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Cuba’s New Foreign Investment Law: Amplified Discrimination against Cuban Small Enterprise Operators and in Favor of Foreign Enterprises.
17 Apr 2014
Book Review: ¿Quo vadis, Cuba? La incierta senda de las reformas
14 Apr 2014
Reordenamiento Laboral: Quién se queda, quién se va?; Labor Force Down-Sizing in Cuba’s Medical System
9 Apr 2014
Cuba’s Conception Conundrum: A Valentine’s Day Puzzle
14 Feb 2014
POTENTIALS AND PITFALLS OF CUBA’S MOVE TOWARD NON-AGRICULTURAL COOPERATIVES
30 Jan 2014
Book Review: Carmelo Mesa-Lago and Jorge Pérez-López, Cuba Under Raúl Castro: Assessing the Reforms
28 Oct 2013
CAN WORKERS’ DEMOCRACY IN CUBA’S NEW NON-AGRICULTURAL COOPERATIVES CO-EXIST WITH AUTHORITARIANISM?
7 Oct 2013
CAN CUBA RE-INDUSTRIALIZE?
5 Oct 2013
The Tax Regimen for the Mariel Export Processing Zone: More Tax Discrimination against Cuban Micro-enterprises and Citizens?
26 Sep 2013
Oscar Espinosa Chepe, 1940-2013
23 Sep 2013
“Political Science”: When Will Cuban Universities Join the World?
17 Jun 2013
“ASSESSING THE GOALS AND IMPACT OF THE CUBAN EMBARGO AFTER 50 YEARS”
25 Mar 2013
Cuba-Russia Debt Write-Off and Aircraft Leasing: Win-Lose or Win-Win?
22 Feb 2013
Raul on a Roll; Anti-Reformers in Retreat!
21 Jan 2013
The Economic Implications for Cuba of Relaxing Restrictions on the Freedom of Movement
17 Oct 2012
Cuba’s Economic Problems and Prospects in a Changing Geo-Economic Environment
13 Jul 2012
My Skepticism Runs High, but Maybe I am Wrong! Some Articles on the Moringa Oleifera.
27 Jun 2012
Still More “Good Advice” from Fidel!
26 Jun 2012
Cuba in the 2012 Yale University “Environmental Performance Index Rankings.”
14 Jun 2012
Cuba’s Debt Situation: Official Secrecy and Financial “Jineterismo”
8 Jun 2012
Cuba: Still Paying Homage to the Economic Absurdities of “Che” Guevara
20 Apr 2012
Cuba’s World Heritage Sites
16 Mar 2012
The Concept of a “Loyal Opposition” and Raul Castro’s Regime
28 Feb 2012
Poor Fidel: Repudiated by his Own Brother and Reduced to Playing “Chicken Little’”
13 Jan 2012
Johann Sebastian Bach, the “Stasi” and Cuba
9 Dec 2011
Fidel Castro: The Cowardice of Autocracy
4 Nov 2011
Liberating Cuba’s Long-Suppressed Resource: Entrepreneurship
20 Oct 2011
The “Home Hardware” Cooperative Model and its Relevance for Cuba
19 Oct 2011
Can Cuba Recover from its De-Industrialization? I. Characteristics and Causes
27 Sep 2011
Cuba: A Half-Century of Monetary Pathology and Citizen’s Freedom of Movement
23 Sep 2011
A Further Step in the Liberalization of the Regulatory and Tax Environment for Small Enterprise Has Raul Now Got the “Horse before the Cart”?
27 May 2011
Up-Date on Canadian-Cuban Economic Relations
27 May 2011
Sixth Congress of the Communist Party of Cuba: Will Raul Forge His Own Legacy?
16 Apr 2011
Cuba’s Economic Agenda and Prospects: An Optimistic View!
8 Apr 2011
Cuba’s Economic Reform Process under President Raul Castro: Challenges, Strategic Actions and Prospective Performance
4 Apr 2011
Recuperation and Development of the Bahi ́a de la Habana
29 Mar 2011
An Overview Evaluation of Economic Policy in Cuba circa 2010
15 Mar 2011
A Major Slow-Down for the Public Sector Layoff / Private Sector Job Creation Strategy
1 Mar 2011
Cuba’s Standings in Social, Political, Economic and Environmental Indices in Comparative International Perspective
3 Feb 2011
Has the US Tourism Tsunami to Cuba Already Begun?
2 Feb 2011
Cuba’s Best Friend: the Canadian Winter
25 Jan 2011
Micro-enterprise Tax Reform, 2010: The Right Direction but Still Onerous and Stultifying
10 Jan 2011
“Shifting Realities in ‘Special Period. Cuba”, LATIN AMERICAN RESEARCH REVIEW, volume 45 number 3, 2010
17 Dec 2010
Cuba’s 12 to 20 Chair Reform: Can the Small Enterprise Sector Save the Cuban Economy?
15 Dec 2010
Cuban Demography and Development: the “Conception Seasonality Puzzle”, the “Dissipating Demographic Dividend” and Emigration.
25 Nov 2010
Still the “Bestest” and the “Worstest” and Maybe the Most Opaque: Cuba in the 2010 UNDP Human Development Report
5 Nov 2010
Does Sherritt International Have a Future in Cuba?
20 Oct 2010
Jump-Starting the Introduction of Conventional Western Economics in Cuba
19 Oct 2010
Cuba’s Achievements under the Presidency of Fidel Castro: The Top Ten
14 Oct 2010
- Cuba’s New Foreign Investment Law: Amplified Discrimination against Cuban Small Enterprise Operators and in Favor of Foreign Enterprises.
Book Review: CUBAN ECONOMIC AND SOCIAL DEVELOPMENT: POLICY REFORMS AND CHALLENGES IN THE 21ST CENTURY
22 Apr 2014
Cuba’s New Foreign Investment Law: Amplified Discrimination against Cuban Small Enterprise Operators and in Favor of Foreign Enterprises.
17 Apr 2014
Cuban Doctors in Eye of Venezuelan Hurricane
16 Apr 2014
Book Review: ¿Quo vadis, Cuba? La incierta senda de las reformas
14 Apr 2014
The Venezuelan Dialogue From a Cuban Point of View
14 Apr 2014
Reordenamiento Laboral: Quién se queda, quién se va?; Labor Force Down-Sizing in Cuba’s Medical System
9 Apr 2014
As Cuba eases investment rules, many Cuban-Americans turn against the embargo
8 Apr 2014
A Belated Brief Review: Samuel Farber’s “Cuba Since the Revolution of 1959: A Critical Assessment”
7 Apr 2014
ETECSA: un monopolio creciente
7 Apr 2014
Richard Feinberg: “Cuba’s New Investment Law: Open for Business?”
2 Apr 2014
- Book Review: CUBAN ECONOMIC AND SOCIAL DEVELOPMENT: POLICY REFORMS AND CHALLENGES IN THE 21ST CENTURY
- Vladimir Laplace on Time to hug a Cuban
- Biblioteca Digital Cubana | Nuestras Voces Latinas on BIBLIOTECA DIGITAL CUBANA
- Laz on Proyecciones macroeconómicas de una Cuba sin Venezuela
- Rita Maria Garcia Betancourt on Clase de economía política para el Ministerio del Interior (MININT) en Cuba, por Juan Triana Cordovi,
- Vladimir Laplace on The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did
- Arch Ritter on The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did
- Vladimir Laplace on The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did
- laz on Cuba: hacia un redimensionamiento de los derechos humanos
- Omar on The Mariel Special Zone: Economic Wagers and Realities
- Marcel on Cuba ensaya nuevas fórmulas para flexibilizar la comercialización agrícola
A rush to embrace a fading outpost of communism
HOW best to speed change in Cuba? The past few weeks have brought three different answers to that question, from the United States, the European Union and Latin America.
