• This Blog on The Cuban Economy is dedicated to Cuba's Generation "A". Although inspired by Yoani Sánchez' blog "Generation Y" this is not dedicated to those with names starting with the letter "A". Instead, it draws from Douglas Coupland's novel Generation A which begins with a quotation from Kurt Vonnegut at a University Commencement that was brought to my attention by Andrew Johnston of Ottawa: ".. ... I hereby declare you Generation A, as much as the beginning of a series of astounding triumphs and failures as Adam and Eve were so long ago."

    The objective of this Blog is to facilitate access to research resources and analyses from all relevant and useful sources, mainly on the economy of Cuba.

TWO VIEWS ON THE FUTURE OF GUAANTANAMO:

II.   Peter McKenna, THE FUTURE OF GITMO

Ottawa Citizen, May 15, 2015

Original here: Gitmo

Guantanamo_bay_satellite_imageI’ve just returned from a visit to Guantanamo City and its outskirts. It is blistering hot in and around Guantanamo City, which surely doesn’t minimize the harsh prison conditions for the remaining 120 or so detainees at the U.S. naval facility in Guantanamo Bay, Cuba. It is not clear what their fate will be if the U.S. base is eventually returned to the Cubans.

Taking up 117 square kilometres, which includes over 1,000 buildings and two airfields, it’s hard to miss in south-eastern Cuba. But will it prove to be a major stumbling block in the way of a normalized U.S.-Cuba relationship?

Interestingly, it is a self-contained U.S. military facility (or reservation) — replete with its own grocery store, movie theatre, church and golf course. It even has its own McDonald’s restaurant, the only one on the island.

The initial 1903 Cuban-American Treaty, which laid out the terms of the lease agreement, put the annual rental fee at 2,000 U.S. gold coins. The 1934 Lease Agreement set the current cost at US$4,085 and essentially gave the U.S. government a lease in perpetuity for the territory around Guantanamo Bay (for use as only a naval coaling station).

It is said in Cuba that the Castro brothers have either sent the lease cheques back to the Americans or left them un-cashed in a desk drawer somewhere. The Castro governments have always maintained that the lease component of the 1934 revised treaty is illegal.

Since the 1959 Cuban Revolution and the coming to power of Fidel Castro, Cuba has seen the U.S. base as “occupied territory” and has consistently demanded its return. To this day, Cuba’s political leadership views Guantanamo as a matter of national sovereignty and as rightful Cuban territory. And just about every Cuban whom I spoke with feels that same ways about the base, its tarnished colonial legacy, and its connection to Cuba’s identity.

Just in case, the Cubans have military bases (at least three) near and around the U.S. naval facility. There are other trenches, prickly cacti, fences and observation/guard posts to repel the Americans — to say nothing of the deadly minefield.

For the U.S. government, the domestic politics of relinquishing control of Guantanamo would suggest an American resistance to even broaching negotiations over its return. It also still has strategic importance in terms of the Caribbean (and China’s growing involvement in the region), value as a naval training facility, and as a means of keeping a watchful eye on Cuba. Notwithstanding a substantial financial operating cost, it will certainly not be easy for the U.S. to walk away from Guantanamo.

That explains why the Barack Obama White House said plainly in early 2015: “The president does believe that the prison at Guantanamo Bay should be closed down. But the naval base is not something that we believe should be closed.”

However, at a regional summit meeting in Costa Rica in late January, Cuban President Raul Castro was adamant about the transfer of Guantanamo back to Cuban hands. He noted that normal bilateral relations “will not be possible while the blockade still exists, while they don’t give back the territory illegally occupied by the Guantanamo naval base.”

Most Cubans know that the issue of Guantanamo is complicated and not likely to be resolved easily. But they are determined to get it back, which might make it a diplomatic deal-breaker.

Both sides may simply continue to agree to disagree about the base. Or, the prison could be closed down and the U.S. military presence further reduced (or wound down entirely over a set period of time). It is also possible that the stalemate over Guantanamo remains frozen in time — at least in the short to medium term — while an improvement in bilateral relations limps along.

One hopes that a normalization of U.S.-Cuban relations doesn’t get torpedoed by an antiquated lease agreement. But if Cuba and the United States are unable to come to a meeting of the minds on Guantanamo (e.g., essentially a complete transfer back to Cuba), it’s hard to see how a full-fledged rapprochement can take place.

Peter McKenna is professor and chair of political science at the University of Prince Edward Island in Charlottetown.Aerial-view-bay-ships-bw DN-ST-95-01300 BE070079.

II.   Nick Miroff, WHY THE US BASE AT CUBA’S GUANTANAMO BAY IS PROBABLY DOOMED

The Washington Post, May 18, 2015

Original here: Us Base at Guantanamo  Probably Doomed

HAVANA — If the United States and Cuba restore diplomatic ties in the coming weeks, as anticipated, the two countries will still be a long way from anything resembling a “normal” relationship, Cuban President Raul Castro has said repeatedly. His list of grievances is lengthy. But this week Castro said it boils down to two big issues.

