Cuba faced a chaotic economic panorama during the year 2023, where the increase in emigration is combined with a notable decrease in remittances, according to a report group of the NGO Cuba Siglo XXI and the firm Havana Consulting Group.
Despite the exodus which has brought more than half a million Cubans to the United States in the last two years, remittances experienced a drop of 3.31%, totaling 1,972.56 million dollars. According to the economist Emilio Morales, author of the dossier, this phenomenon marks a milestone in the history of remittances to the island, signaling the loss of one of its main sources of income.
The massive migration, both legal and illegal, has triggered a series of changes in the dynamics of Cuban remittances. Despite previous restrictions, the opening of operations with the company ORBIT S.A., opaquely connected to the Grupo de Administración Empresarial S.A. (GAESA, owned by the regime's military and political leadership), has paved the way for sending remittances from the United States.
However, the return of Western Union and other companies has not managed to promote official transactions, since the informal method predominates by 84%. The preference for carrying cash, the instability of official banks and the constant devaluation of the local currency contribute to this trend.
The double barrier: Communist regime and mass migration
This new reality presents a double challenge for the Cuban regime. On the one hand, its refusal to carry out political and economic transformations is an internal barrier.
On the other hand, mass migration, which has become a family reunification operation largely financed by relatives abroad, has become a critical component.
The Cuban diaspora has redirected its remittances towards financing the exodus, marking a significant change in the use of these funds.
The regime's strategy to facilitate migration through Nicaragua, designed to increase future remittances, has had unforeseen consequences.
Despite the hundreds of millions of dollars brought in by the human trafficking business, the figure does not compensate for the loss experienced in remittances.
Furthermore, social tension in Cuba has not decreased; On the contrary, the country is in a state of high volatility, with the possibility of an imminent social outbreak.
At the regional level: Contrasts and trends
At the regional level, Cuba's situation contrasts drastically with the boom in remittances experienced by other Latin American countries. According to the Inter-American Development Bank (IDB), a record inflow of $155 billion in remittances is projected for Latin America in 2023, an increase of 9.5% compared to the previous year.
Factors such as the increase in the migratory flow to the United States and fiscal stimulus policies in that country have contributed to this phenomenon. Mexico and Central America lead the growth, with record figures of 64,247 and 43,977 million dollars respectively.
The response of the Cuban regime to the decrease in remittances has been the promotion of MSMEs and online stores. However, this strategy still fails to compensate for the drop in remittances received directly. The preference for purchasing products through these stores instead of sending direct remittances reflects the discontent of Cuban exiles with government policies.
While Latin America celebrates records in sending remittances, Cuba is plunged into a deep economic and social crisis. The political and economic restrictions of the regime, along with mass migration, have transformed the destination of Cuban remittances.
The government's strategy to alleviate internal pressure has had negative consequences, decapitalizing human resources and exacerbating the crisis. The loss of income and human capital poses a monumental challenge for a regime that appears to be on the brink of a historic crossroads.
The desperate strategy of the regime
While the figure of 1,972 million dollars reached by remittance shipments in 2023 takes us back to the figure that was reached 13 years ago in 2010 when the country registered 1,920 million dollars, the regime's strategy to compensate for these losses is becomes more and more desperate.
The depth and extent of the system's crisis have reached such a magnitude and the speed with which it is collapsing is so dizzying that they block any possible margin for the survival of the regime if it insists on entrenching itself in its archaic totalitarian system of governance.
The regime's strategy to facilitate migration through Nicaragua, which sought to exploit human trafficking to increase future remittances, has become a double-edged sword.
Despite the million-dollar income generated by this business, they cannot compensate for the drop in remittances, and social tension in Cuba has not decreased. On the contrary, the country has become a true tinderbox with a high probability that at any moment a large-scale social outbreak similar to the one that occurred on July 11, 2021.
A drastic change in the destination of remittances
In October 2023, an article from the Cuban Conflict Observatory estimated that The Cuban regime had received 300 billion dollars between remittances and subsidies since 1960.
The figure of 1,972 million dollars reached by remittance shipments in 2023 marks a drastic change in the destination and use of these funds. Mass migration has altered the dynamics, leading to remittances, instead of being an internal economic support, becoming a financial engine for the family reunification operation.
This change in the pattern of use of remittances reflects the loss of confidence of the Cuban diaspora in government policies and in the regime's ability to address the economic crisis that is ravaging the island.
What do you think?
SEE COMMENTS (7)Filed in: