• 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.

El proceso del socialismo de Cuba desde el mandato de Raúl Castro

Por Mao Xianglin.

Mao Xianglin, investigador-profesor titular, asesor del Centro de Estudios de Cuba del Instituto de América Latina de la Academia de Ciencias Sociales de China.

Professor Mao is an  friend of many years, who visited Carleton University and also  Harvard University in the early 1980s just as the relations between China and western countries were starting to open up. He has been the main analyst of Cuba for the Chinese Academy of Social Sciences for some 30 years.

Prof. Mao’s complete essay can be read here:  Mao Xianglin, “Cuba desde el mandato de Raul Castro”

….

Conclusion: Las perspectivas del futuro

Cuba continuará persistir y desarrollar el socialismo, y la actualización de su modelo tiene como objeto consolidar y perfeccionar el sistema socialista. En la actualidad, Cuba encara oportunidades y condiciones favorables para sus reformas, pero al mismo tiempo, enfrenta deversos desafíos tanto internos como internacionales. Si Cuba logra cambiar cabalmente las viejas concepciones sobre el modelo de desarrollo y el papel del mercado, su camino de avance será cada vez más amplio. Entonces, Cuba no sólo podrá resolver sus propias dificultades y problemas de desarrollo, sino también podrá proporcionar últiles experiencias al movimiento socialista internacional.

毛相麟肖像(201309)

Prof. Mao Xianglin

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Brookings/CEEC Study: “Políticas para el crecimiento económico: Cuba ante una nueva era”

Juan Triana Cordoví and Ricardo Torres Pérez Centro de Estudios de la Economía Cubana, Universidad de la Habana

Original CEEC/Brookings Study here: Triana & Torres for Brookings  Politicas crecimiento economico

Este trabajo analiza los factores estructurales que afectan el crecimiento económico, incluyendo la dinámica y calidad de la fuerza de trabajo, la acumulación de capital físico, la acumulación y estructura de factores de producción, y el acceso a mercados internacionales y el mercado doméstico. Luego el trabajo promueve opciones de algunas políticas orientadas a atender los desbalances que se han acumulado a través de los años, con el objeto de colocar a Cuba en un camino hacia el crecimiento alto y sostenible.

Cuba revela profundas paradojas en lo que respecta a su desarrollo. Tiene recursos (aunque escasos) pero carece de una infraestructura macroeconómica o institucional que le permita explotarlos. De igual manera, se enorgullece de poseer trabajadores altamente educados y calificados, sin embargo su modelo económico no genera suficiente empleo, ni en cantidad, ni en calidad, ni en salarios adecuados. Asimismo este modelo económico no ha mostrado la flexibilidad necesaria para adaptarse al ambiente exterior en proceso de cambio.

Estas paradojas se exacerban aún más debido a factores externos e internos. Desde el punto de vista externo, el embargo Estadounidense limita el acceso de Cuba al mercado más cercano y mayor de los Estados Unidos y evita que Cuba participe en instituciones financieras internacionales. Internamente Cuba enfrenta una compleja interacción entre la oferta de trabajo y la demanda de bienes y servicios, especialmente dentro del contexto del mercado internacional. En los próximos quince años Cuba prevé una población en envejecimiento y una taza de dependencia en crecimiento (de 54.7% hoy en día a 66.75% en el 2025) que resultará en una presión en aumento sobre las finanzas públicas. La mayoría del crecimiento en los países en desarrollo en los últimos 50 años se ha llevado a cabo de una manera diametralmente opuesta, impulsado por una población joven y una fuerza laboral en crecimiento. Estos elementos junto con el modelo económico actual hacen inmensamente difícil que Cuba se encamine hacia un crecimiento sostenible a largo plazo.

En el 2011 el gobierno Cubano, bajo el Presidente Raúl Castro, presentó unas nuevas pautas económicas para “modernizar el socialismo cubano”. En la práctica esto permitió algunas actividades económicas restringidas (compra y venta de hogares y automóviles, creación de cooperativas no agrícolas, etc.). Sin embargo, más allá de estos casos limitados, es incierta la implementación de cambios al modelo económico de Cuba que estimulen el crecimiento y desarrollo. Como resultado, la atención se ha volcado en la necesidad de una infraestructura más moderna (especialmente las telecomunicaciones), la necesidad de una inversión extranjera directa y de formación capital fija, y las políticas de producción que complementan las nuevas pautas económicas y apoyan los altos niveles de crecimiento y desarrollo que Cuba necesita.

Este ensayo fue preparado para ser presentado en una serie de talleres de expertos sobre el cambio económico Cubano visto desde una perspectiva comparativa, organizado por la Iniciativa Latinoamérica en el programa de Políticas del Exterior de la Institución Brookings, y el Centro de Estudios de la Economía Cubana y el Centro de Investigaciones de la Economía Internacional en la Universidad de la Habana. Fue presentado inicialmente en un seminario de expertos en Washington D.C. el 28 de mayo del 2013 y fue revisado posteriormente. Los ensayos preparados por esta serie serán recopilados y publicados por Brookings en el 2014.

