• 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.

MY FAMILY’S TEARS OF JOY AND SADNESS FOR CASTRO’S CUBA

Son of a Cuban émigré, John Paul Rathbone asks what Fidel’s death means for the republic’s people

John Paul Rathbone, Financial Times, December 2, 2016

Original Article: Joy and Sadness for Castro’s Cuba

It has been many years since my family celebrated the usual exile toast which tacitly imagined Fidel Castro’s death — “To next Christmas in Havana!”

My mother’s family left Havana in the autumn of 1960 — 18 months after Castro came to power — expecting to return soon. But as the years passed, the toast I heard as a child growing up in London grew heavier with irony. By the end of the 20th century, it was repeated only because the repetition was comic. Then, last Friday at 10:29pm, Castro really did die. His younger brother, President Raúl Castro, made the announcement on national television.

I learnt the news on Saturday morning, in New York. My phone was lit up with texts and emails. In Miami, the night before, my niece had rushed out of her apartment in the Cuban district near Calle 8 to join the euphoric crowd. In Madrid, a cousin celebrated in a Cuban dive bar with a hip audience and politics far to the left of his own — and those of the owner, a black Cuban in his early 60s who served the crowd cocktails but kept his satisfaction to himself. From Havana, the mother of a friend left a strange message on his answering machine: “Fidel is dead”, and then a long silence before she hung up.

“DEAD” was the bald Miami Herald headline on its special edition. There was little more to say. Cuba has been “post-Fidel” since he retired from public office in 2006 because of ill-health, formally handing over power to Raúl in 2008. One friend who heard the news on Friday night simply went back to sleep. The revelry outside Miami’s famous Versailles restaurant soon rang hollow. It was a moment instead for grief, that churning of old emotions whenever a major figure in your life dies.

I called my mother in London. Although she left Cuba several years before the revolution for reasons that had nothing to do with politics, she often returned and had cheered Castro’s jubilant rebels and thrown flowers in their path when they had marched into Havana 57 years ago, the dictator Fulgencio Batista vanquished. She claims to have hugged Camilo Cienfuegos, the most-loved rebel leader, that day. But then Castro nationalised my grandfather’s store, and soon her parents and siblings and their children left too. “So many memories,” she told me.

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Camilo  Cienfuegos  and  Fidel  Castro, January  1 1958

I returned to Miami on Sunday evening. Driving home from the airport, I asked my Uber driver, a 26-year-old who left Havana four years ago, about his weekend. He was dismissive. “I understand the celebration. It’s not of a person’s death. It is of the end of someone who has caused so many people so much pain. But nothing really has changed. I stayed at home.”

Charismatic defiance

There is still, though, the public weighing of Castro’s life, the lengthy consideration of this versus that. Hero or villain?

First, we need a necessary correction of perceptions. Even Cubans who dislike him sometimes take a strange pride in Castro. “Fidel embodied the best and worst of us,” wrote Achy Obejas, a Cuban-American novelist, in a New York Times column this week. “We hated his ambitions and loved that he had them. Hang out with a bunch of Cubans, and the minute someone gets imperious, someone else will call her out for the ‘little Fidel’ in her.” It’s in every Cuban, really.

Castro (left) is shown in file photo dated May 1963 holding the hand of Soviet leader Nikita Khrushchev during a four-week official visit to Moscow. Castro resigned on Feb. 19, 2008 as president and commander in chief of Cuba in a message published in the online version of the official daily Granma.

Castro (left) is shown in file photo dated May 1963 holding the hand of Soviet leader Nikita Khrushchev during a four-week official visit to Moscow. Castro resigned on Feb. 19, 2008 as president and commander in chief of Cuba in a message published in the online version of the official daily Granma.

Castro was epic, especially from afar. He seemed to rule forever. He was the Quixote whose defiance of the Yankee monster warmed the cockles of the hearts of the red, the young and the poor. His charisma was inarguable.

There were also the achievements, especially Cuba’s lauded education and health systems, and the fight against South African apartheid. His longevity — outlasting 11 US presidents — won him the respect of Latin American leaders. European, African and Asian politicians played court too.

Up close, however, his portrait becomes like the picture of Dorian Gray. There were the summary executions in the early days of the revolution; the stifling ideology that followed; the neighbourhood snooping; and the official discourse with its sledgehammer words like “conflict” and “struggle” but never “prosperity”, “reconciliation” or “harmony”. There were, and still are, the desperate escapes across the Florida Straits in makeshift rafts, the stultifying economy, the drain of the talented and the young seeking a life for themselves as exiles, and the fact that while Cuba’s island population is 11m, another 2m live abroad.

More than anything, though, there has been the terrible breaking apart of families — and Cuba, under all the politics, is a family affair. I think of this analogy. At his height, Castro was the father of the nation — the man who shaped everyone’s lives. Yet he was also an abusive father. On Tuesday night, as I watched the state funeral in Revolution Square on the television, I noticed that Raúl never used the word “brother” during his tribute speech. With Castro, it was politics all the way.

FILE - In this April 19, 2016 file photo, Fidel Castro attends the last day of the 7th Cuban Communist Party Congress in Havana, Cuba. Fidel Castro formally stepped down in 2008 after suffering gastrointestinal ailments and public appearances have been increasingly unusual in recent years. Cuban President Raul Castro has announced the death of his brother Fidel Castro at age 90 on Cuban state media on Friday, Nov. 25, 2016. (Ismael Francisco/Cubadebate via AP, File)

FILE – In this April 19, 2016 file photo, Fidel Castro attends the last day of the 7th Cuban Communist Party Congress in Havana, Cuba. Fidel Castro formally stepped down in 2008 after suffering gastrointestinal ailments and public appearances have been increasingly unusual in recent years. Cuban President Raul Castro has announced the death of his brother Fidel Castro at age 90 on Cuban state media on Friday, Nov. 25, 2016. (Ismael Francisco/Cubadebate via AP, File)

Cuba waits

Castro’s death at the age of 90 is, of course, one of the most unsurprising news events ever. The obituaries were written long ago. Nothing happening this past week on the island has been improvised either, even if most Cubans had probably not expected to trudge through nine days of state-mandated mourning, with alcohol sales banned.

On Wednesday, after tributes from foreign dignitaries the night before, Castro’s ashes were driven off in a cortege on an 870km tour across the island. On Sunday, his ashes will be interred at the Santa Ifigenia cemetery in Santiago, in a tomb next to José Martí’s: Castro has thereby sought to appropriate the legacy of the poet and man of letters who is Cuba’s most famous independence hero.

Castro’s own legacy will be disputed for years. For every argument in its favour, there is a riposte. What is inarguable is that the island is physically crumbling, and the economy in desperate need of investment and funding. Socialist Venezuela, Cuba’s closest ally, faces an economic crisis. Soon Caracas may no longer provide Havana with the aid and subsidised oil it needs.

When I last visited Cuba in July, there were blackouts. A euphoria I sensed in February, an expectancy of change triggered by President Barack Obama’s historic visit and the prospect of subsequent US rapprochement, had faded. The significant but small economic reforms launched by Raúl have stalled. The generals still control the most lucrative sections of the Cuban economy. When Raúl steps down as president in 2018, as he has promised, the system will probably be much the same as now. But perhaps it will be otherwise.