The first, of course, is the U.S. trade embargo. The other is the Guantanamo Bay Naval Station, the oldest overseas American Navy base in the world, which the United States has occupied for 116 years.

That one isn’t up for debate, the Obama administration says. But, one can only wonder, for how long?

Scholars and military experts say it’s difficult to see how United States can overhaul its relationship with Havana while hanging on to a big chunk of Cuban territory indefinitely, especially if relations warm significantly in a post-Castro era.

While there are plenty of examples in the world of disputed borders or contested islands, the 45-square-mile American enclave at Guantanamo is something of a global geopolitical anomaly. There is no other place in the world where the U.S. military forcefully occupies foreign land on an open-ended basis, against the wishes of its host nation.

“It’s probably inevitable that we’ll have to give it back to Cuba, but it would take a lot of diplomatic heavy-lifting,” said retired Adm. James Stavridis, a former Supreme Allied Commander of NATO and now dean of the Fletcher School of Law and Diplomacy at Tufts University.

Stavridis was head of the U.S. military’s Southern Command between 2006 and 2009, putting him in charge of the Guantanamo base, which he said remains a “strategic, and highly useful” U.S asset. “It’s hard to think of another place with the combination of a deep water port, decent airstrip and a lot of land,” Stavridis said.

The controversial American detention camp for global terrorism suspects is just one of the base’s conveniences. It is a logistical hub for the Navy’s Fourth Fleet, as well as counter-narcotics operations and disaster-relief efforts. It also functions as a detention center for north-bound migrants intercepted at sea. The base’s location on Cuba’s south coast allows the U.S. military to project power across the entire Caribbean basin. And it’s strategically located next to Haiti, a place that often needs U.S. help.

As a military installation, though, Guantanamo — Gitmo is its nickname — is no longer essential in a modern era of aircraft carriers, nuclear submarines and drones, Stavridis said. “You wouldn’t launch a large-scale military operation from there,” he explained, adding that many of the other uses Guantanamo provides could be fulfilled by existing U.S. military facilities in Puerto Rico or south Florida.

“I don’t think it’s irreplaceable,” Stavridis said.

U.S. warships sailed into Guantanamo Bay in 1898, and together with Cuban rebels, defeated the Spanish fleet. The Americans essentially never left, conditioning Cuban independence on constitutional provisions allowing the U.S. Navy to occupy the area “for the time required.” Rent was set at $2,000 a year, paid in gold.

A new lease increased the amount to $4,000 in 1934, according to this history of the base by scholar Paul Kramer. But there was no cut-off date for the Americans to leave.

The U.S. government still dutifully sends rent checks to the Cuban government, but the Castros don’t cash them. They don’t recognize the lease, and — like landlords in a rent-controlled Brooklyn apartment — want their tenants to leave. Fidel Castro is said to keep the checks piled up in his desk drawer, using them as a kind of political prop. It’s hard to imagine a more ready-made symbol of U.S. imperialism than a military base whose history is so wrapped up in late 19th-century attempts at American empire.

After Castro’s revolution, the United States had no intention of letting the base fall under communist control. At times of peak tensions during the Cold War, such as the 1962 Cuban Missile Crisis, the base’s fences became a front line for the Soviet-American standoff. Volleys of gunfire were occasionally exchanged between U.S. and Cuban troops. One such event was dramatized in the 1992 film “A Few Good Men,” in which an agitated Jack Nicholson memorably told Tom Cruise he wouldn’t be able to handle the pressures of living under constant threat at Guantanamo.

Castro shut off the water and electricity in 1964, and today the base is completely isolated from the rest of Cuba. Visitors say it resembles a small American city, with the island’s only McDonald’s franchise, as well as a Taco Bell, a Subway and other American chains. The divide from the rest of the island is lethally enforced by land mines, concertina wire and thickets of thorny cactus.

In recent years, President Barack Obama’s unsuccessful attempts to close the base’s prison camp have inspired several dream scenarios of a post-military future for the base. One would converted it to a research center and treatment facility for tropical diseases and epidemics. If returned to Cuban control, it could become a second campus of Cuba’s Latin American School of Medicine, where students from around the world get free medical training from the Cuban government.

Stavridis said a proposal along these lines to “internationalize” the base that retains its value as a logistical center for humanitarian relief would probably be an acceptable future within the Pentagon — at least in the long run. Other optimists say the base’s transformation could serve as an exercise in trust-building between Cuba and the United States as hostilities ease.

Such a move wouldn’t be without precedent. The U.S. reluctantly gave up the Panama Canal Zone, a place far more strategic to military operations and U.S. commercial interests than Guantanamo Bay. Panama converted the military installations into a “City of Knowledge,” a cluster of research labs and campus facilities in partnership with several U.S. universities.

Miroff is a Latin America correspondent for The Washington Post, roaming from the U.S.-Mexico borderlands to South America’s southern cone. He has been a staff writer since 2006.

