• 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. It includes analyses and observations of the author, Arch Ritter, as well as hyper-links, abstracts, summaries, and commentaries relating to other research works from academic, governmental, media, non-governmental organizations and international institutions.
    Commentary, critique and discussion on any of the postings is most welcome.
    This Blog on The Cuban Economy is dedicated to Cuba's Generation "A". Although inspired by Yoani Sánchez' original 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:
    "... 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."

TRUMP’S CUBA GAMBIT PUSHES CANADIAN MINER SHERRITT TO THE BRINK

Original article: Sherritt could get caught in the crossfire between U.S. and Cuba

Paula Sambo and Danielle Bochove,

Bloomberg News, June 5, 2020

 

Sherritt International Corporation’s nickel mine in Cuba.

Sherritt International Corp. (S.TO), whose executives were once known as Fidel Castro’s favorite capitalists, is paying the price for its close ties to the struggling Caribbean nation.

The Canadian miner, which gets all its revenue from assets in Cuba, is being hit on multiple fronts by Donald Trump’s isolationism, plunging nickel prices and cost overruns. With the stock at 21 cents and its bonds trading at distressed levels, investors are starting to question the company’s viability.

“It all depends how the world unfolds in terms of commodity prices and the U.S.-Cuban relationship,” Chief Executive Officer David Pathe said in an interview this week. “There’s only so much that we can do right now and that’s focusing on the things that we can control.”

The Toronto-based miner is a shadow of what it once was. Long-known as a proxy for Cuba since former CEO Ian Delaney first engaged with Castro in the 1990s to develop the island’s nickel, oil and gas assets, Sherritt prospered as U.S. relations thawed over the past two decades and commodity prices soared.

Revenue jumped to almost $2 billion a decade ago, while the stock traded as high as $18 in 2007. Since then, the stock has dropped 99 per cent amid heightened country risk, a failed project in Madagascar, cost overruns and the collapse of the commodity super-cycle. The company’s bonds are trading at about 30 Canadian cents, according to multiple portfolio managers, implying low recovery in case of a default or debt overhaul.

“We have seen some bonds selling in the context of more aggressive U.S. policy towards Cuba, which has caused holders that have significant interests or operations in the U.S. to get out,” Pathe said. “That is what it is. From our perspective, we are focused on running our business as best we can.”

Sherritt’s debt costs are rising even as the company’s ability to generate cash flow to service that debt falls. Concerns about global growth have knocked the price of nickel down 24 per cent over the last year, reducing the amount of cash Sherritt receives from markets outside Cuba. Meanwhile, a tightening of U.S. sanctions against Cuba this year has resulted in the island nation being unable to pay Sherritt for the energy it produces in foreign currency and has caused bondholders to sell the company’s debt.

“We have deliberately avoided having any presence in the U.S. since Helms-Burton came in 23 years ago,” said Pathe, who is barred from entering the country under a section of the act. Despite this, the company is being caught in the cross-fire as Trump punishes Cuba for its support of Venezuela, and takes aim at trading partners around the world.

Debt Reduction

Having managed to knock around $2 billion off its debt in recent years, the 92-year-old company’s top priority is to continue to see that balance come down and reduce interest expenses, according to its CEO. The next big bond maturity is $170 million in notes in 2021 and the company has a $70 million revolving facility due next year that it anticipates renewing ahead of the maturity, Pathe said.

As it hangs on by its fingernails, some debt investors are seeing a silver lining ahead.

“They are trading below their working capital; the optionality is huge even excluding long-term assets like the refinery” said Paul Tepsich, founder and portfolio manager at High Rock Capital Management Inc. in Toronto, referring to the refinery in Alberta. “I think they get a deal signed with Cuba imminently and that produces strong cash flow on a monthly basis to Sherritt.”

For Tepsich, who owns Sherritt debt, the company has room to buy back bonds. The Moa nickel-and-cobalt mine joint venture should also provide both cash flow and dividends in hard currency, he said. The company produces electricity, oil and gas in Cuba and has a 50 per cent stake in the Moa mine, although it finishes the ore in Canada.

Coal Sale

For more than a decade, Sherritt has fought to reduce its debt, selling all of its coal assets in 2013 as commodity prices languished. A spike in cobalt prices in 2017 helped the company post its first annual profit since 2012 but it fell back into the red last year. Total debt stands at $706 million, less than a third of what it was less than two years ago.

Sherritt’s debt almost quadrupled between 2007 and 2008 as the company developed the massive Ambatovy nickel and cobalt project in Madagascar with Sumitomo Corp. and Korea Resources Corp. From the start, the project was plagued with delays and cost overruns, not to mention a political coup that resulted in the suspension of mining licenses.

Meanwhile, the company’s footprint in Cuba has created constant challenges. In 1996, Sherritt executives and shareholders were the first to be banned from the U.S. under the Helms-Burton law.  Twelve years later, Fidel Castro’s resignation sparked hope for more foreign investment in Cuba but progress, including subsequent American liberalization under President Barack Obama, has recently been overshadowed by a tightening of policy under Trump. The pressure has worsened Cuba’s access to foreign currency; it owed Sherritt almost US$172 million at the end of the first quarter, although Sherritt said a plan is in place to manage payments.

Last April, meanwhile, the White House said it would activate a provision of Helms-Burton that would let Americans sue for land confiscated in the 1959 revolution.  That’s a big deal for Sherritt: The US$88.3 million claim against its nickel mine is now greater than the company’s market capitalization.

 

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TRUMP DECLARES ECONOMIC WAR ON CUBA

April 18, 2019 6.45am EDT

William M. LeoGrande, Professor of Government, American University School of Public Affairs

Original Article: Trump Declares Economic War on Cuba

The Trump administration has declared the most severe new sanctions against Cuba since President John F. Kennedy imposed an economic embargo banning all trade with the communist island in 1962.

Speaking in Miami on April 17, the anniversary of the United States’ failed 1961 invasion of Cuba’s Bay of Pigs, national security adviser John Bolton announced the end of virtually all non-family travel to Cuba and placed new limits on the money Cuban Americans can send to family on the island.  He also said the U.S. will now implement a 23-year-old law aimed at blocking both U.S. and foreign investment in Cuba, first passed by Congress in 1996 as part of a broader sanctions package against Cuba but put on hold because it triggered immense opposition among U.S. allies.

The harsh new sanctions reverse “the disastrous Obama-era policies, and finally end the glamorization of socialism and communism,” Bolton said.

A law too controversial to implement

Trump’s decision activates a long-suspended 1996 provision of U.S. Cuba sanctions that allows Cuban Americans to sue in U.S. courts any company that benefits from private property of theirs confiscated by Fidel Castro’s regime.

Normally, U.S. courts have no jurisdiction over property owned by non-citizens that is nationalized by a foreign government. For U.S. courts to sit in judgment of another government’s actions toward its own citizens in its own territory is a challenge to that government’s sovereignty.

U.S. allies who do business with Cuba vehemently oppose the move.

In 1996, when the U.S. law was first approved, the European Union filed a complaint with the World Trade Organization and adopted a law prohibiting EU members and their companies from complying with the U.S. legislation. Mexico, Canada and the United Kingdom soon passed similar legislation.

In response, President Bill Clinton suspended the lawsuit provision, which is called Title III, for six months, and in 1998 he signed an agreement with the EU that European companies who do business in Cuba would not be targeted.  Since then, every president, Democrat and Republican, has renewed the suspension. Trump himself renewed it three times – until he didn’t.

The president has now reignited international outrage over this sanction, which abrogates Clinton’s agreement with the EU and complicates already rocky U.S. relations with Mexico and Canada.

Who wins?

A small but elite community stands to benefit from Title III: Cuba’s former one percenters – members of the exiled upper class that owned nearly all the land and business in Cuba prior to the 1959 Cuban Revolution.

