Dark times for Cuba’s economic experiment

What It Covers

Cuba's economy collapses under the weight of a 2025 U.S. oil embargo, exposing six decades of structural fragility built on alternating dependence on communist allies — the Soviet Union, Venezuela, China — and capitalist tourism. Havana bike tour operator Yasser Gonzalez Cabrera and economist Ricardo Torres trace how both strategies simultaneously failed.

Key Questions Answered

• •Single-industry vulnerability: Cuba's economy became dangerously concentrated in tourism during the 2010s, with hundreds of thousands of Cubans converting homes to hotels and running tour businesses. When Venezuela cut oil shipments in 2016, Trump restricted travel in 2017, and COVID eliminated tourists entirely, GDP collapsed with no diversified fallback — a textbook small-economy specialization trap.
• •Dependency chain risk: Cuba replaced Soviet oil subsidies with Venezuelan oil after 1991, receiving cheap fuel in exchange for exporting doctors, teachers, and sports coaches. When the U.S. seized Venezuela's oil industry in 2025 and threatened tariffs on Mexico and other potential suppliers, Cuba's entire energy infrastructure collapsed within months, causing nationwide blackouts exceeding 24 hours.
• •Private sector ceiling: Even during Cuba's most liberalized periods, government policy explicitly capped private business growth — businesses could hire up to 100 employees maximum, and pricing, production, and key decisions remained state-controlled. This structural ceiling prevented Cuban entrepreneurs from building resilient, scalable enterprises capable of surviving external shocks or substituting for state economic failures.
• •Migration as economic indicator: Nearly 3 million Cubans — roughly 25% of the total population — left the country after 2020, representing the largest emigration wave in Cuban history. Economist Ricardo Torres, who spent decades studying Cuba's economy from inside Havana, departed in 2021 after concluding his contributions were exhausted, signaling elite human capital flight alongside mass emigration.
• •Moral reserves depletion: Cuban economist Ricardo Torres identifies a measurable social threshold: populations tolerate economic hardship when they retain faith the system can recover. After the Soviet collapse in 1991, Cubans endured 35% GDP contraction believing socialism would rebound. By 2021, visible inequality — Teslas alongside people searching trash cans for food — exhausted that tolerance, accelerating protests and mass departure.