 1280px-US_Navy_111213-N-IQ128-009_USS_Oak_Hill_arrives_at_Naval_Station_Guantanamo_Bay,_Cuba VP741_P2V5Fs_GuantanamoBayCuba1961_USNcropadj_1000

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REFORMANDO EL MODELO ECONÓMICO CUBANO

Mauricio A. Font y Mario González-Corzo, Editores, Con la asistencia de Rosalina López

New York: Bildner Center for Western Hemisphere Studies, The Graduate Center, The City University of New York, 2015

Documento Completo: Reformando el Modelo Economico Cubano

 New Picture (12)

CONTENIDO

Introducción, Mario González-Corzo

Del ajuste externo a una nueva concepción del socialism Cubano, Juan Triana Cordoví

La estructura de las exportaciones de bienes en Cuba 29, Ricardo Torres

Relanzamiento del cuentapropismo en medio del ajuste structural, Pavel Vidal Alejandro y Omar Everleny Pérez Villanueva

Las cooperativas en Cuba, Camila Piñeiro Harnecker

La apertura a las microfinanzas en Cuba, Pavel Vidal Alejandro

Hacia una nueva fiscalidad en Cuba, Saira Pons

Bibliografía

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CUBA’S HAD A LUNG CANCER VACCINE FOR YEARS, AND NOW IT’S COMING TO THE U.S.

The Huffington Post | By Erin Schumaker

 Posted: 05/14/2015

Original here: Cuba’s Cancer Vaccine

 When New York Governor Andrew Cuomo (D) headed to Havana on a historic trade mission in April, he returned with the promise of an important commodity: a Cuban-developed lung cancer vaccine.

The vaccine, called CimaVax, has been researched in Cuba for 25 years and became available for free to the Cuban public in 2011. The country’s Center for Molecular Immunology signed an agreement last month with Roswell Park Cancer Institute in Buffalo, New York to import CimaVax and begin clinical trials in the United States.

“We’re still at the very early stages of assessing the promise of this vaccine, but the evidence so far from clinical trials in Cuba and Europe has been striking,” Dr. Kelvin Lee, Jacobs Family Chair in Immunology and co-leader of the Tumor Immunology and Immunotherapy Program at Roswell Park, told The Huffington Post.

When President Obama loosened the United States’ 55-year long trade embargo against the island nation in December, he allowed for such joint research deals to be finalized. Similar programs might have been impossible just a few years ago.

Cuba has long been known for its high-quality cigars, and lung cancer is a major public health problem and the fourth-leading cause of death in the country. A 2007 study of patients with stages IIIB and IV lung cancer, published in the Journal of Clinical Oncology, confirmed the safety of the CimaVax and showed an increase in tumor-reducing antibody production in more than half of cases. It proved particularly effective for increased survival if the study participant was younger than 60.

So far, 5,000 patients worldwide have been treated with CimaVax, including 1,000 patients in Cuba. Lee said the latest Cuban study of 405 patients, which has not yet been published, confirms earlier findings about the safety and efficacy of the vaccine. What’s more, the shot is cheap — it costs the Cuban government just $1, Wired reported. And studies have found there are no significant side effects.

“We think it may be an effective way to prevent cancer from developing or recurring, so that’s where a lot of our team’s excitement comes in,” Lee said. “There’s good reason to believe that this vaccine may be effective in both treating and preventing several types of cancer, including not only lung but breast, colorectal, head-and-neck, prostate and ovarian cancers, so the potential positive impact of this approach could be enormous.”

Preclinical investigations of CimaVax at Roswell Park and the unpublished findings of the 405-patient Cuban study are promising, according to Lee. CimaVax works by blocking a hormone that causes lung cancer tumors to grow, a method which has also been shown to be effective in treating colon cancer. That fuels researchers’ hope that the vaccine will be an effective treatment for other types of cancer as well.

Still, he acknowledged that the vaccine needs rigorous testing in each of these different disease areas to know whether or not the drug will work as well as the scientists at Roswell Park hope. To be clear, the CimaVax doesn’t cure cancer. It’s a therapeutic vaccine that works by targeting the tumor itself, specifically going after the proteins that allow a tumor to keep growing. (And as PBS points out, a person can’t just take a shot of CimaVax and continue to smoke without fear of lung cancer.)

“We hope to determine in the next few years whether giving CimaVax to patients who’ve had a lung cancer removed, or maybe even to people at high risk of developing lung or head-and-neck cancers because of a history of heavy smoking, may be beneficial and may spare those people from having a cancer diagnosis or recurrence,” Lee said.

The United States is currently at work developing two lung cancer vaccines of its own, GVAX and BLP 25, though neither has been studied for as long as CimaVax.

How does a tiny island nation with limited economic resources pioneer a powerhouse cancer vaccine? “They’ve had to do more with less,” Candace Johnson, CEO of Roswell Park, told Wired. “So they’ve had to be even more innovative with how they approach things. For over 40 years, they have had a preeminent immunology community.”

Despite decades of economic problems and the U.S. trade embargo, Cuba has been a model of public health. According the New York Times, life expectancy for Cubans is 79 years, on par with the United States, despite the fact that its economy per person is eight times smaller. While many drugs and even anesthesia have been hard to come by over the years, Cuba has one of the best doctor to patient ratios in the world. Moreover, the Cuban government’s investment in primary care for residents and preventative health measures like public education, housing and nutrition have paid huge dividends in the health of citizens, especially relative to similarly poor countries.

