• 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.

Exchange Rate Unification: The Cuban Case

New Picture (5)Exchange Rate Unification: The Cuban Case

By: Alain Ize and Augusto de la Torre

 In Exchange Rate Unification: The Cuban Case, Augusto de la Torre and Alain Ize take an international perspective in examining the challenges Cuba faces in unifying its exchange rate, and compare various options to meet this objective.

Since 2011, the Cuban authorities have placed exchange rate unification as one of their top policy priorities. Indeed, the current dual exchange rate system—whereby a one-to-one exchange rate for the “convertible peso” coexists with a twenty four-to-one exchange rate for the “Cuban peso” (both against the U.S. dollar)—introduces severe and pervasive distortions with costly consequences for resource allocation and the growth potential of the Cuban economy. At the same time, the unusually large (by international comparison) spread between the two exchange rates exacerbates the transition costs and thus constitutes one of the main reasons delaying their unification.

De la Torre and Ize argue in favor of a fast unification approach, cushioned during a pre-announced transition period by lump-sum taxes and subsidies applied on an enterprise-by-enterprise basis. By allowing for relative price changes to operate in full from the start, the immediate unification would maximize efficiency gains. At the same time, by cushioning the Cuban economy from potentially large transitional pains—including fiscal revenue losses, productive dislocations, inflationary outbursts and distributional effects—the lump-sum taxes and subsidies (to be gradually phased out) would ease the transition, thereby boosting policy credibility. However, to ensure the viability of the scheme and the rapid materialization of the efficiency gains, important habilitating reforms would be needed, particularly regarding the governance of state enterprises.

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 Havana, Cuba el 26 de septiembre del 2013 y fue revisado posteriormente. Los ensayos preparados por esta serie serán recopilados y publicados por Brookings en el 2014. Este ensayo refleja solamente las opiniones de los autores.

 

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Reforms in Cuba: Seat belt, mirrors, brake; The road to capitalism does not run smooth

Reforms in Cuba

The Economist., Jan 11th 2014 | Havana

Original here: http://www.economist.com/news/americas/road-capitalism-does-not-run-smooth

 Cuba Apr 2012 069.jpgAA

’52 Dodge  going down La Rampa;alongside the Havana Libre Hotel, Photo by Arch Ritter, 2011

WHEN the Cuban government said in December that it intended to let the population buy modern cars without requiring permits, many suspected there would be a catch. They were right.

The cars, which can only be bought through state-owned suppliers, cost a fortune. A 2013 Peugeot 508, marketed in Europe as an affordable saloon car costing around $30,000, has a price tag of more than a quarter of a million dollars at a rundown showroom in Havana. A Chinese Geely, with more than 80,000 kilometres (50,000 miles) on the clock, is on sale for around $30,000. The average salary in Cuba is less than $20 a month. “What do they think they are selling? Aeroplanes?” jokes Erik, a handyman, as he looks at the price-list. “They don’t want to sell any cars. It’s all a show,” agrees Ernesto, a mechanic.

The prices certainly seem designed to deter purchasers. Some even wondered whether there had been a clerical error and prices had been listed in Cuban pesos, Cuba’s local currency, which is worth 24 times less than the dollar-pegged convertible peso (CUC). Another theory is that the high prices are a preview of a widely predicted devaluation of the CUC as part of the government’s commitment to unify the island’s two currencies.

A further explanation may lie in the immediate effect of the reform: the elimination of a thriving black-market trade in the permits to buy new cars. For decades these have been awarded to valued individuals such as exceptional party workers, sports stars and artists. But they had more recently become a currency themselves, swapping hands for around $12,000 each. The government says that those with permits will be first in line to buy new cars—a dubious benefit given that many have quadrupled in price since the reform.

“There could hardly be a stronger signal that this remains a controlled economy,” says one Havana-based diplomat. Since taking over as president from his brother Fidel in 2008, Raúl Castro has taken some steps to reduce the state’s economic role. He has allowed small-scale self-employment, permitted Cubans to buy houses and given private farmers more autonomy to grow and sell their produce. But he has always insisted such reforms will be “without haste”. Now there are signs that he is deliberately slowing things down.

On January 1st, the 55th anniversary of the revolution, Mr Castro gave a speech in Santiago, Cuba’s second-largest city. He made no mention of further reform, instead castigating unnamed foreign groups for attempting to introduce “neoliberal” and “neocolonial” thinking.

That day the government also enacted a law banning the resale of clothes imported from abroad. The trade of “tailor and dressmaker” is one of around 200 private occupations that were officially permitted in 2010. Since then thousands of entrepreneurs have stretched its definition, setting up small clothing stores stocked with brands from Europe and the United States.

The clothes are often imported in suitcases by Cuban travellers taking advantage of another reform, which eliminated the requirement for a permit to travel. Eva, a 27-year-old from Havana, says that since 2011 she has been flying to Madrid every two months to stock up her fashion store in the back of her apartment. Now she says she will close her business. “Every time we start to breathe a little, we know the government’s grip will soon tighten.”

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Claes Brundenius and Ricardo Torres Pérez (Editors), No More Free Lunch: Reflections on the Cuban Economic Reform Process and Challenges for Transformation.

