Cuba is going to implement “market socialism, Cuban-style,” says Juan Triana Barros of the University of Havana. Not everyone is sure about that. Fully implemented, the reforms would shrink the areas of the economy from which private businesses are banned, enable them to import and export more freely, and let them attract foreign investment. For the first time entrepreneurs would be permitted to hire more than 100 employees and own multiple firms. The reforms would also shake up state-owned enterprises. They could be sold or made into commercial ventures with shares and equity stakes—and the possibility of bankruptcy. They could set their own prices. In theory financing for private and public firms would get easier. Private banks would be allowed and the foreign-exchange market opened to more players. Some services that were once the pride of the state, such as nursing homes and soup kitchens, will in theory go private. Blanket subsidies provided through the Cuban ration book are to be replaced with direct support for “vulnerable individuals”. The president, Miguel Díaz Canel, said the accumulation of wealth in private hands would no longer be forbidden. “If there is no wealth, there is nothing to distribute,” he said. Such changes are sorely needed. Decades of mismanagement and America’s embargo have hammered the island. Measures enacted since January by Mr Trump and Marco Rubio, his Cuban-American secretary of state, are pushing Cuba to the brink. America has put sanctions not just on Gaesa, the military conglomerate, but any Cuban or foreign business working with it. They have blocked off fuel. The economy has shrunk by over 20% since 2020. A dollar now buys over 600 pesos on the informal market, making the minimum monthly wage worth only around $5. Officially, inflation hit nearly 16% year-on-year in May; the real rate is certainly higher. Tourism was down by 58% in the first five months of the year. Blackouts last around 22 hours a day even in central Havana; when power comes on, Cubans rush to do what they can while it lasts. Water runs every other day. “It is utterly exhausting,” says a father of two.
Yet the government’s announcements have been met with little enthusiasm —at home or abroad. For one thing, the promised reforms fall short of the huge changes that once shook up China’s and Vietnam’s hidebound economies. Moreover, many doubt the promises will become reality, or at least not at the speed required. An official at the US State Department dismissed the proposals as “superficial smoke signals”. The government has promised change many times before, only to later drag its feet. It is a “circus”, says a former translator in Havana. Even a deeply committed government would find implementing the reform plan tricky. Cuba lacks foreign currency, rule of law and institutional capacity. American sanctions make it almost impossible for Cuba to get foreign capital. Even if America’s government issued a licence tomorrow for everyone to operate in Cuba, firms could be sued for dealing in expropriated property, says Yosbel Ibarra of Greenberg Traurig, a law firm in Miami. Cubans fear any reforms will primarily benefit regime insiders and the already rich. Without a proper social safety-net—including reviving the island’s once decent systems of education and health care—ordinary people might struggle to withstand the hyperinflation that market reforms may bring. The gap between Cuba’s haves and have-nots is already plain. On a Saturday afternoon, the pool at the Meliá Habana hotel is packed with people sipping cocktails as their children swim around. The $15 entry fee is far beyond most Cubans. BMWs are parked outside fancy restaurants where steaks cost $100. For the moment there is little sign that political change will follow an economic opening. Political prisoners are not being released, despite American requests. On June 20th Manuel Cuesta Morua, a moderate opposition figure, was seized, roughed up and threatened with being shot, all for supporting a pot-banging protest (these now happen nightly). Mr Trump and Mr Rubio also want Cuba to reduce its security ties with China, Russia and Iran. Mr Trump reckons he can pile more pressure on Cuba before cutting a deal. On June 23rd the State Department put sanctions on more Gaesa-linked bodies, including AUSA, which ran container traffic at Mariel port. Days
later Gaesa sold it to another state-owned company so that supplies may again reach the island. If Cuba’s rulers move fast, the reforms may buy the island some breathing room. “This is a lot,” says Paolo Spadoni of Augusta University. “But it is not enough.” Mr Trump is betting that more pain will force deeper change; the regime is betting it can please or outlast him. Ordinary Cubans worry that, either way, they will lose out. ■ Correction (July 2nd 2026): It was the president, Miguel Díaz Canel—and not the prime minister, Manuel Marrero—who said that the accumulation of wealth in private hands would no longer be forbidden. Sign up to El Boletín, our subscriber-only newsletter on Latin America, to understand the forces shaping a fascinating and complex region. This article was downloaded by zlibrary from https://www.economist.com//the-americas/2026/07/02/promised-reforms-could-change- cuba-radically