Looking forward, ongoing research collaborations between the two nations are almost certainly on the horizon as relations between Cuba and the U.S. continue to thaw. For now, Lee says the researchers at Roswell Park have their eyes trained on about 20 cancer treatment and prevention technologies in Cuba — including another lung cancer vaccine called racotumomab that the group hopes to study in clinical trials at Roswell. Cuba - CIMCentro de Inmunología Molecular – Cuba

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CUBA’S ECONOMY: DAY ZERO OR D-DAY?

The tricky task of unifying a crazy system of exchange rates

The Economist, May 16th 2015

Original here: UNIFYING THE EXCHANGE RATES SYSTEM

CUBA has two currencies and a mind-boggling number of exchange rates. So when President Raúl Castro set out four years ago to unify the currency system by 2016, it was not surprising that he gave few details on how he would achieve it. A year in advance, it is still not clear. Nor is there a fixed date. Cubans call the unknown day of reckoning Día Cero (“day zero”).

The main difficulty is not unifying the two currencies per se. They are the Cuban peso, which most people use, and the convertible peso (CUC), worth about $1, which is a dollar substitute used by individuals in tourism, for remittances and in the private sector. It would be relatively easy for the average Cuban to scrap the CUC and conduct all transactions in pesos. Already many goods can be bought with either currency. The exchange rate for the peso is 24 per CUC, a level that has changed little since the CUC was created in 1994.

But for the economy at large what looks like a relatively simple book-keeping exercise could have devastating consequences, because there is a parallel exchange rate, mostly hidden from the public, that is used in accounting by state-owned firms and foreign joint ventures. It is one peso per CUC (or dollar). The massively overvalued rate has been in place since the 1980s, when Cuba was subsidised by the Soviet Union. It creates huge distortions in the economy, allowing importers to buy a dollar’s-worth of goods for one peso, a wheeze that drains precious foreign exchange from the country. Cutting the overvalued rate to the cheaper one would be the equivalent of a 96% devaluation. This could bankrupt many state-owned firms, whose costs have been accounted for at the overvalued rate.

Augusto de la Torre, the World Bank’s chief economist for Latin America, says he doesn’t know of any country that has started unification with such diverse exchange rates, and that it could be “suicidal” to join them in one big bang at 24:1. Vilma Hidalgo, vice-rector of the University of Havana, urges caution. She says many segments of the economy, such as exporters and firms that struggle to compete against subsidised imports, would benefit from devaluation, but others could be devastated.

So Cuba is, typically, treading carefully. The government has started with hotels and the sugar and biotech industries. Though their new exchange rates are far from uniform, the most common is 10:1, which some think may be the target rate for unification. But even if the whole economy were to merge at that rate, it would still represent a 90% devaluation for most.

Typically, a country embarking on such an upheaval would get financial help from the IMF and World Bank. Because of its history of enmity with the United States, Cuba does not have that option. Ms Hidalgo hopes that rapprochement will spur enough trade and financial flows to support the new exchange rate. In the meantime, gradualism will remain the guiding principle, which means the distortions will persist. Expect many day zeroes.

Che Guevara: One of the Architects of Cuba’s Monetary Pathology, immortalized (?) on the three CUP and three CUC bills

CU107Three Peso in Moneda Nacional (CUP),  worth about $US 0.12 in mid-2015. 

Cuban3PesosThree “Convertible Pesos”  (CUCs), now ostensibly worth $US 1.00.

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CUBA’S ECONOMY: PICTURESQUE, BUT DOING POORLY

Despite the thaw with the United States, politics is paralysing the economy.

The Economist, May 16th 2015 | HAVANA

Original here: ECONOMIC REFORMS AND POLITICS

 BY DAY grey-haired Americans trundle through the streets of Havana in pink 1957 Chevy convertibles, klaxons blaring. By night they recline over rum and cigars, tipping generously, listening to hotel salsa and reminiscing about the cold war. Many of the new American visitors to Cuba, whose numbers have surged since a diplomatic detente in December, are old enough to remember life before the internet and relish a few days in one of the world’s last Facebook-unfriendly bastions. What tourists find quaint seems stifling to many Cubans themselves.

For a lucky minority life has improved since “D17” (December 17th), the day Barack Obama and his Cuban counterpart, Raúl Castro, announced that they would seek to end five decades of hostility. Mr Obama’s decision to relax some restrictions on American visitors is expected to push tourism to Cuba up by 17% this year, bolstering foreign exchange by around $500m, or 1% of GDP, estimates Emily Morris, an economist at the Inter-American Development Bank. Visitors spend CUCs (Cuba’s dollar-equivalent hard currency) at a few swanky private restaurants where the quality (and prices) have reached fashionable Florida standards. Cubans are borrowing whatever they can to spruce up accommodation in a city where hotels are now booked up weeks in advance. According to Omar Everleny, a Cuban economist, 18,000 private rooms have become available. That is the equivalent of 31 new hotels the size of the 25-storey Habana Libre.

