• 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.

Cuban Gov. Presents “Favorable” Stats

July 7, 2013

HAVANA TIMES — The Cuban government said on Saturday it is satisfied by the “favorable performance” of the island’s economy in the first half of the year, despite a “slowdown” overall and increased unemployment.

An optimistic minister of the economy, Adel Yzquierdo, painted a “favorable” picture of developments in the island’s centrally planned economy, but pointed to a general decline and reduced growth estimates for this year, in an address to the Cuban parliament.

Yzquierdo presented the legislature with economic performance figures for the first half of 2013. President Raul Castro was also present.

According to the figures, employment in the emerging private sector in Cuba continued to grow in the first half of 2013 while the state sector fell.

Unemployment is expected to grow by 4.2 percent in the state sector in the first half of the year, compared with a growth figure of 8.8 percent in the private sector, according to Yzquierdo’s report.

The forecasts, however, point to a general increase in unemployment because the expected growth in the self employed sector was not reached “, noted Prensa Latina.

The island currently has 400,000 people working in the private sector, the so-called “self-employed”. Over recent years, the government of Raul Castro is implementing a program of economic reforms with market elements that have allowed for an opening of some less specialized trades to private work.The medium-term goal is the progressive reduction of half a million jobs in the bloated state sector, as announced by the government in 2010.

Many of the “self-employed” registered so far, however, are retired or keep their jobs in the state sector while trying to obtain a little other income.

The economy showed an overall a “favorable performance”, said Yzquierdo. Almost all sectors recorded growth, “including trade, transport, communications and manufacturing,” he noted.

Yzquierdo said the Cuban trade balance was positive at the end of the first quarter and pointed to a similar trend for year-end. At the same time, he spoke of a “slowdown” in the global economic situation.

Cuba recently reduced its forecasts for annual growth in 2013 from the 3.6 percent initially estimated to somewhere between 2.5 and 3.0 percent. He emphasized that the evolution of gross domestic product (GDP) has been influenced by the crisis in the international arena.

In the first semester, the island’s economy grew 2.3 percent, according Yzquierdo, despite “external stress”, the “internal weaknesses” and the effects of Hurricane “Sandy”, which swept across the east of Cuba in October 2012.

“Sandy” affected 11 provinces and caused losses of almost 7 billion dollars, according to the minister.

The inaugural session of the eighth legislature of the National Assembly of People’s Power closes on, Sunday. Raul Castro is expected to pronounce in a speech to the parliament.

In a Communist Party Central Committee meeting last week, Castro came down hard on what he called “indiscipline and illegalities” in the State apparatus. He will most likely refer to the fight against corruption, one of the banner efforts of his administration.

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Raul Castro rages against Cubans’ sloppy habits and decaying morals

The 82-year-old Cuban president denounces petty ‘social indiscipline’ such as drinking and swearing in the street

Original Here: guardian.co.uk, Sunday 7 July 2013 23.45 EDT

Raul Castro at the National Assembly in Havana.

Raul Castro spent the lion’s share of a prominent speech on Sunday scolding his countrymen for all kinds of bad behaviour, from corruption and theft to public urination and the practice of raising pigs in cities.

Speaking before legislators at one of parliament’s twice-annual sessions, the Cuban president railed against decaying morals, a deteriorating sense of civic responsibility and vanishing values such as honour, decency and decorum.

Castro aired a laundry list of complaints about illegal activities that he said did the country harm: unauthorised home construction, illicit logging and slaughter of livestock and the acceptance of bribes, to name a few.

He also fulminated against baser examples of “social indiscipline”: shouting and swearing in the streets, public drinking and drunk-driving, dumping rubbish on the roadside and people relieving themselves in parks.

At times, the 82-year-old’s speech sounded like a generational broadside against disrespectful youth who do as they please, a diatribe that could have crossed the lips of many a grandfather.

“When I meditate on these regrettable displays, it makes me think that despite the undeniable educational achievements made by the Revolution … we have taken a step back in citizens’ culture and public spirit,” Castro said. “I have the bitter sensation that we are a society ever more educated, but not necessarily more enlightened.”

Other examples of bad behaviour cited by Castro included:

• People showing up late to work;

• Graffiti and vandalism of parks, monuments, trees and gardens;

• Loud music that disturbed neighbours’ sleep;

• Raising pigs in cities despite the public health risk;

• Scavenging metal from phone and electrical lines, sewers, signs and traffic lights;

• Fare evasion on public transport;

• Failure to comply with school dress codes, and teachers who accept bribes for higher grades;

• Lack of deference to the elderly, pregnant women, mothers with small children and the disabled;

• Children throwing rocks at cars and trains.

“All this takes place right in front of our noses without inciting public condemnation and confrontation,” Castro said.

“It is not acceptable to equate vulgarity with modernity, sloppiness and negligence with progress,” he said. “Living in society entails, in the first place, accepting rules that preserve respect for decency and the rights of others.”

The Cuban leader also spoke of the corrosive effects of official corruption, quoting his elder brother Fidel as saying such activity posed a greater risk to the Cuban revolution’s success than any outside forces.

Castro’s biannual speech to parliament has sometimes been a moment to announce new initiatives, but Sunday’s was short on specifics. Perhaps his most notable comment was a reiteration of the importance of doing away with Cuba’s unique dual currency system.

Most citizens get paid in Cuban pesos, while a second currency, the dollar-pegged convertible peso, is used in tourism and to buy most imported goods.

Castro told legislators the Cuban economy was advancing “positively” even if those gains had yet to be felt by the average Cuban family.

Castro also voiced support for Latin American allies’ apparent willingness to grant the NSA whistleblower Edward Snowden asylum, though he did not say whether Cuba itself would offer him refuge or safe passage.

