By Francisco Diaz Pou
For more than sixty years, the Cuban government under the Castro regime has consistently relied on the term «blockade» as the central argument to explain the ongoing economic and social crises affecting the country. This narrative has remained unchanged, directed both toward the Cuban population and the international community. The government has repeatedly portrayed the so-called «blockade» as the primary source of the nation’s hardships. As a result, the concept of the «blockade» has become the dominant explanation provided to justify internal difficulties and setbacks.
Fidel Castro’s visit to Washington in 1959
A few months after the seizure of power on January 1, 1959, Fidel Castro led a delegation of senior officials of the regime on an official visit to Washington. Among the attendees were prominent members of the Cuban economic team, such as Finance Minister Rufo López Fresquet, former economist of the Association of Industrialists of Cuba; Felipe Pazos Roque, president of the National Bank of Cuba (now the Central Bank) and founder of the institution in 1948; and Justo Carrillo, president of the Agricultural and Industrial Development Bank [BANFAIC] and its founder in 1950. Both Felipe Pazos and Justo Carrillo had previously resigned from their executive positions in 1952 following the coup d’état. However, at Fidel Castro’s request in 1959, they were reinstated in their respective leadership roles, highlighting Castro’s trust in their expertise and the continuity of professional management within the new administration.
Felipe Pazos’ career and influence on the Cuban economy
Felipe Pazos was a distinguished economist whose academic journey began at the University of Havana, where he earned degrees in Civil Law as well as Political and Social Sciences. He furthered his expertise by specializing in Economics at Columbia University and the New School for Social Research in New York. Pazos’ academic reputation led to his participation in the Cuban delegation at the United Nations Financial and Monetary Conference, better known as the Bretton Woods Conference of 1944. This historic gathering, attended by representatives from forty-four allied nations, established the framework for the post-World War II global economic and financial order.
With the founding of the International Monetary Fund (IMF) in 1946, Pazos was appointed to lead the Latin American Division of the IMF’s Research Department. His tenure at the IMF demonstrated his commitment to international economic cooperation and policy development. In 1948, Pazos returned to Havana, where he founded and assumed the presidency of the National Bank of Cuba, the country’s highest monetary authority. Through these roles, Felipe Pazos played a crucial part in shaping Cuba’s economic policies and institutions during a period of significant transition.
Expectations and development of the visit to Washington
The visit of Fidel Castro and his economic team to Washington in 1959 was met with considerable anticipation in both Cuba and the United States. Given the longstanding historical relationship between the two nations, there was widespread expectation that the meetings would lead to a renewed and strengthened partnership, particularly through increased economic cooperation.
Contrary to these hopes, Fidel Castro made it clear to his delegation that they were not to seek any form of assistance from the U.S. government. This directive was issued despite the willingness of the United States to support the economic plans presented by the Cuban officials. Castro’s firm stance not only took the American hosts by surprise but also caught members of the Cuban delegation off guard, as they had anticipated a different approach to the discussions.
Castro’s Strategic Shift Following the Buenos Aires Conference
Upon returning to Cuba, Fidel Castro’s true strategic intentions became evident. Shortly after, he traveled to Buenos Aires to participate in an Inter-American Conference, where he directly confronted the United States. Castro issued a bold challenge, demanding that the U.S. provide $30 billion to Latin American governments for economic and social development, insisting that these funds be given without any conditions attached.
The United States refused Castro’s proposal. In response, Castro escalated his anti-imperialist rhetoric, shifting focus away from Cuba’s specific national interests. Instead, he cultivated the image of himself as a «heroic anti-imperialist fighter.» This approach would come to define both his political career and the legacy of his followers, as Castro prioritized international ideological positioning over domestic concerns.
The La Coubre incident and the construction of the external enemy
From the outset, the Castro regime made the establishment of Armed Forces a top priority, aiming to build a military capability that far exceeded the country’s actual needs. This strategy served not only to bolster national defense, but also to strengthen political control by promoting the militarization of Cuban society and maintaining a perpetual state of readiness for war. The regime’s approach was shaped by the context of the United States’ embargo on war materiel, which had been imposed during the Batista government and left Cuba in need of alternative sources for military supplies.