Most wealthy Cubans fled the country after Fidel Castro’s Communist government nationalized their businesses and confiscated their homes, bank accounts and property. Some still dream of recouping their lost fortunes.  They can now sue Cuban, American and foreign companies that profit in any way from the use of that property.  For example, former owners of Cuba’s nickel mines could seek damages from Canada’s Sherritt International Corporation, which has invested in Cuba’s nickel mining industry. The former owners of Cuban hotels could sue the Spanish hotel company Melia, which manages hotels across the island.

Every U.S. and foreign company that does business with Cuba – or might do so in the future – risks being sued if they make use of property once owned by a Cuban exile who is now a U.S. citizen. According to a 1996 State Department analysis, implementing Title III could flood U.S. federal courts with as many as 200,000 lawsuits.

Trump’s 2020 bet

Most Cuban Americans will gain nothing from Trump’s latest sanctions.  It exempts private residences from compensation. So, if the main thing you owned back in Cuba was a house that was confiscated after Jan. 1, 1959, you’re out of luck.  The exiled owners of thousands of small Cuban mom-and-pop shops nationalized in 1968 won’t see compensation, either, because the law exempts Cuban small businesses that were confiscated.

Those who stand to benefit are the oldest, most conservative and wealthiest segment of Florida’s 1.5 million Cuban Americans.  Trump believes these influential Republicans helped him win Florida in 2016 because he promised to take a hard line toward Havana, rolling back President Obama’s restoration of diplomatic and economic relations with the island.

If the president thinks these punishing new sanctions can deliver Florida to him again in 2020, he may have miscalculated.

I’ve studied Cuba-U.S. relations for decades. While activating the law may please Cuba’s former wealthy business owners, Trump’s new sanctions – like limiting the money Cuban Americans can send back to the island – are unlikely to be popular in the broader Cuban American community.  By decisive majorities, Cuban Americans support free travel between the U.S. and Cuba, broader commercial ties and President Obama’s decision to normalize relations. Every year, they send $3 billion to family on the island, and hundreds of thousands of them travel there to visit.  These Cuban-American voters don’t want to inflict more economic pain on the Cuban public, which includes their friends and family.

Hurting everyday Cubans

The punitive aspects of the newly implemented law, which administration officials have for months hinted that they would put into effect, are already having an impact.

Cuban American families who owned the land and facilities at the port of Havana and José Martí International Airport have warned the cruise ship companies and airlines that their use of these properties could put them at legal risk.

Along with money sent from their families abroad, tourism-related income sustains many everyday Cubans.

If travel businesses withdraw from Cuba, and if U.S. and foreign firms hesitate to enter into new commercial relations with Cuba for fear of incurring lawsuits in the United States, Cuba’s already fragile economy would take a serious hit.

That may play well with Cuba’s old elite. But the rest of Florida’s Cuban Americans will feel the hurt, too.

 

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THE REVENGE OF THE JEALOUS BUREAUCRAT”: A CRITICAL ANALYSIS OF CUBA’S NEW RULES FOR CUENTA-PROPISTAS

ASCE Conference Proceedings 2018

Ted A. Henken 

Original Article: Cuba’s New Rules for Cuenta-propistas

The quantitative expansion of self-employment from150,000 to nearly 600,000 licensed cuenta-propistas between 2010 and 2018 during the presidency of Raúl Castro can be celebrated given its expansion of economic freedom, the provision of job opportunities, greater productivity and efficiency, and a markedly higher quality of goods and services for those who can afford them. However, it is also curious that the Cuban government has embraced the micro-enterprise sector historically only during times of economic crisis when it could no longer provide enough jobs, goods, or services for the people (Mesa-Lago and Pérez-López 2013).

Indeed, this is one of the mantras most commonly repeated in the official press when justifying the downsizing of the state sector and the expansion of cuenta-propismo (i.e., self-employment or literally “on-your-ownism”): The state must “lighten its load” so it can focus on the fundamental sectors of the economy.

Given such a context, Cuban workers can be forgiven for concluding that Castro’s much trumpeted economic “updating,” constant calls for greater productivity and efficiency, and sharp criticisms of Cuba’s “inflated state payrolls, bulky social spending, undue gratuities, and excessive subsidies” (2010) are simply fancy words for the state’s abandonment of its  historic commitment to them under the Revolution.

Indeed, entrepreneurship has an elastic history in revolutionary Cuba and has undergone oscillating phases of relevance, vigilance, legality, and illegitimacy.  In that context, Cuba’s successful cuenta-propistas (the island term that lumps individual freelancers, together with private business owners and their employees, without giving formal, legal recognition to Cuba’s emergent small- and medium-sized enterprises, SMEs) have often found themselves in the frustrating position of being counted on to supplement the moribund state enterprise sector by providing private employment, high quality goods and services, and economic productivity and efficiency, while simultaneously doing without any legal personality or legal standing (personalidad jurídica) as true business enterprises.

This restriction prevents them from opening bank accounts, signing contracts, importing needed inputs, or exporting their goods or services abroad. That is, while Cuba’s cuenta-propistas may be individually licensed to operate as freelancers (i.e.,personas naturales), “Cuban law does not recognize1. In some cases, the expansion of the private sector has also driven down prices. However, because of extensive subsidies and price controls in the state sector, combined with chronic material scarcity and a dual currency system where a good portion of the private sector operates in hard “convertible” currency, prices for most goods and services available in Cuba’s private sector are very high relative to the state sector.

 Continue reading.

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WHY TRUMP’S CUBA POLICY IS SO WRONG

Nacla  May 20, 2019

Arturo Lopez Levy, Visiting Assistant Professor of International Relations, Gustavus Adolphus College, Minnesota.

 Original Article: Why Trump’s Cuba Policy Is So Wrong

Nearly five years have passed since President Barack Obama restored diplomatic relations with Cuba and began relaxing the U.S. policy of unilateral sanctions. Now, the Trump Administration is doubling down on a failed strategy of hostility, reducing engagement with Cuba, and returning to the 1996 Helms-Burton law, one of the most repudiated pieces of “trade” legislation in the world. Trump’s decision to restore the grip of Cold War-era policy to the Strait of Florida caters not to the interests of the Cuban people, but to a small group of voters between Little Havana and Doral—the new Little Caracas—in South Florida.

On April 17, National Security Advisor John Bolton announced in a speech in Miami that the U.S. would be fully implementing Chapters III and IV of the 1996 Helms-Burton law—which allows U.S. citizens to file claims against Cuba’s trading and investment partners for properties nationalized following the revolution 60 years ago. Bolton salted his red-meat speech with new restrictions on U.S. non-family related travel and remittances sent to Cuba. Present in the audience were veterans of the defeated 2506 Brigade, a group of exiles who invaded Cuba in 1961 after receiving CIA training in Guatemala.

Reparations for Exiles Over Citizens in Need

Under Chapter III of the Helms law, American courts will be open to hear any claims for lost properties by Cubans who became American citizens before 1996 after January 1, 1959. The former Cuban economic and political elites seem poised to try to claim all of these properties—except the one for the responsibility of mismanaging a country to the point of revolution.

It is not the United States government’s responsibility or place to force the current or any future Cuban government to prioritize compensating Cuban right-wing exiles over demands for other reparationsThe implementation of this chapter has profound implications for Cuba’s national reconciliation and how Cubans may perceive Washington in the future. Cuban-Americans who lost their properties as result of revolutionary nationalizations were at the time Cuban nationals, living under Cuban jurisdiction and sovereignty. The logical venue for these Cubans to seek remedy for the alleged injustice committed against them is in Cuban courts. No matter what one thinks about the priorities for reparations for Cuban injustices, it is difficult to argue that U.S. courts are the proper place for solving these issues. It is not the United States government’s responsibility or place to force the current or any future Cuban government to prioritize compensating Cuban right-wing exiles over demands for other reparations, such as for slavery or any of the many other abuses committed in Cuban history before or after 1959. Such meddling in issues of exclusive Cuban sovereignty will not sit well in Cuban politics and will feed anti-American nationalist resentment. Whether Cubans would like to use their own resources to compensate wealthy exiles should not be an imposition of the United States government.