This activity is expected to boost economic growth from last year’s meagre 1.3%. But there is little sign as yet of the $2.5 billion a year in investment that the government hoped to woo with a new foreign-investment law last year, mostly because it sends mixed signals. It has authorised at most two manufacturing projects at its Mariel port and special economic zone, despite hundreds of applications. It continues to view private business with distaste, and believes socialist state enterprise will remain the core of the Cuban economy. As one economist puts it, “the government wants to create prosperity, but it doesn’t want to create prosperous citizens.”

As a result, it risks creating neither. Some of the 500,000-odd people self-employed in private enterprise—about 10% of the labour force—benefit from earning hard currency, and represent a nascent middle class. Unlike the rest of the labour force, their productivity is improving.

But the majority who work in the state sector earn Cuban pesos, live on ration books and can barely make ends meet unless they receive remittances from abroad or do informal jobs illegally. This produces stark inequality, which is exacerbated by shortages, especially of food. Some of the new restaurateurs admit that they face wrath in Cuban supermarkets when they pull out wads of notes to stock up on scarce beer, milk and cheese, leaving shelves empty and pushing prices higher. They insist it is not their fault; the government has failed to open up well-supplied wholesale markets or allow them to import goods. But that argument counts for little with a hungry public.

What’s more, it exacerbates a vicious circle in which disgruntled government employees slow down at work, further sapping output and causing more shortages. In a bid to counter inequality, the government has raised salaries of favoured state workers such as doctors. It has authorised public entities such as the sugar monopoly to raise pay if productivity improves (this year, sugar production is up 22%). But partly as a result of higher wages, the budget deficit is expected at least to double to above 6% of GDP this year.

All this creates a headache for Mr Castro. He has less than a year before a Communist Party congress next April. There he will have to defend reforms launched at the previous congress in 2011, including a planned unification of Cuba’s two currencies (see article), despite their disappointing results so far. Mr Castro must also worry that a Republican will succeed Mr Obama, who will leave office in early 2017. To forestall a renewed tightening of the American embargo, he will want to show that Cuba is making economic progress.

Next April’s congress could also mark the start of a generational change in Cuba’s leadership. Mr Castro, who took over from his brother, Fidel, in 2008, is expected to step down as president in 2018. He has said that he is keen to promote younger leaders, replacing the “historic generation” of octogenarians who fought under Fidel in the 1959 revolution.

He is grooming Miguel Diáz-Canel, the 55-year-old first vice-president, to replace him. There is a possibility that Mr Castro could step down as head of the party next year. Economists working for the government say some of Mr Diáz-Canel’s peers are receptive to reformist ideas. They are often seen carrying PCs or tablets, suggesting an interest in bringing more internet to Cuba. But they are also reluctant to defend reform publicly, so it is hard to know what they stand for.

Many in the establishment are terrified that change will jeopardise what they see as the main gains of the revolution, such as free education, health care and welfare. “The economy has to become more efficient, but you can’t ignore our principles or you’ll get a tsunami of capitalism washing over the whole island,” says Luis René Fernández of the University of Havana.

Mr Castro may be preparing to take on Communist Party conservatives. The party’s central committee said in February that it would discuss a new electoral law at next year’s congress. It gave no details; no one expects anything like political freedom. The aim may be to pressure mid-level bureaucrats to stop paralysing reform. “Change starts from the top and those at the bottom want it, but it gets stuck in the middle,” says Rafael Hernández, editor of Temas, a social-sciences journal.

Mr Hernández believes that a priority for the government will be a stronger National Assembly that can approve laws to underpin economic liberalisation, such as the right to own a business (currently, private firms, however prosperous, are considered “self-employment”). He also argues that professionals such as lawyers, teachers and doctors should be able to moonlight from their state jobs in private consultancies, consolidating a “socialist middle class” that pushes for further reform. However, he frets that hardship has made ordinary Cubans apathetic about greater political representation. For them “the glass is always half empty.”

Among intellectuals, though, resistance is growing. Dagoberto Valdés, editor of Convivencia, a Catholic journal, says the American thaw has robbed the regime of its ability to cast its neighbour as an “external enemy”, so its own shortcomings have moved into the spotlight.

El Capitolio, a marble landmark in central Havana, modelled on (and with a bigger dome than) America’s Capitol, points to a brighter future. It is being refurbished and is supposed to become the seat of the National Assembly for the first time since 1959. Alberto Pagés, a wiry old man who for 30 years has been operating a homemade box camera for small change on the building’s steps, thinks it will attract more tourists and could become “a symbol of how Cuba and the United States can look more like each other”. But ask him whether it could also become a harbinger of democracy and he clams up. “I know absolutely nothing about politics,” he mutters.

Cuba Mar 2014 002

The Capitolio, Under Repairs.

After 56 years. the prospective home of the National Assembly once again,

Cuba April 2015 212

A rationed food outlet on Calle Jovellar

Cuba April 2015 110.jpg qqqqThe Art and Crafts Retailing Center in a Converted Warehouse, a showcase of Cuban ingenuity and creativity.