For more than 50 years the official American answer has been to try to asphyxiate Cuban communism through an economic embargo, and to encourage internal dissent. It was policy as tantrum, a counterproductive failure. Change is coming to Cuba—but from the top, not below. Since replacing his elder brother, Fidel, as Cuba’s president in 2008, Raúl Castro has unleashed economic reforms which, while officially aimed at “updating socialism”, are in practice introducing elements of capitalism. Some 450,000 Cubans work in a budding private sector of farmers, co-operatives and small firms.
Across the Florida Straits, the changes are causing long-monolithic support for the embargo to crumble. A poll taken in the United States for the Atlantic Council, a think-tank, published on February 11th found that 56% of respondents favoured normalising relations with Cuba. Days earlier Alfonso “Alfy” Fanjul, the patriarch of a pre-revolutionary sugar dynasty and long a pillar of anti-Castro Miami, told the Washington Post that he had made two trips to his homeland, talked to Cuban officials and would invest in Cuba “under the right circumstances”.
Barack Obama, who briefly shook Raúl’s hand at Nelson Mandela’s funeral in December, has lifted some restrictions on travel and remittances to the island. Many observers expect him to take further steps in that direction and to revoke Cuba’s anachronistic designation as a state sponsor of terrorism—once November’s mid-term elections are out of the way. But only the United States Congress can fully dismantle the embargo.
On February 10th the European Union, whose members maintain economic ties with Cuba, announced that it wants to start talks on a “political dialogue and co-operation agreement”. In practice many of its members have already sloughed off a “common position” adopted in 1996, a kind of embargo-lite that predicated closer links on promoting a transition to democracy. The EU was at pains to stress that this was not really a policy change, but it is.
One thing the EU will keep doing is to complain about the lack of human rights in Cuba. Latin America has already stopped bothering. Last month Raúl hosted a gathering of the Confederation of Latin American and Caribbean States (CELAC), a body set up in 2011 explicitly to include Cuba and exclude the United States. In Havana the bloc’s leaders signed a declaration that stated that regional integration should “respect…the sovereign right of each of our peoples to choose its own form of political and economic organisation”.
Many Latin American leaders see being friendly to the Castros as a cost-free way of showing that they no longer take political direction from Washington, DC, let alone Miami. (A handful would like to go further and be like the Castros.) Yet their declaration was a cavalier disavowal of the democracy clauses inserted into many regional agreements over the past two decades. It smacked of double standards: so quick to condemn dictatorships of the right, today’s crop of centre-left leaders are happy to give the Castros a free pass.
Oddly this rush to hug a Cuban comes as reform shows signs of stalling. The pace of private-sector job creation has slowed. The government has shut down private cinemas; it has ejected several Western businessmen. A special economic zone at a new Brazilian-built port at Mariel has yet to attract foreign investors, because of the restrictions they still face. Many Cubans felt insulted when they were granted permission to buy new cars—at astronomical prices.
The aim of the reforms is to allow the private sector to create the wealth that the state can’t. But the Communist bureaucracy still resists the notion that this has to involve creating wealthy people. If Raúl were to die before the reforms have created a broad coalition of winners, there would be a risk of backsliding.
In fact, the key to speeding change in Cuba probably lies in Caracas. Thanks to an alliance forged by Fidel and Hugo Chávez, Venezuelan aid accounts for around 15% of Cuba’s GDP. Years of misrule have brought Venezuela to the verge of an economic implosion. It is the fear of losing Venezuelan petrodollars, as well as apprehension about the “biological factor” (as Cubans call the death of the elderly Castros), that drives the island’s halting process of change. For other powers the best way to help is through efforts that support Cuba’s budding capitalism without offering the Castros any political endorsement.
Latin America’s weakest economies are reaching breaking-point
Feb 1st 2014 | BUENOS AIRES AND CARACAS
WHEN the euro crisis was at its height it became commonplace for struggling European economies to insist that they were not outliers like Greece. Whatever their woes, they declared, Greece’s were in a class of their own. In Latin America, by contrast, the unwanted title of outlier has two contenders: Argentina and Venezuela. Both have been living high on the hog for years, blithely dishing out the proceeds of an unrepeatable commodities boom (oil in Venezuela; soya in Argentina). Both have been using a mix of central-bank interventions and administrative controls to keep overvalued exchange rates from falling and inflation from rising. Both now face a come-uppance.
High inflation is a shared problem. Argentina’s rate, propelled higher by loose monetary and fiscal policies, is unofficially put at 28%. Argentina’s official exchange rate is overvalued as a result, fetching 70% more dollars per peso than the informal “blue” rate in mid-January. Venezuela’s prices are rising faster still. Last year, during an awkward political transition after the death of Hugo Chávez to the presidency of Nicolás Maduro (pictured with Cristina Fernández de Kirchner, the Argentine president), the Central Bank stepped up money-printing to finance public spending, pushing inflation to 56.2%. A dollar fetches 75-80 bolívares on the black market, up to seven times the official rate.
Both countries have dwindling arsenals with which to defend their overvalued currencies. Venezuela’s reserves of gold and foreign currency, which stood at nearly $30 billion at the end of 2012, were down to just over $21 billion by last week. Only about $2 billion of that is in liquid assets. Ecoanalítica, a research firm, estimates that the government can also dip into around $13 billion of opaque, off-budget funds. Argentina’s reserves have also been tumbling (see chart).
Something had to give, and late last month it did. Argentina first allowed the peso to plunge, by more than 15% in the week starting January 20th, and then announced a relaxation of the government’s ban on buying foreign currency for saving purposes. Argentines making over 7,200 pesos ($900) monthly are now able to change 20% of their salary into dollars at the official exchange rate so long as they get approval from AFIP, Argentina’s tax agency. The dollars are transferred to their bank accounts, not released in cash, and hit by a 20% fee if withdrawn before a year. If that sounds complicated, it is still cheaper than buying dollars in the illegal market.
The government’s objective seems to be to close the gap between the official and blue exchange rates, alleviating the need to spend more of those precious reserves to prop up the official rate. Although the gap has closed a little, fear that devaluation will lead only to yet higher inflation explains continued high demand for dollars, even at the less favourable exchange rate. So too does the fact that only a third of Argentine workers meet the declared-income threshold for buying dollars, according to analysis by IARAF, a think-tank.
Guido Sandleris of the University Torcuato di Tella says the plan is doomed to failure unless the government becomes more open about its intentions and adopts a genuinely restrictive set of policies to battle inflation. Although the Central Bank this week raised one of its interest rates by a full six percentage points, rates remain below inflation, giving Argentines little reason to hold pesos.
On the fiscal front the government needs to reduce subsidies and remain unyielding in the face of workers’ demands for pay rises. Miguel Kiguel of EconViews, a consultancy, says wage increases to be negotiated in March and April must remain under 30% if they are to serve as an anti-inflationary anchor. That will be hard given lavish pay awards handed out to striking policemen last year.
Whether the government is willing to put prudence before politics is not clear. On the day that her government let the peso’s slide turn into a slump, Ms Fernández announced a plan to fund education for unemployed 18- to 24-year-olds that could cost 11 billion pesos. Her only reference to the currency’s fall was a tweet accusing banks of helping favoured investors to speculate on the peso. There are some people, she wrote, who “want to make us eat soup again, but this time with a fork.”
At least Argentina’s partial liberalisation of currency controls is a halting step towards normality. Venezuela, where the situation is even more perilous, is heading in the other direction. On January 22nd the government unveiled new rules under which a higher rate for non-essential transactions is set weekly (it stood at 11.36 bolívares to the dollar this week). The old rate of 6.3 still applies for government imports and basic items such as food and medicine, so reserves will keep falling as the government defends the currency.