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Cuba’s Public Transport System: Adjustments are not Enough

 

Cuba’s Public Transport System: Adjustments are not Enough

July 4, 2013 | Fernando Ravsberg*

HAVANA TIMES — Fifty years of unsuccessful attempts at re-structuring its public transportation into a system that works should suffice to make Cuba consider changing the very foundations of the system. The “reorganization” being proposed today promises to be more of the same and is not likely to yield the quality services aimed for.

The last meeting held by Cuba’s Council of Ministers publicly recognized that the country’s transportation system “has been unstable, inadequate and low-quality for years.” The common Cuban who “hops on a bus” every day has something similar to say, albeit with far less refined words.

“Updates” can help steer those sectors that actually work, such as public health, education or sports, in the right direction. It can even improve the tourism industry, which has seen much progress in the course of the last 3 decades.

Cuba’s public transportation system, however, has always been bad and, in recent years, has gone from bad to worse. Truth is, it wasn’t even satisfactory in the days of Soviet aid, when there was plenty of money and State subsidies to invest in it.

One of the many problems faced by the sector are the odd administrative decisions of Cuba’s Ministry of Transportation, which purchases buses from China but demands that they be equipped with U.S. engines, as though oblivious to the economic embargo that has existed for over fifty years.

When the engine in one of those buses breaks down, Cuba has to buy it from the United States. The purchase is conducted through a foreign company and involves sending the product to a third country, where it is re-shipped to Cuba. Prices naturally skyrocket and spare parts take a long time to reach the island.

What’s more, a whole series of meetings between the commercial departments of the Cuban import companies and Ministry experts are held before the order is actually placed. There are committees that convene to evaluate one, specific aspect of the product, which refer the matter to other committees designed to review other product details, which in turn call on a third committee…and this process goes on and on for months.

All the while, the broken bus idles at a State workshop where, many a time, it is scavenged for pieces that can be sold in the black market. When the Ministry finally decides to make a purchase, more spare parts are needed and the whole, interminable process of committee meetings begins anew.

In this way, Cuba’s Ministry of Transportation has at times managed to keep half of Havana’s public buses out of circulation, a remarkable feat when we recall that the country has purchased a large fleet of vehicles from China.

Organizing a functioning public transportation system anywhere is, admittedly, a complex task which requires experts, large investments and continuous subsidies. Such efforts, however, are only successful when the system, at base, actually works, be it in a wealthy or poor country.

All transportation resources should be a part of a single, unified system. Photo: Raquel Perez

Granting a large number of vehicle owners licenses to operate as private cabs greatly improved Cuba’s public transportation situation, but the government undertook this liberalization without establishing a standard fare, the routes where these taxis must circulate and a maximum frequency of operations, regulations which are currently being applied in many countries around the world.

In the end, those who end up paying for the absence of official regulations are the passengers, for cab drivers charge whatever they feel like charging and circulate down the city’s busiest streets at the time of day they deem convenient, leaving other areas of the city bereft of viable transportation.

I also hear that the government will begin encouraging the use of bicycles as a means of transportation people can use to move around the city. Vice-President Murillo even said that authorities “will evaluate the possibility of selling spare parts needed to maintain the bicycles at subsidized prices.”

When I questioned the wisdom of removing bicycle lanes from Cuban streets in this blog, I was accused of being hypercritical. Now, it appears as though they will have to bring back these lanes, as selling cheap bicycles won’t be enough – you also need to give cyclists a safe space to move in.

Some people make fun of this proposal, as though the use of this means of transportation were a sign of backwardness. In fact, many developed nations promote the widespread use of bicycles and have an extensive network of bike lanes. Some major cities, like Barcelona, even have an efficient public bicycle rental system.

Cuba, a poor country, would benefit considerably from a strategy that availed itself of its various resources, creating a transportation system that could harmonize State, private, cooperative and even individual initiative.

To get there, however, the many import companies and endless committees that have been stepping on the brakes of the State must be removed, the private sector must be organized more efficiently, the cooperative sector expanded and inexpensive, individual alternatives which the population can afford must be sought.

Everything depends on how priorities are established. With what the government spends on only one of the thousands of vehicles it imports for use by its companies and ministries, a dozen electrical motorcycles or hundreds of good-quality bicycles could be purchased.

To buy a new bus, there’s no need to make an additional investment – importing 10 less automobiles suffices. The government could begin by suspending the practice of assigning vehicles to transportation officials, so as to give them the opportunity to experience what their less privileged compatriots endure (and think) on a daily basis.

Cuba’s economic progress should not be measured on the basis of the number of automobiles in circulation around the country, the fact there are more luxury cars on the street or we catch sight of a Hummer in Havana from time to time.

True success in this area will be to guarantee that ordinary Cubans have the means of transportation they need to get to work every day and take their kids to the Zoo one weekend or other.

Cooperativa de Omnibus Aliados, in the 1950s, (driving up Montes, it looks like)

Estacion Central de Ferrocarriles, Havana

Bicytaxis, Havana, November 2008

Camello, on Paseo de Prado (Marti), 1990s

Old Engines awaitying a home in a museum, in the shadow of the Capitolio, November 2008

New Chinese Bus, (driving up La Rampa?)

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Economic Reform in Cuba: A Private Affair

Hesitantly, wholesale markets are becoming more established

FROM the Bay of Pigs to Che Guevara’s mausoleum, there is plenty for revolutionary tourists to see in Cuba. For economic junkies there should soon be a new item on the itinerary: Cuba’s first privately run wholesale market in half a century.

At present it is a nondescript warehouse of green-painted concrete near Havana’s airport. It is unmarked, and so few locals know about it that your correspondent drove past several times before finding it. But state media say it will open on July 1st. It is a source of excitement for those who will occupy it, because it will replace the muddy scrubland where drivers of hundreds of old trucks have been gathering on the outskirts of Havana to sell fruit and vegetables in bulk, always concerned that at any moment their makeshift trading post could be shut down.