 

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REFORMING CUBA: BE MORE LIBRE. The transformation of the economy needs to happen much faster

The Economist, May 16th 2015

Original Here: Reforming Cuba: Be More Libre

IT HAS been five months since Cuba and the United States announced that they would end their long cold war, but Cuba’s president, Raúl Castro, is still basking in the afterglow. On his way home from Russia this week he stopped off at the Vatican to see the pope, and said he might return to the Catholic faith. Later François Hollande paid the first-ever visit to Cuba by a French president; he was granted an audience with Fidel Castro, Raúl’s ailing brother, who led the revolution in 1959 and ruled until 2008.

But beneath the bonhomie lies unease. Cuba’s creaky revolutionaries spent half a century blaming the American embargo for all the island’s woes. Now they resist American capitalism for fear of being overrun. The result for most ordinary Cubans is not too much change but too little (see article). The island is poorer than many of its neighbours. Doctors earn just $60 a month—after a 150% pay rise. Food and other basics are in short supply. Boat people still flee to Florida’s shores.

Cuba deserves a proper democracy and a robust market-based economy. Sadly, that is unlikely to happen soon. Some things are changing. Private guesthouses, restaurants, barber shops and the like have begun to flourish, creating the kernel of an entrepreneurial middle class. But if Cubans are to benefit from the opening with America, their rulers need to reform more boldly and quickly than they have done so far.

A cocktail of reform

Where to start? Cuba should begin by opening up many more sectors to private enterprise. Currently, Cubans can be “self-employed” in 201 activities (including reading Tarot cards), but few that require a university degree. In place of a “positive list” of permitted private activities, the government should publish a negative one that reserves just a few for the state. All others would then be open to private initiative, including professions such as architecture, medicine, education and the law. The new bourgeois are potential customers for professional services; catering to that demand would in turn expand the middle class.

Liberalisation is urgent in wholesale markets. Today enterprises such as restaurants are forced to buy supplies from state-run supermarkets where ordinary people shop, which exacerbates shortages. This undermines popular support for the emerging private sector.

The climate for foreign investment must also improve. Cuba woos foreign investors for the expertise, jobs and currency they bring, but treats them shabbily. Under a supposedly friendly new law, they must still recruit workers through state agencies, to which they pay hard currency; the agencies then pay out miserly salaries in pesos. Imported inputs pass through bureaucratic state-run enterprises. Worst of all, legal codes are vague and their application is arbitrary. In recent years several foreign businessmen have been imprisoned (and later released) with little explanation.

How much of this thicket Mr Castro is prepared to clear away is uncertain. The party’s leadership has hinted that its congress would strengthen the National Assembly, a rubber-stamp body. A proper legislature that could write laws would give security to enterprise. Cuba is also bracing for a painful currency unification, which will end a huge subsidy to state companies.

For many of the revolution’s ageing leaders reform and privatisation are yanqui-inspired dirty words. The regime looks to China and Vietnam, where communist governments have embraced capitalism without yielding power. The Cuban communists are wary: they fear that, if they give up too much economic control, they will be obliterated just like the communists of eastern Europe. Yet the bigger risk would be merely to tinker with a system that keeps Cubans poor at a time when their aspirations are rising.

Cuba April 2015 228A Symbol of Santeria, the meaning of which I do not understand.

Not entirely relevant to this Economist editorial. Photo taken in April 2015 on Calle Animas

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Carmelo Mesa-Lago: NORMALIZACIÓN DE RELACIONES ENTRE EEUU Y CUBA: CAUSAS, PRIORIDADES, PROGRESOS, OBSTÁCULOS, EFECTOS Y PELIGROS

Carmelo Mesa-Lago

 Documento de Trabajo 6/2015

Real Instituto Elcano | DT 6/2015 | 8 de mayo de 2015

Carmelo-Mesa-Lago-003Resumen

Ríos de tinta han corrido desde el 17 de diciembre de 2014 cuando se hizo el anuncio simultáneo del inicio de conversaciones para normalizar relaciones entre EEUU y Cuba después de 55 años de hostilidad. Este ensayo aborda un análisisl de as causas del cambio de política, las posibilidades y obstáculos en el comercio, los sectores económicos prioritarios, la inversión y entrada a organismos financieros internacionales, y las reclamaciones monetarias mutuas.

Índice

(1) Introducción

(2) Causas del cambio de política en Cuba y EEUU

(3) Avances y problemas en las relaciones económicas

(4) ¿Habrá un boom en la economía cubana si se levanta el embargo?

(5) ¿Mejorarán los derechos humanos y políticos con la normalización?

(6) Los escollos que afronta el proceso

(7) Los resultados de la Cumbre de las Américas

(8) Posibles explicaciones a un enigma

(9) Apostillas finales

(10) Referencias bibliográficas

 (1) Introducción

Ríos de tinta han corrido desde el 17 de diciembre de 2014 (17D en adelante) cuando se hizo el anuncio simultáneo por los presidentes Barack Obama y Raúl Castro, respectivamente en Washington y La Habana, del inicio de conversaciones para normalizar relaciones entre ambos países después de 55 años de hostilidad, un paso importante y positivo que abre una nueva etapa en las relaciones entre ambos países.