In its search for arms, the Cuban government initially turned to Western and Eastern European countries. Early efforts to procure weapons from Poland proved unsuccessful, as the Soviet Union advised the Polish authorities against moving forward with arms sales to avoid escalating tensions with the United States1. Undeterred, the regime found more cooperative partners in France and Belgium, both of which agreed to supply Cuba with the necessary weaponry.
The culmination of these efforts occurred on March 4, 1959, when the ship La Coubre arrived at Havana’s port carrying Franco-Belgian arms and ammunition. Unfortunately, a critical error was made by docking the vessel at the Tallapiedra dock, which was located near the city’s electric power plant and just steps away from the main avenue of the port. During the unloading process, improper handling of the ammunition led to a series of explosions, resulting in the tragic loss of more than one hundred lives.
Fidel Castro’s reaction and meeting with the Soviet envoy
The day following the tragic explosions at Havana’s port, Fidel Castro used the funeral of the victims as an opportunity to publicly accuse the United States of sabotaging the unloading of armaments and ammunition from the ship La Coubre. Castro suggested that the incident was intended to echo the infamous explosion of the battleship Maine in Havana Bay in 1898, which had precipitated the Spanish-American War. By invoking this historical event, Castro drew upon nationalist and anti-American interpretations, which argued that the explosion of the Maine was caused by a mine attached to its hull—a theory used to justify U.S. intervention in Cuba. However, later research by Admiral Rickover, the architect of the U.S. Navy’s atomic submarine fleet, concluded that the explosion was caused by the self-combustion of the ship’s coal deposits2.
Mere hours after Castro’s speech, a confidential meeting took place at the residence of Antonio Núñez Jiménez, director of the National Institute of Agrarian Reform (INRA). Attending were Aleksandr Alekseev—who had arrived in Havana as a journalist but was, in fact, a senior KGB official specializing in Latin American affairs—and only the Castro brothers and Núñez Jiménez. Alekseev was the highest-ranking Soviet official in Cuba at that time, as diplomatic relations between Cuba and the USSR had been severed during the Batista government.
At the meeting, Fidel Castro spoke candidly, telling Alekseev, “Under the present circumstances, any friendly gesture of the Soviet government toward Cuba would be accepted with gratitude by our people.” Castro asserted his conviction that the United States had orchestrated the explosion of La Coubre, acknowledging that while he lacked legal or irrefutable evidence, he was convinced that the U.S., which had been pressuring its allies not to supply Cuba with weapons, had sabotaged the ship as a warning.
According to Alekseev’s report to Moscow dated March 8, 19603, Castro was psychologically prepared to confront the “Colossus of the North.” He explained a series of countermeasures he was prepared to implement, including the nationalization of all American property—particularly sugar companies—cutting off the supply of drinking water to the U.S. military base at Guantanamo, mobilizing the people’s militia and revolutionary army to defend against probable U.S. intervention, and deploying security services to suppress any counterrevolutionary activity within Cuba.
During a six-hour lunch with Alekseev, Fidel Castro inquired whether Cuba could rely on the Soviet Union for supplies and weaponry in the event of a blockade or U.S. intervention. Castro further noted that Cuba possessed many uninhabited bays suitable for Soviet ships and submarines. Additionally, he admitted that Havana lacked economists with experience in constructing a socialist economy and hoped the USSR would send experts to assist. Alekseev’s report to Moscow highlighted Castro’s most significant statement: he now regarded the Soviet Union as a model for Cuba’s future.
The implementation of the Castro plan
In March 1960, Fidel Castro outlined his strategy before the Soviet envoy and began to implement it in the following months. On July 6, the Council of Ministers issued Law-Decree 851 that authorized the nationalization of U.S. assets and companies. On August 16, 1960, Resolution No. 1 expropriated thirty-six U.S. sugar mills that had produced 2,118,432 tons of sugar the previous year, 36.65% of the country’s sugar production4.