Venezuelans are furious with the American-backed regime But the earthquakes could give it an excuse to keep putting off elections July 2nd 2026 Wooden coffins are being piled up behind the port of La Guaira, a short drive from Caracas, Venezuela’s capital. The municipality, once known for its beaches and proximity to the international airport, was among the worst hit by two powerful earthquakes on June 24th. Across the country more than 59,000 buildings have been badly damaged or have completely collapsed, according to one tally. A week on, specialist rescue teams from at least 27 countries were still racing to save those trapped in the ruins. There have been extraordinary stories: a mother and an 18-day-old baby were rescued after nearly two days; a 21-year-old man was saved after 106 hours. But by July 1st the number of
people known to have been killed had reached 2,295, with another 11,267 injured. Reports of over 50,000 missing appear to be exaggerated, mostly based on a crowd-sourced website where people could add loved ones’ names (some names appear several times). But the death toll is bound to rise. The UN in Venezuela says it is procuring 10,000 body bags. In Caracas dozens of buildings were destroyed. All schools are shut until July 5th. Most businesses have closed, in mourning. People are lining up to donate food, medical supplies and clothing. The tragedy, and the limits of the response to it, are causing deep anger, mostly aimed at the regime. “Negligence has a terrible cost,” said María Cristina, a university student, as she queued to donate canned food in the capital. La Guaira residents say they were totally on their own for the first 48 hours after the quakes. They tried to save people with their bare hands. “It was all volunteers, the government was no help at all,” says one woman. There is widespread criticism of the armed forces. Some military folk have been seen milling around ruined sites while civilians search for survivors. Four policemen were caught apparently stealing bags of dollar bills from a ruined building when they were meant to be searching for a 14-year-old.
Systemic corruption under the purportedly socialist governments of former president Nicolás Maduro and his predecessor Hugo Chávez have left the services needed to confront a disaster like this hopelessly run down. In Caracas brave members of a government rescue team were borrowing phones from onlookers to use as torches. Messrs Maduro and Chávez used to have a stock answer to critics: that hardships were all the fault of America. But in the “new” Venezuela, that excuse will not fly. The current interim president, Delcy Rodríguez, is in power thanks to the Trump administration. Following the capture of Mr Maduro, her boss, by US commandos on January 3rd, the former vice-president has been working closely with the Americans. America has eased sanctions. Ms Rodríguez has reformed rules that discouraged foreigners from investing in oil and mining. Mr Trump portrays all this as a great strategic success. He has called it “sort of like a joint venture”. Apart from the earthquake “the people are happy, they’re dancing in the streets,” he said, preposterously, on June 26th. The earthquakes have imperilled Mr Trump’s narratives. His administration must now decide how far it is prepared to get involved in a large-scale reconstruction effort. The quakes have caused damage and losses between $7.5bn and $9bn, equivalent to nearly 8.5% of GDP, said Asdrúbal Oliveros, a Venezuelan economist. James Story, a former US ambassador to Venezuela, says America has a duty to help on a large scale, given its overt interference to date. “Clearly Delcy was not an elected president,” he says: “The actions of the United States put her in power.” He recommends “a full effort” of American assistance to alleviate suffering. The Trump administration has deployed significant resources to the crisis. The warship USS Fort Lauderdale has docked at La Guaira. Some 900 armed forces personnel are said to have joined the rescue effort. US soldiers have repaired a runway at Caracas’s international airport, which was damaged in the earthquakes. America’s grand plan for Venezuela is supposed to involve three stages: stabilisation, recovery and transition. The idea is that stabilisation and recovery (both of Venezuela’s economy and its battered institutions) can take place while Ms Rodríguez is interim president. The third stage, transition, requires democratic elections. No timetable has been given for this process,