New Picture (1)

With the 2011 economic reforms enacted under Raúl Castro having tangible impacts (the expansion of self-employed cuentapropistas, the legalization of the sale of homes and automobiles, the recent announcement of the elimination of the dual currency, etc.), Cuba faces important choices regarding the updating of its economic model. These authors present their ideas for Cuba’s economic reforms as part of a series of expert workshops on Cuban economic change in comparative perspective organized by the Foreign Policy Latin America Initiative at the Brookings Institution and the University of Havana’s Center for the Study of the Cuban Economy and the Center for the Study of the International Economy. Additional papers will cover monetary and fiscal policy, and institutional changes.

habla22Juan Triana Cordoví

_MG_4323Ricardo Torres Pérez

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Emilio Morales, “JOINT VENTURES ARE THE BIG QUESTION IN UP-DATING THE CUBAN MODEL”

By Emilio Morales and translated by Joseph L. Scarpaci, Miami (The Havana Consulting Group).

Original Article here: The Havana Consulting Group, Joint Ventures

There is a longing in Cuba for the ‘old days’ of the 1990s when there was a successful boom in creating joint-venture companies on the island. Such nostalgia stems from the economic and political crisis in Venezuela, which has lessened the flow of capital from Big-Brother Venezuela.

Joint-venture companies played a key role in helping the Cuban economy recovery in the 1990s when Soviet aid dried up and the so-called Special Period began.

Many of these companies supported the expanding tourist sector and the decriminalization of the U.S. dollar, which became a staple in a dollarized retail market.

This spate of joint ventures sought to develop tourism infrastructure, assist in import substitution, and revive the national economy.

Joint venture companies concentrated mainly in the industrial sector, tourism, food processing, and real estate. Assuming there was a prior agreement with the Cuban counterpart, decisions were usually made by the foreign partner because they had put up the capital and the know-how.

In this stage of the island’s history with joint ventures, foreign companies played a key role training personnel about modern marketing research methods. This was a time when the economic teams of the armed forces launched the so-called ‘business improvement’ (perfeccionamiento empresarial in Spanish) programs.

Upper management teams of these companies learned modern marketing research techniques. Training this echelon of Cuban businessmen and women was a way to ensure loyalty, avoid corruption, and safeguard information.

Some $3 billion drove this surge of joint-venture operations and parallel activities in duty-free zones.

Uncertainty lowers the expectations of reforms.

Around 2002, the number of joint ventures and amount of investment capital began declining. Two years later, the government did an about-face and began centralizing the economy once again which, in turn, caused investment to dry up and erode the economic reforms launched in the 1990s.

As a result, some 200 joint-venture operations folded and investment plummeted. The Cuban government took to prioritizing investments with such friendly nations as Venezuela, China and Brazil to fill this investment void, offering private investors slim pickings.

Investment and joint-venture operations dropped off quickly between 1999 and 2011, except in Venezuela, where they shot up from 13 to 30. Morales

Figure 1. Number of Businesses Operating in Foreign Direct Investment, 1999-2001.

Data source: Ministry of Foreign Investment and Collaboration (1999) and the Ministry of Foreign Trade and Foreign Investment (2001, calculated by The Havana Consulting Group.

Those foreign companies that remained in Cuba during this period had to endure, from 2008 to 2010, diminished or no payments that were owed to them by the island’s government (called the corralito, or little corral). Considerable tension resulted, particularly between the Spanish diplomatic corps that pleaded for payment to some 300 Spanish firms who had operations there.

This acute two-year financial crisis stemmed from the island’s lack of liquidity that not only affected the supply of raw materials in the sectors where these foreign firms operated, but decreased inventory in hard-currency retail chains and in tourism. The Cuban government’s failure to make payments led to a further decline in foreign investment as investors got jittery.

Raúl Castro introduced a series of economic reforms called “updating the Cuban economic model” when he came to power. This entailed trying to insert market mechanisms at all levels of the economy with the socialist planning system. Joint ventures were at the center of these measures so that the economy could receive foreign investment. In all instances, the Cuban government maintains at least 51% control of these companies.

From the start of these reforms until October 2013, the bulk of them have tried to expand the private sector and agriculture. However, the pace of foreign investment has not gone as expected because of corruption charges made against some foreign investors residing on the island, and Cuban business representatives of joint-venture firms.

Cuban authorities have detained or jailed several foreign businessmen and high-ranking Cuban officials (including one minister and several vice ministers and Cuban CEOs. They are charged with corruption, bribery, and related crimes. Some have been sentenced up to 10 years while others were acquitted after having spent more than a year in jail while awaiting trial.

Undoubtedly, this anticorruption has proven unattractive to foreign investors because of the uncertainty and insecurity the matter has created.

Searching for investors.

Despite all this, the Cuban government has created a special zone adjacent to the Mariel port, just west of Havana. The Brazilian government has invested $900 million, which the Cuban government hopes will attract foreign investment and give the economy a second chance.

By the looks of things, the Cuban government is moving forward with plans to attract investment. It is noteworthy that Venezuela, its principle political ally and one of two pillars of the Cuban economy, is coping with a deep crisis back home. Still, these strategic actions aim to exceed the results obtained in the 1990s.

Potential gains in joint ventures will likely concentrate in the tourism, agriculture and real-estate sectors.

However, it is unclear whether the traditional business partners already located on the island will play a prominent role. The lack of transparency about the jailing of foreign businessmen and the closing of joint ventures is unattractive to international investors.