They see the new premises as a further step on Cuba’s hesitant path towards freeing up wholesale markets and loosening the state’s control of food distribution. A farmer, sitting under a banana tree next to his cargo, proudly displays a handful of permits that he has recently paid for, covering everything from selling crops to owning and driving a delivery truck. He says that in the past, when the police caught him trying to drive produce to Havana without a licence, they would seize it and give it to a nearby hospital. “They can’t stop me now,” he says.

However, his ability to sell a broader selection of crops remains stymied by a shortage of seeds and fertilisers, supplies of which will not be available in the new market. Such inputs are still controlled by the state, he says, stroking his chin in a gesture that is meant to resemble Fidel Castro’s beard. The only way for a farmer to acquire more than he is allotted is via the black market.

The benefits of burgeoning wholesale trade are evident in a stroll through the back streets of Old Havana. Handcarts owned by private traders overflow with ripe mangos, avocados and limes, whereas government outlets nearby contain a few tired-looking pineapples.

Although wholesale produce is becoming more widely available, the government is only gingerly broadening wholesale trade to other supplies. Restaurant owners, for example, want to be able to buy flour, cooking oil, beer and soft drinks in bulk. Only a few shops provide these. The same is true of construction materials. “We don’t have anything like a Costco, where you can buy 20 crates of beer,” says Omar Everleny, a Cuban economist.

Partly to put such concerns to rest, the government announced in early June that it would gradually permit a variety of wholesale goods to be sold to state-run and privately run businesses, apparently building on an experiment started three months earlier on Isla de la Juventud, an island in western Cuba where Fidel Castro was imprisoned before his revolutionary victory in 1959. A pilot project to sell equipment to private farmers is also said to be taking place on the island. More than helping businessmen, the government’s priority in promoting such changes appears to be to raise output. So far, however, the reforms have been too half-hearted to achieve that.

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Cuba: Wind Power vs. Oil

Isbel Díaz Torres, HAVANA TIMES (Havana), June 21, 2013

Original Essay Here: Cuba: Wind Power vs. Oil

It would seem that local newspapers are intent on misinforming the public – both at home and abroad – about the Cuban government’s priorities with respect to the development of alternative energy sources.

A case in point was the news surrounding the recently-concluded congress of the World Wind Energy Association and the Renewable Energy Exhibition (WWEC 2013), held in Havana at the beginning of this month.

During a press conference, the director of Cuba’s Center for the Study of Renewable Energy Technologies (CETER), Conrado Moreno, declared that Cuba plans on developing the infrastructure needed to generate at least 10 percent of its electricity with renewable sources by the year 2030.

In this connection, the official lauded “the great strides in the development of wind power technologies” that Cuba has made in recent years, adding that the country has “a program the world can learn from.”

However, thanks to this impressive wind power “program”, whose installed capacity was less than 0.5 Megawatts (MW) in 2005, the country barely produced 12 MW of electricity in 2010.

That Cuba should present the congress with such an out-of-date figure (a figure which, in addition, is anything but impressive, representing a mere 0.08 % of the country’s entire energy output) should raise some eyebrows.

This figure may help explain why it will take thirteen years for the country to be able to generate 10 % of its energy with wind power and the other renewable sources of energy used on the island.

The fact of the matter is that Cuba currently has 9,343 wind turbines, 15 turbines and 4 wind farms in operation, for an installed capacity of 11.7 MW, a figure which places it beneath 68 other countries around the world.

As a way of comparison, in 2010 Nicaragua had a generating capacity of 40 MW (the equivalent of 5 % of the country’s total installed capacity), garnered from wind power technologies alone, while Cuba currently generates a mere 4 % of its electricity via renewable energy sources in general.

Local optimism, however, isn’t dampened by any of this, and experts continue to extol the virtues of Cuba’s largest wind farm (with a capacity of 51 MW), whose construction on the northern coast of the island’s eastern province of Las Tunas, a place of allegedly “ideal” wind conditions, is expected to be completed next year.

It is estimated that the wind farm could generate some 153 GW/h a year, allowing the country to cut down its fossil fuel consumption by some 40 thousand tons a year.

Not without a number of altercations at different levels, the Cuban government has managed to secure the environmental licenses required for the project from the pertinent agencies rather quickly, giving technicians a mere week to collect the required data.

Wind power is an abundant, renewable and clean energy resource which can aid in the reduction of greenhouse gas emissions. Cubans, however, have never received any in-depth information regarding its benefits and limitations, nor have we ultimately been consulted in connection with its implementation.

Boasting of a relatively high Energy Return Rate* (18.1:1), wind power is cursed by one, significant limitation: its intermittence, that is, the fact that wind currents are not constant.

According to experts, wind currents on Cuba’s northern coastline are not uniform and are heavily influenced by local conditions, resulting from the interaction of trade and local winds and seasonal meteorological events.

The contribution of biomass to Cuba’s energy production in the period 2000 to 2011. Figures in the equivalent of thousands of tons of oil.

Because of this, wind power can only ever supplement, never wholly replace, fossil fuel sources on the island, as the contribution of conventional energy sources is indispensible. In addition, as these conventional technologies operate in “backup mode” in this scheme, they consume a lot more fuel per KW produced every hour.

Fossil fuels are also consumed during the process of constructing the wind farm (during the mining of the materials, transportation and industrial processing) and all subsequent, indispensable maintenance operations.

Another inconvenient aspect of this technology is that winds must reach a certain, minimum velocity to be able to move the blades of the turbines. There is also a maximum wind velocity that, if exceeded, causes the entire network circuit to shut down.

In addition to the noise they produce and the disruption of the natural environment they represent, these wind farms reportedly affect the routes of migratory birds or the areas where these birds avail themselves of lateral winds, and the creation of access roads – and regular human presence, in general – damages local fauna.

