When the Cuban authorities launched the first solar park in the capital’s Cotorro district, it quite literally provided a small glimmer of hope. A total of 92 solar facilities are planned to be in operation throughout the country by 2028. Although the park, built by Cuban companies with Chinese technology, now produces around 100 megawatt hours a day, this is not enough to provide any meaningful attenuation to the severe energy crisis afflicting the island. But it does instil hope that a brighter future may be on the way.
Gerold Schmidt is the director of the Rosa Luxemburg Foundation’s regional office in Mexico City.
The socialist country is currently facing what is likely the worst economic crisis since the 1959 revolution. Since the autumn of 2024, massive power outages have repeatedly crippled production and disrupted public life across the country. On some days, the nation produces only enough electricity to meet half of its domestic demand, resulting in frequent power outages. A lack of oil is preventing several power plants from operating, and what’s more, there is a shortage of spare parts to fix anything that breaks. Not to mention the petrol shortage, which is severely impacting the entire transportation system.
For the time being, some 80 percent of Cuba’s food supplies must be imported in exchange for costly foreign currency. The supply situation in general is dire — even in health and education, two sectors that Cubans have rightly prided themselves on for decades. The tourism industry has yet to recover from the coronavirus pandemic, with airlines such as Condor and the Swiss company Edelweiss no longer offering direct flights to Havana as part of their summer schedules.
In recent years, hundreds of thousands of young and well-educated people in particular have left the island. The vast majority did not do so because they opposed the Cuban leadership, but because the country was unable to offer them sufficient professional and economic prospects. For the first time in many years, the island’s population has once again fallen below the ten-million mark.
The Cuban government under President Miguel Díaz-Canel has not tried to paint a rosy picture of the situation: as recently as December 2024, it admitted that its previous measures had failed to revive the economy.
Trump Tightens Sanctions
On 20 December 2024, Díaz-Canel and Raúl Castro, who is now 93 years old, mobilized hundreds of thousands of people in Havana to protest against the US policy of blockades and sanctions. Since the early 1960s, Washington has inflicted untold hardship on the population of its rather inconvenient and unyielding neighbour. Since then, virtually every subsequent US administration has been obsessed with undermining the Cuban socialist model by means of an economic and financial blockade, which have been enacted and maintained in an attempt to destabilize the country.
It is impossible to say with certainty how the Cuban economy would fare if the blockade were to be lifted. What is clear, however, is that it would be much better off. But now, amid a situation that is already quite precarious for Cuba, Donald Trump has stepped up US sanctions against the country. The faint hope that his administration would leave the country alone for a while, since it is already dealing with so many global political conflicts, has not been fulfilled. The US Secretary of State Marco Rubio, who also happens to be of Cuban descent, adopted an extremely pugnacious stance from day one of his term in office. He made it unmistakably clear to Albert Ramdin, the new Director General of the Organization of American States (OAS) elected in March, that he considers small socialist Cuba to pose “a risk and a threat”.
The new US administration also reversed the decision — made only recently by Joe Biden — to remove Cuba from the list of states that sponsor terrorism. This accusation of terrorism is used by the US to justify its policy of making it extremely difficult to conduct international financial transactions with Cuba by threatening third parties with sanctions. The move to re-classify Cuba as a terrorist entity means that companies that maintain business relationships with certain Cuban partners and institutions may face criminal charges and penalties. Faced with this threat, many companies are likely to back down from doing business with Cuba for fear of legal repercussions or economic hardship.
Cuba’s abundant sunshine could pave the way for a transition to a more sustainable energy industry.
The Trump administration has also reactivated Part III of the infamous Helms-Burton Act. This controversial law allows US citizens (including naturalized US citizens of Cuban origin) to file lawsuits in US courts against companies that invest in assets expropriated after the 1959 Cuban Revolution. These provisions create additional legal risks for international companies seeking to do business with Cuba.
Another recently implemented measure serves a similar purpose: anyone engaged in cooperation programmes with Cuba must risk being subject to US visa restrictions. In particular, Cuba’s international medical missions, which are among the country’s most important sources of foreign currency, are being targeted. For example, the regional government of the Italian province of Calabria signed an agreement with Cuba in 2022, according to which 500 Cuban doctors were to be sent to Italy to alleviate staff shortages in public hospitals. Now Italian politicians from the region face the prospect of being banned from entering the United States.