If we consider the recent announcement about shifting to a single currency, it is obvious that foreign companies with investments in Cuba take a beating. Government efforts to attract a new wave of investors to the new Mariel port facilities could be impacted adversely because of these proposed monetary changes.

Another weakness is the lack of flexible and attractive foreign investment laws.

This is why the government urgently seeks a new wave of foreign investors. To do that, it has announced that it is reworking its investment laws so that they appeal to the international community. Moreover, for the first time in half a century, these new laws may consider allowing Cubans who reside off the island to invest.

Until now, however, these new laws have not appeared. Until they do, uncertainty grows, the crisis deepens, and the country is losing the glamour and allure it needs to attract new investment.

01MeliaCohiba-GeneralHotel Melia Cohiba, Spanish-Cuban Joint Venture

Sherritt-RefinerySherritt International Nickel Refinery, Fort Saskatchewan Alberta: Cuban-Canadian Joint Venture in Canada!

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Book Review: Carmelo Mesa-Lago and Jorge Pérez-López, Cuba Under Raúl Castro: Assessing the Reforms

 

Carmelo Mesa-Lago and Jorge Pérez-López, Cuba Under Raúl Castro: Assessing the Reforms, Boulder CO: Lynn Rienner, 2013, pp. 1-293, Copyright © 2013;  ISBN: 978-1-58826-904-1 hc

M-L & P-L

Cuba Under Raúl Castro: Assessing the Reforms is, so far, the definitive survey, analysis and evaluation of Cuba’s economic and social policies and of its development experience during the Presidency of Raúl Castro.

This is an excellent volume. Mesa-Lago and Jorge Pérez-López have built on their 50 and 40 years records respectively of their highest quality analyses of the economic strategies, policies and economic performance of Revolutionary Cuba, as well as numerous in-depth analyses of specific issue areas.

This study is comprehensive in scope, yet concise and focused. It is balanced and objective. It is constructed on a solid and broad a foundation of statistical information and a deep knowledge of the meaning and limitations of that information. It includes virtually all possible source materials from inside as well as outside the island.

In sum, it constitutes the best starting point for any observer, analyst, researcher or scholar trying to understand Cuba’s economic experience after Raul Castro’s “Acting” Presidency then Presidency.

Below is the Table of Contents to provide a quick overview of the scope of the volume.

Chapter 1        Cuba’s Economic and Social Development, 1959-2012.

Chapter 2        The Domestic Economy, 2006-2012.

Chapter 3        International Economic Relations, 2006-2012.

Chapter 4        Social Welfare, 2006-2012.

Chapter 5        The Reforms, the National Debate, and the Party Congress.

Chapter 5        Assessing the Reforms: Impact and Challenges.

Carmelo Mesa-Lago is undoubtedly well-known to all all observers and analysts interested in Cuba in view of his prolific and excellent work on Cuba over the last half-century. He currently is distinguished service professor emeritus of economics and Latin American studies at the University of Pittsburgh. He is the author of numerous books on Cuba, most recently Cuba’s Aborted Reform: Socioeconomic Effects, International Comparisons, and Transition Policies (with Jorge F. Pérez-López).

Jorge Pérez-López is executive director of the Fair Labor Association in Washington, DC. He also has been the organizer of the conferences and publications of the Association for the Study of the Cuban Economy since its inception some 20 years ago. His publications on Cuba have been numerous and excellent – as a spare time activity. His recent publications include Corruption in Cuba: Castro and Beyond. How he manages to carry out his excellent research and writing on Cuba over and above his demanding employment is an amazing mystery to me!

The full Introduction to the book can be read here: https://www.rienner.com/uploads/51cb22c8e9c96.pdf

The Lynne Rienner web site where it can be ordered is here: https://www.rienner.com/title/Cuba_Under_Raul_Castro_Assessing_the_Reforms

New Picture (3)

Carmelo Mesa-Lago and Jorge Pérez-López

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Fidel Castro’s Son Calls for Major Change in Cuba Baseball Policy

October 27, 2013 |

 HAVANA TIMES — Antonio Castro, son of Fidel Castro and team doctor of the Cuban baseball squad, requested that the Cuban players who fled the island and became professionals in the US Major Leagues be allowed to play with the national team in international tournaments, reported dpa news on Sunday.

“We need to change on both sides, we have to do something realistic, we have to do something for our players … [The current policy is] not good for athletes, for families, for anyone. We lost those players but why can’t they return to play again with the national team,” asked Castro, in an interview on Cuban baseball today by ESPN.

“We have to strive to not lose them. Unless we change, we lose the players, we lose everything,” he added.

IndustrialesCampeon2010The Famous “Industriales”

Up to 16 players who fled the island played this season in the Major Leagues, including the new idol of the Los Angeles Dodgers, Yasiel Puig.

Professional sports were abolished on the island in 1962, prohibiting Cuban athletes from working as professionals or joining foreign teams. Over the years it became routine for some athletes to skip out during trips abroad to try to build a future as professionals.

The sacrifice of having to leave their family is sometimes compensated with millions: This month Cuban first baseman José Dariel Abreu closed a record contract for a non-US player to play next season with the Chicago White Sox. He will earn US $68 million over six years.

Abreu defected from the island in August and obtained residency in Haiti, from where he began processing permits with the US Treasury Department in order to be a free agent and sign with the majors.

From Haiti he traveled to the Dominican Republic, where major league scouts were able to follow his progress as he trained.