Cubans also face the prospect of Donald Trump. The US president-elect has threatened to reverse Mr Obama’s detente. “If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the US as a whole, I will terminate the deal,” Mr Trump tweeted this week.

It is hard to see the logic of how a return to a US policy that failed when Castro was alive will succeed now that he is dead. Squeezing Cuba again will more likely prompt the turtle to shrink back into its shell. But does Mr Trump really want that for the island nation anyway, even if many Cuban American Republicans do?

It is only a straw in the wind, but Maria Romeu, who concierges yacht charters to Cuba from Florida, continues to take lots of bookings from her largely Republican clients. On a recent Havana trip, the 58-year old Cuban American took four wealthy Trump voters on a city tour where they imagined where the Trump Tower might be built. “They were quite elated and the possibility of not going to Cuba next April did not cross their mind,” says Ms Romeu, who adds that the bookings for next summer are intact. “I’m taking their lead.”

It is ironic that the death of one of the 20th century’s most charismatic nationalists, the narcissistic father figure Fidel, coincides with the rise in the US of another charismatic nationalist, Mr Trump. For some, it is a worrying symmetry; a populist playbook seen before.

“I don’t care if Castro is alive or dead. That was already a done deal for me,” a family friend wrote on Facebook. “Instead I care about those who still think he was great. That is bothersome, and dangerous, because it is a trap. A trap that can ruin lives — like those who think Donald Trump is great, [believe his promises] and yet you see the train wreck coming.”

I left for Cuba on Friday, with no great expectations, but wanting to witness Castro’s passing. His death, it seems to me, truly marks the end of the 20th century and also of certain attitudes that already seemed old-fashioned and outdated many years ago.

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John Paul Rathbone

 

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ACADEMICS FROM CARLETON UNIVERSITY HELPED “JUMP-START” WESTERN ECONOMICS IN CUBA AFTER THE COLLAPSE OF THE SOVIET UNION.

How Carleton profs brought Western economics to Cuba

zzzzzzzzzJustin Trudeau speaks to a University of Havana audience plus officials in the Aula Magna, Universidad de la Habana, November 16, 2016

Here’s how it happened: after the Soviets ended their “special relationship” with Cuba, the faculty of economics at the University of Havana wanted to introduce supply-demand micro and macroeconomics into its curriculum.

This was no small problem. Soviet economics had virtually disappeared, and Cuban economists were left orphaned. They didn’t even speak the language of Western economics, and they found it difficult to communicate with their counterparts in the rest of the world.

Carleton economist Archibald “Arch” Ritter, an expert in economic development, was at the first meeting in Havana in December 1993. The meeting brought together academics from Canada, Chile, Argentina and the University of Havana as well as officials from the International Development Research Centre (IDRC) to hammer out a plan.

The  group decided to organize a joint master’s program in economics, mainly for young faculty members from Cuban universities, to be offered at the University of Havana. Carleton’s then-president Robin Farquhar approved the agreement. The program was up and running six months later.

Financed for the first two years by the IDRC and in its final three years by the Canadian International Development Agency with support from the United Nations Economic Commission for Latin America, the program was later expanded to include biology, business, linguistics, women’s studies and public administration. Professors were recruited from Canada and Latin American countries.

 “It was neat to jump-start the introduction of Western economics to Cuba,” says Ritter, who taught in Havana part-time for five years. “And we did it on a shoestring budget.”

The project had broad support at the University of Havana, but it was far from unanimous, says Ritter. The students, however, “were all most congenial and very keen.”

In his blog, former student Luis Casaco, who now lives in Uruguay, recalls the day a stranger arrived in a classroom while he was making a presentation. She identified herself as a member of the communist party. The presentation continued, but there was a confrontation and the students defended their position that Cuba needed a radical transformation towards a market economy and a democratic system.

The woman angrily left the classroom. The next day, Casaco was called in for an urgent meeting.

“The woman started speaking in an irritating, slowly and softly way on the importance of the program, while emphasized the interest of some sectors in the university to dismantle it,” Casaco recalled. “She started to get angry, and said that the university belongs for the revolutionary people.”

Casaco’s professors came to his aid, including Ritter. “If they threaten you and intend to force you to stop free-speaking, I will shut down this program,” he recalls Ritter saying. “And then he added: ‘This is not a class of the communist Cuban party; this is a Carleton University class.’”

The program ran until 2001. Between 1991 and 1997, there was a shortage of food in Cuba after subsidies from the Soviet Union ended. “People were very thin,” said Ritter.

Many of the Cuban graduates went on to earn PhDs in economics both inside Cuba and at Carleton. Some left Cuba and built their lives elsewhere. According to Ritter’s count, 31 of the 76 graduates had left Cuba to go to Canada, the U.S. and countries in Latin America as of 2010.

“We contributed to a change in the climate of opinion, and changed the teaching of economics,” says Ritter.

zzzzzzzzzzzzzzzzzzzzzzzzCarleton University economics professor Arch Ritter, pictured in Cuba in 2015 in a 1955 Chevrolet, taught part-time for five years at the University of Havana.

Ritter is often called upon to answer questions about Cuba. So, what will happen in the wake of Fidel Castro’s death?

Ritter doesn’t think it will change much. Castro has been mostly out of the picture since he became ill about a decade ago. Castro’s brother Raúl, now 85, served under his brother for 46 years. He was officially made president in 2008, and instituted a major set of reforms in 2010-11, which have liberalized small businesses.

“I don’t see much of change in the short run,” says Ritter. “Raúl will pretty much pick his successor. The succession will follow Raúl’s line. Raúl is very cautious. It took him almost five years to decide on the reform package.”

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U.S.-CUBA RELATIONS UP IN THE AIR AS TRUMP THREATENS TO REINTRODUCE SANCTIONS

Barrie McKenna

The Globe and Mail, Sunday, Nov. 27, 2016 9:06PM EST

Fidel Castro is gone, but the economic thaw between the United States and Cuba remains tenuous amid threats by Donald Trump to roll back Barack Obama’s efforts to normalize relations with the Communist regime.

The president-elect is warning he may reimpose some sanctions and reverse last year’s historic reopening of the U.S. embassy in Havana after 54 years unless Cuba agrees to major political and economic reforms.

“We’re not going to have a unilateral deal coming from Cuba back to the United States without some changes in their government – [on] repression, open markets, freedom of religion, political prisoners. These things need to change in order to have open and free relationships,” Reince Priebus, Mr. Trump’s chief of staff, told Fox News on Sunday. “And that’s what president-elect Trump believes and that’s where he is going to head.”

Read more: From Brazil to Venezuela, Fidel Castro’s influence felt across Latin America

John Ibbitson: Trudeau’s words on Fidel Castro a reminder Canada willing to go own way on Cuba

Read more: Respect and affection tie the Trudeau family, Quebec and Fidel Castro

Many Republicans in Congress have long opposed the détente with Cuba without a full dismantling of the regime. Florida Senator Marco Rubio vowed on Sunday to try to reverse much of Mr. Obama’s legacy on Cuba. “We want to take a look at all the changes that were made,” he told NBC.