This isn’t the first time that U.S. policy has pressured a Latin American government to put appeasing exiles over its own governance. In post-revolutionary Nicaragua in 1994, Senator Jesse Helms imposed a hold on legislation for U.S. aid, with consequences for the government of Violeta Barrios de Chamorro. A significant portion of U.S. economic aid to Nicaragua for development purposes went to compensating anti-Sandinistas who had lost property or investments under the revolution rather than towards poverty alleviation efforts. Bolton’s support for tightening Helms-Burton to allow similar claims for Cuban exiles is similarly misguided.

Unilateral sanctions will not work in Cuba because other countries will not stop trading and investing if there is a profit to make. After 60 years of conflict and hard sanctions, the Cuban communist regime has survived, outmaneuvering every U.S. president who imposed or implemented sanctions since the Eisenhower era. Even though the U.S. is a much more powerful country than Cuba, it is still unable to impose its preferences on its weaker neighbor. Cuba has demonstrated time and time again that despite this asymmetric power, they are well-versed in strategies to delegitimize the U.S.’s position.

As Wayne Smith, the American diplomat who closed the U.S. embassy in Havana in 1961 and later returned to Cuba as Chief of the Special Interests Section (1978- 1982) once wrote: “Cuba seems to have the same effect on American administrations that the full moon once had on werewolves.” Bolton’s April 17 speech in Florida is simply the same howling. It only makes sense as a policy towards Florida, not towards Cuba.

Under Chapters III and IV of the Helms law, right wing Cuban-Americans are trying to internationalize the U.S. embargo against Cuba at all costs. They have brought legal claims against U.S., Canadian, and European Union citizens and companies. Trump’s catering to these interests by returning to this logic is detrimental to U.S. interests in Cuba and Latin America—and to Cuba itself—for a number of reasons.

Cuba in Transition

First, this decision ignores Cuba’s current moment. Most Cubans are eagerly looking to their first post-Castro president, Miguel Díaz-Canel, to address the critical challenges of reforming the country, especially its economy. While the new president has maintained a clear distance from the most audacious reforms, he is aware that the Cuban Communist Party’s rule is not sustainable without a wider opening of the economy to private business and foreign investment, or improving relations with reform-oriented civil society and diaspora groups. At this critical moment, Trump’s aggressiveness will distract the Cuban public debate from Cuba’s internal situation and create an opportunity for the Communist Party to rally the population and its various elites—old and new, pro-market or pro-state-owned corporations, pro or against regulation—behind the patriotic flag.

The more the Trump administration tries to asphyxiate Cuba, the harder the Cuban government will impose political discipline in its ranks and within Cuban civil society. In contrast, in the wake of Obama’s rapprochement, a wide spectrum of autonomous publications emerged. Although this expansion of the public sphere does not amount to democratization and did not result from U.S. policy, a friendly international environment may have played a constructive role in influencing their development.

Patriotic segments of civil society such as the Catholic Church, the majority of intellectuals, LGBTQ activists, and other groups will condemn U.S. policy towards Cuba. Those who do not close ranks with the government against foreign aggression will appear aligned with what Cuban national hero and poet Jose Martí called “the scrambled and brutal north.” Not a good position to be in Cuban politics, isolated with just one foot out of prison.

Sanctions for Sanctions Sake

Most of Trump’s Latin America team do not understand how political asymmetry works in international affairs. Hard power is tremendously important in state-to-state relations, particularly in war. But in many cases, the stronger cannot impose its preferences on the weaker side. Small countries have agency and well-known repertoires of asymmetric strategies that erode and deteriorate the stronger country’s position, without achieving domination.

Relations between the world’s major powers are indeed very important. But sustainable leadership relies also on constructive relationships with small countries. Wasting political, economic, and social capital on mismanaged and unnecessary conflicts not only alienates allies but also pushes neutral and potential non-aligned countries into the arms of rival great powers. Leadership, different from domination, is about attracting others to operate and think within one’s own agenda. That is the role of effective diplomacy.

Trump’s return to sanctions will neither empower any relevant actor in Cuba’s politics nor change the Cuban government’s behavior. Cubans of almost every political persuasion will see Vice President Pence’s announcement that the United States will sanction oil shipments from Venezuela to Cuba as sanctions for the sake of sanctions—a means to create scarcity, desperation, and chaos in the island. Obviously, the Cuban people will suffer if Venezuela is forced to reduce the amount shipped daily to Cuba by some 20,000 to 50,000 barrels. But such sanctions will not peel off Cuba from the Bolivarian Alliance and would in fact encourage more security cooperation with Maduro and strengthen Havana’s alignment with Moscow and Beijing.

Trump’s new sanctions against Cuba replicate the same problems that the embargo has represented since the 1970s. First, the United States is alone geopolitically in its desire to double down on the Cuban embargo. Second, because the sanctions cater to domestic interests, Bolton’s speech repeated unrealistic expectations about imposing American diktat to third countries and provoking the fall of Maduro in Venezuela, Ortega in Nicaragua, and Díaz-Canel in Cuba. Third, limiting travel to the island and capping remittances will mainly harm Cuba’s emerging private sector, providing new incentives for mass migration to the United States. Cubans who are anticipating a sharp economic downturn are traveling to Mexico and Central America and headed north to the U.S. border.

The announcement of sanctions may spark catharsis in some segments of the Cuban and Venezuelan diasporas in South Florida, but history has proven that foreign policy for retribution therapy at the service of traumatized exile groups is not very effective.The announcement of sanctions may spark catharsis in some segments of the Cuban and Venezuelan diasporas in South Florida, but history has proven that foreign policy for retribution therapy at the service of traumatized exile groups is not very effective. A policy towards Cuba should be, well, a policy towards Cuba. For those passive opponents of communism within the Cuban government coalition, it is doubtful that these sanctions will create a wedge between development-oriented nationalists and control-oriented communists. In terms of those Cubans who openly oppose communism, the sanctions will not diminish their isolation from most Cubans, but will certainly increase their internal divisions over how to interact with the United States.

Consequences for Business and International Law

Reinforcing sanctions and threatening litigation over property claims will also make companies wary of doing business in Cuba. This could include the U.S. companies that began to explore business possibilities with Cuba at the end of the Obama administration, and farmers who sought an opening to a substantive market.

Mixing U.S. legitimate compensation claims on properties that were U.S.-owned at the time of nationalization with claims by Cuban citizens who lost their properties and became U.S. citizens later makes a difficult problem intractable. Cuba will never agree to pay for acts that were taken under its jurisdiction after 1959 between parties that were Cubans in Cuban territory. Even the Eisenhower government recognized the Cuban government’s prerogative to nationalize some properties that had been owned by corrupt members of the Batista regime.

When Congress first debated the Helms-Burton Bill in the late ‘90s, the U.S. State Department warned legislators that the sanctions would provoke clashes with other U.S. allies doing business in Cuba, for example in international institutions, such as the WTO. Under Helms-Burton regulations, the United States has sanctioned French, German, and Canadian companies for participating in commerce and investment transactions with Cuba that are plainly legal in their own countries and under international law. Economists and experts have warned repeatedly that the abuse of sanctions by the United States using the primacy of the dollar creates incentives for other actors to seek mechanisms to protect themselves from this financial vulnerability.