Claes Brundenius and Ricardo Torres Pérez have recently produced a volume of essays on Cuba’s economic reform process entitled  No More Free Lunch: Reflections on the Cuban Economic Reform Process and   Challenges for Transformation and published by Springer; Publishers. (2014. Hardcover: pp. 250;  ISBN-10: 3319009176 )

This note does not constitute a Review of the book as one of the chapters was written by me. Instead, this is meant as a Presentation of the volume. As can be seen from the Table of Contents, the book includes analyses on a number of the central issues confronting Cuba’s economic reform process.

The publisher’s Web Site and the page for the book are located here: http://link.springer.com/book/10.1007/978-3-319-00918-6#

The Front Matter is available here: http://download.springer.com/static/pdf/355/bfm%253A978-3-319-00918- 6%252F1.pdf?auth66=1389296888_83e5a5a86df2ed875567195285979ec2&ext=.pdf

 Table of Contents

 Chapter 1        Introduction, Claes Brundenius Lund University and Ricardo Torres Pérez, University of Havana

Chapter 2        Structural Problems and Changes in Cuba’s Economic Model, Ricardo Torres Pérez, University of Havana

Chapter 3        The Economic Transformation Process after 2011, Oscar Fernandez Estrada University of Havana

Chapter 4        Current Problems in the Cuban Economy and Necessary Reforms, Mauricio de Miranda, Pontifica Universidad Javeriana Cali, Colombia

Chapter 5        Monetary and Financial Challenges in Cuba: Lessons from Vietnam, Pavel Vidal, University of Havana

Chapter 6        Food Production and Import Substitution in the Cuban Reform Process, Anicia García, University of Havana

Chapter 7        Cuba’s ‘Apertura’ to Small Enterprise,  Archibald Ritter, Carleton University

Chapter8.        Innovation,  Entrepreneurship and SMEs: What Cuba can Learn from the Vietnamese Reform Process, Claes Brundenius, Lund University and Le Dang Doanh, University of Hanoi

Chapter 9.       Science, Technology, Innovation Policies and the Innovation System in Cuba: Assessment and Prospects, Jorge Nunez Jover and Luis F. Montalvo Arriete, University of Havana

Chapter 10      Foreign Direct Investments in Cuba and Vietnam: Lessons Learned, Omar Everleny Perez Villanueva, University of Havana

Chapter 11      Non-State Socially Responsible Enterprise: Local Development: The Key to Inclusive Economic Growth in Cuba, Julia Sagebien, Dalhousie University and Rafael Betancourt, University of Havana

Chapter 12      Concluding Reflections on the Current Reforms,  Ricardo Torres Pérez, University of Havana

Chapter 13      Moving from Reacting to an External Shock: Towards Shaping an new Conception of Cuban Socialism, Juan Triana Cordovi, University of Havana

Chapter 14      Without Sugarcane there is No Cuba: What Should We Do Now?, Pedro Monreal Gonzalez, UNESCO, Jamaica

Chapter 15      Reflections on the Cuban Model and the reform Process, Claes Brundenius Lund University

 New Picture (9)

From the Back Cover

In September 2010, the Cuban government decided to embark on an economic reform program, unprecedented after the Revolution in 1959. This opened up opportunities for Cuban economists and scholars to participate in the development of the reform program. Thanks to grants from SSRC (Social Sciences Research Council, New York) and the Norwegian Ministry of Foreign Affairs, several researchers from the Cuban think tank CEEC (Center for Studies of the Cuban Economy, Havana) got an opportunity to visit countries that could be of interest for the reform process, notably Vietnam, but also Brazil, South Africa and Norway.

The result of these field visits and a subsequent workshop involving contributions from Cuban as well as non-Cuban scholars, this volume showcases unprecedented new insights into the process and prospects for reform along many dimensions, including foreign direct investment, import substitution, entrepreneurship and business creation, science and technology development, and fiscal policies. The resulting analysis, in a comparative perspective, provides a framework for future research as well as for business practice and policymaking.

About the Authors

Claes Brundenius is Honorary Professor at the Research Policy Institute (RPI), Lund University, Sweden. He holds a PhD in Economic History from Lund University. Before joining the staff at RPI he was attached to the OECD Directorate for Scientific Affairs in Paris. He has been a Guest Professor at Pittsburgh University (1984) and Smith College (1987), USA. Between 1997 and 2003 he was Senior Researcher at the Centre for Development Research in Copenhagen. His main interest is research and policy studies on the role and impact of Science, Technology and Innovation policies and strategies in developing countries. His current work has focused on policy analysis of technological change and knowledge based development in developing and transition economies, notably in Latin America and the Caribbean, East Asia, and Southern Africa (SADC). His latest book (co-editor with Bo Göransson) is Universities in Transition – The Changing Role and Challenges for Academic Institutions (Springer, New York, 2011).

