Author Archives: Arch Ritter

News and Articles on the Cuban Economy, September 16, 2010

Edmonton Journal, September 16: Editorial. Castro still surprises http://www.edmontonjournal.com/news/Castro+still+surprises/3531639/story.html

Generation Y, September 16: The Evil Master http://www.desdecuba.com/generationy/?p=1989

The Miami Herald, September 16: The ‘de-Fidelization’ of Cuba has begun http://www.miamiherald.com/2010/09/15/1826223/cuba-expert-the-de-fidelization.html

Diario de Cuba, 16 de septiembre: Cuentapropistas deberán pagar a la seguridad social el 25% de los ingresos http://www.diariodecuba.net/cuba/81-cuba/3220-cuentapropistas-deberan-pagar-a-la-seguridad-social-el-25-de-los-ingresos.html

RIA Novosti, September 16: Cuba may link up to Glonass system http://en.rian.ru/science/20100916/160606798.html

AP, September 15: Self-employment key to Cuban economic overhaul http://www.google.com/hostednews/ap/article/ALeqM5ipe0no99xWr_oUrAP-q6PnKLj8XgD9I897AO0

BBC Mundo, 15 de septiembre: ¿A dónde irán los cesantes cubanos? http://www.bbc.co.uk/mundo/america_latina/2010/09/100915_cuba_despidos_donde_iran_lav.shtml

Cuba Standard.Com, September 15: Sherritt announces dividend http://www.cubastandard.com/2010/09/15/sherritt-announces-dividend/

Reuters, September 14: Analysis: Cuba jobs reform brings opportunity and uncertainty http://www.reuters.com/article/idUSTRE68D5A320100914

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News and Articles on the Cuban Economy, September 15, 2010

National Post, September 15: Is Cuba giving up on socialism? http://www.nationalpost.com/Cuba+giving+socialism/3525648/story.html

Time, September 15: Cuba’s Big Layoffs: What to Do with the Unemployed? http://www.time.com/time/world/article/0,8599,2019225,00.html

Documento. El Nuevo Herald, 15 de septiembre: ¿Cómo está planificado el proceso de reducción de plantillas? http://media.elnuevoherald.com/smedia/2010/09/14/16/Proceso-reduccion-Plantilla-Disponibles-Isabe1l.source.prod_affiliate.84.ppt

AP, September 14: Cuba’s leaders lay out details for layoffs http://www.google.com/hostednews/ap/article/ALeqM5ipe0no99xWr_oUrAP-q6PnKLj8XgD9I7O0BO0

The Miami Herald, September 14: Cuba’s economic overhaul would require new approach, experts say http://www.miamiherald.com/2010/09/14/1825330/cubas-economic-overhaul-would.html

St. Petersburg Times, September 14: Economic disruption of mass layoffs in Cuba could lead to exodus http://www.tampabay.com/news/world/economic-disruption-of-mass-layoffs-in-cuba-could-lead-to-exodus/1121594

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Fidel’s No-Good Very Bad Day

A “Senior Moment”? On Wednesday September 8, former President Fidel Castro was quoted as saying: “The Cuban model doesn’t even work for us anymore”, when asked if Cuba’s economic system was still worth exporting to other nations, by Jeffrey Goldberg, of The Atlantic. A few days later, Friday September 10, Fidel said that it was a misunderstanding though Jeff Goldberg and Julia Sweig insisted that this is what he said. Had Fidel been experiencing a “Senior Moment?” Had he been speaking in jest- a throw-away line in a jocular conversation, but also revealing concerning his legacy to Cuba and the world? Was he misunderstood or misheard or mistranslated?

Fidel’s Economic Legacy: Rejected by Brother Raul and Questioned by Cuba’s Government

Then on Monday September 13, the Pronunciamiento de la Central de Trabajadores de Cuba announced the new policy on lay-offs in the state sector and expansion in the self-employment and cooperative sector employment. This statement outlines a new direction for the Cuban economy, namely towards greater reliance on the market mechanism, private ownership and entrepreneurship and a reduced role for the state and (attempted) planning. Cuba already had a “mixed economy” with a substantial private sector in agriculture and some 143,000 in non-agricultural activities, not to mention all those in the underground economy. However, the statement by the Cuban Federation of Labour indicates a major shift of emphasis towards a more marketized, decentralized, private-sector economy. This shift in direction for the Cuban economy negates all that Fidel has stood for regarding the economy in the past. Fidel was responsible for

  • the initial nationalizations of almost all the private sector, including self-employment in 1961-1963 and 1968 (with the “Revolutionary Offensive” )
  • the continuous fulminations against the self-employment and “capitalism” from a variety of perspectives
  • the shut-down of the farmers’ markets in 1986 with the “Rectification program”
  • the tight containment of self-employment after 1995 and
  • discrimination against self-employed Cuban citizens vis-à-vis foreign enterprise in joint ventures in terms of tax regimes.