The same dilemma is even more pronounced in Mexico. The country is showing solidarity with Cuba by rushing to fill the gap left by Venezuela’s oil shortages. Mexico is even sending experts and materials to help stabilize the Cuban power grid and has signed contracts with several thousand Cuban doctors in recent years. Since taking office, Donald Trump has bombarded Mexico with threats of new punitive tariffs if it does not act as Washington sees fit on issues such as migration, the war on drugs, and foreign trade with China. It is presumably only a matter of time before the US comes down hard on Mexico’s policy towards Cuba.
Consequences of US Immigration Policy
The US is also doubling back on its immigration policy. For decades, the US created incentives for Cuban citizens to leave their country in order to destabilize the government there. Now, the US president is making family reunification, which was previously incentivized, virtually impossible. The so-called “Parole” programme previously granted more than 110,000 Cubans the opportunity to live in the US for two years with the prospect of gaining permanent residency. Those days are over. What’s more, a large percentage of the approximately 900,000 Cubans who have emigrated from the island to the United States since 2021 under special provisions are now at risk of being deported. Trump is even considering a general ban on Cubans entering the country.
In addition, the US government revoked the Cuban company Orbit’s licence to collect remittances from Cubans in the US and send them to their family members in Cuba. Western Union discontinued its remittance service due to fear of sanctions, in a move that ultimately impacts tens of thousands of families who rely on these remittances in order to cover their living expenses.
Furthermore, Trump has also stopped granting visas for exchange programmes. This will affect Cuban artists, academics, scientists, and athletes in particular and will mean that in future, not even Cuban students will be able to participate in sports competitions in the United States.
Squaring a Circle
It will be difficult for Cuba’s political leadership to find a way out of the crisis in the foreseeable future. On the one hand, it does not want to give up the gains made by the revolution in the sectors of education and health, thereby maintaining the primacy of the state over the private sector. But the country lacks the necessary funds for investing in vital sectors and cannot obtain further loans due to US sanctions and its already high levels of foreign debt. In the short term, the focus will have to be on how the country’s economy can survive without overstretching the population’s patience.
Agriculture offers vast, untapped potential, including for organic farming, which has proved very successful on a small scale in some areas. However, the Cuban system has thus far offered few incentives that would encourage young adults to stay in the countryside and cultivate arable land or raise livestock there. Recent legal reforms now permit foreign companies and individuals to lease agricultural land in Cuba. For example, a Vietnamese company is planning to cultivate 1,000 hectares of rice crops this year. If successful, the area could be more than tripled in subsequent years.
Cuba’s abundant sunshine could pave the way for a transition to a more sustainable energy industry. But this would require investment in infrastructure — something that other countries would have to provide upfront due to the country’s empty coffers. The long-standing supply of cheap oil from Venezuela delayed the energy transition from taking place during more prosperous economic periods.
Cuba’s situation would be immensely assuaged if the European Union were to take a stronger stand against the US blockade.
For the time being, Cuba’s membership in BRICS, made official in January 2025, is primarily symbolic. Under the current arrangement, the country can only hope for significant economic support from China and Russia.
The increasing dollarization of the economy, with its enormous differences between the official exchange rate and the black-market rate, as well as the income disparities between those employed in the small private sector and those in the state sector, pose a further challenge. In the so-called “special period” following the collapse of Eastern European real socialism in the early 1990s, all Cubans were equally affected by supply shortages. Today, however, inequality has increased. And closing this gap would be akin to squaring a circle, given the vast differences in productivity between the nation’s private and public sectors.
Cuba’s situation would be immensely assuaged if the European Union were to take a stronger stand against the US blockade against the country. Year after year, the EU member states vote against the US economic and trade embargo in the UN General Assembly. All other UN members follow suit in this regard, with the exception of the US and Israel.
However, the EU shies away from open conflict. Long-standing regulations aimed at providing assistance to EU-based companies affected by US sanctions are rarely applied in practice, which certainly does not offer much incentive for companies to defy the blockade.
According to Cuban government officials, there is no shortage of plans for what would happen in the period after the US blockade were lifted. But with Trump in office, this outcome has receded into the distant future. For the time being, it looks like the situation will remain difficult for the island nation.
This article first appeared in nd.Aktuell in collaboration with the Rosa Luxemburg Foundation. Translated by Hunter Bolin and Louise Pain for Gegensatz Translation Collective.