In addition, in November 1959, the National Bank of Cuba under the presidency of Ernesto Guevara had suspended dollar transfers from oil refining companies to cover their crude oil purchases in Venezuela and other countries. The government’s solution was to order it to process Soviet oil that they would supply. The companies rejected the proposal and their operations were taken over by the government, but on August 16 through Resolution No. 1 Esso Standard Oil Co., The Texas Co., West Indies Ltd. and Sinclair Cuba Oil Co. were nationalized5. The Cuban Electricity Company,a subsidiary of the U.S.-based American & Foreign Power Company and the Cuban Telephone Co., a subsidiary of the International Telegraph & Telephone Co. also were nationalized6.
A month later, on September 17, the Government nationalized the branches of The National City Bank of New York, The Chase Manhattan Bank and The First National Bank of Boston7.
The expropriations continued and on October 13, 1960, the government issued Law No. 890 by which all sugar companies, industrial companies and banking entities in the country were confiscated. Both the nationalizations of U.S. companies and the expropriations of Cuban nationals have never been compensated, so it can be considered that the Castro regime has stolen those properties from their legitimate owners.
The isolation of Cuba from international financial organizations
On October 23, 1959, Felipe Pazos resigned, observing the anti-democratic turn that the Castro regime was taking. He went into exile and resumed his professional career. In 1961 he joined the United Nations Economic Commission for Latin America and the Caribbean (ECLAC), which since its foundation in 1950 had been directed by his colleague Raúl Prebisch, creator of the Structuralist and Developmentalist School of Latin American economic thought. He later served as Chief Economist of the Inter-American Development Bank and finally served on the board of directors of the Central Bank of Venezuela.
In November 1959, Ernesto Che Guevara was appointed by Fidel Castro as president of the National Bank of Cuba. Guevara received his medical degree in his native Argentina and immediately began a journey through Latin America until he ended up in Guatemala where he remained for six months until the overthrow of Jacobo Arbenz in 1954. From there he escaped to Mexico where he met Fidel Castro.
It is incredible that this young Argentine adventurer who had never had a stable job, without academic training in economic matters and who arrived in Cuba as part of an armed group, assumed the direction of the country’s monetary policy governing body two years later. Guevara accelerated the process of dismembering Cuba from the economic system that emerged from the Bretton Woods Conference. Guevara’s appointment demonstrated the Castro brothers’ infinite ignorance of the economic and governance issues prevalent in the modern world.
The Inter-American Development Bank [IDB] was founded on December 30, 1959, as an alliance between the United States and nineteen countries in Latin America and the Caribbean. It has established itself as the first regional development institution in the world following the example of the World Bank Group. Currently, twenty-six countries in Latin America and the Caribbean belong to the IDB as borrowers and twenty-two that include the United States, Canada, sixteen European countries, Israel, Japan, South Korea, and China. The United States has 30% of the voting power, due to its capital contributions to the entity, and borrowing countries hold just over 50%, the remaining percentage is distributed among non-borrowing extra-regional countries. Some of the IDB’s principal areas of action are Agriculture and Food Security, Water and Sanitation, Climate Change, Education, Energy, Transportation, Small and Medium Enterprises [SMEs]. Unfortunately, Cuba rejected its participation in the creation of the IDB and 66 years after its foundation it is the only country in the Western Hemisphere that is not part of it by the decision of the Castro brothers.
On October 14, 1960, Decree No. 2876 was issued, which formalized Cuba’s withdrawal as a member of the International Bank for Reconstruction and Development [World Bank Group] and the International Monetary Fund [IMF].
The Soviet Union and China had refused to participate in these organizations at the time of their creation and had forced the countries in their orbit to withdraw from them. The Castro brothers enthusiastically followed the Stalinist autarkic line and withdrew Cuba. Our country is the only one in the Americas that does not participate in the economic and social development programs of the World Bank and the monetary stabilization programs emanating from the IMF. In fact, Cuba’s isolation is staggering, and this situation was created by the Castro brothers in their eagerness to faithfully follow the Soviet political line.