Antonio Castro noted as an example the visit to Cuba this year by Jose Contreras, who defected and returned to the island after spending ten years playing in the United States. “I never expected to return to Cuba because many before me were not able to return, since the government considered us traitors,” he told ESPN.

Contreras escaped from the island in 2002 taking advantage of the presence of the national team in Monterrey, Mexico.

The return of the pitcher early this year was the first by an athlete who had abandoned a national team and came after the new Cuban immigration policy took effect on January 14, which allows for the return of athletes who left the country through irregular channels since the early ’90s and later as long as they had spent eight years abroad.

“Many want to go back and live here to teach children, is that bad? No, of course not. Contreras returned and is working for children to develop baseball. I love that idea,” Antonio Castro told the ESPN reporter in English during her recent visit to Cuba .

The island seems to be gradually lifting restrictions for high-level athletes that have existed for decades. The Cuban authorities, for example, announced on September 27 that they would allow their athletes to sign in the off season with teams in foreign leagues as long as they play in the Cuban leagues.

The reform seeks to “generate revenue” and “gradually increase wages,” explained the official daily Granma.

The measure is part of the process of market economic reforms being instituted by Raul Castro’s government.

In July, the Cuban Baseball Federation also announced that it had authorized the signing of active Cuban ballplayers with professional clubs abroad with the aim of “inserting Cuban baseball in the world.” Shortly after the authorities allowed the three players to sign with the Mexican professional team the Campeche Pirates.

“Cuba needs change, we are part of the world, we need to change,” Antonio Castro told ESPN.

Fidel-Castro-playing-baseball Antonio Castro’s Father in Earlier Times

fidel-hugo-baseball

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Eliminating Dual Currencies in Cuba: Measured, but Necessary Risk

By Emilio Morales and translated by Joseph L. Scarpaci, Miami (The Havana Consulting Group).

Original Here: Eliminating Dual Currencies in Cuba: Measured, but Necessary Risk

New Picture

The Cuban government finally announced the elimination of its dual currency system in what will be one of the most challenging reforms to the economic model. Great expectations are riding on this new, single currency, which will have a great impact on the island’s society and economy.

Said measures will change the prevailing lifestyle of the past nearly 20 years for 11.2 million Cubans. That consisted of getting paid in a devalued ‘soft’ currency yet purchasing essential goods and services daily in a ‘hard’ currency, one used by tourists or sent by loved ones from abroad.

Authorities say they will deploy the new measure in stages, and the timeline will begin with government businesses.

A first stage will entail specifying the legal framework to support the move to a single currency. Financial information systems and adjustments to accounting systems are required as well.

Accountants and other personnel from across the country will require some training to handle the transition.

Uncertainty Awaits.

This important announcement, however, fails to specify firm dates and related details. News of the single currency system no doubt aims to calm the nerves of those who have saving accounts in convertible pesos (CUCs), international currencies, and Cuban pesos (CUPs). Still, the government will continue to apply the current policy of both subsidizing retail prices, and subsidizing those Cubans who require special government assistance.

Both subsidy strategies, though, are contradictory. On the one hand, a single currency means that one of those subsidies will be eliminated. Therefore, bank accounts will lose some value when they are rolled over to a single currency, whenever and whatever that might be.

On the other hand, in order to unify the currencies, sate subsidies will have to disappear or be reduced to a bare minimum, and that will be the hardest measure for the Cuban government to carry out. How will authorities face the dilemma of protecting the most vulnerable groups once this process takes holds?

The list of subsidies is extensive: utilities (electricity, telephone, gas, potable water) and the dwindling list of sparse, yet essential products provided by the longstanding ration book (libreta). Other subsidized public services include transportation, all levels of education, health care, and the sale of prescription drugs.

Do conditions exist to eliminate or drastically reduce these subsidies? Do the results achieved by the reforms carried out thus far justify these measures Will the government allow the private sector to expand in order to minimize the pain this difficult process will unleash?

All of this is uncertain. As the details of this currency matter become known, we will be able to assess the real impact that the elimination of the dual currency will have. Until then, it remains a uncertain.

New Exchange Rate in Sight

The government announcement also fails to specify how it will adjust the exchange rate in the process. We anticipate an immediate and sharp rise in the black-market dollar; perhaps two or three times for what the dollar will officially sell at the state-run CADECA money-exchange houses.

CADECA exchange rates currently value 25 Cuban pesos (CUC) for a single convertible peso (CUP). It is likely that in a few weeks the government will adjust this rate as a first step. That will be the first test of the impact this monetary policy will have in the marketplace and in everyday living. It will no doubt shape how the rest of the reforms unfold.

For instance, reducing the exchange rate to 1 CUC for 18 CUPs would lower the ceiling on the black market and avoid early speculation. At the same time, the move would increase workers’ purchasing power if prices set in dollars in state stores remain unchanged.

In this regard, the 240% mark up that the government automatically places on consumer goods sold in the so-called ‘dollar stores’ (e.g., hard-currency CUC sales) will give the government some cushion in absorbing these costs because it is a handsome margin. Foregoing some state profit will increase consumer purchasing power for ordinary Cubans.

But one thing is a fine wine and the other is just plain table wine, which gives pause and makes us wonder these first-stage measures really will jump start the process.