The limitations of this technology, and the impact it has on the environment, ought not make us reject wind farms outright, but should, rather, make us re-think the way in which we have been implementing the technology and how congruous it is with the country’s global development strategy, as well as prompt us to demand accurate information in this regard.

Cuba has been working in the renewable energy field for decades without any type of legal regulations and without incurring any legal action from anyone. Recently, the director of CETER claimed that “a team of experts is working to implement it [the legal regulations] in a manner that suits Cuba’s economic development model.”

One of the more disquieting aspects of the wind power issue is how the Cuban media portray its state of development on the island, selling an image of a sustainable and ecological program, when, in fact, the country is heading down the more profitable road, caring little about its environmental impact.

Some statements we find in the press include: “In recent years, Cuba has made great progress in the development of wind power technologies.” / “Cuba has developed a wind power infrastructure (…) which only highly developed countries can boast of.” / “Cuba’s renewable energy program includes photovoltaic energy sources, which have experienced considerable development since the 1990s.” / “The ‘solarization’ of Cuba’s energy generating system.” / “The generation of electricity with renewable sources of energy will grow by 949 MW.”

As these grandiloquent reports on “green” energy sources are published, oil prospecting projects across Cuba’s platform continue in almost utter silence. This means that the government continues to invest heavily in this polluting energy source.

Cuban oil experts and government officials had anticipated that the country would be producing 90 % of its electricity with domestic oil reserves by 2010, but were unable to achieve this.

According to recent declarations made by Jorge Piñon, Associate Director of the Latin American and Caribbean Energy Program, Cuba could be producing as many as 250 thousand barrels of crude a day within five to seven years.

Enthusiastic Cuban government experts estimate that the Gulf of Mexico platform could contain as many as 20 billion barrels of oil. The U.S. Geological Service estimate is considerably more modest, calculating reserve volumes there at 5 billion oil barrels.

To date, results have not been exactly promising. The “Scarabeo 9” platform had to pull out of the so-called Exclusive Economic Zone last year, following three unsuccessful attempts to find oil in the area.

To top things off, a few weeks ago, the Russian oil company Zarubezhneft decided to push back prospecting efforts to 2014, reporting “complications of a geological nature.”

These fiascos do little to burst the oil bubble of the Cuban government, which continues to spend millions in prospecting infrastructure.

Following the intensive modernization of the country’s thermoelectric plants ten years ago, Cuba is now working to expand its refinery in Cienfuegos, construct an oil duct connecting Cienfuegos and Matanzas, build a storage facility that can house 600 thousand oil barrels in Matanzas and complete the vast commercial port in Mariel (a billion dollar investment), and in many other related projects.

In the meantime, Venezuela continues to ship an average of 100 thousand barrels of oil to the island every day, 30 thousand of which are financed by PetroCaribe, as per a 25-year agreement with an interest rate of only 1 % signed with the island.

What will Cuba do in 2030, then, when it has the infrastructure to generate 10 % of its electricity using renewable energy sources? Will it have found the oil it seeks by then? Will it abandon the idea of using this oil for energy production? Will it sell it to the United States?

According to the most recent report issued by the National Intelligence Council, the CIA bureau responsible for analyzing and anticipating geopolitical and economic developments around the world, by 2030 the United States (the world’s largest importer of hydrocarbons today) will be entirely self-sufficient in terms of oil resources, and the world’s oil market could well collapse as a result of this.

We must acknowledge that hydrocarbons continue to be the world’s chief energy resource and that, like the rest of the world, Cuba does not have the infrastructure or programs needed to make the transition to a post-oil economy.

Many experts agree that the diversification and expansion of energy sources must become one of the pillars of Cuba’s future energy production scheme.

A broad range of alternative energy sources, from natural gas (the least polluting of all hydrocarbons) to renewable sources such as ethanol extracted from sugar cane, wind power, solar energy and bio-gas could be developed in Cuba.

That said, according to Cuba’s National Statistics Bureau, the amount of energy Cuba produced using renewable sources in 2011 was nearly 2 million tons less of oil equivalent than in 2001. This report reveals a marked decline in the use of these alternative energy sources in the course of the decade, a trend which coincides with the “oil enthusiasm” of recent years and the shutting down of numerous sugar refineries across the country.

The greatest drop was experienced in the use of biomass (chiefly sugar cane bagasse). Hydroelectric plants are the most widely used forms of primary energy production, while wind power generators occupy the fifth place among renewable energy technologies used on the island.

In recent years, experts in the field have voiced complaints that Cuba’s Electricity Law does not particularly encourage the use and commercial promotion of renewable energy sources.

The truth of the matter is that none of these sources of energy afford us one, magical solution to the problem of the energy deficit, and many of these technologies pose serious bioethical questions. If anything, they underscore the fact that the demands of contemporary society, engineered by global capitalism, are insatiable.

The policy of development at all costs, planned obsolescence, the alienation of individuals and collectives in productive processes, the outsourcing of production, the deification of consumption, policies which protect banks and international financial institutions, these and many other problems are at the root of the crisis faced by the energy sector and, I dare say, our civilization as a whole.

In the words of social anthropologist Emilio Santiago Muiño, “a sustainable system which is not grounded in marketing implies a profound change in lifestyle.”

Cuban economists and politicians do not appear to be equipped with the mentality needed to understand this. They are prey to the same ills mentioned above, and they are irresponsibly supported, in their policies, by a good part of Cuba’s scientific community, which does little to re-think the idea of “development” that prevails today.

At the recently-concluded world conference on wind power, Cuba sought to put together a business portfolio with a view to signing international agreements and broadening productive capacities in the sector.

This, which appears commendable, is congruous with the pragmatism of calculating analysts within and outside Cuba, who seek a painless reinsertion of the island’s economy in the international market.

*Energy Return Rate (ERR): Amount of primary energy that must be invested in order to produce energy with a given source.