Since 2014, Mr. Obama has used his executive powers to re-establish diplomatic relations, resume direct flights, liberalize banking links and drop restrictions on imports of Cuban cigars and rum. He had planned to go much further, eventually lifting the broader trade and investment sanctions, a step that would require Congress to rewrite laws.

Mr. Trump would likely face a backlash from the business community. And if the Cuban economy falters, the United States could also face a renewed exodus of boat people from the island.

U.S. companies have embraced the easing of sanctions, rushing in after the United States resumed diplomatic ties and loosened some economic sanctions two years ago. Airlines now offer direct flights from U.S. cities, Airbnb is doing business there, telecom companies have roaming coverage, Marriott International Inc. has a joint venture to manage some Cuban hotels and a Miami cruise-ship line now sails to Havana. Many other U.S. companies are actively exploring potential deals.

The resumption of relations has also been welcomed by most Cubans, who can see their relatives more easily and could improve economic prospects.

Cuba’s economy is relatively small at less than one-tenth the size of Canada’s, and the country has struggled to gain traction since the former Soviet Union stopped propping it up in the 1990s. Its rich agricultural land, beaches and proximity to the United States make it a draw for investors and major trading partners, which include Canada, Venezuela, China and Spain.

Mark Entwistle, who was Canada’s ambassador to Cuba from 1993 to ’97 and helps businesses set up there, said the regime will likely “shrug off” any crackdown by Mr. Trump – the 12th U.S. president since the revolution. “I predict business as usual,” he said.

Likewise, Canadians doing business in Cuba say Mr. Castro’s death won’t dramatically alter the slow pace of economic liberalization.

“I don’t think his passing will have a huge impact on economic reform or Cuba opening up for foreign investment,” Gregory Biniowsky, Canadian law firm Gowling WLG’s lead lawyer in Cuba, said from Havana. Mr. Biniowsky said while Gowling has attracted an array of U.S. clients hoping to establish operations on the communist island, its clients are in for the long haul. “They have to be ready for a very slow process forward,” he said.

Mr. Trump has sent mixed signals on what he wants from Cuba. After initially suggesting he supported easing of sanctions, Mr. Trump later attacked normalization of relations as too weak. And last week, he named Cuba hard-liner and sanctions advocate Mauricio Claver-Carone to lead his transition team at the Treasury department.

As a businessman, Mr. Trump actively explored opportunities for golf courses and other ventures in the late 1990s and again more recently – in apparent defiance of the U.S. economic trade and investment embargo.

A Trump administration will slow down the rapprochement with Cuba, and may reverse some of what Mr. Obama has done, said Pedro Freyre, head of international practice at law firm Akerman LLP in Miami. “There is an internal struggle going on. People are tugging from all directions,” he said.

A resumption of tough sanctions could easily backfire on the United States. Undoing the past two years would undermine U.S. commercial interests throughout the Americas and won’t likely succeed in prodding the Cuban government any further toward economic or political reforms, argued Allan Culham, a former Canadian diplomat and ambassador to the Organization of American States from 2010-2014. “If Trump chooses to reimpose the isolationist policies of the past, the recent goodwill generated in the Americas would be lost,” Mr. Culham said.

More effective in pushing Cuban President Raul Castro to change, Mr. Culham said, will be the end of subsidized oil it gets from Venezuela – something that is probably inevitable given Venezuela’s faltering economy.

A hard line by Mr. Trump could also trigger a new wave of boat people, particularly if he tightens the economic screws on Cuba and clamps down on the legal flow of immigrants to the United States, according to Julia Sagebien, an associate business professor at Dalhousie University and an expert on Cuban economic reforms. “Keeping Cuba afloat is in the national interest of the United States,” Ms. Sagebien pointed out.

 

 

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HOSTILITY, SECRET TALKS, REGRETS: FIDEL’S TUMULTUOUS RELATIONSHIP WITH THE U.S.

Time Magazine, William M. LeoGrande and Peter Kornbluh, 11/26/16

No foreign leader was more associated with conflict and confrontation with the United States than Fidel Castro. His legendary defiance and lengthy tirades against U.S. “imperialism” became an integral part of his lengthy reign in power. He made a political career by appealing to nationalism, wrapping himself in the Cuban flag and “hitting the Yanquis hard.” He aligned Cuba with the Soviet Union, Washington’s global adversary during the Cold War—an alliance that brought the world to the brink of nuclear annihilation during the 1962 missile crisis. Behind the scenes, however, the historical truth of Fidel Castro’s relationship with the United States is far more complicated.

The long saga of Fidel Castro’s confrontation with the United States began in 1958 when Castro and his small guerrilla band were still in the Sierra Maestra mountains fighting against General Fulgencio Batista’s dictatorship. Planes supplied to Batista’s air force by the United States dropped bombs and fired rockets at the guerrillas and their peasant supporters, enraging Fidel. The planes symbolized not only Washington’s years of support for the brutal Batista regime, but U.S. political and economic domination of Cuba dating back to the Spanish-American War. From the Sierra, Castro wrote to confidante Celia Sánchez, “When this war is over a much wider and bigger war will commence for me, the war I am going to wage against them [the United States].”

Yet when the revolution triumphed in January 1959, Castro harbored guarded hope that Washington might accept his vision of a new Cuba—less dependent on the United States and built on social justice. “At that time, we believed the revolutionary project could be carried out with a great deal of comprehension on the part of the people of the United States,” Castro told journalist Lee Lockwood, explaining why he came to the United States in April 1959. “[I went] precisely in an effort to keep public opinion in the United States better informed and better disposed toward the Revolution.”

z33Then-Cuban Prime Minister Fidel Castro smokes a cigar during interviews with the press during a visit of U.S. Senator Charles McGovern in Havana in this May 1975 file photo. Reuters

“Fidel went to the United States full of hope,” recalled his press secretary, Teresa Casuso. The public response was overwhelming. Everywhere Fidel went, he was met by cheering crowds. Fifteen hundred people were on hand when he arrived at Washington National Airport; 2,000 greeted him at Penn Station, New York; 10,000 turned out to hear him speak at Harvard; and 35,000 attended his outdoor address in Central Park. Fidel was delighted. “This is just the way it is in Cuba,” he marveled, wading into the crowds to shake hands.

The meetings between Castro and suspicious U.S. officials were less successful. President Dwight D. Eisenhower left town to avoid meeting Castro, delegating that task to Vice President Richard Nixon. Nixon came away from his two-and-a-half-hour meeting with Fidel convinced that Castro was inexperienced, naive and dangerous. But Nixon also was impressed with Castro’s charisma, according to the secret report he sent to Eisenhower. “Whatever we may think of him he is going to be a great factor in the development of Cuba and very possibly in Latin American affairs generally,” Nixon wrote.

The possibility of reaching a modus vivendi between revolutionary Cuba and the United States proved fleeting, smashed on the twin shoals of Castro’s anti-American rhetoric and Washington’s intolerance of Fidel’s impudence. By late 1959, the CIA had already begun plotting against Castro. The era of confrontation followed, marked by the familiar litany of the Bay of Pigs invasion, the missile crisis, CIA assassination plots, Operation Mongoose’s secret paramilitary war and the economic embargo.