Investors on Alert

If the impact will be great on the Cuban people, it will be no less salient for investors residing on the island.

Regardless of the fine points these changes unleash, foreign joint-venture companies with investments in Cuba will be affected in some fashion. The bottom line for these companies will be affected by the costs, exchange rates and prices of the products they produce there. Profit margins will likely diminish somewhat until the currency changes stabilize, and production cycles catch up other changes in the monetary system.

Even if the transition is relatively smooth, it is likely that investment will slow down or simply be deferred until the most challenging part of the transition is over. It is noteworthy that over the past ten years, almost 200 joint-ventures have closed in Cuba, particularly since the freeze on repatriating profits took place in 2008, which was not fully over until 2010. On top of that comes the anti-corruption campaign carried out over the past four years.

Government efforts to attract new waves of investment to the upcoming duty-free zone of Mariel port (just west of Havana) will be challenged by these proposed banking measures. The uncertainty caused by the positive and necessary combining of the island’s currency will not be attractive to investors, at least until the process is fully implemented.

We can only hope that efforts to modernize the Cuban economy through these fiscal and monetary proposals –the most daunting measures proposed in recent economictimes—achieves its goals for the good of the Cuban people and does not become a huge disaster.

peso_cuban_currency_cuba_photo_gov

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Gobierno cubano inicia proceso para eliminar la doble moneda

Havana, 22 octubre, 2013 (Café Fuerte) — El gobierno cubano anunció este martes la puesta en marcha de la unificación monetaria y cambiaria en el país, un paso decisivo en las transformaciónes impulsadas por Raúl Castro.

img_0002-0014 depositphotos_1265406-One-peso

tres

El Consejo de Ministros acordó “poner en vigor el cronograma de ejecución de las medidas que conducirán a la unificación monetaria y cambiaria”, indicó una Nota Oficial aparecida en el diario Granma. “Ninguna medida que se adopte en el terreno monetario, será para perjudicar a las personas que lícitamente obtienen sus ingresos en CUC [pesos convertibles] y CUP [pesos cubanos]“, enfatizó la declaración.

 Aunque no se precisa una fecha exacta para la arrancada del proceso, todo indica que la implementación de las primeras medidas será inmediata, comenzando por el sector empresarial y las instituciones estatales.

 Dos monedas, un camino

 En Cuba conviven dos monedas: el CUP, con el que la población cobra sus salarios y paga productos y servicios básicos, y el CUC, que es equivalente a 24 pesos cubanos y equiparable al dólar. La dualidad monetaria existe en el país desde la autorización del dólar en agosto de 1994.

 El texto expresa que los cambios en esta primera etapa afectarán a los organismos y entidades jurídicamente establecidas, a fin de “propiciar las condiciones para el incremento de la eficiencia, la mejor medición de los hechos económicos y el estímulo a los sectores que producen bienes y servicios para la exportación y la sustitución de importaciones”.

 El acuerdo fue analizado en una reunión del gabinete gubernamental, que sesionó el pasado sábado bajo la presidencia de Raúl Castro. “La unificación monetaria y cambiaria no es una medida que resuelve por sí sola todos los problemas actuales de la economía, pero su aplicación es imprescindible a fin de garantizar el restablecimiento del valor del peso cubano y de sus funciones como dinero, es decir de unidad de cuenta, medio de pago y de atesoramiento”, argumentó el documento.

 Período de preparación

 La información señala que esta decisión se sustenta en los lineamientos de la política económica y social aprobada en el VI Congreso del Partido Comunista, que busca la unificación de la moneda nacional teniendo en cuenta “la productividad del trabajo y la efectividad de los mecanismos distributivos y redistributivos”. Menciona además los pasos que se seguirán en la aplicación del proceso:

Se comenzará por un periodo de preparación de condiciones que permitirá la elaboración de las propuestas de normas jurídicas, los diseños de los cambios de los sistemas informáticos encargados de los registros contables y los ajustes en las normas de contabilidad.

 Esta etapa será esencial igualmente para la capacitación de las personas que deben acometer la ejecución de las diferentes transformaciones.El proceso de unificación monetaria conservará intactos los ahorros de las personas en los bancos cubanos en CUC, otras divisas internacionales y CUP.

 Continuará aplicándose la política vigente de subsidios a precios minoristas y a personas donde sea necesario, en tanto las condiciones económicas del país lo requieran.

 El CUC al igual que el CUP son monedas cubanas emitidas por el Banco Central de Cuba y mantendrán su total respaldo. En lo adelante se continuará extendiendo la posibilidad que hoy existe de aceptar en las tiendas que venden en CUC, pagos en CUP con tarjetas magnéticas denominadas en esta moneda. Experimentalmente en lugares seleccionados se po-drán efectuar pagos en efectivo en CUP por el equivalente calculado a la tasa de cambio de CADECA de 25 CUP por 1 CUC.

 La eliminación de la dualidad monetaria era un objetivo anunciado desde que abril del 2011, cuando el VI Congreso del Partido implementó las nuevas directrices para la actualización del modelo económico del país.

 La reunión del Consejo de Ministros se centró en el análisis de temas vitales para la economía del país y aprobó el perfeccionamiento del Ministerio de la Agricultura, tanto en su área empresarial como presupuestada.

 Reproducimos a continuación el texto íntegro sobre el proceso anunciado para eliminar la dualidad monetaria.