Alternative energy source production in Cuba.

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Cuba, home of the world’s oddest property market

Financial Times, June 21, 2013 5:02 pm

By John Arlidge

The country is finally allowing its people to buy and sell homes but property lawyers and agents are still illegal.

It’s only 9am but it’s already 33C on the Malecón, Havana’s corniche, and my brain feels like a conch fritter. I’ve come to meet a man who we will call Rafael – because that’s his name. But that’s the only part of his name he is prepared to reveal. Rafael is an estate agent but he does not want anyone to know it. “Being an estate agent is illegal here,” he says.

If we do agree a price, Rafael will advise me not to buy the penthouse in the normal way. Instead, to avoid tax, I should pay him a nominal amount locally, say 20 per cent, and “deposit the rest in an account in Spain, please”. I must not talk about the true price because, under new laws, anyone caught lying about the price of property goes to prison. Also, I must not reveal the name of the lawyer who does the paperwork because working as a private property lawyer is illegal.

Undercover estate agents? A legal system that is illegal? Jail for lying about house prices – which everyone the world over does? Welcome to the oddest property market in the world. Welcome to Cuba.

Half a century after Fidel Castro’s government expropriated all private property, the sunshine socialist state is up for sale – in part. Raúl Castro, who took over as president from his ailing brother in 2008, has introduced new laws that allow Cubans to buy and sell homes. Billions of dollars in property assets that have been frozen in place and time, unvalued or undervalued, are now up for grabs.

Raúl Castro’s move is the latest – and boldest – step in a slow economic liberalisation programme designed to generate economic growth. Cuba desperately needs new sources of revenue. It is only kept afloat thanks to cheap oil, and other subsidies worth $5bn a year from its ideological ally, Venezuela. The subsidy deal was agreed by Fidel Castro and former Venezuelan president Hugo Chávez, who died in March. If Venezuela’s new president, Nicolás Maduro, renegotiates the agreement – and many analysts say that, with Venezuela’s economy slumping, he has no choice – Cuba will grind to a halt.

After half a century in which they could only swap houses in a creaky, bureaucratic and often corrupt state-run process known as permuta (exchange), which involved finding two properties of roughly equal value and then getting state approval to transfer the title, Cubans are relishing their new-found economic freedomFirst-in-a-lifetime buyer Guillermo Rey stands next to the scruffy portico of a four-bedroom, three-bathroom house in Vedado, Havana’s most high-end, fashionable district. The price, says the owner Rosa Marin, is 350,000 CUC, or convertible pesos, Cuba’s hard currency, which is roughly equivalent in value to the US dollar. She is selling because she wants to move into a smaller property “and buy my daughter a car, a good one, a Lada”.

It is a scene repeated all over Havana. The market is growing so fast that queues form outside the tumbledown offices of Cubisima, a Havana-based property sales website. “Every day we get more people looking to sell and more people looking to buy,” Mayelin Aguilar tells me as she keys the latest listings into her bulky Russian-built desktop computer – so old it still runs Windows 95.

The tree-lined Prado is polka-dotted with estate agents, their listings written in longhand in school exercise books. Their commission? A whopping 5 per cent – if, that is, the buyer pays up. With estate agency not on the approved list of private businesses Cubans can now set up, buyers know agents have no recourse to law, so many simply refuse to pay. “I’m lucky if I get commission for one deal in five,” says one agent.

Some 45,000 homes were sold in 2012, according to Cuba’s National Statistics Office. Observers say informal deals take that number to almost 100,000. Prices range from $10,000 for a small, run-down flat in Old Havana to $500,000 for villas in sought-after districts, such as Siboney and Miramar, and more than $2m for penthouses in modern blocks. The average price last year was just $16,000. The Cuban on the calle is still desperately poor.

This being Cuba, the conditions surrounding home sales are complicated and, occasionally, bonkers. The law says that only Cubans and permanent residents can buy and sell property and they must limit themselves to one main residence and, if they have the money, one holiday home. Raúl Castro does not want Cubans to become property barons.

Nor does he want to encourage armies of foreign investors, especially the many arch-critics of the regime, to descend on Havana and buy it up, block by block. But, thanks to an early flirtation with capitalism 20 years ago, there are a few apartment buildings in Havana where foreigners can buy. The best are in the Atlantic Building, a 25-storey tower on the Malecón, where Rafael shows me the penthouse he says is worth $2.5m. Few want to say so publicly but some are being snapped up by Miami-based Cubans, via local relatives, making it difficult to divine whether the émigré Cuban or the relative is the real buyer. President Barack Obama recently relaxed the restrictions on foreign remittances from Cubans living in the US. Up to $5bn a year now flows into Havana and much of it ends up in bricks and mortar.

Other overseas investors get around the restrictions by giving money to a Cuban friend, or more often, girlfriend, to buy a property – although, when the deal is completed, some swiftly discover that their girlfriend is no longer their girlfriend. “I took a risk and it failed,” sighs one Dutch-born investor, whose $400,000 “home” in the fashionable Kholy western suburbs is now home to his former girlfriend and her extended family who cannot believe their luck – and his naivety.

Tax is troublesome, too. Both sellers and buyers must pay 4 per cent but most disguise the value of deals to reduce the liability. Raúl Castro’s dream of generating much-needed tax revenue from home sales is, so far, a forlorn hope.

But he might have an ace up his linen guayabera shirt – or, rather, 130km down the cracked highway from Havana in Varadero. It is Cuba’s “touristic zone”, a ghetto of white sand and whiter westerners, who sip mojitos and snap up Che Guevara T-shirts without bothering to wonder what Che would make of them splurging their Yankee dollars on a swanky beach holiday.

