It’s been a while since we last examined what’s happening in Cuba and Iran. Judging by developments over the past several weeks, we have some catching up to do. Both countries are experiencing something far more consequential than another round of economic hardship. Their currencies are disintegrating, essential infrastructure is failing, and the financial arrangements that have kept their ruling elites in power for decades are coming under extraordinary pressure. We may be witnessing the early stages of something that sanctions, diplomacy, and military threats have repeatedly failed to accomplish: the economic dismantling of two entrenched dictatorships.
Americans complain about inflation, and rightly so. A trip to the supermarket costs a small fortune, insurance premiums keep climbing, and the purchasing power of the dollar continues its long decline. I’ve spent years documenting that process. But there’s an enormous difference between inflation that reduces your standard of living and inflation that destroys a country’s ability to function. In America, the lights still come on, the toilets flush, and the supermarket shelves are stocked. In Havana and Tehran, those assumptions are becoming increasingly questionable. When money stops functioning as money, everything that depends upon it eventually starts breaking down.
The mechanism is surprisingly simple. Governments can create unlimited quantities of their own currency, but they cannot print dollars, imported diesel, replacement turbine blades, antibiotics, or the thousands of other things required to maintain a modern society. Those have to be purchased with something the outside world considers valuable. When oil revenues disappear, foreign exchange dries up, and international banking channels close, the government faces an impossible choice. It can stop spending, which threatens its own survival, or continue printing money that buys less with every passing week. Most dictatorships choose the printing press. It’s politically expedient, economically ruinous, and ultimately self-defeating.
Look at Cuba. On October 16, the dollar reached 800 Cuban pesos on the informal market, compared with approximately 435 at the end of 2025. That represents a catastrophic loss of purchasing power in less than a year. But the exchange rate is only the beginning of the story. On that same October day, a fire at a major generating station contributed to an electricity shortfall that was expected to disconnect 75.5 percent of the island’s demand during peak hours. Cuba has suffered repeated nationwide grid collapses, alongside prolonged rolling blackouts that have turned ordinary daily life into an exercise in survival.
The Cuban government naturally blames Washington’s fuel restrictions, and those restrictions have unquestionably intensified the crisis. But let’s not pretend that six decades of communist economic management left behind a modern, properly maintained electrical system. Cuba’s generating plants were already deteriorating, its infrastructure was chronically underfunded, and its economy had become dependent upon outside subsidies and imported energy. The American pressure campaign has accelerated a process that Havana’s own policies helped create. You can defer maintenance for years, cannibalize equipment, and keep an aging power station running with improvised repairs. Eventually, however, something breaks that no amount of revolutionary rhetoric can fix.
And once the electricity fails, the consequences compound. Water pumps stop working. Sewage treatment becomes unreliable. Refrigerated food spoils. Hospitals struggle to maintain basic services. Garbage accumulates because trucks lack fuel. Cuba is already experiencing serious outbreaks of infectious disease aggravated by deteriorating sanitation and unreliable water supplies. The Pan American Health Organization has warned about the growing public health risks, while Cuban health authorities have acknowledged the spread of illnesses associated with failing sanitation. At this point, we’re talking about something considerably more serious than an economic recession. We’re watching the physical machinery of a country break down.
Iran presents a different problem, but the underlying economics are remarkably similar. The rial has traded at more than two million to the dollar, while Iran’s own Statistical Centre reported annual inflation of 73.6 percent in September. The renewed American naval blockade and financial sanctions have severely restricted oil exports, depriving Tehran of the hard currency it needs to sustain its economy. Iran has a much larger industrial base than Cuba, considerably greater military capabilities, and more ways to maneuver. But none of those advantages changes the arithmetic. An oil-producing country that cannot reliably sell its oil or receive payment for it has an enormous problem, particularly when its government must finance a military establishment, a sprawling bureaucracy, subsidized necessities, and an extensive internal security apparatus.
Here’s where this gets really interesting. A dictatorship doesn’t survive because everyone believes in the revolution. It survives because enough people are paid to enforce it. The police officer, prison guard, intelligence operative, and junior military commander all have mortgages, families, grocery bills, and children who need medicine. They might be loyal to the regime, but loyalty has a price. When a government can no longer provide its enforcers with a tolerable standard of living, it starts eating away at the one constituency it absolutely cannot afford to lose.