Credit history of the Castro regime
According to ECLAC, «Economic activity in Cuba during 1957 reached the highest levels of the post-war period.» «If price increases are taken into account, gross product growth in real terms can be estimated at just over 8 percent.8» This growth required an increase in imports of goods (equipment and machinery) and services that produced a deficit in the trade balance that amounted to 52.9 million dollars. This debt was partially covered by the financial assistance granted by the IMF to the Cuban Government to maintain monetary stability in the country.
José Luis Rodríguez, former Minister of Economics of Cuba and professor at the University of Havana, in an article published in the official Cuban press, stated, «it is essential to resume the alternative of a more flexible renegotiation of the debt, which at the end of 2024 was estimated, -according to creditor sources- at about 29,800 million dollars, which represents an approximate figure similar to the balance of 2019.9» In addition, from 2011 to 2015, the regime obtained several debt cancellations for 46,341 million dollars from Russia, China, the Paris Club and to a lesser extent Mexico10.
During the Latin American Debt crisis in the 1980s, Fidel Castro advocated the non-payment of obligations, maintaining an intransigent stance towards creditors and the IMF. The Castro regime’s high-risk credit history was a determining factor in the inclusion in the regulations of the Helms-Burton Act of the prohibition of granting credit for commercial transactions with Cuba.
The outcome of the crisis and prospects for Cuba
A comparative analysis of the Caribbean Basin for the year 2024 using the Economic Profiles published by ECLAC, shows that the Cuban economy lost its leadership and currently occupies the thirteenth position [13] in the region, surpassing only the Bahamas, Barbados, Suriname and Belize, with populations of less than 700,000 inhabitants. Cuba’s Gross Domestic Product per capita is the lowest in the entire Western Hemisphere.
The Castro leadership, from Fidel Castro to the present, has been characterized by its ignorance and mediocrity in the management of public affairs. The Castro brothers, in their eagerness to stay in power, isolated Cuba from the Western context and turned it into an instrument of the Cold War, with profound consequences for the nation.
The only option for the leadership that emerges from the ashes of Castroism to overcome the crisis suffered by the people of Cuba would be the full reintegration of the country into the Western world. A key element in the reintegration process is the reactivation of links with the international financial institutions that have favored the economic and social development of the region in recent decades. As we have pointed out, Cuba was a full member of those financial institutions and without them it cannot emerge from the current crisis.
In addition, it is vital that the new leadership be able to incorporate the Cuban community abroad in the required modernization processes. Without their effective participation, inserting Cuba into the areas in which they operate would be an extremely arduous task.
- Resolution of the Presidium, 23 de september 1959. Quoted by Fursenko, Alexander & Naftali, Timothy in One Hell of a Gamble (Nueva York: W.W. Norton & Co., 1997) p. 24 ↩︎
- Rickober, Hyman G., How the Battleship Maine was destroyed. (Washington: Naval History Division, 1976) ↩︎
- File 78825, pp164-66 SVR. Quoted by Fursenko, Alexander & Naftali, Timothy, en One Hell of the Gamble. (Nueva York: W.W. Norton & Co. 1997) p. 42 ↩︎
- Anuario Azucarero de Cuba 1959 (Havana: Cuba Económica y Financiera, 1960) p. 92-93 ↩︎
- Study on Cuba (Miami: University of Miami, 1963) p. 1406. ↩︎
- Study on Cuba, p. 1408-1409. ↩︎
- Study on Cuba Cuba, p. 1321 ↩︎
- Economic Study of Latin America Latina, 1957 (México: Economic Commission for Latin America. 1958) Ch. V, p. 195 ↩︎
- Rodríguez, José Luis, The World Economy in 2024 and Prospects for 2025: The impacts for Cuba (Part II (La Habana, Cuba Debate, february 11, 2025) ↩︎
- German Trade and Investment Promotion Office in Cuba, july 30, 2024 ↩︎