Havana (AFP) – Cuba's communist president has cited China and Vietnam as models for a historic shift towards a market economy that was hurriedly pushed through last week to try to end a severe crisis.
Issued on: 24/06/2026 - RFI
But some worry that Russian-style crony capitalism could be on the menu instead.
Under immense pressure from US sanctions, including a crippling fuel blockade, Cuba's government last week drew a line under nearly seven decades of central planning.
Unveiling 176 reforms that represent a seismic change to the island's socialist model, it said state-owned enterprises would be converted into joint-stock companies and opened up to private investors, private banks would be authorized and private developers would be allowed to build tourist infrastructure.
President Miguel Diaz-Canel said the measures, which also included sweeping changes to land use, aimed to "preserve" socialism rather than bury it.
But economists warned that a politically-connected elite would profit most from a rushed transition implemented without any semblance of democratic reforms.
Spain-based Cuban economist Pedro Monreal warned that a quick-fire sale of state enterprises "without robust legal safeguards" could result in "the capture of state assets by insiders well-connected to those in power."
"I inevitably think of the "crony capitalism" of the Russian transition," he wrote on X, referring to the former communist officials who snapped up state assets at knock-down prices after the break-up of the Soviet Union.
Fellow Cuban economist Ricardo Torres, a research fellow at the American University in Washington, issued a similar warning.
The "structural conditions for insider capture are present," he told AFP, noting that there are "no independent valuation mechanisms, no competitive bidding requirements, and no oversight body insulated from party control."
Socialism with Cuban characteristics
Former president Raul Castro, Fidel's brother, who led the country from 2006 to 2018, regularly cited Vietnam as an inspiration for his timid reform effort starting in 2010, when he boosted small private businesses and legalized home sales.
Communist Vietnam has become one of southeast Asia's fastest growing economies since introducing market-led reforms in the 1980s.
In China, meanwhile, Deng Xiaoping's "socialism with Chinese characteristics" has produced hundreds of billionaires and major homegrown companies such as internet giants Alibaba and Tencent.
London-based Cuban economist Daniel Torralbas argued that neither China nor Vietnam served as a useful comparison for Cuba because their transformation was "much more gradual."
"Both began with agricultural reforms that lasted several years, and then the reforms expanded to promoting foreign direct investment, international capital, the creation of special economic zones, and, of course, the expansion of the role of private property in the economy."
Cuba's opening up, by contrast, comes "at its worst moment," he said, when the economy is at rock bottom and US sanctions, including the fuel blockade, have caused an exodus of foreign investors and tourists.
From centralism to capitalism
Alexei, a 52-year-old building supervisor in Havana, recalled Mikhail Gorbachev's 1989 visit to Cuba, when the Soviet leader touted his perestroika reforms to a skeptical Fidel Castro and suggested that Cuba, too, needed to adapt.
"The best time to implement these reforms was in the 1990s," Alexei, who did not wish to be identified when talking about government policy, said, echoing a sentiment voiced by many Cubans about what they saw as wasted years.
Santiago, an engineer who worked in the Soviet Union in the 1980s, said the move to privatize chunks of the economy was long overdue, "because the state can't be dealing with simple things like fixing a television."
But the 59-year-old, like many Cubans who spoke to AFP, was worried about the pace of the changes and the risk of the island's most vulnerable being left behind.
In a recent opinion article in Time magazine, Torres, the economist, urged Havana to "resist the temptation to leap from bureaucratic centralism to a harsh, socially detached form of capitalism."
He called for the preservation of Cuba's core values: "that education is a fundamental good, that access to healthcare should not depend solely on purchasing power, and that exclusion of whole communities, whole generations, is not an acceptable price for growth."
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Mexico is gearing up to resume oil shipments to Cuba through privately owned companies rather than state entities, President Claudia Sheinbaum announced on June 22, floating a manoeuvre that would sidestep Washington's blockade while leveraging Havana's newly enacted economic liberalisation measures. The initiative, though, faces a materially harder sanctions environment than when Mexico first suspended its deliveries in January.