Venezuela is running out of dollars to pay its bills. Although payments to its financial creditors of around $5 billion this year do not appear to be at risk, the country’s arrears on non-financial debt are put at over ten times that sum. These include more than $3 billion owed to foreign airlines for tickets sold in bolívares, and around $9 billion in private-sector imports that have not been paid for because of the dollar shortage. “Under the current economic model, and with this economic policy,” says Asdrúbal Oliveros of Ecoanalítica, “this [debt] looks unpayable.”
The effects are already apparent. Foreign airlines have placed tight restrictions on ticket sales; some have suspended them altogether. Many drugs and spare parts for medical equipment are unavailable. Car parts, including batteries, are increasingly hard to find; newspapers are closing for lack of paper. The country’s largest private firm, Empresas Polar, which makes many basic foodstuffs, is struggling to make some products. In a statement Polar said the government owed it $463m and that production was “at risk” because foreign suppliers of raw materials and packaging were threatening to halt shipments.
The government blames the crisis on private businesses and “irresponsible” use of hard currency by ordinary Venezuelans. It has ordered drastic cuts in dollar allowances for travellers, especially to popular destinations like Miami. Remittances to relatives abroad have also been slashed. In a bid to curb runaway inflation, it has introduced a new law restricting companies’ profits to 30% of costs. Long jail sentences await transgressors. Without a big injection of dollars from the state oil company, Petróleos de Venezuela, which brings in 96% of foreign earnings, the crunch will continue. Better terms for foreign investors in the oil industry would bring in much-needed cash and boost stagnant production. But unless the government abandons its antipathy to private capital, the prospect of new investment is dim. Shortages of goods are only likely to worsen. If Argentina is an outlier, Venezuela risks straying into a different category entirely.
BRUSSELS, JANUARY 31 2014 (Reuters) — The European Union (EU) will agree next month to deepen relations with Cuba in its most significant overture to the communist island since the bloc lifted diplomatic sanctions in 2008, people close to the matter have told Reuters.
Foreign ministers from the EU’s 28 countries will give the go-ahead on February 10 to launch talks with Havana on a special co-operation accord to increase trade, investment and dialogue on human rights. The pact could be agreed by the end of 2015.
“Cuba wants capital and the EU wants influence,” said one person involved in the talks who declined to be named because of the sensitivity of the issue. “This co-operation could serve as a prelude to much more.”
Two other people with knowledge of the negotiations told Reuters that a consensus had been reached in Brussels to give momentum to Cuba’s market-oriented reforms under President Raul Castro and to position European companies for any transition to a more capitalist economy there in the longer term.
While the initial effect of a co-operation agreement will be limited, the symbolism is huge for the EU, whose ties with Cuba had been strained since it imposed sanctions in 2003 in response to Havana’s arrest of 75 dissidents. Although the EU lifted those sanctions in 2008, the normalisation of relations has been tortuous because of resistance from Poland and the Czech Republic due to their communist past.
Havana has rejected the EU’s “common position” on Cuba that the bloc adopted in 1996 to promote human rights and democracy in the country.
Furthermore, the US, Cuba’s long-time foe that has kept an embargo against the Caribbean island since 1962, had exerted pressure on Brussels to try to isolate Havana. Washington has not sought to block the EU’s latest efforts, people close to the talks said, while Poland and the Czech Republic now back a deal with Cuba.
In a sign of impatience with the status quo, the Netherlands sent its foreign minister to Havana in January. This first such trip by the Dutch since the 1959 Cuban Revolution broke with EU policy to limit high-level visits. Spain, a former colonial power in Latin America and the Caribbean, has also been pushing for a change of approach since ailing, long-time Cuban leader Fidel Castro handed power to his younger brother Raul in 2008. Some EU countries see the 1996 “common position” policy as outdated because 18 EU governments have bilateral agreements with Cuba outside the common position, making it hard for the bloc to speak with one voice.
Still, Spanish Foreign Minister Jose Manuel Garcia-Margallo has been adamant that the “common position” will remain for the time being while the European Commission, the EU executive, negotiates the co-operation pact.
“If Europe wants to have a presence when there’s a transition in Cuba, the EU has to start working now.
“It’s right to start dialogue now so that Europe isn’t absent when a transition happens,” said Carlos Malamud, head of Latin American research at the Real Instituto Elcano, a think-tank in Madrid.
A co-operation pact, which the EU has used as a tool in the past to strengthen relations with Central America and Asia, is not likely to increase trade greatly because Cuba sells very little to Europe. Besides cigars and rum, Cuba’s exports are not of huge interest to the EU, but Brussels believes developing business ties is the best way to press for change in Cuba. The EU is Cuba’s biggest foreign investor and Cuba’s second biggest trading partner after Venezuela, and a third of the tourists to the island every year come from the EU.
Cuba recently opened a Chinese-style special economic zone and is preparing a new foreign investment law. The country is seeking foreign investment at its port facilities in Mariel Bay to take advantage of the expansion of the Panama Canal.
Below is an analysis of Cuba’s move toward non-agricultural cooperatives, presented at the meetings of the Association for the Study of the Cuban Economy in July 2013 and published in the Proceedings of that Conference.
The complete essay can be read here: Cuba’s Move towards Non-Agricultural Cooperatives
By Archibald R. M. Ritter
In the process of re-analyzing the issues and problems facing the Cuban economy following the July 2006 accession to power by Raúl Castro, it was concluded that much of the state sector of the economy — and the planning process under which it operated — was irredeemably inefficient. Numerous attempts had been made to improve its operation, but all were without significant success. This was typified sharply by the collapse of the sugar agro-industrial sector, by the inability of the non-sugar industrial sector to be revived after its collapse in 1989-1992, by the continuing shortcomings of the consumer economy and by the burgeoning of the underground economy. In response to this continuing predicament, Raúl Castro’s Government produced the “Draft Guidelines for Economic and Social Policy” of October 2010 with a final version in May 2011, which notably called for the establishment of an enabling environment for small enterprise, among other things. The “Guidelines” document also included a section on the promotion of new non-agricultural cooperative enterprises. This institutional form was the object of considerable analysis within the Cuban Government between 2008 and 2012.
On December 11, 2012, a battery of new laws and regulations on cooperatives were published in the Gaceta Oficial No. 53, including two Council of State Decree-Laws, two Ministerial Resolutions, one Council of Ministers Decree, and one Ministerial “Norma Específica de Contabilidad.” This legislation outlined the structuring, functioning, governance and financial organization of the new cooperatives and provided the legal framework within which they were to operate. It permitted and defined a new type of economic institution for Cuba, one that would have been out of the question under the presidency of Fidel Castro, but that holds the potential for revolutionizing the institutional structure of the Cuban economy. The legislation presented the cooperatives as “experimental,” and indicated that after some 200 were initially approved, the institutional form would be reappraised and modified as appropriate. There is therefore some uncertainty regarding the long-term character of the legislative framework governing the structure and functioning of the cooperatives. However, in our judgment, the reform will more likely be more “loosening” rather than restricting – assuming that Raúl and his successors do not return to the de-marketizing and centralizing orientations of the previous “Fidelista” era.
In essence, the new legal regime for non-agricultural cooperatives provides for ownership and management of the enterprise by its employees, with mainly independent management and control –– over the setting of prices, the purchase of inputs, decisions regarding what to produce, labor relations and the remuneration of members.
Reforms of state enterprises were announced on July 7, 2013 by the Minister responsible for the reform process, Marino Murillo (Frank, 2013). State enterprises were to be granted greater control over their profits – retaining 50% thereof for their own uses – as well as over wages and salaries, investment expenditures, and the purchase of imported inputs. It was still unclear as to whether prices were to be controlled by the state planners or by market forces. It is still too early at the time of writing to say whether these changes in the regimen for state firms will amount to a reliance on the forces of supply and demand for their social control. However, they signal a shift towards a more mixed economy, greater decentralization of economic management, and a diminished role for the central planning authority.