 NOTA OFICIAL

 El Lineamiento No. 55 de la Política Económica y Social del Partido y la Revolución, aprobado por el VI Congreso del PCC plantea: “Se avanzará hacia la unificación monetaria, teniendo en cuenta la productividad del trabajo y la efectividad de los mecanismos distributivos y redistributivos. Por su complejidad, este proceso exigirá una rigurosa preparación y ejecución, tanto en el plano objetivo como subjetivo”.

 En cumplimiento de dicho Lineamiento, ha sido acordado por el Consejo de Ministros poner en vigor el cronograma de ejecución de las medidas que conducirán a la unificación monetaria y cambiaria.

 Como se ha informado, la unificación monetaria y cambiaria no es una medida que resuelve por sí sola todos los problemas actuales de la economía, pero su aplicación es imprescindible a fin de garantizar el restablecimiento del valor del peso cubano y de sus funciones como dinero, es decir de unidad de cuenta, medio de pago y de atesoramiento. Lo anterior, unido a la aplicación de las restantes políticas encaminadas a la actualización del modelo, propiciará el ordenamiento del entorno económico y en consecuencia la medición correcta de sus resultados.

 Se dará inicio al proceso por la unificación monetaria, para las personas jurídicas y para las personas naturales.

 Los principales cambios en esta primera etapa, se producirán en el sector de las personas jurídicas, a fin de propiciar las condiciones para el incremento de la eficiencia, la mejor medición de los hechos económicos y el estímulo a los sectores que producen bienes y servicios para la exportación y la sustitución de importaciones.

 Se comenzará por un periodo de preparación de condiciones que permitirá la elaboración de las propuestas de normas jurídicas, los diseños de los cambios de los sistemas informáticos encargados de los registros contables y los ajustes en las normas de contabilidad. Será una etapa esencial igualmente para la capacitación de las personas que deben acometer la ejecución de las diferentes transformaciones.

 El General de Ejército Raúl Castro Ruz en su discurso de clausura de la primera sesión ordinaria de la VIII Legislatura de la Asamblea Nacional del Poder Popular, el pasado mes de julio, expresó sobre el proceso de implementación de los Lineamientos lo siguiente: “Deseo reiterar que en este frente de significación estratégica ha continuado el avance y ya comienzan a observarse los primeros resultados alentadores, aunque también es verdad que falta un largo y complejo camino para actualizar nuestro modelo económico y social, asegurando el apoyo mayoritario de la población a este proceso, lo cual excluye la utilización de terapias de choque y el desamparo de millones de personas que caracterizan a las políticas de ajuste aplicadas en los últimos años en varias naciones de la rica Europa”.

 Al igual que ha sido una práctica aplicada en el transcurso de los años de la Revolución cubana, ninguna medida que se adopte en el terreno monetario, será para perjudicar a las personas que lícitamente obtienen sus ingresos en CUC y CUP. En este sentido, el proceso de unificación monetaria respeta los principios de que la confianza ganada por las personas que han mantenido sus ahorros en los bancos cubanos en CUC, otras divisas internacionales y CUP, se conserve intacta y que continuará aplicándose la política vigente de subsidios a precios minoristas y a personas donde sea necesario, en tanto las condiciones económicas del país lo requieran. El CUC al igual que el CUP son monedas cubanas emitidas por el Banco Central de Cuba y mantendrán su total respaldo.

 En lo adelante se continuará extendiendo la posibilidad que hoy existe de aceptar en las tiendas que venden en CUC, pagos en CUP con tarjetas magnéticas denominadas en esta moneda.

 Experimentalmente en lugares seleccionados se po-drán efectuar pagos en efectivo en CUP por el equivalente calculado a la tasa de cambio de CADECA de 25 CUP por 1 CUC. De acuerdo con el avance de la ejecución del cronograma, se irán dando a conocer los detalles sobre las medidas que en cada momento correspondan, tanto a los especialistas de las entidades que deben participar en su implantación, como a la población.

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Are Raul Castro’s Reforms Helping the Cuban Economy?

Inter-American Dialogue’s Latin American Advisor, October 16, 2013 Original Journal Issue:  Inter-American Dialogue, Cuba Commentary, October 15 2013

Featured Questions and Answers, with

Matthew Aho, Inter-American Dialogue’s Latin America Advisor,

Colin Laverty, Founder and President of Cuba Educational Travel,

Kirby Jones, Prtesident, Alamar Associates, Arizona,

Carmelo Mesa-Lago, Professor Emeritus, Economics and Latin American Studies, University of Pittsburgh,

Archibald Ritter, Distinguished Research Professor, Economics and International Affairs, Carleton University, Ottawa, Canada.

 

Inter-American Dialogue

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Cuban Merchants Defy Ban on Sale of Imported Clothes

Original Article here  Cuban Merchants…..

Privately-owned small retailers in communist Cuba are defying a government order to stop selling imported clothing or face stiff fines.

Imported clothing is in high demand in Cuba because foreign apparel is cheaper and of higher quality than threads sold in state-run stores.

“We have been here for three years selling without a problem and abiding by the law, and now they say that this is over?” asked Nadia Martinez, 32. “We are not going to close our business.” Martinez has a government license to work as a seamstress, but in practice runs a modestly successful business selling imported clothes on Galiano Street, one of Havana’s busiest commercial avenues. The clothes are not imported by the government, but rather brought in by Cubans traveling to places like Ecuador, Mexico, Spain and the United States.

