Has Cuba returned to 1898?
By Francisco J. Diaz Pou · July 13, 2026
For nearly four centuries, Cuba remained under Spanish rule. However, in 1895, the island became the stage of a new war aimed at ending colonial control. The conflict concluded in 1898, after the intervention of the United States, leaving Cuban society in a state of profound devastation.
The war severely affected all economic sectors of the country. The different social classes were ruined, and the population suffered a considerable decline.
Before the outbreak of the conflict, the island’s estimated population was 1.8 million inhabitants. At the beginning of 1899, a census conducted by U.S. authorities recorded only 1.57 million, highlighting the strong demographic impact of the conflict.
While the war brought devastation to Cuban society, most deaths did not result directly from combat. Instead, the majority occurred due to widespread epidemics triggered by the Reconcentration policy enforced by the Spanish High Command. This strategy dramatically affected the civilian population, intensifying the humanitarian crisis that unfolded in Cuba as the conflict ended.
The sugar industry, a fundamental engine of the Cuban economy during the 19th century, suffered a severe collapse as a direct consequence of the war. In 1894, production had reached 1.086 million metric tons, but the insurgents’ military strategy consisted of attacking the main instruments of colonial wealth, especially sugar mills. The objective was to raise the costs of the war for Spain and weaken its ability to sustain the conflict. As a result, the 1898 harvest, the last year of the war, dropped drastically to just 315,000 metric tons, reflecting the magnitude of the economic destruction.
At the end of the 19th century, Cuba’s livestock sector underwent a dramatic contraction as a direct result of the War of Independence. In 1894, the country possessed around 2.486 million head of cattle, but the devastation caused by the conflict led to a steep decline, with the 1899 Census recording only 377,000. This drastic reduction had significant repercussions, undermining both the dietary needs of the population and the country’s overall productive capacity. The shortage of meat, coupled with the absence of draft animals—particularly oxen, which were essential for agricultural labor—hindered economic recovery during a critical period. Recognizing the urgency of revitalizing the sector, the U.S. Intervention Government permitted the importation of livestock and provided partial financial assistance for these purchases from nearby countries such as Mexico. These measures were intended to speed up the reconstruction of Cuba’s livestock industry and support the broader process of economic restoration.
The economic imbalance generated by the war had profound effects on Cuba’s property structure. The absence of agricultural and industrial credit institutions prevented local producers from accessing the capital needed to reactivate their activities, worsening the widespread ruin. In this context, large tracts of land and numerous urban properties passed into the hands of those with liquid resources, further consolidating inequality. The inability of national actors to rebuild the productive fabric facilitated the entry of foreign capital, which found a favorable scenario to acquire strategic assets and assume a decisive role in the Cuban economy during the first decades of the 20th century.
The severity of Cuba’s current economic crisis closely mirrors the devastation experienced more than a century ago and, in certain respects, reflects even more adverse conditions. Remarkably, for the first time since 1550, the country has not only ceased to export sugar –staple of its economy for centuries—but is also unable to produce sufficient quantities to meet its own population’s needs. The livestock sector, too, demonstrates a stark contraction: official data from 2024, preceding the latest downturn, reported 2.913 million head of cattle, a figure that falls short of the 2.968 million head registered in 1908. Notably, the 1908 count occurred when the country had an estimated population of just 2.13 million inhabitants, underscoring the depth of the present decline.
The reduction in the output of basic food items had already reached alarming proportions before 2025. According to official statistics, Cuba produced 672,600 tons of wet paddy rice in 2013. By 2024, production plummeted to 100,477 tons, signaling an 85% decline. The situation was similarly dire for beans: while 129,800 tons were harvested in 2013, only 26,188 tons were recorded in 2024—a decrease of 80%. These figures point to a persistent deterioration in agricultural productivity, which has been ongoing even before the onset of the current energy crisis. As a result, Cuba’s food insecurity is not a recent development but rather the outcome of a long-term weakening of its productive sector.
In the realm of finance, Cuba is burdened with high levels of external debt and has struggled to maintain a consistent record in servicing its obligations. Official data indicates that, as of December 31, 2024, the country’s sovereign external debt stood at 29.8 billion dollars. This is the case despite significant debt forgiveness between 2011 and 2015 from creditors such as Russia, China, Mexico, and the Paris Club, totaling 46.341 billion dollars. For context, in 1958, the government’s external debt was approximately 50 million dollars, and the Cuban peso was freely exchanged at parity with the U.S. dollar. At that time, only Cuba, Guatemala, and the Dominican Republic in Latin America and the Caribbean enjoyed similar levels of monetary stability. Additionally, during the Latin American external debt crisis of the 1980s, Fidel Castro publicly criticized the International Monetary Fund—the organization leading the crisis response—and encouraged debtor nations to default on their loans.
In 1948, the World Bank identified Cuba, alongside Argentina and Uruguay, as one of the countries in the region offering the highest quality of life to its inhabitants.