This type of worker ownership and management within a market environment could be regarded as a variant of “market socialism.” Cuba is launched on a path towards a hybrid type of mixed economy with a still-significant state sector, an expanding small enterprise sector, a joint venture (foreign and domestic state enterprise), and now an employee-owned and managed sector.
Only Yugoslavia prior to its break-up included a large part of its economy under a unique form of workers’ management, though it still seems to have involved authentic workers management in theory more than in practice (Carson, 1973). Most other countries have cooperative enterprises of various types that survive and thrive. However, while some cooperative enterprises are large and highly successful, no form of cooperative model has taken over a majority share of the economy in any country since Yugoslavia disintegrated in 1990-1992.
If Cuba’s new legislative framework for non-agricultural cooperatives is sustained, and if they actually function as they are intended, their governance and operation will be quite democratic and egalitarian in terms of the decision-making process within the enterprise and the distribution of income among members. The adoption of this cooperative model, involving workers’ ownership and management and operating under market mechanisms, could turn out to be a major institutional innovation for Cuba. In the current context of the existing economic structures in virtually all of the countries of the world, this might prove to be innovative and perhaps revolutionary, though it is still too early to judge.
THE COOPERATIVE ALTERNATIVE
THE 2012 LAW ON NON-AGRICULTURAL COOPERATIVES
POTENTIAL OF THE COOPERATIVE COMPONENT FOR THE CUBAN ECONOMY
DIFFICULTIES AND LIMITATIONS OF CUBA’S COOPERATIVE LAW
SUMMARY AND CONCLUSION
Cuba’s December 2011 initiative for the establishment of non-agricultural cooperatives may permit the emergence of larger scale non-state enterprises that could operate with greater effectiveness than state enterprises. Moreover, such cooperatives may well have advantages over private sector enterprises particularly regarding the equity of their income distribution arrangements and also workers’ incentives and levels of commitment.
If this initiative is implemented broadly in the Cuban economy, it could constitute a change and perhaps an improvement of historic dimension. With much of the state sector of the economy converted to cooperative institutional forms, Cuba could become a country of “cooperative socialism,” which would be quite different from the highly centralized and state-owned system to which it has aspired for half a century.
However, authentic cooperatives are not easy to establish, to manage or to operate effectively. There are also a number of uncertainties and potential problems which are specific to the Cuban case, judging from the legislation. Perhaps the more serious of these potential difficulties include firstly, the approval process which is unclear and susceptible to control from the center; secondly, the nebulous role of the Communist Party in the functioning of the enterprises; thirdly, the limited possibility of hiring of non-member workers;
is very limited and finally, the uncertainty as to whether or not cooperatives providing professional services of various sorts will be permitted.
It is wise that the government is proceeding cautiously and that it is considering the cooperative enterprises’ first phase as “experimental” and tentative in character. The legislative framework within which these cooperatives operate can then be modified on the basis of the initial experience. This pragmatic approach is pointedly different than the decision-making process under President Fidel Castro, in which substantive policy shifts and institutional changes were determined by the President and implemented rapidly such that the full foolishness of the decisions would become apparent only after it was too late to change course.
If it comes to fruition as it is envisaged in the cooperatives legislation, the role of worker management and of worker control could constitute a significant degree of “economic democracy” for Cuba. This would be a significant and, indeed, a paradoxical development in view of the near complete lack of authentic democracy in Cuba’s political system. Will democracy in the workplace generate a strong pressure and impetus for the spread of genuine participation in the political sphere?
 I would like to thank Ted Henken and Jorge Pérez-López for valuable substantive as well as editorial contributions in the preparation of this essay.
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Caruso-Cabrera, Michelle. 2013. “Cuba shows beginnings of free enterprise—sort of,” CNBC, July 12.
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Cuba Libre Digital. “La burocracia ‘socialista’ consume a las nuevas cooperativas no agropecuarias.” 10 de enero de 2013.
Decree 309, Council of Ministers. Gaceta Oficial de la República de Cuba, Número 53. 11 de diciembre de 2012.
Decree-Law 305. “De las cooperativas no agropecuarias.” Gaceta Oficial de la República de Cuba, Número 53. 11 de diciembre de 2012.
Frank, Marc. 2013a. “Cuba’s non-farm co-ops debut this week amid move toward markets,” Chicago Tribune, June 30.
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Horvath, Branco. “Yugoslav Economic Policy in the Post-War Period: Problems, Ideas and Institutional Developments,” American Economic Review, June 1971.
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La Nación. “Primeras cooperativas no agropecuarias en Cuba comienzan en una semana.” San José, Costa Rica. 23 de junio de 2013.
Mesa-Lago, Carmelo. Market, Socialist and Mixed Economies: Comparative Policy and performance, Chile, Cuba and Costa Rica. Baltimore and London: Johns Hopkins University Press, 2000.
Ministry of Finance and Prices. Resolución 427/2012, Gaceta Oficial de la República de Cuba, Número 53. 11 de diciembre de 2012.
Partido Comunista de Cuba. Proyecto de Lineamientos de la Política Económica y Social del Partido y la Revolución. La Habana, noviembre de 2010
Partido Comunista de Cuba. VI Congreso. Lineamientos de la Política Económica y Social del Partido y la Revolución. La Habana, 18 de abril de 2011.
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Piñeiro Harnecker, Camila. “Las cooperativas en el nuevo modelo económico,” in Pavel Vidal Alejandro and Omar Everleny Perez Villanueva (Compiladores) Miradas a la economía cubana: El proceso de actualización. La Habana: Editorial Caminos, 2012.
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By John Paul Rathbone, Financial Times, January 17, 2014 11:48 am
Original Here: Raúl Castro’s unhurried reforms of Cuba economy falter
In a dusty Havana parking lot, a group of Cubans examine the prices of the modern cars they can now buy from the state for the first time: $263,000 for a 2013 Peugeot saloon that retails in Europe for $30,000, or $20,000 for a 2002 Fiat Uno with over 100,000km on the clock.
“Who are they kidding? At those prices, they have to give a lifetime supply of petrol too,” says taxi driver Antonyne Carrera as he peers through the lot’s wire fencing. “It’s a bad joke,” adds fellow bystander Mauricio, who works in the tourist trade.
The car sale is the latest in a series of reforms introduced by President Raúl Castro that are supposed to improve the country’s economic lot and bolster the government’s popularity but which, in this case, has made the authorities a laughing stock among Cubans who earn an average state wage of $18 a month. It also illustrates the hesitancy and contradictions at the heart of the economic transition begun by Mr Castro and that Latin American heads of state will see when they visit Havana for a regional summit on January 28.
“I call it Raúl’s mambo – two steps forward, one step back,” says Ted Henken, a Cuba specialist at City University of New York. “Every measure Raúl announces has great potential, but there is always a dark cloud.”
Since he became president in 2008, Mr Castro has stressed the need to reduce the state’s role in Cuba’s sagging economy and boost growth forecasts of just 2.2 per cent this year. Foreign debts have been restructured and a unification of Cuba’s multiple exchange rates even mooted. Yet even as he introduces reforms, such as allowing small businesses and co-ops to set up, the ruling Communist party’s blocking habits of command and control remain.
“Raúl is going as fast as he can, or he understands,” says Roberto Veiga, editor of Espacio Laical, an independent Cuban magazine funded by the church. “There is a tension between how slow things need to go given the government’s desire to retain control, and how fast they need to given the precariousness of the economy.”
Continue reading: Raúl Castro’s unhurried reforms
By John Paul Rathbone in Havana; January 21 2014; Financial Times
Original Article here: Glimmers of change in Cuba as fear and secrecy fade
Apartment building meetings are no longer what they used to be in Havana. A few years ago, they were thinly attended affairs. Residents stayed away as nobody listened to their concerns and nothing ever changed: the broken lift, the lack of water. Cubans, remarkably, seemed to have lost their desire to criticise.