President Raul Castro’s new approach instead is placing its faith in the small enterprise and cooperative sector, hoping that these will to come to the rescue of the economy by absorbing the underemployed labour in the state sector to be laid off in the next six months. . This is strong confirmation that President Raul Castro himself is convinced that the Cuban model is not working any more – if it ever did. It also is likely that the Communist Party and the National Assembly will not contradict Raul on this. I argued earlier that none of the variants of the “Cuban Model” had worked effectively. (The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did) Many foreign analysts and observers had of course questioned the value of Fidel’s legacy in the economy as well as politically and in terms of human rights. It now appears that Fidel’s legacy is questioned by his own Government. President Raul Castro has implicitly rejected Fidel’s life work regarding the economy of Cuba.

A Difficult Day – and Situation – for Fidel

Fidel Castro allegedly said to the judges in his famous 1953 speech in his own defense at his trial after the unsuccessful attack on the Moncada army barracks “Condemn me, History will absolve me.” However, “History” will not absolve Fidel. It appears also that even the official versions of “history” under Cuba’s current Communist system will not absolve Fidel either. Small wonder that he is attempting to portray himself as the elder statesman, altruistically offering advice and warnings on international issues, many of which appear to him to be apocalyptic in character. How will Fidel respond to the official Cuban rejection of his vision of “socialism” that he has been attempting to impose on Cuba for almost half a century? . PS. It is instructive that the labour federation, the CTC, is placed in charge of implementing the lay-offs on the part of the government rather than trying to defend the interests of the state sector workers. This pretty much confirms the view of the CTC as an arm of the regime not an organization to defend workers’ rights and interests.

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News and Articles on the Cuban Economy, September 14, 2010

The Guardian, September 14: Cuba to cut more than 1m state jobs http://www.guardian.co.uk/world/2010/sep/14/cuba-privatisation-state-job-cuts

The Atlantic, September 14: The Cuban Model, Not Working So Much http://www.theatlantic.com/international/archive/2010/09/the-cuban-model-not-working-so-much/62904/

Cubaencuentro, 14 de septiembre: De la lealtad a la complicidad http://www.cubaencuentro.com/opinion/articulos/de-la-lealtad-a-la-complicidad-244826

Cubaencuentro, 14 de septiembre: La economía cubana: Opiniones, hechos y tendencias http://www.cubaencuentro.com/opinion/articulos/la-economia-cubana-opiniones-hechos-y-tendencias-244856

Diario de Cuba, 14 de septiembre: Ministro: Taxis en sistema de arrendamiento multiplicaron la productividad ’55 veces’ http://www.diariodecuba.net/cuba/81-cuba/3205-ministro-taxis-en-sistema-de-arrendamiento-multiplicaron-la-productividad-55-veces.html

Documento. Granma, 13 de septiembre: Pronunciamiento de la Central de Trabajadores de Cuba http://www.granma.cubaweb.cu/2010/09/13/nacional/artic01.html

Cuba Standard.Com, September 13: Official labor union: Workers must shift to private-sector jobs http://www.cubastandard.com/2010/09/13/official-labor-union-workers-must-shift-to-private-sector-jobs/

IPS, September 13: Cuban Union Calls for ‘Unity’ in Face of Job Reduction http://www.ipsnews.net/news.asp?idnews=52817

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News and Articles on the Cuban Economy, September 13, 2010

América Economía, 13 de septiembre: Cuba eliminará medio millón de empleos hasta primer trimestre de 2011 http://www.americaeconomia.com/politica-sociedad/politica/cuba-eliminara-medio-millon-empleos-hasta-primer-trimestre-de-2011

Granma, 13 de septiembre: Evaluó Ramiro Valdés marcha de inversiones en Matanzas http://www.granma.cubaweb.cu/2010/09/13/nacional/artic04.html

Financial Times, September 12: Cuba’s economy at a crossroads http://www.ft.com/cms/s/0/9dbb96b8-be99-11df-a755-00144feab49a.html

Café Fuerte, 12 de septiembre: Drástica caída en las compras de Cuba a EEUU http://cafefuerte.com/2010/09/12/drastica-caida-en-las-compras-de-cuba-a-eeuu/

