The energy crisis in Cuba demonstrates the extent to which structural problems in the economy can affect everyday life.
Halfway through the workday, a food factory in Cuba loses electricity. The machines grind to a halt, the production line comes to a standstill, and workers are left waiting as products requiring refrigeration risk spoiling.
Without power, packaging processes cannot be completed, and production cannot maintain its usual pace. Every hour of disruption means less food available for distribution, financial losses, and delayed deliveries. When electricity is restored, the factory must restart its equipment and reorganize the workday in an attempt to recover some of the lost production.
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This scene, which illustrates the daily challenges facing Cuba’s state-owned industrial sector, has a particular feature: in many companies across the country, workers report to their jobs whenever electricity is available. Often, this means starting production in the early hours of the morning, at midnight or one o’clock.
The economic and energy blockade imposed on the island has contributed to forcing numerous state-run enterprises to halt or scale back production. The consequences ripple through the economy, ultimately affecting people’s daily lives, from food availability to access to basic hygiene products, textiles, and footwear.
Given its impact, restoring the public sector’s productive capacity is the first pillar of the package of economic and social measures approved by Cuba’s parliament during an extraordinary session held on June 18, 2026.
Expanding the powers of state-run enterprises, decentralizing decision-making, advancing digital transformation, and establishing the National Institute of Business Assets are all part of a program aimed at revitalizing the Cuban economy without relinquishing sovereignty over strategic resources or abandoning the social achievements of the Revolution.
Energy: A Decisive Factor in Production
Light industry is one of the sectors most severely affected by energy constraints, given its role in supplying essential goods to the population.
“The shortage of fuel and energy has had a direct, significant, and substantial impact on light industry production, which ensures the supply of basic consumer goods to the population, including personal hygiene products, textiles, and footwear,” explained Carlos Boggiano, Production Director at the Light Industry Business Group.
The executive provided figures illustrating the scale of the difficulties: during the first quarter of 2026 alone, the sector received just 6% of the fuel it had received during the same period ofthe previous year. Faced with this situation, enterprises have had to seek alternatives to keep their operations running, protect jobs, and make the most of available resources.
“We have adopted different approaches to maintain production, including remote work,” said Lissette Alonso Morales, First Vice President of the Chemical Industry Group. She explained that, in industries operating shifts and continuous production lines, teams have been organized with workers who live near their workplaces. Alternatives involving electric mobility have also been explored, with companies assessing the purchase of electric vehicles, including bicycles and tricycles.
The measures also include reassigning workers to priority activities to preserve their jobs and ensure they are not left without support. These organizational solutions are intended to sustain production under the extraordinary conditions Cuba is facing, imposed by Washington.
However, adapting to the emergency does not replace the need for decisions that improve business performance, restore productive capacity, make better use of resources, and establish mechanisms that enable enterprises to respond swiftly to the needs of the economy.
Giving in to adversity will never be an option. Preserving the achievements of the Revolution also requires finding new ways to produce, manage, and distribute wealth.
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Economic Transformation Without Abandoning the Social Project
As of June 2026, Cuba had 20,394 entities within its institutional framework, according to the National Office of Statistics and Information (ONEI). Of these, 2,082 were state-run enterprises and 234 were public micro, small, and medium-sized enterprises (Mypimes, in Spanish).
The scale of the business system underscores the importance of the proposed transformations. Its performance directly affects domestic production, employment, state revenues, and the country’s ability to ensure the provision of goods and services to the population while protecting its most vulnerable members.
The Cuban government acknowledges its own mistakes and shortcomings but places these challenges within a context also shaped by the consequences of more than six decades of the U.S. economic blockade. In response to this reality, the country has undertaken successive processes to assess and update its economic and social model.
Among the most recent precedents are the transformations approved by the Communist Party in 2011, which laid the groundwork for a process of change that continues today through the 176 economic measures presented in June 2026. These measures aim to correct distortions, reactivate the economy, and increase national productive capacity.