The backdrop is a near-total collapse in Cuban energy supply. Cuba produces only around 40% of the petroleum it requires domestically and has historically depended on imports from Venezuela, Russia and Mexico. That structure disintegrated on January 3 when a US military operation resulted in the capture of Venezuelan president Nicolás Maduro, halting Caracas' subsidised deliveries. Mexico stepped into the breach but suspended its own Pemex-operated shipments after the Trump administration issued an executive order on January 29 declaring a national emergency over Cuba and threatening tariff penalties on any country supplying hydrocarbons to the island. Only one oil shipment has reached Cuba since: a Russian tanker docking on March 30 carrying 730,000 barrels of crude. A second Russian vessel turned around off the coast of Brazil on May 27 without arriving. Cuba's Ministry of Energy and Mines warned on May 14 that the country had run out of oil and diesel entirely.
The humanitarian toll is severe and worsening. The record power deficit was registered on May 13 and 14, reaching between 2,153 and 2,174 MW and leaving 70% of the country without power. Grocery store shelves are empty, hospitals can barely function, and the lack of diesel has stalled the agricultural sector, marine vessels and trucks. Cuba's economy is forecast to contract by between 6% and 15% this year, according to estimates cited by multiple analysts.
Sheinbaum's proposed workaround pivots on the 176 economic reforms approved unanimously by Cuba's National Assembly on June 18 under Prime Minister Manuel Marrero. Among them, documented under the "Energy Transformations" section, is a provision allowing private domestic companies, cooperatives, joint ventures and foreign investors to participate in fuel importation and distribution — a sector historically monopolised by the state entity Unión Cuba-Petróleo (CUPET).
Sheinbaum argued this reform creates legal space for Mexican private operators to engage commercially with the island without routing supply through state channels. "The mechanism would be through private companies that have permits to transport fuel to Cuba," she said at her daily press conference, without naming firms or specifying a timeline. Her foreign ministry has indicated it can facilitate introductions for interested businesses.
The sanctions deterrent, however, has grown considerably more severe since January. The Trump administration's original tariff threat was subsequently invalidated: on February 20, the US Supreme Court ruled that IEEPA does not give the president authority to impose tariffs. Washington's response was to escalate through a different instrument. On May 1, President Trump signed Executive Order 14404 establishing a new Cuba sanctions authority under IEEPA, authorising OFAC to impose blocking sanctions on foreign persons determined to operate in Cuba's energy sector — covering oil and gas supply, electricity generation, distribution and fuel trading — as well as defence, metals and mining, and financial services.
Critically, the order extends secondary sanctions risk to foreign financial institutions that process transactions on behalf of designated Cuban entities. Any Mexican private company with US dollar banking exposure or American investors faces the prospect of SDN designation and loss of access to the US financial system.
OFAC has released no guidance on what constitutes "operating in" Cuba's energy sector for the purposes of secondary sanctions exposure, and there is no price-cap carve-out comparable to the Russia framework. That ambiguity will almost certainly be read conservatively by compliance officers at any firm with material US exposure.
Whether Mexican companies will accept the commercial risk remains the article's open question. Unlike the state-backed Pemex, which has the sovereign weight of the Mexican government to cushion geopolitical friction, private mid-sized transporters and fuel traders possess no such safety net; losing access to US dollar clearing accounts represents an overnight death sentence.
Sheinbaum is offering political cover and ministry-facilitated introductions, but no indemnification against US enforcement action. Cuban authorities themselves cautioned that implementation of the reforms could be slow, and acknowledged that the measures will not be viable if the US maintains its current posture. The designation of GAESA, the Cuban sprawling military's commercial conglomerate, as an SDN under the May order further narrows the universe of Cuban counterparties any Mexican firm could legally transact with, particularly now that OFAC's wind-down period for existing GAESA relationships expired on June 5.
Mexico's prior oil relationship with Cuba was commercially structured and paid. Pemex's then-director Víctor Rodríguez Padilla stated in February that Cuba had paid $496m for crude and refined products during 2025 with no overdue invoices. But the sanctions environment that private firms would now navigate bears little resemblance to what Pemex faced before January.
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