Introduction
The Special Period went down in history as one of the most difficult economic phases ever experienced by Cubans. Problems started in1989 and continued until the end of the 90s. Most of Cuba’s woes began when the USSR collapsed; this had immediate implications for its oil import, as well as its economy (Erikson 216).
Therefore, the research question in this paper is “What were the economic implications of the reduction of oil imports resulting from the collapse of the USSR during the Special Period?”.
Implications to Cuba’s Economy
After the collapse of the USSR, the Soviet Union no longer fulfilled its international agreements, including critical oil exports to Cuba (Blacker 12). The USSR and Cuba previously belonged to an international organization known as COMECON (Council for Mutual Economic Assistance), which facilitated economic cooperation between the USSR and communist states (Aponte-GarcĂa 486).
However, when the Soviet Union broke up, along with the COMECON, Cuba immediately entered the time of severe economic crisis, the Special Period in Time of Peace (Kath 24). The shift from non-market principles to a market-based economy respectively caused the Soviet Union to cancel its obligations with communist member states like Cuba (Aponte-GarcĂa 487).
The Soviet government introduced market reforms that made its economy incompatible with the communist-based international agreement with Cuba (Kath 24). Therefore, the USSR announced that it would no longer deliver oil on a continuous basis to Cuba, as had been the case before the collapse. It also added that there would be no foreign aid or subsidies to be accorded to Cuba.
This was devastating news because the USSR was Cuba’s most powerful trading partner. Now that, this relationship no longer existed, Cuba could not export or import goods from countries in the Soviet Union (Hernandez 10).
The USSR collapse coincided with the break up of socialist institutions that, in turn, had a potent impact on socialism development in Cuba, which still held on to socialist values, was becoming increasingly isolated (Perez 343). It could not trade with a newly formed Soviet because this new government did not adhere to Marxist principles anymore (Perez 314). As a result, there was an ideological rift that broke up this relationship.
The biggest challenge arose in the petroleum sector because petroleum products met most of Cuba’s energy needs. Over 70 % of oil was import to Cuba from the Soviet Union, which agreed to deliver 13.3 million tones of oil products annually under the terms of bilateral trade (Clow 72).
At the end of 1990s, Cuban government found that the USSR was almost 2 million tones behind in shipments due to the rise of international oil prices (Clow 73). As a result, Cuba was unable to cover the payment for the Soviet oil, which led to the economic crisis and highlighted a much deeper political dilemma (Perez-Lopez 17).
It could no longer resell the excess oil that came from the Eastern European trade block for profit because the Soviets had cut-off oil supply to Cuba. Cuba often engaged in this trade because its chief trading partner sold petroleum products at lower than global market prices (Clow 72).
Heavy reliance on the oil-based product also created a number of challenges for economic development of Cuba (Perez-Lopez 17). This was about a tenth of what it had before the collapse.
Cuba underwent an economic crisis owing to the lack of sufficient oil imports (Kath 24). Oil shortages had tremendous ripple effects that caused shortages in many other economic sectors (Benzing 72). Therefore, the country strived to recover from the economic crisis and from the loss of trade relations with the Soviet Union (Benzing 72).
In particular, the Cuban government entered the Special Period and recognized a 35 % decrease in GDP (Benzing 68). Approximately two hundred consumer goods became scarce in the country (Trumbull 313). Cuba could not manufacture these items and had no means of importing them. Additionally, the closure of most of these factories made thousands of people unemployed (Mesa-Lago 17).
The absence of oil imports altered Cuba’s transportation sector because it heavily depended on petroleum-based products to operate. As a result, it became almost impossible for Cuban workers to get to work as they waited for hours for buses (Perez 344). Cubans had to adjust to this new standard of living as most of them used personal cars prior to the collapse; that was no longer sustainable during the Special Period.
Poor transportation services hampered the supply of goods to consumers (Gershman & Gutierrez 50). Since food was the main concern for most families, they could not find the money to spend on transport. A number of them depended on free means such as hitchhiking (Hopkins 109). The Cuban population experienced the minimum level of nutrition, but still the food supply guaranteed normal living for people (Monreal 75).
This situation also had implications in the health sector because people could not transport medicine or pharmaceutical products to the individuals that needed them (Monreal 76). The country’s general level of affluence declined owing to these transport challenges (Gershman & Gutierrez 50). Cuban workers belonged to unions that were severely suppressed by state-security agents (Gershman & Gutierrez 50).
Therefore, the international labor movement failed to support Cuban independent movements, which has become the main issues on the agenda of the International Trade Union Confederation (Gershman & Gutierrez 50). In addition, the government placed a number of vehicles in strategic locations for picking up distraught passengers, to reduce the use of energy (Gershman & Gutierrez 50).
The reduced oil imports and subsequent economic crisis led to a series of changes in the economic engagements of the Cuban people, especially in later phases of the Special period (Pedraza 215). The government legalized dollar stores (government initiated stores in which items could be purchased using dollars alone) and some opportunities within the tourism sector (Benzing 69).
This created a crisis of identity because Cubans had to choose between the Communist ideals that they had held on for so long and capitalism, which rewarded individual efforts (Pedraza 215).
The reluctance of international labor movement to fight against the violation of the Cuban workers’ rights presents a deeper discouraging tendency in the world’s community to rationalize and, in certain cases, to justify the oppressive character of the Cuban political system (Gershman & Gutierrez 51).
Impossibility of Fidel Castro to come with existing employment norms and standards, as well as the emerging conflict with the United States, led to deepening the crisis by creating an atmosphere of violence and nationalism (Gershman & Gutierrez 51). As a result, the Cuban government failed to make a smooth shift to a new level of trade relations.
Due to the economic crisis, the agricultural sector had to contend with a more archaic form of production, which was the use of human and animal labor (Pedraza 38). Although these approaches helped the country to cope with its immense challenges, albeit at a slow pace, it still represented a decline in the living standards in the country (Benzing 70). Even intellectual pursuits became a challenge.
Highly educated Cubans could not find work and were exceedingly concerned about their future (Eckstein 315). A vast number of them migrated to other economically stable countries for better opportunities.
Nonetheless, historians credited the country’s government and the Cuban people for their resilience and innovation. They used unorthodox measures to make the most of their circumstances (Gershman & Gutierrez 52). The purchase of seven hundred thousand bicycles is just one of the examples of these people’s willpower.
Convenience was not a primary concern to the people of Cuba; theirs was to conserve the few resources that they possessed. Estimates indicate that the GDP of the country reduced by about thirty four percent immediately after the collapse and elimination of the oil imports (Perez-Lopez 17). These numbers reduced further in subsequent years.
Conclusion
The Cuban Special Period was an immensely difficult period because of the economic repercussions that citizens had to undergo. The sectors that were highly affected deeply relied on oil imports; consequently, the country could not operate normally without them. Transportation, housing, electricity, agriculture and industrial manufacture were some of the sectors that were hardest hit.
The standards of living reduced dramatically, and Cubans had to use archaic strategies to survive. Overall, the re-evaluation of previous experiences has provided Cuba with numerous insights for developing further strategies of economic development.
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