Este ensayo aborda un análisis de dicho proceso de forma abarcadora, documentada y lo más objetiva humanamente posible: las causas del cambio de política, las posibilidades y obstáculos en el comercio, los sectores económicos prioritarios, la inversión y entrada a organismos financieros internacionales, y las reclamaciones monetarias mutuas. También se intenta responder a dos preguntas clave: si el restablecimiento de relaciones tendrá un impacto sustancial en la economía cubana, así como en los derechos humanos y políticos. Por último, se analizan los escollos que afronta el proceso, los resultados de la Cumbre de las Américas, varias explicaciones a un enigma importante, y al final se resumen los puntos principales y se dan algunas pautas para una negociación exitosa.

Me parece justo que de entrada informe a los lectores que desde 1968 he mantenido una posición contraria al embargo de EEUU, por razones que se analizan aquí, a más de ser un partidario de los intercambios académicos y viajes a Cuba, aunque esto no ha impedido tres negativas de visa para ir a mi país de nacimiento a realizar actividades académicas, la última en 2014.

 El Ensayo Completo: Carmelo Mesa-Lago Real Instituto Elcano Normalizacion de Relaciones entre EEUU y Cuba New Picture (6)

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Airbnb: A US FIRM MANAGES TO CRACK THE CUBAN MARKET

By: Reem Nasr

CNBC, Tuesday, 5 May 2015

Original article here: Airbnb in Cuba

Airbnb Site on Cuba

Tatiana Zuniga started to rent out rooms in her Havana home two weeks into the new year. She had never done it before, but decided, along with her family, that it would be a good way to supplement their income.

Then about three months ago, Zuniga decided to try to attract a new type of visitor—tourists from North America. She connected with Airbnb, the U.S. accommodations broker, and listed her rooms for $33 a night. “They are basically teaching us how to make this a lucrative business,” she told CNBC in a telephone interview. “We are really taught how to reach out to clients and have them come to our home, our neighborhood and our city.”

Zuniga’s rooms are booked through the beginning of June. “It’s very good to get into the North American market, and this is what they seem to be helping us to do,” she said.

“We are an Internet company, and there is a 5 percent Internet penetration in Cuba. We couldn’t expect that hosts would access the site on a daily basis.”-Molly Turner, head of civic partnerships, Airbnb

Zuniga isn’t the only one excited about attracting visitors from the north. Airbnb has taken advantage of an easing of relations between the United States and Cuba since President Barack Obama’s announcement last December that he would seek an opening of links between the countries. Changes to certain trade licenses made it possible for travel services firms, like Airbnb, to finally enter and do business in the long-forbidden Cuban market. It puts the company ahead of most U.S. firms that want to do business there.

“Cuba presented a different case for us because we’ve never launched a market before,” said Molly Turner, global head of civic partnerships at the company. “We had to adapt a lot of our system to the Cuban context.”

The San Francisco-based tech firm launched in late 2008, hoping to link renters and travelers around the world through the Internet. (It is one of Silicon Valley’s many “unicorns,” or start-ups worth more than $1 billion). Travelers can search on the site to rent entire homes or just rooms in 190 countries, most of them at a fraction of the cost of staying in a hotel.

Like many other American companies, Airbnb was banned from doing business in the communist nation until this year. But the company found early success when it launched in Cuba with 1,000 listings on April 2. A month later, it’s consistently adding more listings to the site. It took the company about three months to launch in Cuba because doing business there required a lot of due diligence, Turner said. First, the company had to get in touch with the State Department to make sure it was complying with all U.S. regulations.

“In the beginning, it wasn’t entirely clear to us how the regulations would apply,” Turner said. “We had to work collaboratively with the U.S. government, which meant regular phone calls with them to make sure everything we did was compliant with the law.”

The same applied to figuring out regulations on the Cuba side. That required sending several teams to the island to do research and meet with Cuban officials.

Hagar Chemali, a spokeswoman for the Treasury Department and Office of Foreign Assets Contol , which deals with such trade issues, said that the government is doing a lot of private sector outreach to explain sanctions programs for Cuba and other countries. Interested companies should check the department’s website for more information, she said.

She wouldn’t comment on the specifics of working with Airbnb, but said, “it is very common for companies and individuals to reach out to OFAC to figure out sanctions compliance. In fact, we encourage and welcome that.”

Beyond tricky regulations, the company had to figure out how to do business in a country whose technology use lags much of the globe.

“We are an Internet company, and there is a 5 percent Internet penetration in Cuba,” Turner said. “We couldn’t expect that hosts would access the site on a daily basis.”

Because hosts use their listings on the Airbnb site to manage bookings and payments, the company had to reassess its expectations. Internet cafe culture is not big in Cuba, she explained, so people use the Internet at work to manage listings—providing they even have access on the job.

Zuniga is one of the lucky Cubans who can access the Internet at work, although she said the connection is slow. Like many others, she relies on the help of friends who have better connections at their places of work. “One always finds a way,” she said. “And I can’t miss out on the opportunity, so I try to make it work.”