“This is where the £1.5m villas will be. And, over here, right next to an 18-hole golf course, is where the country club will be,” says Andrew Macdonald, striding across the scrub in canary yellow shorts. The Scots-born entrepreneur runs Esencia, an Anglo-Cuban firm, that wants to build Cuba’s first new golf course since the revolution, with 800 homes available for foreigners to buy.

He has signed up some big names to build the $350m development at Carbonera, near Varadero. Sir Terence Conran will design the homes. Adrian Zecha, founder of Aman resorts, is in charge of the country-club-cum-hotel and spa. Golf champion Tony Jacklin will help design the golf course. “Cuba is the top emerging tourism market in the Caribbean by a mile, and it’s in the top five emerging markets globally,” Macdonald says. “It’s a long slog getting stuff done but the potential is huge.”

“Slog” hardly does justice to the tortuous process he has had to undergo to get this far, and which has cost him $3m on feasibility studies. He began negotiations in 2006 and each year the government has said it will approve the venture. But each year then becomes next year. Manuel Marrero, Cuba’s minister of tourism, says the deal has finally been approved in cabinet but Macdonald still does not have the formal sign-off he craves.

Ministers may not like it but they know the only way to balance the books is to encourage the local market

If and when Macdonald, 47, does get the formal go-ahead, it will mark the end of Cuba’s bunker mentality when it comes to golf. Fidel Castro declared golf “incompatible with the glorious revolution” and ordered Cuba’s courses to be put to less “bourgeois” use. Today, one of them lies abandoned just outside Havana; another is a military special forces training ground; and a third forms the rolling lawns of a city’s arts school.

Macdonald wants to build 150 colonial-style oceanfront villas and 670 apartments. Prices for the apartments will start from $2,700 per sq metre and range from 75-140 sq metres. The villas will cost $3,750 per sq metre and range from 350-600 sq metres. Six-hundred investors have registered an interest, Macdonald says. Buyers will have what passes for freehold title under Cuba’s nascent property laws, and will be able to rent out their property.

 Artist’s Depiction of Esencia Housing Project Proposal

Cuba has retained the original Spanish, pre-revolutionary land registry and Macdonald says it shows that no overseas parties have a claim on the land at Carbonera. Tens of thousands of exiled Cubans, who left the country after the revolution, still claim rights over properties. On a bluff just along the coast from Carbonera stands the DuPont villa, the former vacation home of the wealthy US chemicals family. It is now a government-run guest house.

Investing in Cuba is only for the most steely-nerved. Not only is there the vexed question of potential claims on properties from exiled Cubans, the Cuban government has a long, ignominious history of first encouraging and then choking off economic liberalisation. It relaxed restrictions on home sales 15 years ago, only to reverse the policy a few years later.

This time, however, observers say Raúl Castro, who is more pragmatic and less ideological than his older brother, is unlikely to do a U-turn. One western business leader, who has set up a financial services consultancy in Havana, says: “Cuba is bankrupt. Ministers may not like it but they know the only way to balance the books is to encourage the local market and to allow overseas investors to build homes and golf courses and maybe eventually buy villas in Havana.”

That would be good news for Rafael. The more the market expands, the sooner he hopes the government will legalise his profession. “That way,” he smiles, “the next time you come into Cuba, I can tell you my name.”

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Cuba’s Economic System: Reform or Change?

 

Fernando Ravsberg, June 20, 2013 HAVANA TIMES

Marino Murillo, Vice-Chairman of Cuba’s Council of Ministers and architect of the island’s recent economic reforms, has urged the country to aim for growth by eliminating “all of the obstacles that the current economic model places in the way of the development of the productive forces.”

The problem is that the greatest obstacle could be the model itself, which is based on relations of production that hinder the country’s economic development, slow down changes, interfere with reforms and bring about discontent among the population.

By implementing this socialist model, which dates back to Stalin’s time, Cuba obtained the same results seen in all other countries which copied it: agricultural production crises, industrial stagnation, shortages and a disaffected citizenry.

Marino Murillo, Vice-Chairman of Cuba’s Council of Ministers

Murillo invoked socialism’s theoretical forefathers, who said that the new, socialist society would need to nationalize only the “fundamental means of production”, a prescription that wasn’t exactly followed by a model which placed even junk food stands in State hands.

To be at all effective, every economic change essayed in the country today, no matter how small, invariably demands a whole series of subsequent reforms. And it is precisely there where the model, and its defenders, prevent the reform from becoming effective or yielding its best results.

Though the Cuban government’s official discourse itself is calling for a “rejuvenation” of the country’s model, the fact of the matter is that it will be next to impossible to fit a new piece into this jigsaw puzzle without altering the pieces around it, without producing a domino-effect that will ultimately change the entire pattern.

Though the Cuban government’s official discourse itself is calling for a “rejuvenation” of the country’s model, the fact of the matter is that it will be next to impossible to fit a new piece into this jigsaw puzzle without altering the pieces around it, without producing a domino-effect that will ultimately change the entire pattern.

The government runs into these obstacles every time it attempts to move one of the pieces of the puzzle. When it decided to hand over State-controlled lands to the peasants, officials invoked Cuba’s “current legislation” to forbid farmers to set up their homes in farm areas.

Such absurd restrictions discouraged many and pushed others to quit the food production sector altogether and devote themselves to securing construction materials illegally, so as to be able to build a home elsewhere, far from prying looks.

Massive and hugely inefficient, the agricultural sector may well be the very paradigm of bureaucratic mismanagement, but it is far from being its only expression in the country. Cuba’s import system is a true bureaucratic gem, in which producers are those with the least say in official decisions.

A Cuban factory wishing to import a piece of equipment from abroad is required to approach the importing company assigned to it by the State. Technically speaking, this “importer” does not actually import anything – it merely puts out a bid among foreign companies with offices in Cuba.

Employees from these companies are the ones who travel to the manufacturing country, purchase the equipment and bring it back to Cuba. Under the country’s current model, the manager of a Cuban factory is expressly forbidden from contacting the foreign export company directly.