Until now, the government had seemed to look the other way as she stretched the scope of her legal employment. But it now appears it may regulate away her economic success story.

In 2010 President Raul Castro expanded the list of government-approved self-employment occupations as part of a very gradual reform of its Soviet-style economy. Castro announced that over the following years he would also be slashing the country’s five-million strong bureaucracy — this on an island with a population of about 11 million — as a cost-cutting measure. Today more than 430,000 Cubans work for themselves or in small businesses. Authorized job categories include restaurant owners, barbers, electricians, plumbers, mechanics and other skilled trades. Privately owned beauty salons and family-owned restaurants known as “paladares” proliferated, often operating from the back of people’s houses. The government, however, remains the country’s largest employer, and central planners still try to control the cash-strapped economy.

Deputy Labor Minister Marta Elena Feito recently announced that the government would fine businesses and people found selling imported apparel or re-selling clothing that originated in state-run stores. Authorities have long tolerated the clothing vendors, and even though Feito said the measures would be enforced “immediately,” no vendor has been forced to shut down.

“We’re waiting for them to come explain the unexplainable to us, because closing us down cannot be a solution,” said Ledibeth Sanchez, 29, another Galiano Street vendor. A few blocks away Carlos Medina, 44, works at the “Fashion Passions” boutique on Dragones Street. The well-stocked store sells jeans, blouses, T-shirts and imported dresses.

“Everything was going very well and suddenly they change it all,” said Medina. He said vendors and store employees are fretting about being potentially being forced to shutter. “Nobody has notified us, but if they give us the order to close, we’ll close,” he said in a resigned tone.

Omara Cambas, 46, a former Communist Youth national leader, opened the “Catwalk Workshop” clothing boutique in the Havana neighborhood of El Vedado just three months ago. “This measure would affect us a lot — the fact is, I’d be without work,” said Cambas.

A key reason so many people have joined the ranks of self-employed — aside from state job cuts — is that state salaries average around $20 a month. Though people may not have to pay for housing here, that is not enough for most to put food on the table for their families or buy clothing.

Castro, 82, took over from his ailing older brother Fidel in 2006 and has chosen not to dramatically open up Cuba’s economic or political system. Fidel Castro led the nation through five decades of Cold War strains with the neighboring United States. Raul Castro has sought to liberalize Cuba’s socialist economy a bit and encourage more private entrepreneurship, but at the same time maintain a key role for the Cuban state through joint ventures.

Since 1962, Cuba has been under a full US trade embargo. But US goods routinely move through third countries or are resold by people traveling into Cuba.

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CAN WORKERS’ DEMOCRACY IN CUBA’S NEW NON-AGRICULTURAL COOPERATIVES CO-EXIST WITH AUTHORITARIANISM?

By Arch Ritter                                                                                               October 7, 2013

 On December 11, 2012, a battery of new laws and regulations on non-agricultural cooperatives was published in Cuba’s 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 framework for the structure, functioning, governance and financial organization of the new cooperatives and provided the legal framework within which they were to operate.

This major institutional reform may revolutionize the structure and perhaps the functioning of the Cuban economy. It also may have political implications as the cooperatives are to be governed with a form of workers’ management. The legislation presented the cooperatives as “experimental,” and indicated that after some 200 were initially approved, the institutional form would be reappraised and modified. There is thus some uncertainty regarding the long-term character of the legislative framework governing the structure and functioning of the cooperatives.

The establishment of an apparently democratic form of workers’ ownership and control is interesting, surprising and perhaps paradoxical, since Cuba’s political system is characterized by a highly centralized one-party monopoly in which political participation is manipulated effectively from above. Elections in Cuba’s one-party system are a transparent charade and an insult to Cuban citizens.

COOPERATIVE GOVERNANCE

The new regime for non-agricultural cooperatives provides for ownership and management of the enterprise by its employees, with mainly independent control over the setting of prices, the purchase of inputs, decisions regarding what to produce, labor relations and the remuneration of members through wages and the distribution of coop profits.

The ultimate authority within any single cooperative will be its General Assembly which would include all its members. This body would be empowered to elect a president, a substitute and a secretary by secret ballot (Decree-Law 305, Article 18.1). The specific managerial structure of the enterprise is to be determined by the complexity and size of the cooperative and the number of members. Cooperatives with fewer than 20 members would elect an “Administrator.” Those with 20 to 60 members would elect an “Administrative Council.” Those with more than 60 members would elect a “Directive Committee” as well as an “Administrative Council.” The cooperative’s financial management will also depend on its size and complexity, and would be the responsibility of a single member for a very small cooperative enterprise or a financial committee for a large coop.  The management structures and functioning are delineated in detail in Decree 309 of the Council of Ministers.

SOME ADVANTAGES OF COOPERATIVES

The new cooperative enterprise involves democracy in the work-place, a major improvement over both state enterprise and privately-owned enterprise, in the view of many observers.

Under the Cuba’s traditional state enterprise system, workers have been “order takers.” Their labor unions have served as conveyor belts for orders from the top to the workers at the bottom. Rather than defending the interests of their membership, the main purpose of Cuba’s unions has been to ensure that the interests of the nation – as determined by its political leadership – are implemented through the unions. In a private enterprise in most market economies, the worker is also an “order taker,” but may or may not have a strong labor union to defend his or her interests.