Turner said that several Cuban hosts get help from friends and family in other countries to manager their online presence.

The company partnered with local payment companies that take payments from travelers made on the site, and put straight into the pockets of the hosts. “To the typical Airbnb customer, the website is no different, but we hacked the back end to make that possible,” Turner said. But Airbnb was lucky, said Turner, because it was able to capitalize on an already existing culture of Cubans who have been renting out their homes for years. The company was able to get into the market first and connect those hosts to the outside world.

“Airbnb was the perfect business at the perfect time,” she said. “If Obama’s talk had been five years ago, it would have been a different story.”

For Zuniga, using the site to list her home has been a start for her as a businesswoman—no small accomplishment for a nation where private property is largely forbidden. The company takes 3 percent of the rental fee she charges.

 5d29f7bb_original 5d592a1e_original 9cba793c_original ed044fde_originalSOME AIRBNB RENTAL ROOMS IN CUBA, from the Airbnb web site.

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DANGERS IN ECONOMY RUN BY CUBA’S REVOLUTIONARY IN A BUSINESS SUIT

Paul Webster Hare, Financial Times. May 11, 2015

 Original here: Revolutionary in a Business Suit

Both leaders wore business suits at the Panama summit last month. Raúl Castro, the one-time guerrilla from the Sierra Maestra, shook hands with Barack Obama, the former law professor from Chicago. Are Cuba and the US back in business?

In its “normalisation” of relations, the US is finally catching up with more than 100 other countries with embassies in Havana. Americans will now experience the Cuban way of doing business. Existing links can be built on: Cubans want more of the cheap food, such as chicken and rice, that has been sold by US companies in the past decade. They also want fully open US tourism: the prospect of their young people mixing with American peers on their traditional “spring break” is no longer feared by the Castros. Havana wants to maintain billions of dollars in family remittances from the US. But even when the 55-year-old embargo is dismantled, a new business relationship will take time to emerge.

Cuba in 2015 is not a country confidently set in a new direction. Mr Castro can see its past more clearly than its future. He remembers when US companies dominated the economy, and when he and Fidel nationalised them in 1960. Cuba later became dependent on other nations: first the Soviet Union and then Venezuela— which is now looking increasingly wobbly, an important reason to mend relations with America.

So what awaits US companies flying to Cuba? The welcome will be lavish. They will visit revolutionary showpieces such as the Latin American School of Medicine. The mojitos and cigars will taste better. Even the home-run distance at the Havana baseball stadium is marked in feet not metres.

Yet Cuba is still a foreign land for international business. Features of the revolution endure to this day; rudimentary use of the internet is only the most visible. Statistics are produced by the state and there is no independent verification. Foreign exchange reserves are never published. Military-controlled companies retain almost all the hard currency Cuba earns. State employees — estimated at more than 70 per cent of working-age Cubans — receive an average of less than $30 a month in currency worthless anywhere else. “They pretend to pay us and we pretend to work” is a joke almost as old as Havana’s Cadillac Eldorados.

Foreign investors and embassies, forbidden by law to select their own employees, pay well above state rates, producing absurd results: at the British embassy, I had a PhD in microbiology working as a nightwatchman. Education matters little when you cannot pay your bills. Apathy is prevalent: I remember the Havana fun fair manager who closed for lunch with a queue of 50 customers; and the biotech marketing managers who visited the UK but returned with no leads.

US companies bidding for foreign investment projects will face competitors from countries including China, Brazil, Venezuela and the EU. Political considerations will weigh heavily; and if things go wrong the business climate is unfamiliar. The courts have never ruled for a foreign business against the government. And, though Havana badly wants to buy US imports on credit, its record on payment is poor.

Mr Castro will want to put in place a framework for new relations with the US before he steps down in 2018. But he has not yet signalled he wants Cubans to grow rich in private business. Few countries can match the investment potential of his nation. Cuba currently has only two golf courses; the Dominican Republic has more than 30. Some pro­jects will succeed; yet the recent jailing of British investors in Havana’s luxury Saratoga Hotel — after a trial that took place behind closed doors, of which few details have been released — serves as a warning.

The Castro brothers in the Sierra Maestra proceeded cautiously, building their campaign of revolution. American businesses should recognise that they are dealing with the same strategists.

The writer was British ambassador to Cuba from 2001 to 2004, and is now a lecturer at Boston University

Cuba April 2015 012The bar at the Hotel El Colina: an unlikely venue for US-Cuba business deals despite its great pre-Revolutionary canine mural.

 

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FREE ELECTIONS and AUTHENTIC (though IMPERFECT) DEMOCRACY: FUN! BESIDES EVERYTHING ELSE

By Arch Ritter

Winston Churchill might have been right when he said that democracy was the worst political system – except for all of the others!

What he neglected to say was that authentic participatory democracy is also ultimately FUN, despite the uncertainties and heartaches as well as jubilation and legitimacy that it generates.

Here are the results of two amazing elections this past week in Alberta Canada and the United Kingdom as well as the results of the elections in Cuba over the last half century.

  ALBERTA MAY 1 2015