Ricardo Torres Pérez holds a PhD in Economic Sciences from the University of Havana. He is currently associate professor with the Centro de Estudios de la Economía Cubana (CEEC) at the University of Havana. He was a government scholar at Hitotsubashi University in Japan (2007-2009) and visiting researcher at Harvard University and the Ohio State University (2012). He has published in the Harvard International Review and has chapters in several books, including “Cincuenta años de la economía cubana” (Editorial Ciencias Sociales, Havana, 2010) and “Cuba: hacia una estrategia de desarrollo para los inicios del siglo XXI” (Editorial Universidad Javeriana de Cali, 2012).

 

 

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New Site on the Cuban Economy: “ASCE BLOG”

 New Picture (10)

 

The Association for the Study of the Cuban Economy established a Blog  some months ago. It promises to be the locus of timely and serious economic analyses and commentaries on the Cuban economy.

The location of the Blog is  http://www.ascecuba.org/blog/

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The Table of Contents as of January 6 2013 was as follows. Each article is linked to the original location on the ASCE Blog.

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Cuba’s External Debt Problem: Daunting Yet Surmountable  by Luis R. Luis

The external debt of Cuba is not excessively large relative to GDP, though this is distorted by an overvalued currency and the reliance on non-cash services exports. Recent bilateral restructurings are easing the debt burden but are insufficient to lift creditworthiness and restore access to international financial markets. [More]

Controls, Subsidies and the Behavior of Cuba’s GDP Price Deflator by Ernesto Hernández-Catá

In this paper a model of overall price behavior for the Cuban economy is estimated. The model, despite limitations, explains reasonably well the path of the GDP deflator. Importantly, the model sheds light on the interaction between unit labor costs, consumption subsidies and the behavior of prices in the economy. [More]

A Triumph of Intelligence: Cuba Moves Towards Exchange Rate Unification by Ernesto Hernández-Catá

The movement towards a unified exchange rate is positive, though a gradualist approach presents some dangers, argues Ernesto Hernandez-Cata in this post. [More]

La Senda de Cuba para Aumentar la Productividad by Rolando Castaneda

Este artículo de Rolando Castañeda señala la necesidad de estimular la actividad privada propiamente dicha para alcanzar mayor productividad y empleo como han demostrado un gran número de economías en transición. [More]

Another Cuban Statistical Mystery by Ernesto Hernández-Catá

Ernesto Hernandez-Cata estimates the net value of Cuban donations abroad. [More]

La Estructura Institucional del Producto Interno Bruto en Cuba by Ernesto Hernández-Catá

Este trabajo presenta estimaciones de la estructura del PIB cubano para el gobierno, empresas del estado y el sector no estatal e ilustra la relativamente baja contribución del sector privado a la economía. [More]

Oscar Espinosa Chepe by ASCE

The members of ASCE are deeply saddened by the news of the passing after a long illness of Oscar Espinosa Chepe in Madrid on September 23.[More]

Convertible Pesos: How Strong is the Central Bank of Cuba? by Luis R. Luis

In this post Luis R. Luis analyzes implications of the lack of full dollar backing for the convertible Cuban peso (CUC), one of the two national currencies circulating in Cuba. [More]

Government Support to Enterprises in Cuba by Ernesto Hernández-Catá

This post looks at state support to Cuban enterprises and uncovers that net transfers are again rising. The reasons for this are not always clear but Ernesto Hernandez-Cata offers a plausible explanation. [More]

A Political Economy Approach to the Cuban Embargo by Roger Betancourt

Roger Betancourt analyzes the evolution of the Cuban embargo and shows that some parts have already been lifted. Verifiable human rights guarantees may provide a way to elicit political support in the US for action to change trade and financial elements of the embargo. [More]

Cinco mitos sobre el sistema cambiario cubano by Ernesto Hernández-Catá

Ernesto Hernández-Catá comenta sobre el sistema de cambios múltiples vigente en Cuba. [More]

La dualidad monetaria en Cuba: Comentario sobre el artículo de Roberto Orro by Joaquin P. Pujol

Joaquín P. Pujol comenta en esta nota sobre la dualidad monetaria en Cuba. [More]

Unificación monetaria en Cuba: ¿quimera o realidad? by Roberto Orro

En este artículo Roberto Orro describe el complejo sistema monetario y cambiario de Cuba y sugiere que la unificacion monetaria no está a la vista. [More]

Consumption v. Investment: Another Duality of the Cuban Economy by Roberto Orro

Roberto Orro argues in this article that the Cuban economy experienced two distinct periods where either investment or consumption prevailed. This behavior was influenced by external factors among them the assistance derived from the Soviet Union as contrasted to that coming presently from Venezuela. [More]

Gauging Cuba’s Economic Reforms by Luis R. Luis

In this post Luis R. Luis gauges the progress of Cuba’s recent economic reforms using Transition Indicators developed by the European Bank for Reconstruction and Development (EBRD). [More]

On the Economic Impact of Post-Soviet and Post-Venezuelan Assistance to Cuba by Ernesto Hernández-Catá

The end of Venezuelan aid to Cuba will have a sizable negative impact on the economy though very likely of lesser magnitude than the withdrawal of Soviet assistance in the 1990′s concludes Ernesto Hernandez-Cata in this article. [More]

The Significant Assistance of Venezuela to Cuba: How Long Will it Last? by Rolando Castaneda