Indeed, after the announcement on the application of Chapters III and IV, European commissioners for Foreign Relations and Trade, Federica Mogherini and Cecilia Maelstrom, announced the EU’s intention to take the United States to the legal panel of the World Trade Organization (WTO). The EU and Canada also released a statement affirming that they “consider the extraterritorial application of unilateral Cuba-related measures contrary to international law. We are determined to work together to protect the interests of our companies in the context of the WTO and by banning the enforcement or recognition of foreign judgments based on Title III, both in the EU and Canada. Our respective laws allow any US claims to be followed by counter-claims in European and Canadian courts, so the US decision to allow suits against foreign companies can only lead to an unnecessary spiral of legal actions.”

Trump’s officials like Secretary of State Pompeo and National Security Advisor Bolton are indulging themselves in a 19th-century geopolitical time-warp, pontificating about the Monroe Doctrine while creating conflicts with Ottawa and Mexico City, and disregarding its allies’ positions on Cuba policy. Meanwhile, Russia and China are deploying a 21st century approach to Cuba and Latin America. Every area in which trade and investment in Cuba appears to be profitable is an open space for Russian and China’s technology and data-driven impulses.

Unleashing the illegal extraterritoriality of Helms-Burton law now will only add to the allies’ resentment of and skepticism against the U.S.’ capability to act as a leader beyond the short-term pressures of its domestic politics. It also provides ammunition to rival powers to denounce U.S. double standards. Why should Russia or China or Iran obey international law or UN resolutions if the United States so flagrantly violates them?

Plus, Trump’s sanctions will hamper also multilateral cooperation with Cuba such as the medical collaboration established by the Obama administration against the Ebola pandemics in West Africa in 2013 and 2014. An environment of hostility does not help foster any kind of constructive cooperation.

Non-Family Travel Ban

Finally, Bolton’s announcements in Miami included a ban on non-family travel to Cuba and a limit on family remittances, the amount of money sent by Cuban Americans to their relatives in the island. Limiting Cuban-American remittances is a prime example of double standards, where the United States dictate that the Cuban government curtails its involvement in the personal lives of citizens while trying to regulate how Cubans living in the United States spend the money they earn. U.S. taxpayers’ money will be spent on monitoring and persecuting people who only want to spend what belongs to them and travel to Cuba.

Trump’s prohibition of non-family travel to Cuba also privileges Cuban-Americans over other American citizens, including Cuban-descendant U.S. citizens, who fall into a second-class citizen category when it comes to travel rights. Cuban American legislators who cannot convince their constituencies to not travel to Cuba have pushed a compromise on the Trump administration that would bar other U.S. citizens from going to Cuba, while avoiding the backlash they will get in Miami if the government repeats former President Bush’s mistakes of limiting Cuban Americans’ travel to Cuba. More than 300,000 Cuban Americans travel to Cuba each year and will continue doing so.

It is ironic that average Cubans who live under a communist one-party regime, which Washington has deemed “a closed society,” have been allowed by their government to travel to the United States without limitation since October 2013, while U.S. citizens living under a liberal democracy are barred from traveling freely to Cuba. Most Cubans would like to change many dimensions of their country but not with a U.S. run transition but with their own timing, priorities, and sovereignty. The United States’ best contribution to Cuban democratization is to respect Cuba’s and other countries’ sovereignty and practice the freedoms it preaches.

 

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EL IMPACTO EN LA ECONOMÍA CUBANA DE LA CRISIS VENEZOLANA Y DE LAS POLÍTICAS DE DONALD TRUMP

Carmelo Mesa-Lago,  Catedrático de servicio distinguido emérito en Economía y Estudios Latinoamericanos en la Universidad de Pittsburgh

Pavel Vidal Alejandro, Profesor asociado del Departamento de Economía de la Universidad Javeriana Cali, Colombia

30 de mayo de 2019

Articulo originalLA CRISIS VENEZOLANA Y DE LAS POLÍTICAS DE DONALD TRUMP

 

 

 

Índice

Resumen, Abstract……………………………………………………………………………………….. 2

Introducción ………………………………………………………………………………………………… 3

(1) Antecedentes de la relación económica entre ambos países …………………………. 4

(2) Análisis de la severidad de la crisis económica-social venezolana ……………….. 5

 (3) Evolución del comercio exterior cubano con Venezuela……………………………….. 7

(4) Las medidas de Trump contra Venezuela y Cuba ……………………………………….. 14

(5) Los efectos del shock venezolano ……………………………………………………………….. 18

(6) ¿Viene otro Período Especial? …………………………………………………………………….. 22

 (7) Posibilidad de que otros países (Rusia o China) sustituyan a Venezuela ……….. 23

(8) ¿Hay alternativas viables para Cuba? ………………………………………………………… 24

(9) Conclusiones……………………………………………………………………………………………… 30

 

Resumen

Históricamente, Cuba ha padecido la dependencia económica de otros países, un hecho que continúa después de 60 años de la revolución. La dependencia con la Unión Soviética en 1960-1990 dio lugar al mejor período económico-social en la segunda mitad de los años 80, pero la desaparición del campo socialista fue seguida en los años 90 por la peor crisis desde la Gran Depresión. Este documento de trabajo analiza de manera profunda la dependencia económica cubana de Venezuela en el período 2000- 2019: (1) antecedentes de la relación económica entre ambos países; (2) análisis de la severidad de la crisis venezolana; (3) evolución del comercio exterior cubano con Venezuela; (4) medidas de Donald Trump contra Venezuela y Cuba; (5) efectos del shock venezolano en Cuba; (6) ¿viene otro Período Especial en Cuba?; (7) posibilidad de que otros países (Rusia o China) substituyan a Venezuela; y (8) alternativas viables a la situación. El impacto en la economía cubana de la crisis venezolana y de las políticas de Donald Trump

Abstract

Cuba has historically endured an economic dependence on other nations that continues after 60 years of revolution. Dependence on the Soviet Union in 1960-90 led to its best economic and social situation in the second half of the 1980s, but the disappearance of the socialist world was followed in the 1990s by its worst economic crisis since the Great Depression. This Working Paper analyses Cuba’s economic dependence on Venezuela in 2000-19, as follows: (1) antecedents of the economic relationship between the two countries; (2) evaluation of the severity of Venezuela’s economic-social crisis; (3) evolution of Cuba’s trade relationship with Venezuela; (4) Trump’s measures against Venezuela and Cuba; (5) effects of the Venezuelan shock on Cuba; (6) is another Special Period in the offing?; (7) possibility of another country (Russia or China) replacing Venezuela; and (8) viable alternatives to Cuba.

 

 

 

 

…………………………………………..

Conclusiones

Este estudio ha aportado evidencia abundante y sólida (respecto a Venezuela) que ratifica la histórica dependencia económica cubana de otra nación y la necesidad de subsidios y ayuda sustanciales para poder subsistir económicamente.

A pesar del gran peso de la beneficiosa relación económica externa, Cuba no ha logrado financiar sus importaciones con sus propias exportaciones. La ayuda externa resulta, al menos por un tiempo, en un crecimiento económico adecuado (en 1985-1989 con la URSS y en 2005-2007 con Venezuela), pero cuando desaparece o entra en crisis el país subsidiador, ocurre una grave crisis en Cuba. La dependencia sobre Venezuela ha sido menor que la relativa con la Unión Soviética y hay además otros factores que podrían atenuar la crisis resultante de la debacle en el primer país; aun así, Cuba ya ha sufrido

El impacto en la economía cubana de la crisis venezolana y de las políticas de Donald Trump Documento de trabajo 9/2019 – 30 de mayo de 2019 – Real Instituto Elcano 31 desde 2012 una pérdida equivalente al 8% de su PIB y una caída del régimen de Maduro agregaría otro 8%. Las medidas de Trump contra Venezuela no han conseguido hasta ahora derrocar el régimen de Maduro y este ha logrado circunscribir algunas de ellas, pero han agravado la crisis en la República Bolivariana creado una situación peliaguda que se agravará en el medio y largo plazo.