According to the assessment presented, the process launched in 2011 yielded positive results until 2019, when the U.S. government substantially intensified its sanctions policy. Hostilities escalated further in January 2026, following the first year of Donald Trump’s new presidential term.
During a televised appearance, Cuba’s Prime Minister Manuel Marrero recalled that the country had established a guiding principle for these transformations: preserving the Revolution’s main achievements. The proposals are rooted in the ideals of Fidel Castro Ruz and do not represent an abandonment of the pursuit of socialism, but rather an essential condition for its preservation.
“The current circumstances have made it necessary to move beyond views that mechanically equated socialism with egalitarianism,” Marrero said. “In this regard, socialist planning does not exclude market rules; it must incorporate and regulate them in accordance with national development objectives.”
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Greater Autonomy for Socialist State-Owned Enterprises
The first pillar of the 176-measure package focuses on the socialist state-owned sector and proposes a significant expansion of its powers and management autonomy. The proposals include allowing enterprises to engage in any lawful activity, greater decentralization in setting wholesale and retail prices, and increased flexibility in deciding how to use and allocate profits once tax obligations have been met.
The reforms also propose restructuring the Higher Organizations of Business Management (OSDE). These organizations would receive broader powers to establish state-owned enterprises and Mypimes, approve subsidiaries, and make decisions regarding mergers, liquidation, or restructuring processes. They would also be able to determine their own organizational structures and staffing levels.
Another area of reform seeks to modify the relationship between the state budget and the business system. To this end, the proposals include reviewing financial obligations and subsidies, designing new financial instruments, and establishing mechanisms to monetize business assets and attract investment.
Decentralization would also extend to provincial and municipal governments, which could establish, merge, or dissolve local state-run enterprises. At the same time, the package proposes eliminating the existing salary scale within the state-run business system. It would be replaced by a minimum wage that takes inflation into account. The proposal seeks to link remuneration to the country’s actual economic conditions and create opportunities for negotiations among the parties involved.
The measures also include two proposals concerning work arrangements. The first would allow retired workers to be rehired for the same positions they used to hold. The second would authorize enterprises to contract their own employees to perform certain additional services beyond their regular contractual duties, for as long as they are carried outside their normal working hours.
Another novelty is the creation of procedures for corporate bankruptcy, liquidation, and restructuring, as well as the possibility of converting socialist state-owned enterprises into joint-stock companies or companies with equity interests. In these cases, the state would maintain its presence in each sector of the economy and retain a majority stake in those considered strategic for national development, including agroindustry, the pharmaceutical and medical sector, science, technology, and innovation, among others.
Taken together, these provisions seek to give state-owned enterprises greater autonomy to organize their operations, manage their human and financial resources, and make decisions aimed at boosting production and improving efficiency.
Digital Transformation as a Tool for Development
Modernizing the state business system goes beyond administrative and financial changes. Another key pillar of the proposed reforms seeks to promote digital transformation in the service of the population and national development. The measures include the creation of a national technology hub integrating hardware, software, and artificial intelligence, conceived as a foundation for modernizing the country’s digital capabilities.
The proposals also call for incorporating artificial intelligence into public administration under human supervision, as well as implementing competitive compensation systems in the technology sector to strengthen its ability to attract and retain professionals. In terms of investment, the measures expand opportunities for foreign capital to participate in areas such as data centers operated by state-owned telecommunications company ETECSA, mobile networks, and other digital infrastructure.
These proposals position technology as a strategic component of economic transformation, both for its potential to increase productivity and for its capacity to improve public administration and services.
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The National Institute of Business Assets: Supporting Transformation
As part of the measures outlined in the Government’s 2026 Economic and Social Program, Cuba officially established the National Institute of Business Assets (INAE), a national-level entity tasked with guiding and supporting the transformation of the state-owned business system.
Joaquin Alonso Vazquez, head of the Ministry of Economy and Planning (MEP), stressed that the Institute must not become an obstacle to business autonomy.
