The economic reforms included in Cuba’s massive package last week represent a monumental shift in how the communist government manages the economy. Out with the Soviet-style economic system. In with the markets.
The announcement is being met with a mixed reaction in South Florida: On the one hand the reforms in many ways echo economic measures that exiles have long called for. On the other hand, they are seen as a hollow attempt to curry favor with the U.S. on economics while the Trump administration’s pressure campaign for political change on the island has reached a fever pitch.
On paper, the government will take a giant step back from direct, centralized economic management. Vast swaths of the economy will be opened up to private enterprises. Basic goods will no longer be subsidized. There are 176 points in the package passed by the government last week.
The reforms closely resemble those implemented in Vietnam in 1986. The Vietnamese reforms decentralized control of the nation’s economy and opened the nation up to private markets and foreign investment, while leaving the communist government in place. Vietnam remains a close ally of Cuba, and even helps Cuba grow rice. A delegation from Vietnam is visiting the country this week.
“ I know for a fact that the Vietnamese were harping on [Cuba] to do it, and the Cubans just wouldn’t do it. They drag their feet because they're afraid of losing political power. But now I think the chickens have come home to roost,” said Pedro Freyre, a partner at Akerman LLP, and the chair of the international practice group for the firm. “ [Cuban president Miguel] Diaz-Canel is going on, waxing poetic about how brave this decision was in defense of the revolution, when in reality it's just disassembling the fundamentals of a socialist country.”
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Cuban economists have called for similar reforms for decades, and the government has since 2006 announced an intent to implement changes, only to not follow through. Freyre called the long delay a “credibility problem” for the Cuban government, leaving observers wondering if it will actually follow through with the new policies.
The stakes could not be higher. The humanitarian situation in Cuba is a top concern for the United Nations and other international groups, as the U.S. has blocked oil shipments and ramped up pressure for deep structural changes on the island. The new measures have dramatically worsened a humanitarian situation that was already dismal. Even before the U.S. oil blockade, residents were normally undergoing blackouts that lasted a whole day. Now blackouts are more common, impacting hospitals, education, the agriculture sector and more.
The Cuban economy is projected to contract over 7% this year, after contracting 5% in 2025. All together, projections are that between 2019 and 2026, the Cuban economy will have a total contraction of 23%, marking the deepest economic downturn in modern Cuban history.
“ This is la hora negra, this is the witching hour. They now have to step up to the plate and do it,” said Freyre.
The credibility problem is a big issue because without the U.S. easing up on the rapidly increasing sanctions against Cuba, the reforms stand little chance of achieving success. During recent months the new sanctions have pushed foreign companies from Canada and Spain to flee the island, lest they be subjected to secondary sanctions. In order to reverse the pressure and allow foreign investment to start coming to the island again, the U.S. government would need to be convinced that Cuba is serious about implementing the reforms.
“If this had been done 10 years ago with the Obama opening, this would have been a massive win. This would have been what everybody was hoping would happen,” said Freyre. “Today, I don't think it's far enough. [Secretary of State] Rubio's feeling the heat in Miami where people are going, ‘No, run the table on them.’”
“The US has gone a long way down the road for political change, and this is focused on economic change,” he added.
The new Cuban laws open the floodgates on the kind of activities private businesses can operate in. They will be able to blow past the previous 100 employee cap, directly import and export goods, hold foreign currencies and more. The class of micro, small and medium businesses known as MIPYMES were only legalized by Cuban law in 2021; by 2025 they already accounted for more than half of all retail sales on the island.
“ This is something we've wanted for a long time,” said Joe Garcia, a Cuban-American former Democratic congressman. ”It's a step in the right direction. The devil's in the details. They have to start implementing, and that means putting this on the [national] register and making them active laws. But this is what everybody has wanted for a long time, and then some.”
If – and it is likely a big if – the Cuban government quickly pushes forward in earnest, Garcia sees a pathway for the U.S. easing up sanctions and helping the Cuban economy recover. In order for that to happen, Cuba would also have to release political prisoners and begin to compensate the U.S. for claims of confiscated properties.
“ If they do those basic three things, I think we're gonna take our foot off their neck to then start the broader process,” said Garcia.
Making Cuba 'investable'
The State Department, under the leadership of Cuban-American Rubio, has said that it is pushing for deep economic and political shifts on the island, including making Cuba “investable.”
Hardline voices in the Cuban-American exile community might be reluctant to ease up sanctions or pressure in any way, especially now that the Cuban government has been forced to respond with a dramatic realignment of its economy.
But as Garcia sees it, President Donald Trump really cares about opening opportunities for U.S. business on the island more than political changes. Trump is notably building a massive hotel in communist Vietnam, and a close ally of the president recently purchased majority shares of a Canadian mining company that fled the island after Trump imposed secondary sanctions that could have impacted its operations.
The mining deal makes little sense unless there is a pathway for sanctions to be eased, if not the entire U.S. embargo against Cuba to be lifted, said Garcia. Only Congress can lift the embargo.
“ There's no question that if Donald Trump goes to Congress tomorrow and asks the Republican Party to lift the embargo, maybe the three [Cuban-American Republican congressmembers] down here will maybe vote against it,” said Garcia. “But I think overwhelmingly you're gonna get support from the Republicans, and clearly the Democrats will vote for it, and you have more than a majority there to get this through.”
All of this is downstream, from the places where minds wander when confronted by the kind of deep, structural reform announced by Cuba last week. Garcia said Cuban exiles have already definitively won the “ideological battle” against the Cuban government: “Now we've gotta deal with the reality on the ground, and we've gotta find those spaces where we can have influence.”
For Freyre, the attorney, the announced reforms are a good start, but they need to go further. The government must change the law to allow foreign companies to own land outright, he said. The reforms only call for flexibility in leasing arrangements, letting foreign companies lease land for up to 99 years.
“That is a fundamental element of securing capital. Capital will not go in unless they have all the property rights secured,” said Freyre.
The Cuban economy, struggling for decades, long suffering from mismanagement and lack of investment, has entered into a death spiral this year amid escalating sanctions and the U.S. military choking off access to foreign fuel supplies. As an editorial in independent Cuban outlet La Joven Cuba put it: “Cuba’s multi-crisis has hit rock bottom.” The U.S. pressure succeeded in convincing the Cuban government to do something it knew needed to be done, but just couldn’t do. “It’s not a perfect lifeline, but it is something Cuba needs," the editorial added.
Freyre said not only did U.S. pressure play into the announcement, but also domestic pressures inside Cuba. Things were always going to reach a breaking point.
“The stakeholders in the Cuban economy are up in arms. The people are exhausted, absolutely exhausted, and they just needed to do it,” said Freyre. “The problem is that this could be a day late and 500 pesos short. This is something that they should have done 20 years ago, 30 years ago.”