Thus, the person who makes the order is an office clerk who knows little or nothing about what the company needs and who, in the best of scenarios, will opt for the cheapest piece of equipment available, something which often leads to serious production problems later.

The status quo relations of production continue to find support in Cuba, from the defenders of “Real Socialism.” Ironically, or not surprisingly, most of them are isolated from the reality of this socialist system, enjoying government perks that compensate for the “small inconveniences” of everyday life.

In the worst cases, these “intermediating State importers” are bribed by foreign companies so that they will purchase obsolete or poor-quality equipment. In recent weeks, Cuban courts tried hundreds of State employees implicated in these types of “deals”.

These are the “relations of production” which keep equipment in Cuban factories paralyzed for months, waiting for the needed spare parts, while State importers take all the time in the world to decide what to purchase.

Most Cubans I know support the changes that have been implemented thus far and want these to make headway quickly and effectively. It is hard to come by anyone who feels nostalgia for the old model, which proved more efficient in establishing restrictions than in satisfying the material needs of the population.

But these relations of production continue to find support in Cuba, from the defenders of “Real Socialism.” Ironically, or not surprisingly, most of them are isolated from the reality of this socialist system, enjoying government perks that compensate for the “small inconveniences” of everyday life.

During a recent debate, a Cuban journalist suggested that these officials catch a city bus from time to time, so as to immerse themselves in everyday reality. When they told me of this, I recalled the old anarchist graffiti which warned us that “those who do not live the way they think end up thinking the way they live.”

Fernando Ravsberg

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Toronto Businessman Sarkis Yacoubian sentenced to 9 years in Cuba on corruption charges

Toronto man sentenced to 9 years in Cuba on corruption charges

thestar.com/ By: Julian Sher Investigative News reporter, Published on Wed Jun 19 2013

For almost two years as he sat in a Havana prison awaiting trial on corruption charges, North York businessman Sarkis Yacoubian held out hope that by collaborating with the Cuban authorities and fingering a wide web of foreign and domestic corporate intrigue, he would get some leniency.

“They are going to bring down my sentence, provided that I go along with them,” he had told the Star in a series of exclusive jailhouse phone interviews.

But that didn’t happen.

Three weeks after he was put on trial in late May, Yacoubian finally got word he has been sentenced to nine years in jail.

Sarkis Yacoubian

“We were shocked,” said Krikor Yacoubian, Sarkis’ brother in Toronto. “We were anticipating less with the collaboration, but they did not budge much.”

Krikor says his jailed brother was stunned when he first heard the news from his Cuban lawyer.

“He was silent for awhile, for a good minute,” he said. “Not tearful or angry. He said, ‘OK let’s go to the next step.’”

That next step, the family says, will be a protracted battle to try to get the 53-year-old Yacoubian transferred to Canada to serve out his sentence here.

“To my knowledge it is the first time that any Canadian businessman has been sentenced for corruption,” said John Kirk, a professor at Dalhousie University’s Department of Spanish and Latin American Studies who has written several books on Cuba.

“Clearly this is intended to send a message to Cubans and foreign investors alike,” he said. “Several deputy ministers in Cuba and dozens of bureaucrats have also received heavy sentences.”

Yacoubian’s cousin and business associate, a Lebanese citizen named Krikor Bayassalian, was sentenced to four years as a co-defendant, the family says.

The details of the key Canadian connection to Cuba’s widening corruption scandals were revealed last month in a joint investigation by the Toronto Star and El Nuevo Herald, the Spanish-language affiliate of the Miami Herald.

Arrested in July 2011 and detained without charges, Yacoubian – a McGill MBA graduate who operated a $30 million transport and trading company called Tri-Star Caribbean — was formally accused in April of bribery, tax evasion and “activities damaging to the economy.”

Yacoubian disputed many of the specifics of the case but he said he decided to cooperate with the Cubans, exposing what he called the “black forces” of corruption and naming more than a dozen foreign companies and executives.

“I told everything and I told how these schemes were done,” he told the Star. “It was just eating me alive. Maybe in my conscience I wanted my company to be brought down so that I could tell once for all things that are going on.”

In September 2011, Cuban authorities arrested a second GTA man –73-year-old Cy Tokmakjian, whose $80 million Tokmakjian Group company is one of the largest foreign operations in Cuba.

His family told the Star he has still not been charged.

Krikor Yacoubian says the family has decided not to appeal his brother’s sentence but to immediately start the lengthy legal and diplomatic manoeuvres to get Sarkis transferred to Canada under a prisoner transfer treaty Canada signed with Cuba in 1999.

“I don’t want my brother to rot in Cuba,” said Krikor Yacoubian.

 

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Jorge Piñón: ¿Un futuro petrolero para Cuba?

Lenier Conzalez Mederos y Roberto Veiga Gonzalex entevistaron a Jorge Piñón , un cubanoamericano, que salió de la Isla como parte de la Operación Peter Pan, y tantos años después sigue hablando en primera persona cuando se refiere a Cuba. Se desempeñó como presidente para América Latina de la empresa petrolera AMOCO Oil, y  actualmente es investigador del Centro de Política Internacional en Energía y  Medioambiente de la Universidad de Austin (Texas). La entrevista tuvo lugar en el hotel  Meliá Habana, Cuba.

Here is the original interview:   Espacio Laical Entrevista a Jorge Pinon, June 2013

The original is at the web site of  Espacio Laical.

Camilo Cienfuegos Refinery

Jorge Piñón

 

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“Political Science”: When Will Cuban Universities Join the World?