AFP, 11 de septiembre: La UE deja ahora en el aire si revisará la Posición Común de Cuba en octubre http://es.noticias.yahoo.com/12/20100911/tes-la-ue-deja-ahora-en-el-aire-si-revis-044a974.html

AFP, September 10: Castro says misinterpreted on Cuban model not working http://www.google.com/hostednews/afp/article/ALeqM5gJI3zstKHFuSHGchgbaKBT4wQACQ

The Atlantic, September 10: Fidel Tries To Wiggle Out of One http://www.theatlantic.com/international/archive/2010/09/fidel-tries-to-wiggle-out-of-one/62826/

Cuba Standard.Com, September 10: Sucre to be accessible to private companies http://www.cubastandard.com/2010/09/10/sucre-to-be-accessible-to-private-companies/

Cuba Standard.Com, September 10: U.S. surgery equipment manufacturer eyeing Cuba http://www.cubastandard.com/2010/09/10/u-s-surgery-equipment-manufacturer-eyeing-cuba/

Café Fuerte, 9 de septiembre: Destituyen a director de la Unión Suchel http://cafefuerte.com/2010/09/09/destituyen-a-director-de-la-union-suchel/

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News and Articles on the Cuban Economy, September 10, 2010

The Guardian, September 10: Cuba: from communist to co-operative? http://www.guardian.co.uk/commentisfree/cifamerica/2010/sep/10/fidel-castro-cuba-communist

El Nuevo Herald, 10 de septiembre: Emporio intervenido en Colombia tiene nexos con Cuba http://www.elnuevoherald.com/2010/09/09/799393/emporio-intervenido-en-colombia.html

Opciones, 10 de septiembre: Avanzan trabajos de expansión de CUVENPETROL http://www.opciones.cu/leer.asp?idnuevo=4405

Bloomberg, September 9: Castro Remark on Cuba Model Not Working May Signal Change http://www.bloomberg.com/news/2010-09-09/castro-comment-on-cuba-model-not-working-may-signal-more-economic-opening.html

Mclean’s, September 9: Butting out in Havana http://www2.macleans.ca/2010/09/09/butting-out-in-havana/

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News and Articles on the Cuban Economy, September 9, 2010

Jeff Goldberg in The Atlantic, September 8: Fidel: ‘Cuban Model Doesn’t Even Work For Us Anymore’ http://www.theatlantic.com/international/archive/2010/09/fidel-cuban-model-doesnt-even-work-for-us-anymore/62602/

Reuters, September 8: Investment, freight declines reflect Cuban woes http://www.reuters.com/article/idUSN0810508920100908

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The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did

“The Cuban model doesn’t even work for us anymore” stated former President Fidel Castro, when asked if Cuba’s economic system was still worth exporting to other nations, by Jeffrey Goldberg, of  The Atlantic magazine during an interview in Havana. (JIM WYSS ,  AND LUISA YANEZ, Miami Herald, September 9, 2010), broken.html.

Was this a throw-away line? A rare moment of candor and  self-criticism? Or a mis-translation? Or is the implication that Raul can’t make things work anymore. but he, Fidel, could if he were back in charge?

In fact, the “Cuban Model” was a series of “FIDEL” MODELs. None of them ever worked effectively. They were all characterized by a dictatorial, overpowering and personal control by Fidel himself. From 1959 to 2006, the central feature of Cuba’s economic existence was Fidel’s micro-management of the economy. This was observed and analyzed in 1962 by the French agronomist Rene Dumont who lamented Fidel’s itinerant and ill-informed decision-making on every issue or problem that came to his attention. We saw it in January 2006, shortly before he left office, with “La Revolucion Energetica” in which again he micro-managed the issue.

The abolition of private enterprise in 1961, 1963 and 1968 (with the “Revolutionary Offensive”) has been a continuous disaster, suppressing and wasting the energies and entrepreneurial capabilities of the Cuban people. The 1961-1963 “Instant Industrialization” strategy was a disaster, quickly aborted. Likewise, the 1964-1970 “10 Million Ton Sugar Harvest” plus “New Man” plus Hyper-Centralization were all fiascos that also were aborted in 1970.

The Cuban economic expanded steadily from 1970 to 1985. Unfortunately this success was ephemeral, based as it was on Soviet support as well as a convertible currency debt build-up that led Cuba ultimately to declare a moratorium on debt servicing in 1986.