Por otra parte, las políticas trumpistas contra Cuba probablemente tendrán un impacto adverso sobre las remesas externas y el turismo (respectivamente la segunda y tercera fuentes de divisas cubanas), mientras que la aplicación del título III de la ley Helms-Burton generaría costes considerables por las demandas interpuestas y un efecto de congelamiento en la inversión futura.

La reacción de la dirigencia cubana frente a la crisis que se agrava ha sido el continuismo, de lo que no ha funcionado por seis décadas; muy poco se dice oficialmente (aunque se destaca por los académicos economistas del patio) sobre la urgente y necesaria profundización de las reformas económicas fallidas de Raúl Castro, a fin de adoptar algunas de las políticas del socialismo de mercado practicado con éxito en China y Vietnam. Para que Cuba pueda encarar la dura crisis que se avecina a corto plazo y conseguir escapar de la dependencia económica externa a largo plazo, esa es la alternativa más viable.

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CUBA’S NEW CONSTITUTION EXPLAINED

By Geoff Thale and Teresa Garcia Castro

Washington Office on Latin America, (WOLA), February 26, 2019

Original Article: Cuba’s New Constitution

On February 24, Cubans went to the polls to vote on the ratification of a new constitution, one that makes significant changes to the country’s political, social, and economic order. This was the first time in 43 years that the Cuban people had the opportunity to express either support or opposition to a proposal that fundamentally restructures aspects of the Cuban economy and political system.

 Cuba’s President Miguel Diaz-Canel, left, Cuban First Vice President Salvador Valdes Mesa, center and Cuban Vice President Ramiro Valdez, right.

According to the Cuban electoral commission, voter turnout reached 84 percent (slightly higher than in Cuba’s last election cycle in April 2018), with 87 percent of the votes in favor. The size of the vote suggests that, whatever misgivings or frustrations Cubans had with the new Constitutional proposal, they saw it as a step in the right direction.

The new Cuban Constitution retains language that proclaims the Communist Party’s guiding role in Cuban society and socialism as being irreversible. At the same time, the document includes several major changes to Cuba’s traditional economic and political model.Additionally, the drafting process that yielded the final text that was approved in the February 24 referendum involved a citizen consultation process that was relatively inclusive and even resulted in changes to the final document, an important indication that the Cuban government’s gradual process of reform is continuing.   

Overall, there was real and relatively open debate leading up to the referendum on the Cuban Constitution.

Cuba’s current constitution was drafted and approved by referendum in 1976. Since then, the government’s vision for the country’s economy has changed significantly, especially in the past decade.  Reform guidelines announced in 2011, alongside a Communist Party document approved in 2016, make clear that Cuba is moving toward a mixed economy that includes both a private sector and state-run sector, a more significant role for foreign investment, and where the central planning role, though not eliminated, is diminished. A small private sector has already emerged in Cuba, and grown substantially in the last few years.

Overall, the past decade has seen Cuba’s Communist Party shift (at least in principle) toward a less heavy-handed approach to exercising influence over both Cuban society and the economy. In addition, expanded internet access has helped spread access to information and enabled greater and more open political debate.

In the face of these ongoing changes, the government launched a process to revise and update the 1976 Cuban Constitution. Some people had hoped that the final text would incorporate more radical changes in the Cuban model, and were disappointed. Indeed, some rumored changes did not appear in the final version that was voted on, while other proposed reforms appear to have been postponed to later debates about implementing legislation in the National Assembly.

Still, Cuba’s new constitution includes some noteworthy overhauls.The document does the following:

  • Recognizes private property and promotes foreign investment as fundamental to the development of the economy.
  • Limits the term of the president—who is selected by the National Assembly, as in parliamentary systems—to two consecutive five-year terms, and requires that the president be under sixty when s/he is elected. (This is a dramatic change from the era in which aging revolutionaries monopolized key government positions, and were repeatedly approved in their positions.)
  • Restores the pre-1976 position of Prime Minister, an official selected by the president who leads government ministries on a day-to-day basis.
  • Forbids discrimination based on sexual orientation.
  • Guarantees women’s sexual and reproductive rights and protects women from gender violence.
  • Establishes the presumption of innocence in criminal proceedings and the right to habeas corpus.
  • Strengthens the authority of local governments.
  • Allows holding dual citizenship.

These changes, and others, will have to be implemented through legislation and regulation. That process is likely to be both gradual and complicated. However, the changes in the new Cuban Constitution are undeniably significant, both reflecting and advancing the process of economic reform, strengthening citizen protections, and making the political process more transparent. While not as transformative as some had hoped, they should not be dismissed as meaningless or cosmetic.

 

THE CONSTITUTIONAL PROCESS

The process by which the new constitution and referendum came about is also noteworthy, given the degree of citizen participation involved and the government’s response to some of the feedback it received.

Constitutional reform had been under discussion since 2013, but it wasn’t until June 2018 that a drafting commission (made up of senior government and Communist Party officials, the heads of several Cuban National Assembly committees, and academic and technical advisors) began to work on this issue seriously. The government, the National Assembly, and the Communist Party all engaged in ongoing internal debates about the draft constitution, reflecting a larger national conversation among political elites about the pace and depth of political and economic reform in Cuba

Despite Cuba’s image as a state that has suppressed religious freedom, prevented organized political campaigns, and been unwilling to listen to citizens’ views, the government responded.

The first draft of the constitution was approved by the National Assembly in July 2018. For a subsequent three-month period, Cubans were invited to suggest changes to the proposed draft. According to official numbers, more than 8 million people participated in nearly 112,000 debates in workplaces, schools, and community centers, and suggested a large number of proposed modifications to the constitution draft.

This participatory process was also significant in that, for the first time, Cuban expats were allowed to submit proposed changes to the constitution draft. However, other than diplomats, Cubans abroad were not allowed to vote in the referendum unless they returned to the island to cast their ballots.

Overall, the consultation process constituted a significant exercise in citizen participation. While officials were not required to make changes based on citizen feedback, there were some cases in which they did.

The most well-known example of this was the same-sex marriage provision: a draft of the constitution originally included language that defined marriage as a consensual union between two people, without specifying genders. This attracted significant pushback from evangelical churches and some sectors of the Cuban Catholic Church, who organized a campaign to get the provision withdrawn. Many Cubans supported this campaign and made their objections known by disseminating posters, stickers, and t-shirts, threatening to vote “no” in a constitutional referendum. Around 179,000 people signed a petition, backed by evangelical churches, calling on the government to withdraw the provision.

The new constitution and the constitutional drafting process mark important steps forward in the economy, the political system, and the decision-making process in Cuba…

Despite Cuba’s image as a state that has suppressed religious freedom, prevented organized political campaigns, and been unwilling to listen to citizens’ views, the government responded. The commission in charge of processing citizen feedback eventually withdrew the proposed language. The just-approved constitution now contains no language on marriage; the issue will likely be revisited in a debate over the Cuban Family Code sometimes in the next two years.

Meanwhile, the government launched a campaign to encourage “yes” votes with posters, advertising, and the use of social media. On the other hand, opposition forces also painted “no” signs, printed up T-shirts, and staged Twitter protests. While there were reports that some proponents of the “no” vote were harassed, overall, there was real and relatively open debate leading up to the referendum on the Cuban Constitution.

 

WHAT HAPPENS NEXT

Overall, the new constitution and the constitutional drafting process mark important steps forward in the economy, the political system, and the decision-making process in Cuba, and should be understood as signs of change in the thinking of the political leadership and in the population as a whole.