But throughout the ensuing half-century of hostility, Fidel Castro and successive U.S. presidents kept up a secret dialogue to deal with issues that required cooperation and, occasionally, to explore the possibility of rapprochement. Every U.S. president since Eisenhower engaged in talks with Cuba. And when each new U.S. president entered the White House, Fidel Castro sent out feelers– often privately through secret emissaries– to see whether reconciliation might be possible. More than once, he sent the new president a box of his best Cuban cigars to break the diplomatic ice.

Castro regretted his role in the breakdown of relations. “I must acknowledge that I may have had some responsibility for our first divorce,” Castro admitted to U.S. diplomat Wayne Smith. “In retrospect, I can see a number of things I wish I had done differently. We would not in any event have ended up close friends. The United States had dominated us too long. The Cuban revolution was determined to end that domination,” Fidel reflected. “Still, even adversaries find it useful to maintain bridges between them. Perhaps I burned some of those bridges precipitously.”

Over the years, secret talks between Havana and Washington produced a wide variety of agreements on issues of mutual interest. Periodic crises of uncontrolled migration led to a series of migration accords. Other agreements included an anti-hijacking agreement in 1973, a maritime boundaries agreement and an exchange of diplomatic missions in 1977, a Coast Guard agreement in 1978 and an agreement to fight narcotics trafficking in 1999.

Yet these successes never led to normal relations. Two serious attempts, during the presidencies of Gerald Ford (led by Secretary of State Henry Kissinger) and Jimmy Carter, ended in failure. In both instances, Washington was motivated by the futility of the policy of hostility, by pressure from U.S. allies and Congress, and by a hope that Cuba might be enticed out of the Soviet orbit. Although Castro wanted better relations with Washington, it was not his only foreign policy priority and he was willing to pay only a limited price to achieve it. The approaches that Kissinger and Carter set in motion were both disrupted when Cuba sent troops to Africa to defend allies from invasion, first in Angola, then in Ethiopia.

Kissinger was so shocked and offended that Castro would throw the entire architecture of détente into jeopardy and defy the United States this way that he ordered the Pentagon to prepare plans for bombing and blockading the island. “I think we are going to have to smash Castro,” he told President Ford in the oval office on February 25, 1976. “We probably can’t do it before the elections.”

“I agree,” the president replied. But Ford lost that election to Jimmy Carter and Kissinger’s plans to “clobber” Cuba were never implemented.

Instead, within weeks of his inauguration, Carter ordered his government to open a dialogue with Cuba to normalize relations. When Castro sent troops to Ethiopia, derailing those negotiations, some speculated that Fidel simply did not want better relations—that his heroic persona of David defying the imperialist Goliath was too valuable at home and abroad to sacrifice. Castro acknowledged that battling United States had its advantages: “If the United States makes its peace with us, it will take away a little of our prestige, our influence, our glory,” he admitted to U.S. journalists in 1985.

Yet even after Cuba’s involvement in Ethiopia, Castro sent secret emissaries to Washington to try to revive the normalization talks. Knowing President Carter’s commitment to human rights, Castro released more than 3,000 political prisoners without asking for any quid pro quo. A series of secret meetings followed, but faltered over the U.S. demand that Cuba withdraw from Africa. Castro was simply unwilling to sacrifice the rest of his foreign policy as a quid pro quo for improving relations with Washington.

Fidel could never understand—or at least, could never accept—why Cuba should not to be free to help its friends, just as the United States did, and why bilateral relations should be held hostage to Cuba’s policies in Africa. In reality, however, Cuba’s role in Africa shoring up socialist governments with Soviet logistical support tilted the global balance against the United States in the Third World—something no president could ignore.

After the Cold War, Castro’s interest in improving relations with Washington grew. As Cuba sought to diversify its economic relations after the loss of Soviet aid, the potential for trade and investment from the United States was enticing. Absent the imperative of the Cold War, however, Washington was less interested in relations with Cuba, good or bad. The rise of the powerful Cuban-American lobby in the electoral battleground state of Florida transformed the Cuba issue from one of foreign policy to one of domestic politics.

And so it remained for the next 20 years. President Bill Clinton tried to improve relations at the margins by expanding societal contacts, including remittances from Cuban-Americans to family still on the island, travel opportunities and cultural and educational exchanges. But Clinton was torn between his recognition that the hostility policy no longer made sense, and his politician’s instinct to break the Republicans’ electoral lock on Florida. “Anybody with half a brain could see the embargo was counterproductive,” he told a confidante in the Oval Office. However, “Republicans had harvested the Cuban exile vote by snarling at Castro.” Clinton understood the political imperative to snarl, and ultimately placed a higher priority on electoral votes in Florida than he did on relations with Havana.

Then-Cuban President Fidel Castro laughs during the year-end session of the Cuban parliament in Havana in this December 23, 2005 file photo. Reuters

When Cuba shot down two small planes that had violated its airspace, killing four Cuban-Americans from the anti-Castro group Brothers to the Rescue, Clinton signed the Cuban Liberty and Democratic Solidarity Act of 1996 (also known as Helms-Burton) which wrote the embargo into law. From then on, no president could simply lift the embargo and normalize relations with Cuba at his discretion; that would now require an act of Congress.

Over the years, as Fidel Castro jousted with a succession of 10 U.S. presidents, he managed to raise Cuba’s international standing dramatically. He repaired relations with Latin America, which initially supported the U.S. embargo but by the turn of the century was virtually unanimous in condemning it and demanding Cuba’s reintegration into the inter-American community. Despite dramatic ups and downs, Castro rebuilt Cuba’s ties to Europe, also severed in the 1960s when the NATO countries followed Washington’s lead. In the 1990s, when Cuba opened up to tourism and foreign investment, Europe’s ties with Cuba expanded.

In the Third World, Castro’s activism on behalf of small, poor countries won him enormous prestige. “What Fidel has done for us is difficult to describe with words,” said South African President Nelson Mandela. “In the struggle against apartheid he did not hesitate to give us all his help.” Cuba was twice elected to chair the Movement of Nonaligned Nations, and sent thousands of medical personnel abroad on aid missions. He repaired relations with China and Russia.

But the main prize always lay just beyond Fidel’s grasp. He was never able to normalize relations with the United States, never able to win recognition and acceptance for himself and for the Cuban revolution. The task of repairing relations with Washington fell to his brother Raúl, who reached the dramatic agreement with President Barack Obama last December to take the first step toward normality—restoring diplomatic relations broken in January 1961.

Fidel Castro deserved his share of the blame for the half-century of antagonism between Cuba and United States, but he must also get some of the credit for making reconciliation possible. He survived Washington’s best efforts to overthrow him, demonstrating the futility of the policy of hostility, and his policies abroad rallied literally the entire world against the U.S. embargo. The diplomatic cost Washington was forced to pay, especially in Latin America, ultimately proved too costly and convinced President Obama that the time had come to open a “new chapter” in U.S.-Cuban relations. By abandoning more than five decades of a policy of hostility and replacing it with a policy of engagement and dialogue, the United States has finally accepted Cuba as a fully sovereign and independent country. That is, after all, what Fidel Castro wanted from the beginning.