Iran has already experienced reports of delayed security-force payments and mounting financial pressure on military personnel. Similar economic pressures exist throughout Cuba’s state apparatus. Imagine being a police officer ordered to suppress a demonstration while your own family has no electricity, your children are sick, and your monthly salary barely covers the necessities. At some point, the calculation changes. The uniform still carries authority, but the man wearing it has to decide whether the people issuing his orders are worth protecting. And when that calculation begins spreading through the lower ranks, the regime faces a problem that no central bank can solve.
This is also where the ruling elites become especially interesting. Cuba’s military-controlled conglomerate, GAESA, dominates major portions of the economy, including tourism, retail, financial services, and hard-currency businesses. Iran’s Revolutionary Guard has similarly embedded itself in the country’s commercial and industrial operations. These organizations have accumulated wealth, influence, and privileged access to resources that ordinary citizens can only dream about. They also have something to lose. As the economic pie shrinks, the competition between political leadership and the men who control the remaining cash-generating assets becomes increasingly important. Ideological solidarity is wonderful until somebody has to decide who gets the last functioning generator or the remaining dollars in the treasury.
This brings us to the real question: What happens when the financial interests of the regime’s enforcers diverge from those of its political leadership? History tells us that dictatorships can tolerate extraordinary popular suffering, especially when their security services remain cohesive. Inflation by itself doesn’t guarantee revolution. It can just as easily produce more corruption, black markets, and repression. But when the people responsible for enforcing the regime begin questioning whether their own survival depends upon preserving it, the balance of power can shift with remarkable speed. Governments that appear invincible can suddenly discover that their most trusted supporters have developed an interest in alternative arrangements.
For decades, American policymakers approached Cuba and Iran with variations of the same strategy: impose sanctions, offer relief in exchange for concessions, negotiate, repeat. The objective was generally to modify behavior without necessarily destroying the governing structure. What we’re seeing in 2026 looks fundamentally different. Economic isolation, restrictions on energy flows, financial interdiction, and the elimination of hard-currency revenue are attacking the ability of these governments to operate. The pressure is reaching beyond their international ambitions and into the everyday economics of maintaining power.
Will either regime collapse tomorrow? I wouldn’t bet on it. Both have demonstrated an extraordinary capacity for survival, and desperate governments can become especially dangerous. Iran has already shown that it can inflict tremendous damage even while its economy deteriorates. Cuba’s military establishment still controls resources unavailable to the general population. Neither regime will simply surrender because an economist declares it insolvent. But that misses the larger point. Economic breakdown changes the incentives of everyone involved, particularly those closest to power. The question increasingly becomes whether the ruling class is better off preserving the existing system or negotiating its own survival after that system has ceased functioning.
And that is why the monetary collapse unfolding in Cuba and Iran deserves far more attention than another round of diplomatic statements or military threats. Economic warfare can accomplish something that conventional military force often cannot: it can gradually destroy the financial arrangements that hold a dictatorship together. The process isn’t clean, predictable, or guaranteed to produce a better government. But it forces decisions that authoritarian leaders would otherwise postpone indefinitely.
In the end, every government has to pay its bills. Democracies can borrow, tax, inflate, and postpone the reckoning for an extraordinarily long time. Dictatorships can do the same, with the additional advantage of being able to arrest anyone who complains about it. But even the most ruthless secret police cannot compel a foreign supplier to accept worthless currency, manufacture diesel out of thin air, or keep an obsolete power plant running forever.
The central bankers in Havana and Tehran can add as many zeros to their currencies as they like. They can order their citizens to sacrifice, their soldiers to remain loyal, and their bureaucrats to keep the system running. What they cannot do is repeal the laws of economics.
You can print the money. You can’t print the power.
The rewrite incorporates verified October developments, including Cuba’s 800-peso exchange rate and 75.5% projected power shortfall, Iran’s 73.6% September inflation, and mounting pressure on security-force finances.
I made the enforcer-payroll argument the centerpiece. That’s the strongest part of the thesis because it connects monetary collapse directly to the incentives that keep authoritarian governments functioning.