Cuba’s present economic deterioration is so acute that it stands out in regional statistics. The Economic Commission for Latin America and the Caribbean (ECLAC) reports that Cuba now holds the lowest national per capita income in the Western Hemisphere, highlighting the depth of the crisis.
Much like the situation in 1898, Cuba is currently decapitalized. This lack of capital severely limits the country’s ability to embark on the large-scale economic reconstruction that is urgently needed.
From a financial standpoint, recapitalization would primarily rely on three sources of funds:
- Internal savings
- Foreign direct investment
- Financing and technical assistance from international development entities, such as the International Monetary Fund, the World Bank, and the Interamerican Development Bank
However, as previously discussed, Cuba’s high levels of indebtedness and inconsistent debt servicing make it improbable that the country will be able to secure external capital in the near term under reasonable conditions.
Persistently high inflation within Cuba has severely eroded the population’s ability to save. The overwhelming majority of personal income is consumed by essential subsistence expenses, leaving little to no room for internal savings.
Foreign direct investment (FDI) is widely recognized as a critical component for economic recovery and growth. For Cuba to attract investment at the scale required for meaningful revitalization, the country’s legal framework would need to become comparable to those found in other nations within the region and meet the standards established by development and commercial banks. This alignment is essential to provide the legal and institutional guarantees that investors expect when committing capital abroad.
Over the past sixty years, Cuba has not succeeded in drawing substantial foreign investment, a marked contrast to neighboring countries such as the Dominican Republic, which have benefitted from significant inflows of foreign capital. The primary reason for this disparity is that Cuba’s economic system does not operate within a rule-of-law structure capable of offering the necessary assurances to foreign investors. Without the stability and protections provided by such a system, Cuba remains unable to overcome the obstacles that have historically deterred investment and hindered economic recovery.
Participation of international development banks has historically been considered one of the fundamental pillars for any process of economic recapitalization. These institutions are crucial in providing funding, technical assistance, and support for countries seeking to rebuild or strengthen their economies.
Cuba played a significant role in shaping the new international economic order that emerged after the Allies’ victory in World War II. Its active support for the Allied effort enabled Cuba to participate in the discussions that led to the creation of major multilateral economic institutions in the postwar era.
In 1944, Cuba participated in the Bretton Woods Conference, a pivotal gathering that established the foundation for several key international economic institutions. This conference resulted in the creation of the International Monetary Fund (IMF), the World Bank, and the General Agreement on Tariffs and Trade (GATT). Since their inception, these institutions have significantly influenced the trajectory of global economic development.
The International Monetary Fund began its operations in December 1945, with 29 countries, including Cuba, ratifying the agreement that created the organization. This demonstrated Cuba’s commitment to international cooperation in economic matters during that period.
Before returning to Havana to lead the Banco Nacional de Cuba, which was established in 1950 as the country’s central bank, Felipe Pazos served as the head of the Latin American Division in the IMF’s Research Department. Pazos held the presidency of the National Bank between 1950 and 1952 and again in 1959, but he resigned from his position in October of that year.
Following Pazos’s resignation, Fidel Castro appointed Ernesto Guevara, an Argentinian adventurer who had joined Castro’s group in Mexico and accompanied him on the Granma yacht expedition in 1956, as president of the National Bank of Cuba.
From that point forward, Cuba accelerated the establishment of political and economic ties with the USSR and the socialist bloc. Simultaneously, Castro decided that Cuba would not participate in the creation of the Interamerican Development Bank and withdrew Cuba’s membership from both the IMF and the World Bank.
In their efforts to forge closer ties with the Soviet Union, Fidel and Raul Castro adopted policies reminiscent of Joseph Stalin’s approach. Although the USSR was present at the Bretton Woods Conference, Stalin ultimately refused to allow the Soviet bloc to join the International Monetary Fund (IMF) and the World Bank. This decision was rooted in concerns that integrating with these institutions would foster economic interdependence with former wartime allies, thus restricting the absolute control Stalin maintained over his country.
Cuba stands out as the only nation in the Western Hemisphere that has not participated in the economic and social development initiatives led by international development banks in the region over the past sixty years.
This persistent isolation was not merely coincidental; it was a direct consequence of deliberate political decisions made by the Castro brothers. Motivated by similar fears to those held by Stalin, they believed that developing relationships with international financial institutions would compromise the absolute authority they wielded over Cuba.
The crisis facing Cuba today is, by all appearances, even more severe than the one the nation endured following the conclusion of Spanish rule in 1898. The challenges before the country are profoundly impacting both the material infrastructure and the spiritual fabric of society. It is difficult to contend that the very leadership responsible for depleting the nation’s resources and undermining its institutions over the past six decades is now equipped to oversee the monumental task of national reconstruction. The long period of mismanagement and erosion has left deep scars, making the prospect of recovery under the same leadership highly questionable.