Rolando H. Castaneda argues that the high levels of Venezuelan aid to Cuba are unsustainable and constitute a heavy burden for both countries even for Cuba in the medium-term as the assistance allows the postponement of essential economic reforms. [More]

Cuba: The Mass Privatization of Employment Started in 2011 by Ernesto Hernández-Catá

In this post Ernesto Hernandez-Cata analyzes Cuban labor market data, identifying large sectoral changes in employment that signal the beginning of large scale privatization of employment in the island. [More]

How Large is Venezuelan Assistance to Cuba? by Ernesto Hernández-Catá

In this article Ernesto Hernandez-Cata explores Cuban official statistics to show that Venezuelan subsidies rival or exceed those flowing from the former Soviet Union during the 1980s. This raises questions of sustainability and severe adjustment for both countries. [More]

Cuba Ill-Prepared for Venezuelan Shock  by Luis R. Luis

Cuba’s weak international accounts and liquidity and lack of access to financial markets place the country in a difficult position to withstand a potential cut in Venezuelan aid argues Luis R. Luis. The failure of reforms to boost farm output and merchandise exports make the economy highly dependent on Venezuelan aid and remittances from Cubans living abroad. [More]

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Cuban hopes dashed as new and used cars go on sale

 

By Marc Frank

HAVANA (Reuters) – Cubans awoke on Friday for the first time in half a century with the right to buy new and used vehicles from the state without special permission, but markups of 400 percent or more quickly dashed most people’s expectations.

At the state-run Peugeot dealership in Havana on Friday morning, where prices ranged from $91,000 for a 2013 model 206 to $262,000 for a 508, people walked away shaking their heads in disgust.

“I earn 600 Cuban pesos per month (approximately $30). That means in my whole life I can’t buy one of these. I am going to die before I can buy a new car,” Roberto Gonzales, a state driver, said, walking back to his 1950s Plymouth. The average monthly wage in Cuba, where four out of five of the 5 million-strong labor force work for the state, is $20.

A European diplomat quipped, “I am slightly flabbergasted. With these prices, the old-time U.S. cars will not disappear fast from the streets.”

Under a reform two years ago, Cubans can now buy and sell used cars from each other, but until Friday had to request authorization from the government to purchase a new vehicle or second-hand one, usually a rental car, from state retailers. Before September 2011, only automobiles that were in Cuba before the 1959 revolution could be freely bought and sold, which is why there are so many 1950s or older cars, most of them American-made, rumbling through Cuban streets.

Geely-CK

New Geely cars, Cuba’s #1 best seller

Along with Cuba’s famous rolling museum of vintage U.S. cars, there are also many Soviet-made cars, dating from the era when the Soviet Union was the island’s biggest ally and benefactor. Newer models are largely in government hands and were sold used before Friday at a relatively low price to select individuals, for example, Cuban diplomats, doctors and teachers who served abroad.

Across town from the Peugeot dealership, where more than a hundred used rent-a-cars went on sale for prices ranging as a rule from $25,000 on up, disgust turned to anger on Friday.  “These prices show a lack of respect for all Cubans. What is here are wrecks. I now have no hope of getting a car for my family,” artist Cesar Perez said, looking at a 2005 Renault on sale for the equivalent of $25,000 and available outside the country on the Internet for $3,000.

A teacher looked at the price list and yelled “Are there any bicycles?” as she stomped away without giving her name.

STATE MONOPOLY

The Cuban state maintains a monopoly on the retail sale of cars. There are 650,000 autos on the island, half of them owned by the government.

The decades-old ban on importing cars and need for state permission to purchase from the state has left nine out of 10 Cuban households without a car or other vehicle such as a motorcycle and dependent on the decrepit public transportation system.

The cost of new and used cars sold by Cubans to each other is similar to those that went on sale on Friday because of limited availability.

The government said all profits would go into a special fund to upgrade public transportation.

Diplomats, foreign businesses and select Cubans will still need government permission to import a new or used car without the huge markup.

The liberalizing of car sales was one of more than 300 reforms put forth by President Raul Castro, who took over for his ailing brother Fidel in 2008, and approved in 2011 at a congress of the Communist Party, Cuba’s only legal political party. The proposed changes put a greater emphasis on private initiative, which had been largely stifled under Cuba’s Soviet-style system, and less government control over the sale and purchase of personal property such as homes and cars.

“These prices will clearly be outside the purchasing capability of the vast majority of Cubans, even with the support from relatives abroad. In essence, they represent a luxury tax imposed by the government on the nouveau riches of Cuba,” John Kirk, one of Canada’s leading academic experts on Latin America and author of a number of books on Cuba, said by email.

There are now tens of thousands of small private businesses in Cuba, and thousands of farm, construction, transportation and other types of cooperatives, all of which in theory should benefit from the opening up of car sales.

Bert Hoffmann, a Cuba expert at the German Institute of Global and Area Studies in Hamburg said in an email that many businesses needed vehicles, but such high prices would make it difficult for most and cut into other business activity, stalling their overall development.