William M. LeoGrande is professor of government at American University, and Peter Kornbluh is director of the Cuba Documentation Project at the National Security Archive in Washington, D.C. They are co-authors of Back Channel to Cuba: The Hidden History of Negotiations between Washington and Havana (University of North Carolina Press, 2014).

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Oficina Nacional de Estadisticas y Informacion, ANUARIO ESTADISTICO de CUBA 2016; SECTOR EXTERNO and CUENTAS NACIONALES

Attached are the Chapters of the ANUARIO ESTADISTICO DE CUBA 2015 on the National Accounts and the External Sector.  The Chapter of the ONEI Anuario on the External Sector includes information up to and including 2015, data that has not been available for the last few years.

These are not yet up on the ONEI web site but were sent by Dr. Jose Luis Rodriguez, Minister of  Economics and Planning from 1998-2009.

Attached here is the complete document.

ANUARIO 2016, CAPITULO 8:    onei-aec-2015-sector-externo

ANUARI0 2016, CAPITULO 6:   onei-aec-2015-cuentas-nacionales

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WHICH TRUMP WILL CUBA HAVE TO CONTEND WITH, THE HARD-LINER OR THE DEAL-MAKER?

WILLIAM M. LEOGRANDE, Professor of Government, American University, Washington, DC 20016

World Politics Review, November 16, 2016

Original Article: Which Trump Will Cuba Have to Contend? 

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Conference of the Association for the Study of the Cuban Economy: CUBA, NAVIGATING IN A TURBULENT WORLD

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DONALD TRUMP HAS A CHOICE TO MAKE ON CUBA

CNBC.com

Ted Henken,  November 14, 2016

zzazaOne example of freer markets in Cuba isthe Paladar La Cocina de Lilliam (Lilliam’s Kitchen), a home-based restaurant garden where President Jimmy Carter ate on his first visit to Cuba in 2002. Photo: Ted Henken

While Americans have been reeling over the shocking outcome of our presidential election, Cubans are experiencing perhaps even greater vertigo as a result of the surprise victory of Donald Trump.

As the saying goes, “When the U.S. sneezes, the rest of the world gets a cold.” Or perhaps the old Mexican adage is more appropriate to the situation Cubans find themselves in: “Poor Mexico! So far from God, but so close to the United States!”

Cubans went from a largely acrimonious relationship with the U.S. prior to December 2014, to one of unprecedented “hope and change” during the past 22 months under bilateral efforts to achieve diplomatic normalization between the erstwhile adversaries, to one of great trepidation and uncertainty over the past week given the president-elect’s campaign promise to “cancel Obama’s one-sided Cuban deal.” President Raúl Castro perfectly captured the moment’s ambivalence for Cuba by quickly sending the president-elect a brief note of congratulations while simultaneously ordering a five-day military mobilization.

In my more than half-dozen trips to the island over the past year, I have noted a palpable, ebullient expectation among Cubans for a better, more prosperous future under Obama’s “new rules” of engagement. This was especially pronounced among Cuba’s emergent entrepreneurial class, which includes old school cabbies in their even older school American cars, hip app designers in Cuba’s surprising tech start-up scene, and some of the many restaurateurs behind the island’s surging circle of “paladares” (private, home-based restaurants) which now number more than 1,800.

This hard-won hope was also born of Cuba’s own “new rules” introduced in late 2010 under President Raúl Castro aimed at expanding the island’s long-suppressed private sector. However, I also found that most entrepreneurs were under no illusions that the Cuban government would be fully lifting its own counter-productive “auto-bloqueo” or internal embargo against grass-roots entrepreneurial innovation and inventiveness any time soon.

This sense of rising hope inside Cuba reached its climax in Obama’s brilliant deployment of soft power during his historic state visit to the island in March 2016. Many Cubans identified with this youthful, optimistic, and eloquent African-American family man endowed with both a sense of history and of humor much more than with their own waxworks of old white ideologues.

However, Cuba’s old guard realized that Obama’s charm offensive had begun to fatally undermine their own authority and undercut their long-effective use of the U.S. boogeyman as a scapegoat for their own economic failures and as a justification for their continued political authoritarianism. In response, the Cuban leadership has spent the past eight months constantly reminding Cuban citizens of the continued U.S. existential threat to Cuban sovereignty under the Revolution and simultaneously dashing their hopes for a better, more open and prosperous future by stepping up detentions of peaceful political opponents and independent journalists and slowing economic reforms to a manageable trickle.

The clearest example of the Cuban government’s efforts to lower expectations has come on the economic front. First, April’s Seventh Party Congress included no new resolutions about deepening or expanding much needed market-oriented reforms apart from a vague reference to studying the possibility of granting status as legal businesses to a portion of the half-a-million strong micro-enterprise sector. Nothing has come of this idea in the intervening seven months.

Second, price controls have been reimposed in the private agriculture and transportation sectors, reducing incentives for greater production. Third, this past summer saw the government scale back economic growth estimates for 2016 to under 1 percent and impose severe energy saving and cost-cutting measures across the state sector due to a liquidity crisis and the Venezuelan debacle.

Finally, the issuing of new licenses for Havana’s surging private, home-based restaurant sector were suspended for six weeks in the fall in order to root out legal violations such as providing bar services and live entertainment without permission, obtaining supplies from black-market sources, staying open past the state-imposed 3 a.m. closing time, and tax evasion. Some have even been accused of doubling as sites of prostitution and drug trafficking and shut down.
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However, the government has so far not delivered on its promise to provide affordable access to wholesale markets for these restaurateurs nor has it allowed them to legally import supplies from abroad or expand beyond the arbitrary limit of 50 place settings. Moreover, the tax system for the private sector provokes “creative bookkeeping” by imposing a rigid 40-percent deduction limit for business often burdened by much higher supply costs due to Cuba’s environment of chronic scarcity. It also imposes a labor tax on any more than five employees disincentivizing legal hiring.

To add insult to this injury, the moribund network of their state-run competitor restaurants do enjoy access to wholesale markets and suffer no seating or size restrictions or employment taxes. Especially frustrating for Cuban entrepreneurs is the fact that this emphasis on law and order comes in the context of shrinking output in the state enterprise sector, a looming emigration crisis with record numbers of new Cuban arrivals in the U.S., and in the midst of a tourism boom that the state hospitality sector has proven unable to absorb.

As Cubans like to say: “¡No es fácil!” (It ain’t easy!)

President-elect Donald Trump could follow the recommendation of some Congressional Republicans by adding his own isolationist wind to the already full sails of the Cuban government’s rigid control that attempts to keep Cuban entrepreneurs in their frustrated and impoverished places. Or he could send Cuba’s business pioneers a message of support and solidarity as they attempt to build a more prosperous future by continuing America’s historic opening to Cuba that aims to empower the island’s mergent capitalists through engagement, investment, and trade.

For someone who campaigned as a anti-politician who would bring a hard-nosed business sense to Washington, Cuba presents Trump with a golden opportunity to place economic pragmatism and the tangible benefits it would bring to citizens of both countries over the out-dated and counterproductive Cold War ideology that undergirds the embargo.