But today? Cuba can sometimes seem a country in permanent debate. “In my apartment building, the meetings are packed, the conversation voluble, and there is lots of angry finger-jabbing at other people’s chests,” one Havana resident told me. Today, Cubans seem to have regained the ability to speak out, or at least are losing their fear of doing so.
It is a sign of the times. Much has been made of Cuba’s “transition” since Raúl Castro took over the presidency from Fidel, his elder brother, in 2008. That Raúl, a former general, is president is a big transition in itself, especially of style. Meetings now start on time. Fidel’s “Battle of Ideas” and much of its vacuous propaganda have been abandoned. Political decisions are no longer taken on apparent whim.
Instead, steps have been taken by Mr Castro to roll back the state from the economy. Certain restrictions have been lifted, such as allowing travel abroad. There has been a change in tone in US relations. Indeed, when Havana academics travel to the US, they are no longer asked: what will happen when Fidel dies? Now the more common question is: how do I buy a house in Havana? There is also talk of constitutional reform, albeit within a one party system.
Yet perhaps the most striking and progressive difference after visiting the island annually for a decade is psychological: Cubans’ state of fear is lifting.
Continue reading: Glimmers of change in Cuba as fear and secrecy fade
By Justin Rohrlich. from “VICE”, , 23 January 2014
Original essay Here: http://www.vice.com/read/millions-of-cubans-may-lose-their-life-savings-this-year
“F___ing cops in Cuba are always busting everybody’s balls.” A man mutters this to me in perfect English as I walk down the once-elegant Calle 23 in downtown Havana. He is the very last customer waiting in a Kafkaesque line that wraps around the block and doubles back on itself twice. The afternoon is stiflingly hot. Two police officers are hassling a nearby teenager because he took off his T-shirt.
“But that’s why things here are so safe,” the man continues, much louder this time. I’m confused until I realize another cop is standing behind me. He wandered over after spotting a Cuban nacional talking to me—an American gusano. “Very safe, very safe. You know, because the police do such a good job!” The officer gives him a long, hard stare, then wanders away. I take my place at the end of the line next to my new buddy, who says his name is Yaniel.
Along with several hundred other Cubans, Yaniel and I are waiting to get into Coppelia, the iconic ice cream parlor created in 1966 by order of Fidel Castro and named for his then-secretary’s favorite ballet. Located across the street from the Habana Libre hotel, a one-time Hilton from which Fidel directed the revolution for three months in 1959, Coppelia has been called the “ultimate democratic ice cream emporium.” But, as I quickly find out, that isn’t exactly true.
When the Cubans around me spot a foreign tourist standing with them in the endless queue, they’re quick to inform me that the line we’re in is for people using Cuban Pesos—which is to say, most Cubans. As a woman in curlers and a tube top explains, people holding Convertible Pesos, the country’s other currency, aren’t forced to endure such Socialist indignities. Foreigners, like me, carry Convertible Pesos. She then points to a tiny building surrounded by a well-kept patio and leafy trees offering respite from the blistering mid-summer sun. There is no line at this Coppelia stand and, sitting in the shade are several happy, relaxed-looking people, enjoying their ice cream.
This, in a nutshell, is what having two currencies has done to the already dysfunctional Cuban economy for the past 20 years. The good news is that the government is finally attempting to fix it. The bad news is that millions of Cubans could lose their life savings in the process.
Kooks and Coops
Cuba is the only country on earth that prints two currencies. When the Soviet Union fell in the early 90s, Havana’s subsidies from the USSR were cut off. As a result, Cuba suffered a devastating 35 percent drop in its GDP. The situation on the ground was dire. In Con Nuestros Propios Esfuerzos (With Our Own Efforts), a 300-page volume of everyday survival strategies distributed in the early 90s by the publishing arm of the Revolutionary Armed Forces, Cubans were offered helpful instructions for how to make shampoo out of rum and “sausages” made of nylon stockings stuffed with seasoned grapefruit rind.
Desperate for hard currency, Fidel Castro grudgingly legalized use of the US dollar in 1993. People working in the tourism industry were allowed to earn—and keep—tips given to them in foreign currency. In addition, a resolution by the National Bank of Cuba permitted some Cuban citizens to own foreign currency; the list included government officials, artists and athletes paid overseas, airline and fishing vessel crews, and employees of foreign embassies or organizations.
Castro’s ultimate goal was to get greenbacks into the state’s coffers. In order to capture as many of the now-circulating dollars as possible, the Cuban government promptly opened a network of so-called “dollar stores,” which carried otherwise-impossible-to-find goods available only to people who used American dollars to pay for them. The Cuban government would purchase, say, cans of Pringles and bottles of Gatorade from American manufacturers thanks to a humanitarian loophole in the then-30-year-old US trade embargo. Then the government would sell the Pringles and Gatorade to citizens at a 240 percent markup. The state kept the profit.
However, the trade embargo made it all but impossible for the Cuban government to do much with their American dollars, especially after the US Federal Reserve fined Swiss bank UBS $100 million for its dealings with the regime. And so, in 2004, Fidel Castro once again outlawed the US dollar and popularized the Convertible Peso, or CUC, which had been in limited use since 1994. CUCs (pronounced “kooks”) are worth one US dollar, and are used primarily in domestic tourism and foreign trade. Cuban Pesos, or CUPs (pronounced “coops”), are worth 1/24th of one CUC—about four US cents—and are what the government uses to pay Cuban salaries. (The government owns just about everything in Cuba, and so nearly every Cuban is a government employee.) Doctors, who are employed by the national health system, earn a little less than 800 CUPs per month. That’s about $30.
Thus, in theory, a cabdriver who gets tipped by foreign tourists in CUCs can earn a cardiologist’s monthly income in a single shift. And since it’s against the law for anyone with a professional degree—doctors, lawyers, accountants, etc—to ply their trade in business for themselves, a domestic brain drain has decimated Cuba’s educated class.
“Basically, the incentive structure that shapes people’s behavior has become completely perverted and dysfunctional,” says economist Arch Ritter, a professor at Ottawa’s Carleton University who has been studying Cuba for almost 50 years.
People with access to CUCs live far more comfortably than those without. Buses that accept CUCs look like the ones you take to pick up your rental car at American airports. Buses that accept CUPs are Soviet-era, exhaust-belching beaters. Essentials like cooking oil and toiletries are easily purchased with CUCs, while CUP earners like Mario, a parking attendant I met one afternoon behind the Habana Libre hotel, ask tourists if they have extras. After I gave Mario a Right Guard Sport Stick and two bars of Irish Spring, he noted that we both have a 36-inch waist. So he asked for my belt.
Cuban President Raúl Castro has quite rightly called the dual currency “one of the major obstacles to the progress of the nation.” However, he has also said, “I was not chosen to be president to restore capitalism to Cuba. I was elected to defend, maintain, and continue to perfect socialism.” So it’s no surprise that the government has announced plans to split the difference and do away with the CUC while retaining its hold on industry and commerce in the country.
How do you eliminate an entire currency? Castro has released few details about how or even when Cuba intends to begin taking CUCs out of circulation. But Ritter explained it this way: “They’ve got to make people want to hold the CUP, through the forces of supply and demand. You increase the CUP’s demand by letting people use it to buy a wider variety of goods. Then, you also limit how many CUPs are available, so its value goes up. Likewise, you reduce demand for the CUC by increasing supply, which would, in time, bring its value lower.”
In Cuba, however, economic decisions aren’t made based on supply and demand, and “the market” as Adam Smith knows it does not exist. Instead, reforms are made with the stroke of a pen, so the government could simply, say, change the exchange rate between the CUC and the CUP from 24-to-1 to 12-to-1. This would instantly halve the life savings of countless Cubans who’ve spent two decades socking away CUCs, to say nothing of the Zimbabwe-like inflation that could strike the economy after such a move.