Cuba’s “Golden Age” of economic prosperity from 1970 to 1986 or so was one of Soviet economic Orthodoxy under-girded by massive Soviet subsidization.  This subsidization of the Cuban economy occurred mainly through the pricing of merchandise trade products. The USSR paid a ruble price for its sugar imports from Cuban that was a multiple of the prevailing world price at official exchange rates for many years. At the same time, Cuba paid a price that was below the prevailing market price for its petroleum imports from the USSR. The accompanying chart, derived from the work of William Leogrande, and J. M. Thomas illustrates the magnitudes of the assistance. My own quantitative estimates placed the value of this subsidization at around 23% to over 36% of National Income in the 1980 to 1987 period. (See the Table at the bottom of this note for the detail of the calculations.)

When economic stagnation set in 1985, Fidel designed the “Rectification Process” which was supposed to correct previous errors, re-centralize and de-marketize the economy and reignite economic expansion. This also failed.

Then with the termination of Soviet subsidies came the economic melt-down and the “Special Period in Time of Peace”. The latter in fact is not “special” but instead is the real world. In the “Special Period” the expansion of 2004 to 2008 is in large part due to the special relationship with Venezuela and the subsidization that this has produced. President Chávez supports Cuba through low-cost oil exports to Cuba, export and investment credits, and generous foreign exchange payments for Cuban exports of medical services.

In summary, the various development models and approaches that have dominated in Cuba have been Fidel’s personal models. Fidel Castro is correct in stating that they don’t work anymore. However, they have never worked.

Source:

Ritter, Archibald R. M. “The Cuban Economy inb the 1990s: External Challenges and Policy Imperatives.” Journal of Interamerican Studies and World Affairs, 32:3; Fall, 1990.

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New Publication on US-Cuba Relations: Cuba-Estados Unidos, tan lejos, tan cerca

Revista TEMAS, Cultura, Ideologia Sociedad, La Habana,

número 62-63 abril-septiembre de 2010

Web Address: http://www.temas.cult.cu/index.php.

After some three or four years trying to win approval within Cuba, a joint US-Cuba project on the relations between the two countries has finally come to fruition.

Rafael Hernandez, Editor of Revista TEMAS in Havana and Jorge Dominguez, Professor of Mexican and Latin American Politics and Economics, and Vice Chancellor for International Relations at Harvard University have succeeded in bringing together a multinational team of authors and in producing a study already published in Revista TEMAS in Cuba.

An English-language version is in process of publication in the United States with the title Debating U.S.-Cuban Relations: Shall We Play Ball? This is Jorge Dominguez second successful collaboration with Cuban authors in recent years, the first being The Cuban Economy at the Start of the Twenty-First Century, edited with Omar Everleny Perez Villanueva of the Centro de Estudios sobre la Economia Cubana, Universidad de La Habana, and Lorena Barberia also of Harvard.

An essay of mine is included in the collection, namely Estados Unidos-Cuba: potenciales implicaciones económicas de la normalización,

I must confess that I was surprised – but pleasantly surprised – that my essay was included in the collection. My expectation was that the essay would be rejected for ideological reasons.This article contains criticism of current economic policy and institutional structures. though couched in terms of an argument that the gains to Cuba from normalization with the United States would be significantly greater if a series of economic reforms were adopted. The reforms considered include

  • legalization of small, medium and cooperative enterprises,
  • relaxation of taxation and restrictions on self-employment,
  • modification of foreign investment policy to permit majority foreign ownership,
  • relaxation of controls on financial flows from abroad, and of course
  • monetary and exchange rate unification, among other things.

The absence of labor rights – the right to form independent labor unions, to bargain collectively, and to strike – is also discussed as a possible impediment to direct foreign investment in view of the opposition that US groups will have to US firms investing in Cuba under current conditions of the absence of labor rights.

The vetting process that the article underwent was rigorous but surprisingly un-ideological. A long series of critiques were made of the draft that arrived in Havana by the editorial advisors of TEMAS. Some of the criticisms were useful, some were ideologically oriented and a few were neither ideological nor useful. However, following Jorge Dominguez advice, I answered all the queries and criticisms as carefully as I could. Some I accepted. I changed some wording to be less inflammatory. Some criticisms I rejected as diplomatically as I could. In the end, my revisions were accepted by the TEMAS Editor, Rafael Hernandez.