By Arch Ritter

 In 1993, the Faculty of Economics at the University of Havana decided that it had to incorporate mainstream economics into its curriculum because “Soviet” or “central planning” style economics had virtually disappeared following the break-up of the Soviet Union and the Soviet Bloc. After some discussions with the International Development Research Center (IDRC) in Ottawa, a Masters in Economics Program commenced operation at the University of Havana principally for young Cuban professors of Economics plus others. The program was financed by IDRC and then the Canadian International Development Agency and had the support of the United Nations Economic Commission for Latin America and the Caribbean. It included Canadian and Latin American Professors with senior Cuban professors acting as counterparts.

The program ran from 1994 to 2000, and helped to “jump-start” the introduction of conventional economics into Cuban Universities. It contributed to the changing climate of opinion that has resulted in the new approach to economic policy adopted by President Raul Castro.  I am happy to say that it was my Economics Department here at Carleton University that offered its MA in collaboration with the University of Havana. A description of this Master’s Program in Economics offered at the University of Havana from 1994 to 2000 can be found here.

In contrast, the teaching of Political Science – or “Government” to use the Harvard label – in Cuban Universities appears to be virtually non-existent or else locked in a Soviet-era time-warp at this time. As far as I can determine from perusing the web sites of Cuban Universities, little has changed in this regard since about 1990.

During the 1960’s and early 1970’s, the University of Havana’s School of Political Sciences  (Escuela de Ciencias Políticas) was active at the Faculty of Humanities (Facultad de Humanidades)  This School was created in 1961 after the triumph of the Revolution as part of the University Reform (Reforma Universitaria). But during the decade of 1970 to 1980 the School was closed. Some of its activities were then assumed by the recently created “Ñico López” Party School (Escuela del Partido “Ñico López”), affiliated with the Cuban Communist Party, outside the University campus and with no relation to the University. The main purpose of the “Ñico López  Party School was and still is the formation of Party cadres.

Universidad de la Habana

One outstanding research center affiliated with the Communist Party namely the Centro de Estudios sobre sobre América (CEA) apparently got out of control and was effectively terminated. (See Haroldo Dilla’s commentary on the death of CEA in Cubaencuentro¿Qué pasó con el Centro de Estudios sobre América?)

In 2013, one searches in vain for Departments of “Political Science” in Cuba. There are or have been University and Party Centers for the study of international relations such as the Instituto Superior de Relaciones Internacionales ((ISRI) and the  Centro de Estudios Hemisféricos y Sobre Estados Unidos(CEHSEU, formerly CESEU). But there seems to be a total absence of what one might identify as Political Science or “Government” in any part of the Universities. The closest the University of Havana seems to come to political science appears to be in the Filosofía Marxista Leninista program of the faculty of Ciencias Sociales y Humanísticas. This program seems to be totally removed from an objective analysis of how political systems actually operate in Cuba or anywhere else.  Not surprisingly, this program has a clear ideological orientation, as suggested by the first suggested type of employment for its graduates cited below, (though I suspect that the graduates would be increasingly unemployable with the exception of a handful of future professors teaching the same stuff):

El filósofo tiene además una actuación especial en el trabajo político e ideológico, en tanto puede mostrar cauces metodológicos: holísticos, dialécticos, heurísticos, hermenéuticos, etc., desde perspectivas epistemológicas amplias, dialécticas y transformadoras, que permiten para acceder con profundidad a los dominios de la ciencia, al arte y a la vida cotidiana. Igualmente su actuación contribuye a develar nuevos horizontes epistemológicos, axiológicos y comunicativos, en la medida que, con sentido cultural, dialéctico, complejo y sistémico somete a crítica los momentos débiles de la racionalidad moderna y muestra la esencia de los nuevos paradigmas contemporáneos desde un enfoque marxista creador. En fin, su modo de actuación leninista creadora.”

Where are courses on Cuba’s actual political system, comparative politics, political theory, political philosophy, local politics and political sociology, not to mention the innumerable more specialized topics that one commonly finds in the course program of a Political Science department? (See Harvard’s extensive offerings here.)  

Universidad de Oriente, Santiago de Cuba

In the mid-1990s two Cuban professors, Miriam Gras and Gloria Leon of the University of Havana attempted to set up a network of researchers in Comparative Politics. For their efforts – and also for speaking out on political issues – they were fired from the University.

There are of course talented and widely recognized intellectuals both within and outside the universities who analyze US-Cuban relations and some aspects of international relations. But it is difficult to identify professors from Cuba’s universities who are courageous enough to “push the envelope” and to analyze Cuba’s political system seriously, directly and openly, or to adopt mainstream or conventional political science approaches in their work. The serious analyses of Cuba’s own political system and its functioning are the work mainly of off-shore analysts, either recent émigrés such as Haroldo Dilla Alfonso, Cuban-Americans such as Jorge Dominguez and Marifeli Perez-Stable and many others, or non-Cubans such as Vegard Bye of Norway – also among many others. To find critical analysis of Cuban politics within Cuba, one has to go to independent publications such as Espacio Laical linked to the Catholic Church in Havana and a couple of blogs such as SinEvasion, by Miriam Celaya.

Why is such political analysis essentially off-limits in Cuban universities? You can guess the answer.

One consequence of the absence of the discipline of Political Science in Cuba is that we have only a vague idea of how Cuba’s government actually functions. Who within the Politbureau and Central Committee of the party actually makes decisions? To what extent and how do pressures from the mass organizations actually affect decision-making, or is the flow of influence always from top to bottom rather than the reverse? What role do the large conglomerate enterprises that straddle the internationalized dollar economy and the peso economy play in the process of policy-formulation? Is the National Assembly simply an empty shell that unanimously passes prodigious amounts of legislation in exceedingly short periods of time – as appears to be the case?  One is left with a feeling that the real political system is one of black boxes within black boxes linked in various ways by invisible wires and tubes.

One hopes that Cuba’s universities soon will establish formal Departments of Political Science and that the academic staff will undertake real scientific analysis of Cuba’s political system.  

University of Havana, Faculty of Law in the background

University of Havana circa 1955

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