Or, the government may just take everyone’s savings outright. “My guess is that when the government does the reform, it will expropriate some part of the population’s wealth accumulated in CUCs,” says economist Daron Acemoglu, co-author of Why Nations Fail. “This is exactly the sort of expropriation that Argentina did.”
In the years following the collapse of Argentina’s economy in 2001, the government nationalized private pension funds, swiping roughly $24 billion of the citizenry’s money. Argentinians’ dollar-denominated bank accounts were frozen, and withdrawals were severely limited before everyone was forced to convert their savings into comparatively worthless pesos. The result were protests, a flood of court cases, violent riots, a worsening economic crisis, and a two-week period in which Argentina had five different presidents.
Raúl Castro has declared that the transition will not hurt holders of either CUCs or CUPs. But the concept of protecting individual wealth has no place in Cuba—a fact specifically stated in the Cuban Communist Party’s Lineamientos (Guidelines). And as Mauricio Claver-Carone, executive director of the right-leaning Cuba Democracy Advocates points out, the Cuban government could really use the money.
“The Castro regime seems to undertake these currency operations when it’s suffering from a hard-currency crisis,” he explains. “The anticipated currency swap is simply another episode in a long series of asset confiscations by the Castro regime.”
Expropriations and nationalizations of private property have occurred repeatedly since the beginning of the Castro era. People leaving the island in the early days of post-Revolutionary Cuba were forced to give up their property and assets in addition to their rights as citizens. Those who stayed were soon relieved of 42 percent of their wealth in a top-down currency revaluation. In recent years, the CUC has been devalued in pursuit of stabilizing government debt, and hard currency accounts have been periodically frozen and restricted when it has suited the regime.
The economy of Cuba’s main benefactor, Venezuela, is thought by many economists to be in the midst of collapse. Just as the Soviet Union’s was 20 years ago.
Carlos, like 4.6 million of the 5 million people in Cuba’s labor force, works for the state. A lighting and set designer who lives in the “upscale” Vedado section of Havana, the 74-year-old has accompanied traveling Cuban theater and dance productions all over Latin America and Eastern Europe. The government pays Carlos relatively well for his work; he earns roughly what a doctor earns. Yet even though he is relatively privileged by comparison, Carlos’s monthly salary covers perhaps half a month’s worth of expenses. And so, displaying the optimistic, opportunistic trait known in Cuba as resolver, Carlos makes up for the shortfall by earning CUCs on the side.
Carlos runs a small bed-and-breakfast—known in Cuba as a casa particular—out of his art-deco townhouse. He rents out two rooms—he could rent more, but the government imposes limits on how many rooms can be occupied at once—and charges 30 CUCs a night per room (the authorities also set maximum room rates). On paper, this means Carlos can multiply his monthly salary several times with just a handful of bookings. The reality, however, is another story.
Over the course of the three nights I stay with him, Carlos explains how it works. He pays about 300 CUCs a month to the government for the right to run his casa, whether or not he rents a single room. In other words, Carlos needs to fill one bed for 10 nights a month just to break even with the government, to say nothing of his own expenses. Still, the fact that he’s even still in business means Carlos is ahead of the game. One woman I met selling salsa CDs along Calle 12 in Vedado told me she’d set up her home as a casa particular, but was forced to shut down after just two months because she’d gone broke paying the government fees.
Attracting guests presents a whole other set of challenges. Advertising in Cuba is against the law, and few people are permitted Internet access in their homes, making it all but impossible to attract tourists looking for accommodations. Carlos is among the lucky Cubans who has internet access in the form of an old HP laptop and creaky dial-up connection, allowing him to maintain a web page to market himself to tourists.
First legalized in 1997, casas particulares generate intense competition among Cubans eager for precious CUCs. Mercedes, a rheumatologist who rents me a room in her perfectly preserved colonial mansion in the touristy hamlet of Trinidad, has to contend with dozens of other nearby casas. But in addition to going head to head with each other, small-business owners like Mercedes and Carlos must also compete against Gaviota S.A., a government-run tourism operation overseen by members of Raúl Castro’s inner circle.
A division of the Cuban Revolutionary Armed Forces, Gaviota’s tens of thousands of hotel rooms across the island generate the equivalent of almost a billion dollars a year. The money goes directly to the government.
But the big hotels that divert business away from people like Carlos and Mercedes also give other people—housekeepers, bellhops, bartenders—the chance to obtain CUCs for themselves. And state-run entities (particularly ones with bars, restaurants, and plenty of cash on hand) offer opportunities for all manner of graft, theft, and other types of financial chicanery that make up a robust underground economy in Cuba. It’s impossible to put a dollar value on the amount of money that’s stolen or hidden from the state, but economist Arch Ritter estimates that at least 95 percent of Cubans do it.
Isoyen worked at a Soviet-built, Gaviota-run beach hotel on Cuba’s Caribbean coast until he was furloughed earlier this year. When I met him, he told me it wasn’t the loss of his CUP salary that he missed—it was the CUC tips he received from tourists. A college graduate, Isoyen can only use his accounting degree to work for “the people,” making self-employment in his chosen field an impossibility. Living with his parents makes running a casa impossible, so he plans to use his resolver—and the CUCs he socked away—to open an ice cream stand.
For the elderly docents working at Havana’s Museum of the Revolution, resolver means engaging in a bit of basic arbitrage. After showing me Che Guevara’s gun in a glass display case, one of them tries to sell me a three CUP note bearing Che’s likeness as a souvenir. She asks one CUC for the bill. That’s a tidy 88 percent profit.
The Long Con
Resolver can mean a lot of things.
“My friend! My friend!” someone calls out as I walk down Calle E my first morning in Havana. “Where you from, my friend?”
His name is Rafael, and he says he’s a medical student, though he seemingly fails to understand my English only when I ask about the specifics of his education. He’s bald and wiry, and he has a homemade 13 tattoo on the webbing between his right thumb and forefinger. I like him immediately.
Rafael claims to be a licensed tour guide. He even has an official-looking ID card pinned to his shirt. He charges me 20 CUCs—the equivalent of a month’s salary at a typical government job—for a two-hour walking tour in which he listlessly points out a few local sites like the Plaza de la Revolucion and the clinic where soccer legend Diego Maradona supposedly kicked his cocaine addiction in the early 2000s.
We then go to lunch (I pay for it) at a local cafe where Rafael manages to triple his tour fee. For starters, he collects a commission from the restaurant manager for bringing in foreigners with CUCs—and, as I find out later, Rafael’s clients are charged five CUCs for a mojito instead of the usual 24 CUPs, a 500 percent markup. Rafael also sells me a bundle of cigars that he describes as “special, only for Cubans,” for 35 CUC. He’s telling the truth—they aren’t for export. However, I also come to learn they sell to locals for 25 CUP per bundle. (That’s about 1/35th of what I paid.) For his final trick, Rafael gently talks me out of the Everlast speed bag and hand wraps I brought to donate to a local boxing gym, explaining that he would walk them over for me, as the place is “very hard to find.”
As we part ways, Rafael turns to me with an earnest look on his face. “My friend, please don’t tell anybody else this is your first day in Cuba,” he says. “They will take advantage of you.”
Cuban citizens hope that Raúl Castro will tackle financial reform as artfully as Cuban citizens tackle financial survival. But the historically awful performance of the Cuban economy under the tutelage of the Castros doesn’t inspire much confidence. Nonetheless, Ernesto Hernández-Catá, former Deputy Director of the International Monetary Fund, has hope.
“This is part of a reform movement orchestrated by a few brave people in the Cuban government,” Hernández-Catá tells me. “It has been accepted by Raúl, who is not a saint, to be sure. But whereas Fidel was a crazy ideologue, Raúl wants to leave behind an image of a guy who is sober, is reasonably intelligent, and wants to improve the lives of his countrymen.”