One interesting change that the editors proposed and that I accepted was to remove the name of president Fidel Castro who I had referred to in mentioning the ambiguity of Cuba’s policies towards direct foreign investment, promoting it on the one hand but pronouncing against “globalization” – of which DFI is a part – with President Castro taking lead roles at the podium of the “Anti-Globalization” conferences that occurred for a number of years. The editor wanted Castro’s name removed from that discussion, but did not object to the discussion itself. This seemed to be a version of the hesitancy of many Cuban citizens to  mention Fidel’s name, but to use the hand motion of stroking a beard instead.

I will have to modify my criticisms of freedom of expression within Cuba – though only somewhat!

Below is the Title, Table of Contents, and Web address for the issue. The essay titles are hyper-linked to the TEMAS Web site though the connection often seems very slow.

Cuba-Estados Unidos: tan lejos, tan cerca

Reconfiguración de las relaciones de los Estates Unidos y Cuba, Jorge I. Domínguez, Profesor. Universidad de Harvard.

Enemigos intimacy. Paradojas en el conflicto Estados, Unidos-Cuba, Rafael Hernández, Politólogo. Revista Temas.

Cuba y los Estados Unidos en  las esferas de la defensa y la seguridad, Hal Klepak, Profesor. Royal Military College of Canada.

La seguridad nacional de Cuba frente a los Estados Unidos: conflicto y ¿cooperación?, Carlos Alzugaray Tret, Profesor. Centro de Estudios Hemisféricos y sobre Estados Unidos, Universidad de La Habana.

El terrorismo y el acuerdo anti-secuestros en las relaciones de Cuba con los Estados Unidos, Peter Kornbluh, Investigador. National Security Archive, Washington, DC

La política de la Unión Europea en el triángulo Cuba-Estados Unidos-España, Susanne Gratius, Investigadora. Fundación para las Relaciones Internacionales y el Diálogo Exterior (FRIDE), Madrid.

La Unión Europea y su papel en las relaciones Estados Unidos-Cuba, Eduardo Perera Gómez, Investigador. Centro de Estudios Europeo. Universidad de la Habana

Estados Unidos-Cuba: potenciales implicaciones económicas de la normalización, Archibald R. M. Ritter. Profesor. Universidad de Carleton, Ottawa.

Las relaciones económicas Estados Unidos-Cuba. La normalización pendiente. Jorge Mario Sánchez Egozcue, Investigador y profesor. Centro de Estudios Hemisfericos y sobre Estados Unidos, Universidad de La Habana.

Cuba, su emigración y las relaciones con los Estados Unidos, Lorena G. Barberia, Investigadora. Universidad de Harvard.

Los Estados Unidos-Cuba: emigración y relaciones bilaterales, Antonio Aja Díaz, Historiador y sociólogo. Centro de Estudios Demográficos, Universidad de La Habana.

Corrientes académicas y culturales Cuba-Estados Unidos: temas y actores, Sheryl Lutjens, Investigadora. Universidad del Estado de California, en San Marcos.

La diplomacia académica: los intercambios culturales entre Cuba y los Estados Unidos, Milagros Martínez Reinosa, Profesora. Universidad de La Habana.

Jorge Dominguez and Rafael Hernandez

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News and Articles on the Cuban Economy, September 8, 2010

Latin American Herald Tribune, September 8: Grandparents in Cuba, Grandchildren in Spain http://www.laht.com/article.asp?ArticleId=365524&CategoryId=14510

Cubanet, 8 de septiembre: La III Guerra Mundial empezó en La Habana http://www.cubanet.org/CNews/year2010/sept2010/08_C_2.html

Europa Press, 8 de septiembre: Repsol espera elevar en un 9,6% el volumen de hidrocarburos descubiertos en 2010 http://www.europapress.es/economia/noticia-economia-empresas-repsol-espera-elevar-96-volumen-hidrocarburos-descubiertos-2010-20100908122411.html

Reuters, September 7: Cuba to expand use of employee-run cooperatives http://news.yahoo.com/s/nm/20100907/ts_nm/us_cuba_economy_reform_1

AP, 7 de septiembre: Cuba abrirá centro de estudio de nanotecnologías http://es.noticias.yahoo.com/11/20100907/twl-car-tec-cuba-nanotecnologias-1be00ca.html

EFE, 7 de septiembre: Cuba prescindirá de casi todos los estudiantes movilizados para recoger café http://es.biz.yahoo.com/07092010/185/cuba-prescindira-estudiantes-movilizados-recoger-cafe.html

IPS, September 7: Cuban Vaccines Cross Borders, But Barriers Remain http://www.ipsnews.net/news.asp?idnews=52748

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