Cuba Apr 2012 072’57 Ford;  CuC 1.00  for having a photo taken

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Lack of Customers Affects New Cuban Micro-enterprises

Canadian Press | Dec 27, 2013

CuentaPropistaCuenta Propista, Calle Monte, 

HAVANA – The dented metal pizza trays are packed away, so too the old blender that never worked when it was needed. Gone is the sweet smell of rising dough that infused Julio Cesar Hidalgo’s Havana apartment when he and his girlfriend were in business for themselves, churning out cheesy pies for hungry costumers. Two years on the front lines of Cuba’s experiment with limited free market capitalism has left Hidalgo broke, out of work and facing a possible crushing fine. But the 33-year-old known for his wide smile and sunny disposition says the biggest loss is harder to define.

“I feel frustrated and let down,” Hidalgo said, slumped in a rocking chair one recent December afternoon, shrugging his shoulders as he described the pizzeria’s collapse. “The business didn’t turn out as I had hoped.”

The Associated Press recently checked in with nine small business owners whose fortunes it first reported on in 2011 as they set up shop amid the excitement of President Raul Castro’s surprising embrace of some free enterprise. Among them were restaurant and cafeteria owners, a seamstress and taekwondo instructor, a vendor of bootleg DVDs and a woman renting her rooms out to well-heeled tourists. Their fates tell a story of divided fortunes.

Of the six ventures that relied on revenue from cash-strapped islanders, four are now out of business, their owners in more dire financial straits than when they started. But the three enterprises that cater to well-heeled foreigners, and to the minority of well-paid Cubans who work for foreign businesses, are still going and in some cases thriving. While the sample size is small, the numbers point to a basic problem that economists who follow Cuba have noted from the start: There simply isn’t enough money to support a thriving private sector on an island where salaries average $20 a month.

“Clearly, there is a macroeconomic environment that does not favour the private sector or the expansion of demand that the private sector requires,” said Pavel Vidal, a former Cuban Central Bank economist.

Vidal has long called on Communist authorities to adopt a huge stimulus package or more aggressively seek capital from foreign investors. Now a professor at Colombia’s Javeriana University, he says one has only to look at the trends since 2011 to see the private sector economy is nearly tapped out. After a surge of enthusiasm, the number of islanders working for themselves has stalled for the past two years at about 444,000 — or 9 per cent of the workforce.

Even in developed countries where entrepreneurs have access to capital, loans and a wide pool of paying customers, startups are risky ventures. According to the U.S. Small Business Administration, about half of all new establishments in America close within five years, and two-thirds are gone within a decade. The failure rate of Cuban entrepreneurs followed by AP was 44 per cent in less than two years, and worse if one considers only those that relied primarily on Cuban customers.

“There’s not enough money circulating in the economy in the hands of everyday people,” said Ted Henken, a professor of Latin American studies at Baruch College in New York and author of an upcoming book on private enterprise in Cuba. “You’re all competing for the same customers, most of whom are poor and have very limited disposable income.”

Cuba Mar 2011 063Reparaciones, photo by Arch Ritter

Economists have criticized the Cuban government for a series of measures to crack down on what it sees as illegal activities — including banning private movie cinemas, taxing the import of hard-to-get products in travellers’ luggage, and banning the sale of imported clothing. But on Saturday, Castro came down firmly in favour of increased regulation, sternly warning entrepreneurs that “those pressuring us to move faster are moving us toward failure.”

Henken and Vidal said Cuba must find a way to raise state salaries, expand state-funded microcredits and create a functional wholesale market to service the new businesses. They also noted that for a relatively well-educated society like Cuba’s, there are remarkably few white collar jobs on the list of nearly 200 activities that have been legalized.

Still, not every entrepreneur is struggling. High-end bars and glamorous new restaurants have become common in Havana, with shiny state tour buses disgorging photo-snapping travellers to sample lobster tail and filet mignon at upward of $20 a plate. Private rooms and homes that rent to foreigners can go for $25-$100 a night, less than most tourist hotels. Cubans with the means, and the business sense, to tap into the gravy train can do very well.

Chef-owner Javier Acosta sank more than $30,000 into Parthenon, a private restaurant catering to tourists and diplomats. He struggled at first, telling the AP back in 2011 that there were nights when nobody came in and he and his four waiters just sat around. But the restaurant slowly gained a reputation, in part because Acosta makes a potent Cuban mojito and offers a special suckling pig that can feed up to five people for $50.

These days, Acosta is expanding. He recently added tables in a new room decked out with mosaic tiles and faux Greek pillars, and plans to build a roof deck. He even has started advertising, paying $300 a year to have his establishment included in a tourist magazine. “I haven’t yet managed to recover my initial investment and the other money we’ve put into the place,” the 40-year-old said. “But in two or three more years maybe I can.”

Even more humble operations can do well, as long as they have some access to foreign money. One woman who rents an apartment to foreigners for $25 a night in the upscale Vedado neighbourhood says her business provides a stable income that supports her and allows her to help her son and granddaughter.

Two women who sell $1.25 box lunches to Cubans and foreigners in a building in Old Havana with many international firms and consular offices have managed to stay afloat despite a sharp drop in customers following the departure of several companies, and what they say has been a steady rise in prices of key ingredients like black beans, rice, cooking oil and pork. “This has become difficult,” said Odalis Lozano, 48. “But we’re still here, because we can always make some money.”