Whether it turns out to be a failure or a success, the general consensus in the West remains that, while monetary reform is a positive development, Cuba needs to overhaul its entire financial system from top to bottom before real change can take place. While Secretary of State John Kerry called Cuba’s latest slate of reforms a good start—on top of the economic liberalizations, Cubans can now travel outside the country without an exit visa—he said Havana must do more.
And, not surprisingly, Mauricio Claver-Carone of Cuba Democracy Advocates doesn’t see life improving much for Cubans. “The Castro regime will always end up capturing income made in Cuba, one way or another,” he says. “That’s the nature of totalitarianism.”
Original Havana Times translation from BBC Mundo: http://www.havanatimes.org/?p=101429
January 23, 2014 |
HAVANA TIMES — The Presidents of the Community of Latin American and Caribbean States (CELAC) meet in Havana Jan. 28-29 and, paradoxically, the meeting coincides with the 50th anniversary of the mass breaking off of diplomatic and economic relations of countries in the region with Cuba.
“It’s very symbolic ,” says Luis Suarez, a Cuban specialist in Latin America. He explains that “the restoration of relations with all nations of the region and the presence in this gathering of their Heads of State demonstrates clearly that the US failed in its policy of isolating us.”
To continue with the symbolism, coming to the event as a guest is the Secretary General of the Organization of American States (OAS), José Miguel Insulza. It will be the first official visit by a senior official of that entity to Cuba after his expulsion in 1962. “It is the first time in 200 years, the countries of Our America founded an organization at this level without being convened by the United States or Europe.”
Suarez points out that, despite this, Cuba “was the first country in Latin America that included the goal of integration in its Constitution. That vocation comes from the war for independence, when we had the support of citizens of several countries on the continent.” He explains the magnitude of the CELAC noting that “no other entity in the history of the region has joined so many nations,” adding that “it is the result of the existence of leftwing governments that seek to solve social problems and achieve more autonomy. In another context this would have been very difficult.”
Suarez said “the worst external and internal enemies of the CELAC are those who do not want us to have an organization of our own that allows us to reach out to the world with an consensus position. And the closest is the U.S. Pan-American policy.”
Suarez believes “the future of the regional organization will depend on the political consensus achieved for concrete actions that reach the ordinary citizen, in areas such as health or education, for example.” Luis Suarez “No other body in the history of the region has joined many nations” as CELAC.
In these and other subjects, such as coping with natural disasters, Cuba could play a key role. “The country has a vast experience in these areas and also has the necessary human resources to support such initiatives.”
“We even have a Latin American School of Medicine for Latin Americans; the Operation Milagro eye treatment program that has restored vision to millions of people of the continent, and we created the literacy teaching method “Yes I can” that has taught more than 3 million persons read and write,” explains Suárez .
The agenda of the Havana summit falls squarely on social issues but it remains to be seen what agreements are reached and which governments join them, because their application is not mandatory, “because CELAC is just a mechanism for dialogue and intergovernmental cooperation.”
It also aims to declare Latin America a “Zone of Peace”, an agreement that the Cuban specialist considered “extremely important because it implies that governments undertake to seek political and negotiated solutions, avoiding the use of force in the region.”
“The future of the regional organization will depend on political consultations that are achieved for concrete action to reach the ordinary citizen with social action.”
Furthermore, CELAC “can prevent others from using our conflicts to divide us, as they have done many times in the past.” If such an accord is reached it remains to be seen what would happen with the foreign military bases that exist today in Latin America.
Suarez believes that to achieve greater practical effectiveness CELAC should “integrate regional institutions such as SELA, the Latin American Economic System, ALADI, the Latin American Energy Organization, dedicated to integration, the Pan American Health Organization, and ECLAC.” He explains that “the institutional map of cooperation and integration is a swarm of interlocking agreements, overlapping and sometimes conflicting. The great contribution of CELAC is that everyone could now converge in the same forum.”
Luis Suarez reminds me that with the establishment of the Community of Latin American and Caribbean States “is the first time in 200 years, the countries of the Americas founded an organization at this level without being convened by the United States or Europe.”
In 2010 and 2011, Cuba’s government released dozens of political prisoners on condition they accept exile in exchange for freedom. Since then, it has relied less on long-term prison sentences to punish dissent and has relaxed draconian travel restrictions that divided families and prevented its critics from leaving and returning to the island.
Nevertheless, the Cuban government continues to repress individuals and groups who criticize the government or call for basic human rights. Officials employ a range of tactics to punish dissent and instill fear in the public, including beatings, public acts of shaming, termination of employment, and threats of long-term imprisonment. Short-term arbitrary arrests have increased dramatically in recent years and routinely prevent human rights defenders, independent journalists, and others from gathering or moving about freely.
Arbitrary Detentions and Short-Term Imprisonment
The government continues to rely on arbitrary detention to harass and intimidate individuals who exercise their fundamental rights. The Cuban Commission for Human Rights and National Reconciliation—an independent human rights group the government views as illegal—received over 3,600 reports of arbitrary detentions from January through September 2013, compared to approximately 2,100 in 2010.
The detentions are often used preemptively to prevent individuals from participating in events viewed as critical of the government, such as peaceful marches or meetings to discuss politics. Many dissidents are beaten and threatened when detained, even if they do not try to resist.
Security officers virtually never present arrest orders to justify detentions and threaten detainees with criminal sentences if they continue to participate in “counterrevolutionary” activities. In some cases, detainees receive official warnings, which prosecutors may later use in criminal trials to show a pattern of delinquent behavior. Dissidents said these warnings aim to discourage them from participating in activities seen as critical of the government.
Victims of such arrests may be held incommunicado for several hours to several days. Some are held at police stations, while others are driven to remote areas far from their homes where they are interrogated, threatened, and abandoned.
On August 25, 2013, more than 30 women from the Damas de Blanco (Ladies in White)—a group founded by the wives, mothers, and daughters of political prisoners and which the government considers illegal—were detained after attending Sunday mass at a church in Santiago, beaten, forced onto a bus, and left at various isolated locations on the city’s outskirts. The same day, eight members of the group in Havana and seven more in Holguín were arbitrarily detained as they marched peacefully to attend mass.
Cubans who criticize the government may face criminal prosecution. They do not benefit from due process guarantees, such as the right to fair and public hearings by a competent and impartial tribunal. In practice, courts are “subordinated” to the executive and legislative branches, denying meaningful judicial independence. Political prisoners are routinely denied parole after completing the minimum required sentence as punishment for refusing to participate in ideological activities, such as “reeducation” classes.
The death of political prisoner Orlando Zapata Tamayo in 2010 after his 85-day hunger strike and the subsequent hunger strike by dissident Guillermo Fariñas pressured the government to release the remaining political prisoners from the “group of 75” (75 dissidents sentenced to long prison terms in a 2003 crackdown). Yet most were forced to choose between ongoing prison sentences and forced exile. The overwhelming majority accepted relocation to Spain in exchange for their freedom.
Dozens of political prisoners remain in Cuban prisons according to local human rights groups, which estimate that there are more political prisoners whose cases they cannot document because the government prevents independent national or international human rights groups from accessing its prisons.
Luis Enrique Labrador Diaz was one of four people detained in January 2011 for distributing leaflets in Havana with slogans such as “Down with the Castros” and was subsequently convicted in May 2011 for contempt and public disorder in a closed, summary trial. He was still in prison at time of writing.
Freedom of Expression
The government controls all media outlets in Cuba and tightly restricts access to outside information, severely limiting the right to freedom of expression. Only a tiny fraction of Cubans are able to read independent websites and blogs because of the high cost of and limited access to the Internet. A May 2013 government decree directed at expanding Internet access stipulates that it cannot be used for activities that undermine “public security, the integrity, the economy, independence, and national security” of Cuba—broad conditions that could be used to impede access to government critics.
A small number of independent journalists and bloggers manage to write articles for websites or blogs, or publish tweets. Yet those who publish information considered critical of the government are sometimes subject to smear campaigns, attacks, and arbitrary arrests, as are artists and academics who demand greater freedoms.