Commentary by Ted A. Henken, an associate professor of Sociology and Latin American Studies at Baruch College, City University of New York and co-author with Arch Ritter of the book “Entrepreneurial Cuba: The Changing Policy Landscape.” He is a past president of the Association for the Study of the Cuban Economy (2012-2014). Read his blog and follow him on Twitter @ElYuma.

 

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U. S. TREASURY AND COMMERCE DEPARTMENTS ANNOUCE FURTHER AMENDMENTS TO CUBA SANCTIONS REGULATIONS

10/14/2016

 Original Document Here

For a Spanish translation of the Treasury and Commerce Fact Sheet, please click here.

zxz AMENDMENTS EXPAND VENUES FOR SCIENTIFIC COLLABORATION, FACILITATE INCREASED HUMANITARIAN SUPPORT, AND BOLSTER TRADE AND COMMERCIAL OPPORTUNITIES

 WASHINGTON – Today, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) are announcing new amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR), respectively.  These amendments help create more economic opportunity for Cubans and Americans, further implementing the direction toward Cuba that President Obama laid out in December 2014.  The changes will take effect on October 17, 2016, when the regulations are published in the Federal Register.

 “President Obama’s historic announcement in December 2014 charted a new course for a stronger, more open U.S.-Cuba relationship,” said Treasury Secretary Jacob J. Lew.  “The Treasury Department has worked to break down economic barriers in areas such as travel, trade and commerce, banking, and telecommunications.  Today’s action builds on this progress by enabling more scientific collaboration, grants and scholarships, people-to-people contact, and private sector growth.  These steps have the potential to accelerate constructive change and unlock greater economic opportunity for Cubans and Americans.”

 “These amendments will create more opportunities for Cuban citizens to access American goods and services, further strengthening the ties between our two countries,” said U.S. Secretary of Commerce Penny Pritzker. “More commercial activity between the U.S. and Cuba benefits our people and our economies.”

 These changes are intended to expand opportunities for scientific collaboration by authorizing certain transactions related to Cuban-origin pharmaceuticals and joint medical research; improve living conditions for Cubans by expanding existing authorizations for grants and humanitarian-related services; increase people-to-people contact in Cuba by facilitating authorized travel and commerce; facilitate safe travel between the United States and Cuba by authorizing civil aviation safety-related services; and bolster trade and commercial opportunities by expanding and streamlining authorizations relating to trade and commerce.  These amendments also implement certain technical and conforming changes.  OFAC and BIS are making these amendments in support of the process of normalizing bilateral relations with Cuba.

 To see the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR), part 515, please see here.  To see the Commerce regulations, which can be found at 15 CFR parts 730-774, please see here.  Significant changes in the revised Treasury and Commerce regulations are outlined below:

 Health-related Transactions –

Expanding Opportunities for Scientific Collaboration and Access to Medical Innovations

 Joint medical research.  OFAC is issuing a new authorization that will allow persons subject to U.S. jurisdiction to engage in joint medical research projects with Cuban nationals.  This authorization will encompass both non-commercial and commercial research.

  • Cuban-origin pharmaceuticals.  OFAC is issuing a new authorization that will allow transactions incident to obtaining U.S. Food and Drug Administration (FDA) approval of Cuban-origin pharmaceuticals.  An additional authorization will allow the importation into the United States, and the marketing, sale, or other distribution in the United States, of FDA-approved Cuban-origin pharmaceuticals. 
  • Bank accounts.  Persons subject to U.S. jurisdiction engaging in the aforementioned health-related activities will also be authorized to open and maintain bank accounts in Cuba for use in conducting the authorized business.

Humanitarian-related Transactions –

Providing Additional Grant Opportunities and Strengthening Cuban Infrastructure

  • Grants, scholarships, and awards.  OFAC is expanding the authorization for grants, scholarships, and awards to Cuba or Cuban nationals to include grants, scholarships, and awards related to scientific research and religious activities.
  • Services related to Cuban infrastructure.  OFAC is adding a new authorization that will allow persons subject to U.S. jurisdiction to provide services to Cuba or Cuban nationals related to developing, repairing, maintaining, and enhancing certain Cuban infrastructure in order to directly benefit the Cuban people. 

Travel-related Transactions –

Supporting People-to-People Contact by Facilitating Authorized Travel and Commerce

  • Importation of Cuban-origin merchandise as accompanied baggage for personal use. OFAC is removing the monetary value limitations on what authorized travelers may import from Cuba into the United States as accompanied baggage.  This includes the value limitation on alcohol and tobacco products.  Persons subject to U.S. jurisdiction will be further authorized to import Cuban-origin merchandise acquired in third countries into the United States as accompanied baggage, again without value limitations.  OFAC is also removing the prohibition on foreign travelers importing Cuban-origin alcohol and tobacco products into the United States as accompanied baggage.  In all cases, the Cuban-origin goods must be imported for personal use, and normal limits on duty and tax exemptions will apply.
  • Remittances.  Persons subject to U.S. jurisdiction will be authorized to make remittances to third-country nationals for travel by third-country nationals to, from, or within Cuba, provided the travel would be authorized by general license for a person subject to U.S. jurisdiction.

Civil Aviation –

Supporting International Aviation and Passenger Safety

  • Safety-related services.  OFAC is adding a new authorization that will allow persons subject to U.S. jurisdiction to provide civil aviation safety-related services to Cuba and Cuban nationals aimed at promoting safety in civil aviation and the safe operation of commercial aircraft.

Trade and Commerce –

Bolstering Trade and Commercial Opportunities and the Growth of Cuba’s Private Sector

  • Export-related transactions.  OFAC is amending its general license authorizing certain transactions incident to exports and reexports authorized by the BIS to eliminate references to “100% U.S.-origin items.”  This is intended to minimize and clarify the circumstances in which an export or reexport authorized by BIS requires additional licensing by OFAC.
  • Consumer goods for personal use.  BIS will generally authorize exports of certain consumer goods that are sold online or through other means directly to eligible individuals in Cuba for their personal use.
  • Imports of previously exported items.  OFAC is adding an authorization that will allow the importation into the United States or a third country of items that were previously exported or reexported to Cuba pursuant to a BIS or OFAC authorization.  This authorization will also permit persons subject to U.S. jurisdiction to service and repair such items.  Exporting or reexporting replacement items or items that have been repaired or serviced must be separately authorized by OFAC and/or BIS as appropriate.
  • Contingent contracts.  OFAC is adding an expanded general license that will authorize persons subject to U.S. jurisdiction to enter into certain contingent contracts for transactions currently prohibited by the embargo, provided that contract performance is made expressly contingent on prior authorization by OFAC and any other relevant Federal agency, or on authorization no longer being required.  Transactions ordinarily incident to negotiating and entering into such contracts will also be authorized.
  • Financing.  OFAC is making a technical correction to clarify that agricultural items, such as pesticides and tractors, authorized by BIS for export or reexport to Cuba are not subject to restrictions on payment terms.  As required by the Trade Sanctions Reform and Export Enhancement Act, authorized exports and reexports to Cuba of agricultural commodities, such as poultry and corn, remain subject to the limited payment and financing terms of cash in advance or third country financing.
  • Certain vessel transactions.  OFAC is issuing a general license that will waive the restriction prohibiting foreign vessels from entering a U.S. port for purposes of loading or unloading freight for 180 days after calling on a Cuban port for trade purposes if the items the vessel carried to Cuba would, if subject to the EAR, be designated as EAR99 or controlled on the Commerce Control List for anti-terrorism reasons only.