“The Institute’s functions will not trespass the business autonomy we seek to promote; its essential role will be to provide training, supervise, and make proposals. State-run enterprises belong to the entire people, and the Institute will be responsible for representing Cuba’s nine million citizens in demanding that social ownership operate as efficiently as possible and fully meet its social obligations,” he explained.
Roberto Ricardo Marrero, president of the INAE, dismissed speculation that the new structure could become an oversized bureaucratic apparatus.
“It will not be a bureaucratic apparatus; it will be a small team, with only the staff essential to carrying out its duties. Our priority will be to ensure that every step in this process of necessary and urgent transformation is sound, and that any obstacles or mistakes that arise are addressed in a timely manner,” he stated.
The Institute will have the authority to propose the establishment of state-run enterprises of national interest. At the provincial, municipal, and local levels, it will maintain a supervisory and supportive role.
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Economic Sovereignty Versus the Privatization of Resources
The transformation of Cuba’s business system is taking place amid regional challenges marked by fiscal deficits, investment needs, and Latin American governments’ search for new sources of revenue. Faced with these difficulties, some countries have opted to transfer public companies and essential services to the private sector, raising questions about who manages these resources, how prices are set, and what guarantees are in place to protect public access.
According to Privatization in the Latin American Context: Perspectives, a study by Peruvian economist Alejandro Indacochea, Latin America has privatized infrastructure assets and social services worth more than US$45 billion. However, generating revenue through these transactions does not, by itself, resolve a fundamental question: how can the benefits of economic activity be distributed, and how can essential services remain accessible to the population?
Argentina is one example of this debate. The latest economic indicators place the poverty rate in the South American country at 32.3% of the population. In this context, President Javier Milei’s government has promoted a privatization program that includes AySA, the state-owned company responsible for drinking water and sanitation services in the City of Buenos Aires and 26 municipalities in Buenos Aires Province. The highest financial offer, submitted on October 8, 2026, amounted to USD $340.2 million for 90% of the shares owned by the national government.
But how is the value of a strategic company that provides an essential service to millions of people determined, and how can it be guaranteed that drinking water reaches everyone, especially the most vulnerable?
For Argentine columnist Osvaldo Peralta, the sale of AySA does not automatically prove that the private sector will fail. What is at stake, however, is the ability to ensure that an essential resource reaches every household, with reasonable rates, tangible infrastructure projects, and transparent oversight.
“Ultimately, the government can present privatization as a victory for its economic program. But the outcome will not be measured by promises of billion-dollar investments; it will be measured by the households that gain access to drinking water, the sewer systems that are built, and the bills consumers have to pay. Water may change hands, but the responsibility to guarantee the service does not disappear with the sale,” he said.
In contrast, Cuba is pursuing a different strategy: strengthening state-owned enterprises, expanding their management autonomy, and decentralizing decision-making while opening up new opportunities to attract private and foreign investment. The goal is to mobilize capital, technology, and productive capacity without relinquishing public control over sectors considered strategic to national development.
The issue is not whether to exclude private participation, but rather to determine the conditions under which it can be incorporated into the economy and who retains the authority to make fundamental decisions. Under the model Cuba seeks to develop, private investment can help modernize companies, expand production, and generate resources, while the state maintains a majority stake in strategic sectors and retains responsibility for guiding economic development.
Producing More to Protect Social Achievements
The energy crisis demonstrates the extent to which structural problems in the economy can affect everyday life. When a factory shuts down its machines due to a lack of electricity, the consequences go beyond the equipment coming to a standstill: fewer goods are available, deliveries are delayed, costs rise, and the ability to meet the population’s needs is undermined.
Against this backdrop, Cuba faces the challenge of reviving its economy amid energy constraints, financial difficulties, and unilateral coercive measures with extraterritorial reach.
Today, the challenge lies in striking a balance between economic efficiency, national sovereignty, and social justice amid a crisis imposed by Washington. A more productive state-owned enterprise must do more than contribute to the country’s finances: it must be able to ensure the supply of food, goods, and services, sustain employment, and support a development project in which national resources translate into opportunities for the Cuban people.
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