After jazz musician Roberto Carcasses called for direct elections and freedom of information in a nationally televised concert in Havana in September 2013, officials told him that his words benefitted “the enemy” and that he would be barred from performing in state-run venues. The government lifted the ban—widely reported in the international press—a week later. In May, the director of the government-run Casa de las Americas cultural institute, Roberto Zurbano, published an article in the New York Times highlighting persistent inequality and prejudice affecting Afro-Cubans. He was subsequently attacked in the government-controlled press and demoted to a lesser job at the institute.
Human Rights Defenders
The Cuban government refuses to recognize human rights monitoring as a legitimate activity and denies legal status to local human rights groups. Meanwhile, government authorities harass, assault, and imprison human rights defenders who attempt to document abuses.
Travel Restrictions and Family Separation
Reforms to travel regulations that went into effect in January 2013 eliminate the need for an exit visa to leave the island, which had previously been used to deny the right to travel to people critical of the government and their families. Nearly 183,000 people traveled abroad from January to September 2013, according to the government. These included human rights defenders, journalists, and bloggers who previously had been denied permission to leave the island despite repeated requests, such as blogger Yoani Sanchez.
Nonetheless, the reform establishes that the government may restrict the right to travel on the vague grounds of “defense and national security” or “other reasons of public interest,” which could allow the authorities to deny people who express dissent the ability to leave Cuba. The government also continues to arbitrarily deny Cubans living abroad the right to visit the island. In August, the Cuban government denied Blanca Reyes, a Damas de Blanco member living in exile in Spain, permission to travel to Cuba to visit her ailing 93-year-old father, who died in October before she could visit him.
The government restricts the movement of citizens within Cuba through a 1997 law known as Decree 217. Designed to limit migration to Havana, the decree requires that Cubans obtain government permission before moving to the country’s capital. It is often used to prevent dissidents traveling there to attend meetings and to harass dissidents from other parts of Cuba who live in the capital.
Prisons are overcrowded, unhygienic, and unhealthy, leading to extensive malnutrition and illness. More than 57,000 Cubans are in prisons or work camps, according to a May 2012 article in an official government newspaper. Prisoners who criticize the government or engage in hunger strikes and other forms of protest are subjected to extended solitary confinement, beatings, restrictions on family visits, and denial of medical care. Prisoners have no effective complaint mechanism to seek redress.
While the government allowed select members of the foreign press to conduct controlled visits to a handful of prisons in April, it continued to deny international human rights groups and independent Cuban organizations access to its prisons.
Key International Actors
The United States’ economic embargo of Cuba, in place for more than half a century, continues to impose indiscriminate hardship on the Cuban people and has done nothing to improve the country’s human rights. At the United Nations General Assembly in October, 188 of the 192 member countries voted for a resolution condemning the US embargo.
In 2009, President Barack Obama enacted reforms to eliminate restrictions on travel and remittances by Cuban Americans to Cuba put in place during the administration of President George W. Bush in 2004. In 2011, Obama used his executive powers to ease “people-to-people” travel restrictions, allowing religious, educational, and cultural groups from the US to travel to Cuba.
The European Union continues to retain its “Common Position” on Cuba, adopted in 1996, which conditions full economic cooperation with Cuba on the country’s transition to a pluralist democracy and respect for human rights.
Former US Agency for International Development contractor Alan Gross remained in prison despite a UN Working Group on Arbitrary Detention report in November 2012 that called for his immediate release. Gross was detained in Cuba in December 2009 and later sentenced to 15 years in prison for distributing telecommunications equipment to religious groups. The working group said Gross’s detention was arbitrary and that Cuba’s government had failed to provide sufficient evidence of the charges against him.
In May, Cuba underwent its second Universal Periodic Review at the UN Human Rights Council. Several countries expressed concern with repression of human rights defenders, increased arbitrary detentions, and lack of freedom of expression. Cuba rejected many of these recommendations on the grounds that they were “politically biased and built on false premises, resulting from efforts to discredit Cuba on the part of those who, with their hegemonic ambitions, refuse to accept the diversity and the right to freedom of determination of the Cuban people.”
In November, Cuba was re-elected to a seat on the UN Human Rights Council, defeating Uruguay for a regional position despite its poor human rights record and consistent efforts to undermine the council’s work to respond to human rights violators.
Publication of the Papers from the 2013 Conference of the Association for the Study of the Cuban Economy
The proceedings of the Association for the Study of the Cuban Economy’s 23rd Annual Meeting entitled “Reforming Cuba?” (August 1–3, 2013) is now available. The presentations have now been published by ASCE at http://www.ascecuba.org/.
The presentations are listed below and linked to their sources in the ASCE Web Site.
Panorama de las reformas económico-sociales y sus efectos en Cuba, Carmelo Mesa-Lago
Crítica a las reformas socioeconómicas raulistas, 2006–2013, Rolando H. Castañeda
Reformas en Cuba: ¿La última utopía?, Emilio Morales
Potentials and Pitfalls of Cuba’s Move Toward Non-Agricultural Cooperatives, Archibald R. M. Ritter
Las reformas en Cuba: qué sigue, qué cambia, qué falta, Armando Chaguaceda and Marie Laure Geoffray
Cuba: ¿Hacia dónde van las “reformas”?, María C. Werlau
Immigration and Economics: Lessons for Policy, George J. Borjas
Possible Electoral Systems in a Democratic Cuba, Daniel Buigas
The Legal Relations Between the U.S. and Cuba, Antonio R. Zamora
Cambios en la política migratoria del Gobierno cubano: ¿Nuevas reformas?, Laritza Diversent
The Venezuela Risks for PetroCaribe and Alba Countries, Gabriel Di Bella, Rafael Romeu and Andy Wolfe
Venezuela 2013: Situación y perspectivas socioeconómicas, ajustes insuficientes, Rolando H. Castañeda
Cuba: The Impact of Venezuela, Domingo Amuchástegui
Should the U.S. Lift the Cuban Embargo? Yes; It Already Has; and It Depends!, Roger R. Betancourt
Cuba, the Soviet Union, and Venezuela: A Tale of Dependence and Shock, Ernesto Hernández-Catá
Competitive Solidarity and the Political Economy of Invento, Roberto I. Armengol
Biohydrogen as an Alternative Energy Source for Cuba, Melissa Barona, Margarita Giraldo and Seth Marini
Cuba’s Prospects for a Military Oligarchy, Daniel I. Pedreira
Cuba’s Economic Policies: Growth, Development or Subsistence?, Jorge A. Sanguinetty
Cuba and Venezuela: Revolution and Reform, Silvia Pedraza and Carlos A. Romero Mercado
Mercado inmobiliario en Cuba: Una apertura a medias, Emilio Morales and Joseph Scarpaci
Estonia’s Post-Soviet Agricultural Reforms: Lessons for Cuba, Mario A. González-Corzo
Cuba Today: Walking New Roads? Roberto Veiga González
From Collision to Covenant: Challenges Faced by Cuba’s Future Leaders, Lenier González Mederos
Proyecto “DLíderes”, José Luis Leyva Cruz
Notes for the Cuban Transition, Antonio Rodiles and Alexis Jardines
From Nada to Nauta: Internet Access and Cyber-Activism in A Changing Cuba, Ted A. Henken and Sjamme van de Voort
Internet and Society in Cuba, Emily Parker
Poverty and the Effects on Aversive Social Control, Enrique S. Pumar
A Century of Cuban Demographic Interactions and What They May Portend for the Future, Sergio Díaz-Briquets
Trabajo por cuenta propia en Cuba hoy: trabas y oportunidades, Karina Gálvez Chiú
Remesas de conocimiento, Juan Antonio Blanco
The Path Taken by the Pharmaceutical Association of Cuba in Exile, Juan Luis Aguiar Muxella and Luis Ernesto Mejer Sarrá