AI models imagine a liberal, capitalist Cuba, but still sanctioned

Time and again, when I talk with my closest friends from my university years—one lives in Uruguay, another in Spain, and the third in the United States—about the Cuban reality and the reasons behind the fierce crisis unfolding here, we return to the same point. My former classmates are affected by a pervasive flaw that corrodes rational analysis for many people—not something uniquely Cuban, but universal: partiality or bias when interpreting politics. Whatever does not align with one’s political stance is either swept under the rug or its importance is minimized.

I have told them that anyone who does this is engaging in propaganda and ultimately contributes to the dreadful cacophony that public discourse has become. The Cuban problem is twofold: the internal component—government management, with all its problems and shortages—and the external one—fundamentally shaped by U.S. aggressive policy—interact and reinforce each other. This relationship generally hinders Cuba’s political-economic development. Thus, no aspect of Cuban reality can be explained without addressing both components and examining how their interaction operates in each case.

For example, it is often said that the Cuban government failed to invest in modernizing its electrical system. But the external factor imposes real constraints on access to spare parts, and foreign-currency availability is low, among other reasons, due to sanctions. It is also argued that instead of investing in that strategic sector, efforts were focused on building hotels. It is a fair point, but it is also true that this investment has not been fully monetized because the United States restricts tourism to Cuba, and in recent years—since Cuba has been designated a State Sponsor of Terrorism—Europeans are "not eligible for travel under the Visa Waiver Program using an Electronic System for Travel Authorization (ESTA) and must apply for a visa to travel to the United States."

U.S. tourism alone would generate significant spillover effects in the economy, benefiting many Cubans directly—not just military-linked enterprises. My friends want nothing to do with this topic; they avoid it or argue that poor internal management—which I also criticize so much as they do, and maybe even more—is the main, if not the only, root cause of the problem. So I came up with this exercise, which none of them wanted—or were able—to answer: let us imagine Cuba as a modern liberal democracy, with separation of powers and an economic system based on private property, where markets clearly dominate over planning. What would be the prospects for sustained economic growth if U.S. sanctions remain in place? I decided to ask the same question to several AI-powered chat interfaces, including Gemini, DeepSeek, ChatGPT, and Claude. Here are the results for Gemini and Claude.

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Gemini

This is a fascinating policy-fiction exercise that requires isolating two critical variables: internal structural inefficiencies and the external cost of the embargo/sanctions.

To conduct an objective analysis, we will use as a benchmark the performance of similar economies in the region (such as the Dominican Republic), as well as the quantitative impact that international organizations and experts attribute to U.S. sanctions.

1. Growth Potential (Scenario without Sanctions)
If Cuba had a functional liberal democracy and a market economy (like the Dominican Republic or Panama), its growth potential would be very high due to:

• Proximity to the U.S. market (mass tourism and logistics).

• Human capital (a workforce with high literacy and technical training).

• Diaspora investment (billions of dollars in capital ready to return).

In this ideal scenario, Cuba could aspire to GDP growth between 5% and 7% annually, similar to the “Dominican miracle” of recent decades.

2. The Glass Ceiling: The Weight of Sanctions
Even with the most efficient political system, the current sanctions regime (especially the Helms-Burton Act and designation as a State Sponsor of Terrorism) would act as a structural brake. Its main effects would be:

• Financial Restrictions: The biggest obstacle. Cuba would lack access to the IMF and World Bank. International banks would avoid processing transactions due to fear of U.S. penalties.

• Foreign Investment (FDI): Multinationals with U.S. exposure would hesitate to invest due to third-country sanctions.

3. Concrete Estimate: The “Sanctions Discount”
Various studies (including ECLAC reports and independent economists) suggest that sanctions reduce potential growth by 2–4 percentage points annually.

If we assume an ideal projected growth of 6.0%:

Factor	Impact on Growth
Potential Growth (Without Sanctions)	+6.0%
Cost of the lack of multilateral credit access	−1.5%
Cost of country risk and financial sanctions	−1.2%
Logistical and commercial overcost	−0.8%
Estimated Net Growth (Under Sanctions)	2.5%

Conclusion and Achievement Rate
Under these conditions, a democratic, market-oriented Cuba would achieve roughly 40% of its true growth potential.

Final Estimate: Cuba would grow steadily and positively, but at a constrained rate—around 2.5% to 3% instead of 6–7%.

This would resolve basic shortages but prevent Cuba from becoming a high-income economy in the short term, keeping it in a state of “interrupted development.”

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Claude

The exercise assumes a Cuba with fully functional political institutions—separation of powers, democratic alternation, rule of law—and a market economy with strong property rights, transparent rules, and real openness to investment. The only adverse constant is the U.S. embargo/sanctions as they exist today.

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Growth potential in the absence of sanctions

The most relevant comparators are Caribbean and Latin American economies combining institutional openness with tourism, remittances, and service exports. Cuba could reasonably project 6–8% annual growth over 10–15 years under optimal conditions without sanctions.

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Quantifiable impact of sanctions

U.S. sanctions produce three structural effects:

1. Financial exclusion (higher capital costs, banking restrictions).

2. Restriction on U.S. tourism (loss of a major growth driver).

3. Legal risk (Helms-Burton Title III) discouraging FDI.

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Concrete estimate

Factor	Estimated impact on growth
Financial exclusion / high cost of capital	−1.5 to −2.0 pp
Absence of U.S. tourism	−1.0 to −1.5 pp
FDI deterrence due to legal risk (Title III)	−0.5 to −1.0 pp
Exclusion from U.S.-linked export markets	−0.5 pp
Total estimated loss	−3.5 to −5.0 pp

This places achievable growth under sanctions at 2–3.5% annually, roughly 35–50% of potential.

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Key nuances

This does not imply stagnation. Sustained 2–3.5% growth would still mean significant transformation over decades. The difference lies in speed and ceiling.

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Conclusion

Even with optimal institutions, sanctions would cap Cuba’s growth at around 40–50% of its potential.

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But I gave Claude one additional task: to imagine a Cuba where the political system remains unchanged, but without the heavy shadow of sanctions. This was the result, and its conclusion speaks for itself for ending the post.

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Current Cuba without sanctions: growth estimate

Scenario assumptions

The current Cuban system remains unchanged, but all U.S. sanctions are removed: full financial access, unrestricted U.S. tourism, no legal risk for FDI, and free dollar transactions.

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Structural internal constraints

Key internal limitations include:

• Persistent distortions from monetary duality

• Restrictions on private enterprise

• Low agricultural productivity

• Accelerating emigration of human capital

These factors persist independently of sanctions.

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What removing sanctions would change

Three main channels:

• Tourism boom

• Financial normalization

• Increased FDI

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Concrete estimate

Component	Estimated impact
Potential without sanctions and with optimal institutions	7.0% annually
Loss due to low agricultural and industrial productivity	−1.5 to −2.0 pp
Loss due to restrictions on the private sector and FDI	−1.0 to −1.5 pp
Loss due to legal uncertainty and policy instability	−0.5 to −1.0 pp
Loss due to human capital emigration	−0.5 pp
Estimated achievable growth	2.5–3.5% annually

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A striking coincidence—and its interpretation

The result is similar (35–50% of potential), but for different reasons: external constraints vs. internal institutional limits.

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Conclusion

A Cuba with its current system but no sanctions would likely grow at 2.5–3.5% annually, reaching about 40–50% of its potential. The broader takeaway: neither sanctions nor internal institutions clearly dominate in quantitative impact—both weigh comparably, differing mainly in nature, origin, and reversibility.

Thanks for your reading.