Indeed, the referendum comes at a complicated moment for Cuba. Economic growth has stalled in the past year, and is projected to be no more than1.5 percent in 2019. Austerity measures initiated in 2016 will continue this year, including cuts in energy and fuel to state companies and reduced imports of consumer goods. The government will struggle to maintain its investment in the social safety net, including free healthcare, education and other services

Meanwhile, the Trump administration is threatening additional economic sanctions on the island, which could make foreign investment riskier. These sanctions will damage Cuba’s already fragile economy, and hurt everyday Cubans. In addition, they are likely to discourage the process of economic reforms and will have a negative impact on the growing private sector. A more constructive approach, and one that would encourage rather than discourage internal reform, would be to return to normalizing U.S.-Cuban relations. Ultimately, recognizing that important if gradual changes are underway in Cuba—as the new constitution illustrates— is in the interests of both the Cuban people and the United States.

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FOREIGN INVESTMENT IN CUBA MIGHT BE AT RISK IF U.S. ALLOWS LAWSUITS OVER CONFISCATED PROPERTY

BY MIMI WHITEFIELD

Miami Herald, FEBRUARY 20, 2019 12:00 AM

Original Article: Confiscated Property

Cuba’s efforts to attract foreign investment to boost its ailing economy were limping along even before the Trump administration raised the possibility that it might allow lawsuits in U.S. courts against foreign companies that do business on the island using properties confiscated from Americans or Cubans who later became U.S. nationals.

Now with the clock ticking on a U.S. decision on whether to allow U.S. nationals to sue for monetary damages, Cuba’s investment climate might be about to take another hit.

“I think this would be another layer of concern for potential foreign investors and could chill investment in Cuba considerably,” said Jason Poblete, a Washington area attorney who specializes in federal regulatory matters. “It would be an added complication.”

Every U.S. president since 1996 has routinely suspended Title III — the lawsuit provision — of the Helms-Burton Act fearing fallout from important U.S. allies such as the EU countries, Canada and Mexico whose investors in Cuba could be targeted. Like clockwork, presidents have waived the lawsuit provision every six months for more than two decades. The Trump administration has suspended it three times already.

But in January Secretary of State Mike Pompeo informed Congress that this time, beginning on Feb. 1, there would be only a 45-day suspension of Title III. “This extension will permit us to conduct a careful review of the right to bring action under Title III in light of the national interests of the United States and efforts to expedite a transition to democracy in Cuba,” the State Department said.
The review is being conducted at a time when U.S.-Cuba relations are increasingly frayed and will take into consideration “factors such as the Cuban regime’s brutal oppression of human rights and fundamental freedoms and its indefensible support for increasingly authoritarian and corrupt regimes in Venezuela and Nicaragua,” the State Department said.

Analysts say that indicates that the administration wants to make the case that this goes beyond property rights and foreign investment in Cuba and also has a national security dimension.

The decision could come soon, on or around March 2, because the secretary of state must give Congress at least 15 days notice before a suspension of Title III is to begin.

In a process that ended decades ago, the United States certified 5,913 claims for Cuban properties that belonged to U.S. citizens and were expropriated shortly after the 1959 revolution. Those claims plus interest are valued at about $8 billion in today’s dollars.

But under Helms-Burton, also known as the Cuban Liberty and Democratic Solidarity Act, Cubans who were not U.S. citizens at the time their properties were seized also would be able to file suit if a foreign investor in Cuba is “trafficking” in their former properties.

That would include investors who have joint ventures or partnerships with Cuban entities and companies that use or benefit from disputed properties. It also could target foreign companies that have management contracts for properties with underlying claims.

Excluded from the Title III definition of trafficking are any transactions and uses of confiscated property “incident to lawful travel to Cuba” as well as any property that is used for the delivery of international telecommunications to Cuba.

Those who lost their homes and smaller property owners also would be precluded from filing lawsuits if the value of their confiscated property didn’t exceed $50,000 at the time it was taken.

“It would not be easy to make a Title III claim. It requires time, money and emotional capital,” said Poblete. “This is complex litigation.”

Helms-Burton, which was signed into law in 1996 in the heat of Cuba’s shoot-down of two civilian planes piloted by Cuban Americans, notes that the Cuban government “is offering foreign investors the opportunity to purchase an equity interest in, manage or enter into joint ventures using property and assets, some of which were confiscated from United States nationals” in an effort to gain “badly needed financial benefit.”
Cuba, once wary of foreign investors, has said it needs to attract $2.5 billion annually in foreign investment to meet its development targets, but so far it has fallen short of that goal. From October 2017 to October 2018, for example, Cuba approved 40 new projects, representing a potential investment of $1.5 billion.

For 2018-2019, Cuba has announced it is opening up 525 projects, everything from opportunities in the tourism sector to building pharmaceutical, LED lighting and food processing plants, to potential foreign investors. This $11.6 billion portfolio of investment opportunities is the largest Cuba has ever released, beating the previous wish list for $10.7 billion worth of investment in 465 projects.

After the Cuban economy grew by just over 1 percent in 2018, Cuban leader Miguel Díaz-Canel said that “Cuba’s fundamental battle” is economic and that one of Cuba’s urgent needs is attracting more foreign direct investment.

But not everyone is convinced that Cuba is doing enough if it truly wants to attract foreign investors.

“The Cubans might say that foreign investment is a central part of their economic strategy but they haven’t created a climate that is attractive for foreign investment,” said Richard Feinberg, a professor at the University of California San Diego’s School of Global Policy and Strategy and a Brookings Institution fellow.

“The domestic market is stagnant if not shrinking. For companies interested in repatriating profits? There are already delays in Cuba repatriating profits,” he said.

Potential investors also have complained of a lengthy, cumbersome process for evaluating investment proposals, although Cuba said it is streamlining the approval process. It also has opened a Special Economic Development Zone in Mariel that offers special tax and customs breaks and allows up to 100 percent foreign ownership.

 

“The biggest disappointment with Díaz-Canel so far is that the economy is in serious straits. The Cuban people would like to see light at the end of the tunnel,” Feinberg said.

But in the event that Title III lawsuits are allowed to go forward, he said, “the business climate in Cuba would go from a temperature of 0 to minus 5 degrees. That may be a bit dramatic but already there’s just a trickle of foreign investment coming in.”

Cuban Foreign Minister Bruno Rodríguez said earlier this week that Cuba is ready if the United States applies Title III: “We have a program, with a predictable plan for the economy until 2030. The Cuban economy has a strong international anchor.”

Even if the U.S. government decides after its review to continue the suspension of Title III, “the threat itself has a chilling effect,” Feinberg said. “For companies contemplating a new investment in Cuba, they must do their due diligence and make sure there is not an underlying claim.”
“This isn’t really about property,” said Phil Peters, president of the Cuban Research Center. “It’s an attempt to squeeze the Cuban economy to hopefully push Cuba over the brink” and bring political change.

If Title III is activated, a person or entity trafficking in confiscated property would get a three-month warning and then would be liable for monetary damages up to three times the value of the property plus interest as well as court costs and reasonable attorneys’ fees.

European hoteliers and Canadian mining operations are expected to be among the biggest targets if Title III goes forward. Investors from as many as 20 countries could be the targets of Title III lawsuits, said John Kavulich, president of the U.S.-Cuba Trade and Economic Council.

But U.S. trading partners are expected to push back against the extraterritorial nature of Title III.  “The EU, Canada, the UK, and Mexico have what are called blocking regulations on their books to countermand an action under Title III,” said Pedro Freyre, a Miami lawyer who represents cruise lines and other U.S. companies doing business in Cuba.

Such blocking regulations, he said, wouldn’t allow defendants to participate in discovery, would block compliance with any U.S. court orders and wouldn’t allow for the enforcement of a judgment. “They generally allow for claw-back as well, which means the defendant would be allowed to sue the claimant for damages and attorney’s fees,” Freyre said.
The EU also could revive a World Trade Organization complaint it filed when Helms-Burton first became law but which it later withdrew.

“The foreign companies will argue that the United States doesn’t have jurisdiction,” said Robert Muse, a Washington attorney who specializes in U.S.-Cuba relations. “This would be a hard-fought issue.”