 Transit of cargo.  BIS will generally authorize air cargo to transit Cuba, complementing an existing general authorization for cargo transiting Cuba aboard vessels.

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CANADA-CUBA ECONOMIC RELATIONS: AN UPDATE

By Arch Ritter                                                                                                  October 5, 2016

 Canada and Cuba have maintained a normal and mutually beneficial economic relationship from Colonial times to 2016.  With the beginning of Cuba’s “Special Period” in 1990 and its modest moves towards a mixed market economy in the 1990s, Canadian participants were optimistic about future economic relations.  In the 2000’s, this was replaced by some skepticism, but with the reforms of 2010-2012 and the beginning of the normalization of US Cuba relations, optimism has returned. This article provides an update on Cuban-Canadian economic relations, including trade, foreign investment, development assistance and migration and some speculation concerning the future of the relationship.

Canada-Cuba Trade Relations

Since the start of Cuba’s revolution, normal trade relations between Canada and Cuba have been maintained. However, trade has waxed and waned over the years as can be seen in Chart 1. The chief feature of the trade relationship in the 1980s was the large volume of Canadian exports which were mainly wheat. Trade expanded steadily in the 1990s with the ending of the special trade relationship with the Soviet Union, as Cuba’s economy began to recover and as it began to diversify its export markets and sources of imports.

q1After 2001, Cuba’s exports to Canada expanded and began to exceed Canada’s exports to Cuba due to high nickel volumes and prices. Canadian exports to Cuba have more or less stagnated since 2001 while other countries have increased their market shares.  By 2015, Canada was the fourth ranking exporter to Cuba following Venezuela, China, and Spain (Table 1.) In contrast, Canada was the second largest export market for Cuba after Venezuela in 2015, accounting for 11% of Cuba’s exports.

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Cuba’s exports to Canada have consisted almost totally of nickel concentrates, with cigars, rum, seafood and copper scrap (presumably a quirk in 2015) as very small foreign exchange earners (Table 2.).

By 2015, Canada’s exports to Cuba were reasonably diversified (Table 2.) Its agricultural exports remained significant, though overwhelmed by US agricultural exports. Minerals (sulfur for Cuba’s nickel industry, potash for fertilizer), metals (copper products for Cuba’s electrical system mainly) and machinery of various types have all been significant in the 2010s.

r2 Tourism

Cuba’s best and most faithful friend is the brutal Canadian Winter, which has driven millions of Canadians to warmer Caribbean climes during the December to April period. Canada has been the largest single national source of tourists consistently from 1990 to 2015 and accounted for almost 40% of all tourist arrivals in 2015.  But when US tourism opens up completely, there will likely be a deluge of US winter-escape tourism as well as curiosity tourism, convention tourism, medical tourism, March-break tourism and retirement relocation. The result will likely be that prices rise, and Canadian winter time tourism may well be squeezed out of Cuba into lower cost destinations.

q2Canadian Enterprises in Cuban Joint Ventures

In 1991, Cuba opened itself to foreign investment in joint venture arrangements with state firms. By the end of 1999, there were 72 joint ventures or “economic association” agreements between Canadian firms and Cuban state enterprises but few seem to have ever come to life.

Sherritt International has been by far the most successful Canadian-Cuban joint venture.  Its formula for success is one that cannot likely be replicated by any other enterprise.  In effect, it exchanged 50% of its ownership in the nickel refinery in Alberta Canada for 50% ownership of the Moa mine and concentrator in Cuba and shared in the ownership of the marketing enterprise.  This made Cuba a significant foreign investor in Canada!  The Sherritt experience was explored in the previous issue of this publication.

A number of mineral exploration companies established joint ventures in Cuba by 1994 in association with Geominera S.A. It was thought that Cuba was an ideal location for mineral exploration because much of the country had been covered by aero-magnetic and geological surveys in the Soviet era.  Among the enterprises involved in exploration projects in joint ventures with Geominera were Holmer Gold Mines, Joutel Resources, CaribGold Resources, Northern Orion, and MacDonald Mines. Unfortunately, the exploration undertaken from 1992 to 2007 yielded disappointing results and none of the exploration projects led to producing mines. This suggests that either the quality and/or magnitude of the deposits are lower than in other regions of the world. Alternatively, perhaps the investment conditions, the policy environment and/or the political risk situation were worse than elsewhere. It would be surprising if there were another mineral exploration rush in the medium term future, unless mineral prices were to rise to very high levels.

Canadian enterprises in real estate development have also had difficult experiences in Cuba. One project announced in October 1998 by an association between Cuba’s luxury hotel chain, Gran Caribe and Cuban Canadian Resorts International proposed U.S. $250 million set of four condominiums with hotel and resort facilities. It would have opened up an important new type of tourism for Cuba.  However, in May 2000, the Ministry of Foreign Investment and Cooperation announced a prohibition of foreign ownership of condominium units killing this and other such projects for the time being.

Another project was that of Leisure Canada for the construction of some 11 hotels and two golf courses, a marina. (Leisure Canada Incorporated, 2000). This project fizzled out. In 2011 Leisure Canada, having changed its name to 360 VOX Corporation, was bought out by Dundee Corporation in May 2014.  Any mention of this project has disappeared.

One successful venture was the construction of five airports in Cuba, including Varadero and Havana International Airports by Intelcan Technosystems of Ottawa. The CDN$ 52 million investment in the Havana Airport, was financed in part by Canada’s Export Development Corporation (33%) and 15% from Intelcan. Since 2000, the ultimate payment has come from international passengers who pay U.S. $25.00 (CUC 25.00) as an airport tax on departure.

Unfortunately brilliant successes for Canadian-Cuban joint ventures seem to be few and far between.  Indeed, a number of executives of Canadian trading enterprises and joint ventures, Cy Tokmakjian and Sarkis Yacoubian, were jailed and tried on corruption charges –a cooling factor in the foreign investment process. The moral of the story is that establishing a joint venture in Cuba can work, but it must be done with patience, intelligence, and scrupulous awareness of Cuban regulations and processes and with clear benefits for the Cuban partner enterprise and the Cuban people.

