Cuba Was Barely Holding On… And Then The Oil Ran Out

To understand how Cuba ended up where it is today you have to go back to 1960 when the US decided to stop doing meaningful business with Cuba.

That year Castro nationalized American oil refineries and US President Eisenhower banned trade in response.

Kennedy formalized the ban two years later during a particularly intense period of distrust and hostility following the bay of pigs and of course the Cuban missile crisis.

The ban has since become the most enduring trade embargo in modern history.

Now, a trade embargo from the world's largest economy, and one you have a natural advantage in trading with due to proximity, is a pretty serious blow.

Cuba suddenly had to source imports through more expensive and less efficient trade routes, while its industries struggled to find new export markets and foreign investment.

This suppressed growth, with Cuba's own government estimating the cumulative economic cost at around $135 billion.

But what cushioned the blow, at least for a while, was the Soviet Union.

For most of the Cold War, the USSR propped Cuba up with huge subsidies, accounting on average for roughly a fifth of the entire Cuban economy.

When the Soviet Union dissolved in 1991, that support vanished almost overnight, and Cuba's GDP fell by more than a third in just three years.

This wouldn't be the last time that Cuba's structural dependence on America's adversaries would come back to bite it.

The government called this rough patch the special period in a time of peace, a fairly euphemistic name for a period that included mass food rationing, widespread blackouts, and importing more than a million bicycles from China because there was no fuel left for cars.

Now what makes Cuba's situation genuinely unusual is that even after all of this, the embargo survived.

The Soviet Union had collapsed, the cold war was over, and most of the countries that had been on the wrong side of American foreign policy eventually got folded back into the global trading system.

Vietnam, which had fought a brutal and deeply personal war against the United States, rebuilt its relationship with Washington and is now Southeast Asia's fastest growing major economy.

China opened up and became the factory of the world.

Even Russia was doing substantial business with the west, at least until the war in Ukraine changed that.

But Cuba remained locked out.

And the reason has more to do with politics than economics.

Unlike many other communist states, after the USSR collapse Cuba's political leaders continued to prioritize the survival of the socialist system over economic and political reform.

That gave the embargo's defenders exactly the justification they needed to keep it in place.

It also reinforced support among many Cuban Americans who believed continued pressure was the best path forward.

The Cuban diaspora in the US became a serious political force in Florida, a state that has decided more than a few presidential elections.

So the embargo became untouchable.

Because any politician who suggested lifting it risked losing Florida.