Sherritt International

 Nickel Mine and Concentrator, Moa, Cuba; Jointly Owned by Sherritt International and Cuba. A “Helm’s-Burton” Property

 

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PRESIDENT TRUMP RISKS ALIENATING ALLIES OVER CUBAN AMERICAN PROPERTY CLAIMS

William M. LeoGrande

February 14, 2019

The Trump administration is seriously considering whether to allow Title III of the Cuban Liberty and Democratic Solidarity Act (Helms-Burton) to go into effect in March, according to National Security Adviser John Bolton. On January 16, Secretary of State Mike Pompeo announced that he was suspending Title III for just 45 days instead of the ususal six months while the administration reviews whether its implementation would promote democracy in Cuba. He warned foreign companies doing business on the island that they had better “reconsider whether they are trafficking in confiscated property and abetting this dictatorship.”

Title III allows U.S. nationals to file suit in U.S. courts against anyone “trafficking” in their confiscated property in Cuba—that is, anyone profiting from it. If President Trump allows Title III to go fully into effect, he will open the door to as many as 200,0000 law suits by U.S. nationals, most of them Cuban Americans, whose property was taken by the Cuban government after 1959. U.S. courts would be swamped, the ability of U.S. companies to do business on the island would be crippled, and allies abroad might retaliate for U.S. suits brought against their companies in Cuba. Once the suits have been filed, there will be no way to undo the resulting legal chaos and the tangle of resulting litigation could take years to unwind.

The U.S. Foreign Claims Settlement Commission has certified 5,913 claims of U.S. nationals whose property was seized. These are the claims that Cuba recognizies and that the United States and Cuba had begun to discuss during the Obama administration. But Title III takes the unusual position of allowing naturalized Cuban Americans who lost property to also file suit against alleged traffickers. Normally, international law recognizes the sovereign right of governments to dispose of the property of their own citizens. According to the Department of State, by including Cuban Americans who were not U.S. citizens when their property was taken, Title III creates the potential for an estimated 75,000-200,000 claims worth “tens of billions of dollars.”

Back in 1996, when the law was being debated in Congress, angry opposition from U.S. allies Canada, Mexico, and the European Union, whose companies doing business in Cuba would be the targets of Title III law suits, led President Bill Clinton to insist on a presidential waiver provision in Title III. As a result, the president has the authority to suspend for six months the right to file Title III law suits, and he can renew that suspension indefinitely. Every six months since the Cuban Liberty and Democratic Solidarity Act was passed, successive presidents, Democrat and Republican alike, have continued the suspension of Title III.

U.S. allies have denounced Title III’s extraterritorial reach. Mexico, Canada, the United Kingdom, and the European Union all passed laws prohibiting compliance with it. The European Union also filed a complaint with the World Trade Organization, which it did not pursue after President Clinton suspended Title III. In fact, the principal justification both President Clinton and President George W. Bush offered for continuing the suspension was the need to maintain cooperation with European allies.

If President Trump does not renew the suspension, all these old wounds with allies will be reopened as U.S. claimants try to haul foreign companies into U.S. courts for doing business in Cuba. We already have enough tough issues on our agenda with Mexico, Canada, and Europe without adding another one. At this very moment, Washington is trying to muster their support in dealing with the Venezuelan crisis, support that could be endangered if the administration picks a fight with them over Title III.

U.S. businesses would not be exempt from potential liability. A Cuban American family in Miami claims to have owned the land on which José Martí International Airport was built, so any U.S. carrier using the air field could conceivably be sued under Title III. Another family that owned the Port of Santiago could file suit against U.S. cruise ships docking there.

Moreover, it would be almost impossible for a U.S. or foreign company to know in advance whether a proposed business opportunity in Cuba might become the subject of Title III litigation. “This will effectively end for decades any attempt to restore trade between the U.S. and Cuba,” attorney Robert Muse told the Tampa Bay Times.

When President Trump announced new sanctions on Cuba back in June 2017, senior administration officials said they were designed “to not disrupt existing business” that U.S. companies were doing in Cuba. If the president fails to continue the suspension of Title III, business relations will be disrupted far more severely and irreparably than they would be by any regulatory change.

William M. LeoGrande is Professor of Government at American University in Washington, DC, and co-author with Peter Kornbluh of Back Channel to Cuba: The Hidden History of Negotiations between Washington and Havana (University of North Carolina Press, 2015)

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LA ECONOMÍA CUBANA Y EL SÍNDROME DE CONCHA

Por Juan Triana Cordoví

OnCuba News

Fuente: http://oncubanews.com/opinion/columnas/contrapesos/la-economia-cubana-y-el-sindrome-de-concha/

Plaf… o demasiado miedo a la vida es una película cubana de 1988 y podría decirse que es un metáfora anticipada y muy aproximada de nuestra realidad actual.

Concha es uno de los personajes principales de esa película cubana. Mujer divorciada y con un hijo mayor, por demás pelotero. Ella se debate entre la decisión de realizar un cambio drástico (comenzar una nueva vida mudándose con un chofer de taxi, hombre que la ama y al que ella ama) o seguir igual: encerrada en sí misma y en su pasado, soportando una situación interna difícil de sostener y enfrentada a agresiones externas (ataque con huevos) que la acosan sistemáticamente y sobre los cuales no tiene la posibilidad de influir.

Al final Concha muere de un infarto que le produce el sonido de una pelota de goma rebotando en una pared de su casa y que ella confunde con el sonido de otro huevo reventando en algún lugar de su hogar. La verdadera razón de su muerte, sin embargo, fue la indecisión y el miedo al cambio.

Cuba se debate en un problema parecido al de Concha. Es atacada por un enemigo externo que parece insaciable (Trump y los cubano-americanos de Marco Rubio y compañía, que ahora pretenden chantajear al mundo amenazando con poner a funcionar el título 3 de la Ley Helms- Burton); enfrenta una situación económica difícil y está abocada a cambios significativos tal cual anuncia el proyecto de nueva Constitución de la República. A la vez, padece de la permanencia de una testaruda resistencia a los cambios necesarios que de alguna manera ha conducido a idas y venidas en ese proceso de transformación tan necesario que exige nuestra realidad económica, política y social.

“El flamante restaurante Moscú. la calle P entre 23 y 21, ”

Esa resistencia ha generado costos muy grandes. Describo alguno de estos:

  • La tasa de crecimiento sigue siendo muy baja y está muy lejos de la tasa de crecimiento que necesitamos.
  • Las exportaciones de bienes siguen teniendo un comportamiento insuficiente y continúan concentradas en unos pocos bienes.
  • La dependencia de las importaciones se mantiene y no parece que tenga solución de corto plazo.
  • La presión fiscal no permite amplios márgenes de maniobra.
  • El empleo no crece y se ha precarizado.
  • El salario, a pesar del crecimiento del salario medio mensual, sigue siendo insuficiente.
  • El éxodo de personal calificado, especialmente jóvenes y mujeres que desangra a nuestra economía, se mantiene.
  • La tasa de inversión permanece muy baja respecto a las necesidades de crecimiento, prácticamente está a la mitad de esas necesidades y la ejecución de las inversiones sigue siendo insuficiente.
  • La deuda de corto plazo a proveedores y los dividendos no pagados a inversionistas extranjeros son una carga financiera importante, se convierten en incentivos negativos al crecimiento y generan incertidumbre a futuros inversionistas interesados en el país.
  • La empresa estatal socialista, responsable de al menos el 80% del PIB y mayoritaria como fuente de empleo, pilar de las transformaciones emprendidas hace unos años atrás, no alcanza a responder adecuadamente a nuestras necesidades de desarrollo y se ha anunciado será necesario repensar las OSDEs.
  • La inversión extranjera, declarada estratégica para el desarrollo del país no logra despegar y aun cuando ha mejorado su captación respecto a años atrás sigue siendo insuficiente y está lejos de nuestras necesidades reales.
  • Se mantienen brechas importantes –vertical y horizontal– en la infraestructura básica.
  • Existen brechas tecnológicas significativas en buena parte de nuestro sistema productivo.
  • El sector no estatal, cooperativas y propietarios privados en general, arrendadores de tierra y empleados en ese sector, aun espera por un marco legal más proactivo que le permita crecer cualitativamente.
  • Sectores decisivos, como la agricultura y la industria no terminan de encontrar una senda dinámica de crecimiento sostenido.