For those without access to that foreign cash line, the results have been grim. Besides, the failed pizzeria, a DVD salesman, seamstress and street-side cafe owner who allowed the AP to tell their stories shut down after less than a year in business, citing high monthly taxes, a lack of customers and limited resources and business sense.

The only two operations that rely on everyday Cubans for revenue which remain in business are gymnasiums. One is run by Maria Regla Zaldivar, who in 2011 was giving taekwondo classes to children in Nuevo Vedado and dreamed of converting a ruined dry cleaning factory into a proper gymnasium. The factory remains a crumbling shell, but Zaldivar said her business continues. She declined to grant a formal interview, but said in a brief phone call that she had rented a small space near her apartment and continued to give classes.

The other success story belongs to Neysi Hernandez, the mother of Julio Cesar Hidalgo’s girlfriend. Hernandez opened a simple gymnasium for women in the courtyard and garage of her home in Havana’s La Lisa neighbourhood, charging the equivalent of $5 a month for membership. Two years later, she has 25 paying clients and ekes out a small profit.

Hernandez says her customers are loyal, despite the fact the gymnasium lacks basic amenities like a shower room, lockers and towels. Unable to afford imported equipment, Hernandez uses sand-filled plastic water bottles for weights. Her three exercise bicycles and mechanical treadmill are creaky and aging. “My gymnasium is modest, but they like it,” Hernandez said, adding she has dreams of one day installing a small massage room and sauna. “A little bit at a time.”

For the pizza man Hidalgo, however, the experience with private enterprise has been a bitter one. He says he lost between $800 and $1,000 on the pizzeria. He is appealing a $520 fine levied by tax authorities who accuse him of understating his profits, even though the business failed. He has had bouts with illness, and has been unemployed since the pizzeria closed in April. Hidalgo says he has not given up on the idea of opening a new business one day. But he is also setting his sights beyond Cuba’s shores.

“What I wanted was to work and make money so that I could live a normal life, have money to buy myself shoes, eat, and go out with my girlfriend,” Hidalgo said, punctuating each modest desire with a flip of his hand and a rueful smile. “I hope that kind of work materializes in my country, but if the opportunity presents itself to work somewhere else, I won’t turn it down.”

Recently, Hidalgo’s girlfriend, Gisselle de la Noval, 25, took out a license to operate a nail salon in the space once occupied by the pizzeria. The salon has been open a matter of weeks and it is too soon to know if it will do well. But she says she is content, charging about 40 cents for a manicure and slightly more for a pedicure. “I don’t miss the pizzeria, but I am sad it wasn’t a success,” she says with a shrug. “But I am young, so whatever. Now I’m dedicated to this.”

Cuba-taxiingBicytaxis, photo by Arch Ritter

 

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Clase de economía política para el Ministerio del Interior (MININT) en Cuba, por Juan Triana Cordovi,

http://www.youtube.com/watch?v=1KwHP88wXfE

Juan Triana Cordovi, profesor del Centro de Estudios de la Economía Cubana en la Universidad de La Habana, se dirige en una conferencia magistral a los principales jefes del Ministerio del Interior (MININT) para hablarles de las necesidades de cambios profundos en la economía y la política del país

 Desde un enfoque favorable al gobierno cubano, el profesor Triana destaca muchísimos de los errores actuales y no tan actuales en la administración del país. Habla y reflexiona sobre la necesidad de que todos los cubanos tengan internet rápido en sus domicilios.

Habla de forma clara, sencilla y didáctica. Independientemente de su parcialidad política, por primera vez circula en Cuba de forma no censurada un análisis autocrítico del gobierno planteando soluciones

New Picture (9)Juan Triana Cordovi

New Picture (7) Jefes del Ministerio del Interior

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Cuba to eliminate currency pegged to dollar

BY ANDREA RODRIGUEZ, HAVANA, 20 december 2013, ASSOCIATED PRESS 

Cuba will eliminate a currency pegged to the dollar as part of a move to end its unique double-currency system, which had become a symbol of economic inequality to many islanders, Cuba’s top economic official said Friday.

Tourists currently use a convertible peso roughly equal to a U.S. dollar while most Cubans are paid in ordinary pesos worth about four cents. Many goods are easier to find in government stores that exclusively accept convertible pesos, a mechanism designed to keep the flow of the special currency under government control. The dual system has created special privileges for Cubans who work in tourism, and resentment among those who don’t.

The government of President Raul Castro pledged in October to gradually unify the two currencies in order to prevent shocks like spikes in inflation. Many Cuban economists said the process would take years.

On Friday, Vice President Marino Murillo told parliament that the peso pegged to the dollar, known as the CUC, would eventually disappear, the first time the government has explicitly said that. He promised that savings in the convertible pesos would retain their value until the change took place. “People who have the convertible Cuban peso (CUC), whether in the banks or kept at home, will not lose any financial capacity when the dual monetary system is eliminated,” said Murillo. He did not say when the change would go into effect.