It is instructive to recall here that the governmental announcement of September 2010 presenting the proposal for the lay-off of some 500,000 workers in the public sector of the economy by March 2011– to be reabsorbed in the self-employment or micro-enterprise sector – was made in a “Pronunciamiento” from the head of the Central de Trabajadores de Cuba (CTC), Cuba’s official labor union confederation and published in Granma.  It is hard to imagine the head of any other national union confederation making such a proposal on behalf of the relevant government.

 On the other hand, within the cooperatives, the members should be in substantial control through the governing mechanisms that the legislation noted above creates. The system would in fact be a form of workers’ management of the sort that we have not seen since the days of Tito in Yugoslavia.

It perhaps should be noted that most so-called “capitalist…” or “mixed market economies” have significant cooperative sectors.  For example, Brazil has 6,652 coops with 300,000 employees; Canada has 9,000 coops with around 150,000 employees; the United States has 30,000 coops employing over 2 million people; and France has 21,000 coops employing 3.5% of the labor force (International Cooperative Alliance.)

Moreover, Cuba had a significant cooperative sector before 1959, including some major “Benevolent Societies” and the Cooperativa de OmnibusAliados.

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Democratic control of economic enterprises is an end in itself, but it also strengthens worker commitment to a shared endeavor thereby improving the intensity, dedication and effectiveness of workers’ efforts.

Thus, greater democracy in the work place should result in improved productivity. If Cuban cooperatives are genuinely democratic, they may function more efficiently and effectively than both state enterprise and privately-owned enterprise.

WILL THE COOPERATIVES BE DEMOCRATIC?

Will Cuba’s non-agricultural cooperatives in fact be authentically democratic? So far, it is too soon to say as the first cooperatives began operation only in July 2013. As noted earlier, the governing legislation will be modified in the light of the operational experience of the first cooperatives.

Governance may be a continuing problem for cooperative enterprises. The “transactions costs” of participatory management may be significant. Personal animosities, ideological or political differences, participatory failures, and/or managerial mistakes can all serve to weaken the decision-making process and to generate dysfunction. Of course this also happens with private enterprises as well as state enterprises

Secondly, the new cooperatives must go through a complex approval process before they can come into existence. They must be approved initially by the municipal “Organs of Popular Power,” then by the “Permanent Commission for Implementation and Development of the Guidelines,” and ultimately by the Council of Ministers. Will this be a reasonably automatic process or will political controls be exerted to determine which cooperatives can come into existence? One can imagine efforts at the highest political levels to approve favored cooperatives or cooperatives in particular areas of the economy and thereby to shape the evolution of the sector in accordance with preconceived official ideas, as opposed to letting the sector evolve spontaneously and naturally. With such controls on the approval process, the emergence of the cooperative sector could be deformed and stunted.

On the other hand, conceivably the approval process will be less controlling and permit all feasible proposals to be attempted. The Chief of the Management Model Sectionof the “Permanent Commission” assured journalists that this process would be “open” (Juventud Rebelde, 2012). But in the same article, he stated that some cooperatives would be established “according to the interests of the state” (Ibid). If this is the case, the principle of voluntary membership could be jeopardized. Cooperatives established in this manner would resemble those in agriculture that were imposed from above, with negative consequences in terms of both worker commitment and the effectiveness of the incentive system in the cooperative. 

Thirdly, what will be the role of the Communist Party in the new cooperatives? If the control of the general assemblies of medium and large-sized cooperatives is captured by nuclei from the Party, not only would workers’ democracy be subverted, but incentives to work seriously would likely be diminished. Will the Party keep out of cooperative enterprise management?

If authentic democracy were to emerge within the cooperatives, would this have a spread effect into the political system? Conceivably. But Cuba’s agricultural cooperatives have had little or no democratizing effects on the political system – although these cooperatives have not been genuinely democratic either. The “UBPCs” or Unidades Básicas de Producción Cooperativa were in reality state enterprises. This was acknowleged by the government of Cuba when it instituted a series of reforms in the management of the UBPCs aimed at converting them into more genuine cooperatives. (Granma, 2012)

Possible democratic spread effects from the cooperatives to the political system do not seem to be of concern for the government of Raúl Castro.

 

CONCLUSION

If this initiative to establish non-agricultural cooperatives 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,” with a state sector, a cooperative sector, a joint foreign/state enterprise sector, and a micro-enterprise sector. This would be quite different from the highly centralized and state-owned system to which Cuba aspired for half a century. Cuba’s economic system would also continue to be unique in the world and to be of consuming interest to observers, analysts and those looking for alternatives on the left to the world’s prevailing “mixed market economies

 

BIBLIOGRAPHY:

 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.

Granma. September 11 and 14, 2012.

International Cooperative Alliance. WebSite: www.ica.coop (accessed January 15, 2013).

Juventud Rebelde. 18 de diciembre de 2012. Debate sobre la nueva ley de cooperativismo : Se buscan socios.http://www.cubainformacion.tv/index.php/economia/47243–cuba-extiende-las-cooperativas-a-a-la-traduccion-la-informatica-y-la-contabilidad. Accessed January 16, 2013.

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