Esos son en buena parte los costos de esa resistencia. Todos ellos, o la inmensa mayoría, fueron objeto de análisis en la última sesión de la Asamblea Nacional.

Para Continuar: Triana, LA ECONOMÍA CUBANA Y EL SÍNDROME DE CONCHA 2019

Dr. Juan Triana

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CUBA MUST CONTEND WITH A NEW COLD WAR IN THE WESTERN HEMISPHERE

WORLD POLITICS REVIEW, Thursday, Jan. 24, 2019

Cuba faces a much tougher international environment today than it did just a few years ago. Relations with Latin America have cooled as relations with Washington have regressed to a level of animosity reminiscent of the Cold War. In response, Havana is looking to old ideological comrades in Moscow and Beijing to compensate for the deterioration of ties in its own backyard.

These setbacks abroad come at a time when the Cuban economy is vulnerable. Export earnings have been falling, foreign reserves are low, and the debt service burden is heavy, as Cuba tries to retire old debts that it renegotiated. Despite the economic reforms begun in 2011, domestic productivity is still weak, making Cuba dependent on foreign investment for capital to fuel growth.

A decade ago, progressive governments dominated Latin America. Cuba had friendly presidents in every major Latin American country except Mexico and Colombia, and even those two were not actively hostile. In Venezuela, Hugo Chavez saw himself as a protégé of Fidel Castro, promoting “21st-century socialism” in the hemisphere financed by his country’s vast oil wealth. At its peak, Venezuela provided about two-thirds of Cuba’s oil consumption at highly subsidized prices, with the cost offset by some 40,000 Cuban doctors and teachers serving Venezuela’s poor.

Under Presidents Luiz Inacio Lula da Silva and Dilma Rousseff, Brazil’s state development bank provided $832 million in loans to modernize Cuba’s aging port at Mariel. Pressure from Latin American heads of state at the Sixth Summit of the Americas in Colombia in 2012 contributed to President Barack Obama’s landmark decision to normalize U.S.-Cuban relations.

But in recent years, the progressive “pink tide” of leftist governments has given way to a riptide of conservatism. Chavez is gone and his successor, Nicolas Maduro, presides over an ever-worsening political crisis and an economy in free fall, with 80,000 percent hyper-inflation last year. Venezuela’s oil production is down by two-thirds because of mismanagement and neglect. Oil shipments to Cuba have fallen by 50 percent, forcing the government to ration energy consumption by state entities, stunting economic growth.

In Brazil and Colombia, far-right governments have aligned themselves with Washington’s threatening stance toward Havana. New Brazilian President Jair Bolsonaro’s denunciations led Cuba to end its “More Doctors” program, under which some 8,000 Cuban physicians served Brazil’s poor, earning Havana $250 million annually. In Chile, Argentina, Ecuador, Guatemala, Paraguay and Peru, progressive presidents have been replaced by conservatives. In short, Latin America has become a much less hospitable diplomatic environment for Cuba. It is no coincidence that on his first major international tour, Cuban President Miguel Diaz-Canel’s destination was not Latin America, but Russia, followed by North Korea, China, Vietnam and Laos.

The reversal of Havana’s fortunes in Latin America has been serious, but the reversal of relations with Washington has been disastrous. In the two years after Obama and Castro announced their plans to normalize relations on Dec. 17, 2014, the two governments re-established diplomatic relations, expanded trade and travel, and signed 23 bilateral accords on issues of mutual interest. Some 60 U.S. companies signed commercial deals with Havana, and the number of U.S. visitors jumped 57 percent between 2014 and 2016. Castro’s strategy of opening Cuba to U.S. trade and investment as part of his plan to modernize the economy seemed to be paying off.

Donald Trump’s election changed all that. In June 2017, Trump declared he was “canceling” Obama’s policy of engagement and tightening the embargo. Then the mysterious medical problems that afflicted some two dozen U.S. diplomats in Havana became the excuse for downsizing the embassy, thereby crippling educational, cultural and commercial exchanges. Washington imposed a travel advisory warning Americans not to go to Cuba, and in the first half of 2018, the number of U.S. visitors plummeted nearly 24 percent. However, cruise ship arrivals increased over the next six months, so the total number of U.S. visitors ended the year flat.

Then John Bolton, who targeted Cuba during George W. Bush’s administration with false claims that Havana was developing biological weapons, became Trump’s national security adviser last April. Speaking in Miami on the eve of the U.S. midterm elections, he ratcheted up the threatening, insulting rhetoric, declaring Cuba a member of a “Troika of Tyranny”—along with Venezuela and Nicaragua—and promising more sanctions to come. The administration is reportedly weighing sanctions on individual Cuban officials, imposing more restrictions on travel to the island, and returning Cuba to the Department of State’s list of state sponsors of international terrorism.

But the most serious sanction under review is allowing Title III of the Cuban Liberty and Democratic Solidarity Act—known as the Helms-Burton Act, for its original sponsors—to go into effect. Suspended by every president since the law passed in 1996, Title III would allow U.S. nationals, including Cuban-Americans, who lost property after the 1959 revolution to sue both the U.S. and foreign companies in U.S. courts for “trafficking” in their property—that is, making a profit from it.

During its first two years, the Trump administration continued the suspension of Title III, which has to be renewed every six months. But with a new deadline looming this month, hard-liners in the National Security Council—led by Bolton and Mauricio Claver-Carone, a long-time lobbyist for regime change policies aimed at Cuba—argued against suspension. The result was a short 45-day suspension, giving the Trump administration more time to assess the consequences of letting Title III go into effect.

Activating Title III would open a floodgate of litigation and damage Cuba’s efforts to attract foreign investment since U.S. and foreign firms would be loath to risk getting caught up in costly court fights. It would also prompt counter-measures by European governments unwilling to countenance Washington’s assertion of extraterritorial jurisdiction over their firms.

Faced with this new standoff in the Caribbean, Cuba is rejuvenating relations with its old Cold War allies, Russia and China, both of which are expanding their presence in Latin America. Moscow was the first stop on Diaz-Canel’s first major foreign trip last November, and he came away with $260 million in new economic assistance and $50 million in military aid to refurbish Cuba’s aging Soviet-era arsenal. Diaz-Canel and Russian President Vladimir Putin reaffirmed that their “strategic partnership” extended beyond just economic cooperation. In Beijing, Diaz-Canel met with President Xi Jingping and signed several economic cooperation agreements. China pledged new investments in communications, energy and biotechnology—sectors where U.S. firms had hoped to gain a foothold before U.S.-Cuban relations soured.

A small island like Cuba has to be integrated into the global economy in order to prosper. Raul Castro clearly recognized that when he sought to repair diplomatic and commercial relations with Latin America and the United States. Historically, Cuba has suffered because of its economic dependence on a series of global patrons: Spain, the United States, the Soviet Union and Venezuela. Cuba’s leaders would prefer to diversify economic ties across a wide range of countries regardless of ideology. But the Trump administration’s renewed hostility, along with the collaboration of conservative Latin American governments, leaves Cuba no choice but to look for allies among Washington’s global rivals.

William M. LeoGrande is professor of government at American University in Washington, D.C., and co-author with Peter Kornbluh of “Back Channel to Cuba: The Hidden History of Negotiations between Washington and Havana.”

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