today.
Merry Christmas
Chuck da Plumber