The double monetary system was established in 1994 amid an economic crisis sparked by the fall of the Soviet Union, which heavily subsidized Cuba for decades. It was designed to allow Cuba to receive hard currency needed for international trade from the outside world while insulating the rest of the communist economy from market influences.

In October, the official newspaper Granma said that the government’s first step would be to allow several businesses that currently accept only convertible pesos, or CUCs, to do business in ordinary Cuban pesos, or CUPs. The official exchange rate will remain in effect, Granma said, meaning the goods themselves will remain out of reach for Cubans without access to the foreigner exchange-driven economy, which includes millions of dollars a year in remittances from relatives in the United States and other countries.

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The Changing Slogans of Cuba’s Leadership

pedro_campos1December 17, 2013 |  “Down with Capital, Long Live Capital!” Pedro Campos HAVANA TIMES

Those in Cuba who once bet on the complete expropriation and nationalization of foreign capital today beseech foreign capital to come in their aid, offering investors every imaginable guarantee. The Cuban State economy is in crisis, but not as a result of the imperialist blockade or the collapse of the Soviet Union, as the defenders of “State socialism” often say. The main reasons for the crisis must be looked for in more than fifty years of nearly-absolute state control, in the extreme centralization of decisions regarding how and how much of the billions of rubles received as subsidies from the former Soviet Union and the billions of Cuban pesos and hard currency produced by the working class were spent over this period of time, in the all-encompassing intervention of the State in the economy through domestic and foreign trade monopolies. It is to be found, also, in the State’s almost complete control over the means of production, in the nationalization of international capital, the capital of Cuba’s high and petite bourgeoisie, of free, individual and family workers – recall the “revolutionary offensive” of 1968 – of cooperatives and worker associations. The low salaries of workers, the maintenance of wage labor for the State, the financial imbalances generated by high spending in gigantic State institutions – such as the Armed Forces, State Security, the Party’s political and grassroots apparatuses, propaganda networks entirely subordinated to the State / Party / government, the country’s unwieldy foreign service – and international campaigns aimed at securing support for the government are some of the other causes behind the crisis. All of this could be summed up as the catastrophic result of that series of aberrant, archaic and dogmatic conceptions that Stalinism developed under the banner of Marxism-Leninism. According to the Stalinist logic, a political and military elite is to determine and regulate a society’s laws, economy, way of life and just about everything else in the name of the communist Party, the revolution, socialism and the working class – so-called “real socialism”, whose only real characteristics have been the absence of democracy and the refusal to socialize political and economic power. I have insisted on this elsewhere: unless the economic, political and social failure of this false socialism is acknowledged, the mistakes made will never truly be rectified. Those who defend this unjust system and now unscrupulously try to “update” it mistakenly identify the Cuban revolution with the Cuban government/State/Party that has made and continues to make every absurd mistake, “validating” the claims of right-wingers worldwide regarding the “unviability of socialism” (perhaps the best help global capitalism could hope for). Today, Cuba’s State economy can no longer rely on massive subsidies from the Soviet Union, Venezuela is experiencing a serious economic crisis and cannot continue to provide the aid Chavez offered the island. Likewise, the governments of powerful allies such as Russia, China and Brazil only offer credits that must be repaid. The bureaucratic apparatus of Cuba’s government/Party/State has refused to consider the truly socialist option: it has refused to share the country’s economic power with the people, with Cubans at home and abroad, with the workers. It has refused to allow workers to participate in the administration, management and revenue-collection of State companies and to grant full freedom to the self-employed and cooperatives, instead subjecting these to regulations, experiments and all manner of toing-and-froing. Naturally, workers identify less and less with a State that only caters to the interests of an elitist, bureaucratic caste which continues to determine the country’s laws, investments, estates and the lives of people. Faced with this complex situation, torn apart by its own contradictions and flip-flopping, the Cuban government/State/Party has now decided to contract legal matrimony with international capital, in order to be able to continue exploiting Cuban workers with its aid. The ironies of history! The “revolutionary leadership”, thirsty for foreign capital, today assures us it will not nationalize foreign investments made at El Mariel, the immense commercial project dependent on the end of the US blockade / embargo. The same government that blamed international capital – and US capital in particular – of all the world’s evils, that once boasted of having nationalized (placed under State control, to be more accurate) all foreign properties, today swears blind that it will respect international capital and begs, beseeches its powerful northern neighbor to lift the restrictions that prevent US millionaires from showering Cuba with dollars. They are not concerned about the risk that big, transnational companies – particularly US companies – will take possession of the resources and wealth of the “Pearl of the Antilles”, the “Key to the Gulf”, the “World’s Cruise Ship”, offering foreign investors the sweat of Cuban laborers on a silver platter, in order to share with them the surplus value they can squeeze out of workers together. This is typical of the annexationist stance that Cuba’s new Right – which has taken power in “socialist” Cuba – cannot conceal. We are dealing with the same people whose slogan once was “down with Capital”, those who today yell: “long live Capital!” The traditional Cuban Right based in the United States does not conceal its intentions of restoring capitalism on the island. The new Right offers us a pig in a poke, painting itself a “socialist” red while acquiescing to Yankee capital, allegedly excluding the old, “imperialist” capitalists (no, the new ones are “anti-imperialists”), so that the nouveaux riches and bureau-bourgeoisie, allied to and financially dependent on international capital, can survive the inevitable collapse. This comes as no surprise. Many of us in Cuba’s democratic and socialist left have been saying for many years that the bureaucratic State has only two options: coming to an agreement with the Cuban workers and people or with foreign capital. The second alternative has been the one chosen in all places where “State socialism” was essayed, where the powerful, authoritarian elite re-converted back to capitalism and became a new type of bourgeoisie. We are not against foreign investment. The question is who these investments benefit and what type of economy they are to serve, whether they are aimed at overcoming the economic and financial problems of the bureau-bourgeoisie and Cuba’s new Right or at developing the mid-sized and small companies and cooperatives of a socialist economy. During a fund-raising campaign in Miami, President Barack Obama assured Cuban dissidents he would not negotiate with the Cuban government in what is left of his term in office, while speaking of the need to change the United States’ long-standing foreign policy towards Cuba. The Democrats are already scrambling to secure votes from the Cuban and Hispanic communities, in view of the fact that there is a good chance the Republicans will put forth a Cuban-born senator as presidential candidate in the coming elections. If that were to happen and the Republicans won… Many concerns, questions and disagreements must exist in the high echelons of Cuba’s leadership. What did the US president mean? If there are to be no negotiations, the blockade will not be lifted and American investments will not come. What will they do with the Mariel project, its three million containers and their debt to Brazil? What steps could be taken to ensure the inflow of US capital, without putting their political power at risk? If this US president doesn’t lift the blockade, is that possibility to be discarded by Cuba’s current leaders? If the Republicans were to win the coming elections and a man of Cuban origin were to take office, what would they do? Now, has anyone in Cuba’s distinguished government of generals asked the Cuban people what they want? With every new development, what becomes clearer and clearer is that Cuba needs to democratize society, allow all Cubans to freely express our thoughts and to peacefully and democratically fight for their realization, allow for freedom of expression and association, the free and democratic election of all public officials and full access to the Internet. This process of democratization would allow all Cubans of good will to take part in the building of a democratic future of peace, justice and harmony, with everyone and for everyone’s benefit, regardless of their political views, religion, skin color or sexual orientation. Let’s hope open debate and the interests of the people prevail over the petty interests of extremists. Socialism in defense of life.