Canadian Development Assistance

The Canadian International Development Agency (CIDA) has provided some interesting development assistance to Cuba since 1994. A major proportion of this has been “economic” in character, aimed at the “modernization of the state.”  Some has been used to support the initiation of projects by Canadian enterprises with Cuban counterparts or to promote Canadian exports. Some of the economic programs were micro-enterprise tax administration, economic management, support for technical training and computer acquisition at the Central Bank, a program to help strengthen administration and professional economics at the Ministry of Economics and Planning and training/certification programs for tradesmen in some basic industrial areas. Various types of commodity assistance were provided as well. Much of the assistance provided by NGOs was aimed at community level activities.  A small amount of assistance was directed towards human rights and governance initiatives including a “Human Rights Fund Pilot Project” and “Dialogue Fund” with multiple Canadian and Cuban partners.

r3Canada’s active development assistance projects in Cuba as of mid-2016 are listed in Table 3. The annual expenditures of these multi-year projects for 2014-2015 was $CDN 2.42 million, a very

 International Migration

 An interesting dimension of Canadian-Cuban relations is migration. As indicated in Chart 3, Cuban migration to Canada has risen from levels in the hundreds in the 1980s to around 1,400 in 2014-2015. However, an unknown number of the Cuban immigrants to Canada move on to the United States, especially Florida, reflecting the attraction of the large Cuban-American population there and the weather.

 q3

Detailed sociological information on Cuban migrants is not available. However, my impressions are that, generally speaking, they are relatively well-educated, industrious, self-activating and entrepreneurial. They also seem to be relatively young, for the most part, many having recently finished their education and just starting out on their careers. Many Cuban immigrants seem to have done reasonably well and have found work in their professional areas, something that is not easy in a new society, culture and language.  This migration represents a “brain drain” or a loss of human capital for Cuba and a corresponding gain for Canada.

 Prospective Canadian-Cuban Economic Relations

The future economic relationship between Canada and Cuba will be shaped mainly by three factors: the strength and durability of Cuba’s economic recovery; the nature of Cuba’s economic policies affecting trade, and foreign investment; and the character and timing of complete normalization of relations with the United States.

A sustained recovery of the Cuban economy would promote a deepened and broadened economic relationship with Canada. A growing Cuban economy would permit increases in imports from all trading partners, including Canada.  At the same time, economic recovery in Cuba also requires expansion of its exports of goods and services.

Is an enduring recuperation of the Cuban economy probable in the next decade or so? First, the driving force for the Cuban economy, namely export earnings, at this time depends mainly on tourism, medical services and nickel exports.  Nickel and tourism should continue to be strong, but the obscured subsidization from Venezuela is over. Cuba’s medical service exports will likely be transitory as other countries develop their own medical systems and increase medical personnel.  Pharmaceutical exports may hold promise in the longer term but have been somewhat disappointing relative to the high hopes once placed in their prospects. Little progress appears imminent regarding the expansion of other merchandise exports. New exports of manufactured products have not appeared on the scene in a significant way and are obstructed by some public policies.

Some continuing problems may prompt skepticism regarding Cuba’s economic prospects in the near future. Among the difficulties often cited are: a dual exchange rate system with negative consequences for export diversification and expansion; a blockage of people’s initiatives, energies and entrepreneurship due to the unwillingness to extend further the reform process especially for medium scale enterprise; and the deterioration of parts of the infrastructure, most notably housing.

The second set of factors that will shape Canada’s future economic relations with Cuba in is Cuba’s policies relating to trade, foreign investment and tourism. These policies are unlikely to undergo dramatic change under Raul Castro’s leadership. This implies that the basic Canadian-Cuban economic relationship should not be affected seriously by changed Cuban policies in the next few years. The state-trading that in part characterizes these relationships is not intrinsically beneficial for Canada.

Thirdly, the complete normalization of U.S. – Cuban relations especially regarding trade and US investment in Cuba, will have a major effect on the Canada-Cuba economic relationship. Complete normalization will permit expansion of Cuban exports, US foreign investment in Cuba, US tourism in Cuba, financial flows and the possibility of open and vigorous collaboration of Cuban-America and Cuban citizens in business activities.  Greater prosperity will be the result.

Normalization with the United States will lead to expanded exports of goods and services to Cuba from the U.S. and vice versa.  This is due to geographic and transport factors.  More frequent freighter connections, high speed hydrofoil passenger boat connections, a re-connection of U.S. and Cuban railway systems and a proliferation of airline connections will lead to a reintegration of the two economies. The diversified U.S. economy can provide a broad range of consumer and capital goods and services competitively with other countries and with low transport costs and quick delivery times.

Canadian exporters to Cuba therefore will face a challenge after US – Cuban normalization. The location and logistical advantages of U.S. exporters, plus the interest, activism and advantages of the Cuban-American business community will outweigh any lingering “goodwill effect” with Canada. Overnight or next-day delivery of products ordered from the U.S. makes continuation of some types of exports from Canada difficult, as delivery from Canada currently may take up to two weeks or more on ships leaving Canada every week or ten days on average.

On the other hand, some of Canada’s current exports to Cuba are competitive with U.S. products and should increase in a post-embargo Cuban economic recovery. This might include fertilizers (potash), cereals, animal feed stocks, lumber, wood and paper products and fabricated non-ferrous metals products. Canada also is competitive in certain types of capital equipment such as minerals machinery and equipment, some paper making equipment, Bombardier aircraft, railway rolling stock and equipment, urban transit vehicles, communications equipment, electrical generation and distribution equipment, and some specialized vehicles. However, some Canadian exports may be threatened by U.S. competition.

In summary, the recovery of the Cuban economy and the increase in foreign exchange receipts that U.S.-Cuban normalization in time should bring about will be of benefit for some Canadian exporters while others may be replaced by U.S. suppliers.  Will the “expansionary effect” outweigh the costs of the “displacement effect” for Canadian exporters?  Perhaps, but this is not assured.

Normalization will also induce U.S. enterprises to invest in Cuba. With no further changes to the foreign investment law and within the current policy environment, one can imagine some but not many U.S. firms entering joint ventures.  But with policy liberalization in a post-Raul Castro situation, one can imagine large numbers of U.S. enterprises investing in Cuba. Cuban-Americans would also enter Cuba to set up small businesses or to finance business ventures with their Cuban relatives or counterparts.  The “geo-economic” gravitational pull of the U.S. will be strong. After U.S.-Cuba rapprochement Canadian trade and investment as a proportion of total trade and investment will likely diminish even though both might increase in absolute terms.

To conclude, there are future uncertainties and challenges regarding the Canadian-Cuban economic relationship.  The character and intensity of future economic performance in Cuba, Cuba’s policy environment and the timing of the complete normalization of relations with the United States are still ambiguous and uncertain. These factors will have mixed effects, but effects that on balance should be positive for Canada and Cuba.

Bibliography

Citizenship and Immigration Canada.  http://www.cic.gc.ca/english/resources/statistics/facts2014/permanent/10.aspAccessed October 23, 2016

Cuban Club Resorts. 2000. Web site: www.cubanclubresorts.com

Global Affairs Canada, Cuba – International Development Projects, http://www.acdi-cida.gc.ca/cidaweb/cpo.nsf/fWebCSAZEn?ReadForm&idx=00&CC=CU.  Accessed 3 October 2016

Industry Canada, Trade Data Online (TDO), Trade by Product (HS Codes) http://www.ic.gc.ca/eic/site/tdo-dcd.nsf/eng/Home

Leisure Canada Incorporated. (2000, August, 17). Press Release. Reproduced in   www.cubanet.org

Nolen, Stephanie. 2015. In tourist-deluged Cuba, Canadian firms are noticeably absent. The Globe and Mail December 13.

Oficina Nacional de Estadisticas, Cuba.  Anuario Estadistico de Cuba. (Various issues) http://www.one.cu/ . Accessed various times and October 4 2016.

Sequin Rob. 2013. Leisure Canada now a defunct Cuba real estate development brand.  Havana Journal September 25,

 

 

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