 

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Cuban dissidents say police detained more than 150 on Human Rights Day

BY JUAN O. TAMAYO Miami Herald, Wednesday, 12.11.13

Cuban police carried out more than 150 detentions of dissidents Tuesday on International Human Rights Day and followed up Wednesday by carting off the founder of a group that was holding a rare human rights congress, according to activists in Havana.

Antonio Rodiles, founder of the group Estado de SATS, was taken away by police Wednesday around 11 a.m. as he watched a group of children write graffiti on the sidewalk in front of his home, activist Elizardo Sanchez Santa Cruz said.  Dissident blogger Regina Coyula, who was in Rodiles’ house participating in the First Congress for Human Rights, told reporters that Rodiles was detained when he intervened with police who were harassing his girlfriend for taking photos of the children.

Yohandry Fontana, a pro-government blogger widely believed to be a State Security official, tweeted Wednesday: “I confirm the detention of Antonio Rodiles for attacking and insulting children.”

Estado de SATS and two other independent groups sponsored the Congress, which started Tuesday on the anniversary of the U.N.’s Universal Declaration on Human Rights and was to end Wednesday night with a musical concert.

Sanchez Santa Cruz, head of the illegal but tolerated Cuban Commission for Human Rights and National Reconciliation, said he had information on more than 150 detentions on Tuesday and was still receiving new reports as of Wednesday evening. All but a handful had been released by Tuesday night after so-called “short-term arbitrary detentions for political motives,” usually designed to intimidate or harass dissidents and keep them from attending opposition gatherings. “That’s not counting the harassment and other acts of vandalism because there was a lot of violence by the forces of repression along the entire country,” Sanchez Santa Cruz said by phone from Havana.

Reports of more detentions were still arriving at his Havana office Wednesday because government security forces shut down the cellular and home phones of several hundred activists for much of Tuesday, he said.

The dissident group Ladies in White said its members alone suffered about 130 detentions as they tried to stage street protests — not tolerated by the government — in downtown Havana and the eastern city of Santiago de Cuba, the country’s second largest city. Others were detained as they tried to reach Rodiles’ home to participate in the two days of panel discussions, video programs and art shows, according to dissidents. Also detained were several members of the Cuban Patriotic Union, an opposition group most active in the eastern part of the island. UNPACU founder Jose Daniel Ferrer said more than 130 UNPACU and Ladies in White members were detained Tuesday in eastern Cuba alone amid a string of protest meetings, marches and distributions of anti-government leaflets and posters.

Several dissidents were injured when government-organized mobs and State Security agents threw rocks at them, Ferrer said. Mob members and police also made off with cameras, cell phones and cash taken from many of the opposition activists.

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A member of Ladies in White is detained by Cuban security before the start of a march marking International Human Rights Day in Havana, Dec. 10, 2013.

 

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