Author Archives: Arch Ritter

DANGERS IN ECONOMY RUN BY CUBA’S REVOLUTIONARY IN A BUSINESS SUIT

Paul Webster Hare, Financial Times. May 11, 2015

 Original here: Revolutionary in a Business Suit

Both leaders wore business suits at the Panama summit last month. Raúl Castro, the one-time guerrilla from the Sierra Maestra, shook hands with Barack Obama, the former law professor from Chicago. Are Cuba and the US back in business?

In its “normalisation” of relations, the US is finally catching up with more than 100 other countries with embassies in Havana. Americans will now experience the Cuban way of doing business. Existing links can be built on: Cubans want more of the cheap food, such as chicken and rice, that has been sold by US companies in the past decade. They also want fully open US tourism: the prospect of their young people mixing with American peers on their traditional “spring break” is no longer feared by the Castros. Havana wants to maintain billions of dollars in family remittances from the US. But even when the 55-year-old embargo is dismantled, a new business relationship will take time to emerge.

Cuba in 2015 is not a country confidently set in a new direction. Mr Castro can see its past more clearly than its future. He remembers when US companies dominated the economy, and when he and Fidel nationalised them in 1960. Cuba later became dependent on other nations: first the Soviet Union and then Venezuela— which is now looking increasingly wobbly, an important reason to mend relations with America.

So what awaits US companies flying to Cuba? The welcome will be lavish. They will visit revolutionary showpieces such as the Latin American School of Medicine. The mojitos and cigars will taste better. Even the home-run distance at the Havana baseball stadium is marked in feet not metres.

Yet Cuba is still a foreign land for international business. Features of the revolution endure to this day; rudimentary use of the internet is only the most visible. Statistics are produced by the state and there is no independent verification. Foreign exchange reserves are never published. Military-controlled companies retain almost all the hard currency Cuba earns. State employees — estimated at more than 70 per cent of working-age Cubans — receive an average of less than $30 a month in currency worthless anywhere else. “They pretend to pay us and we pretend to work” is a joke almost as old as Havana’s Cadillac Eldorados.

Foreign investors and embassies, forbidden by law to select their own employees, pay well above state rates, producing absurd results: at the British embassy, I had a PhD in microbiology working as a nightwatchman. Education matters little when you cannot pay your bills. Apathy is prevalent: I remember the Havana fun fair manager who closed for lunch with a queue of 50 customers; and the biotech marketing managers who visited the UK but returned with no leads.

US companies bidding for foreign investment projects will face competitors from countries including China, Brazil, Venezuela and the EU. Political considerations will weigh heavily; and if things go wrong the business climate is unfamiliar. The courts have never ruled for a foreign business against the government. And, though Havana badly wants to buy US imports on credit, its record on payment is poor.

Mr Castro will want to put in place a framework for new relations with the US before he steps down in 2018. But he has not yet signalled he wants Cubans to grow rich in private business. Few countries can match the investment potential of his nation. Cuba currently has only two golf courses; the Dominican Republic has more than 30. Some pro­jects will succeed; yet the recent jailing of British investors in Havana’s luxury Saratoga Hotel — after a trial that took place behind closed doors, of which few details have been released — serves as a warning.

The Castro brothers in the Sierra Maestra proceeded cautiously, building their campaign of revolution. American businesses should recognise that they are dealing with the same strategists.

The writer was British ambassador to Cuba from 2001 to 2004, and is now a lecturer at Boston University

Cuba April 2015 012The bar at the Hotel El Colina: an unlikely venue for US-Cuba business deals despite its great pre-Revolutionary canine mural.

 

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FREE ELECTIONS and AUTHENTIC (though IMPERFECT) DEMOCRACY: FUN! BESIDES EVERYTHING ELSE

By Arch Ritter

Winston Churchill might have been right when he said that democracy was the worst political system – except for all of the others!

What he neglected to say was that authentic participatory democracy is also ultimately FUN, despite the uncertainties and heartaches as well as jubilation and legitimacy that it generates.

Here are the results of two amazing elections this past week in Alberta Canada and the United Kingdom as well as the results of the elections in Cuba over the last half century.

  ALBERTA MAY 1 2015

ALBERTA MAY 3 2015

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Rachel Notley; Lou ArabThe New Alnerta Premier, Rachel Notley

UNITED KINGDOM, MAY 5 2015

GB_election2010_changesHex620

 

(Dis)United Kingdom, May 7, 2015

New Picture (4)

genelec2015-david-cameron-worriedPrime Minister Cameron: Still Worried

Britain Election ScotlandNicola Sturgeon, First Minister of Scotland: Jubilant

CUBA:  1960……………………2015

Elections in Cuba?  Fine, but we always have to win!

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130228-castro-brothers-1235p_660;660;7;70;0The Castros:   no “Best Before” date.

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US BUSINESS SCHOOLS SET THEIR SIGHTS ON CUBA

Business Education, May 3, 2015 11:37 pm

Jonathan Moules

Original here: US Business Schools and Cuba

9ce515d9-f339-4845-adab-106167a26600The long-term prospects for business education in Cuba are undoubtedly bright following the warming of relations between Washington and Havana. But how quickly such opportunities will unfold for those schools with connections to the Caribbean island state is a tougher question to answer.

For US business schools, the opening up of access to Cuba has been an unmitigated success in one regard, according to professors such as Stephan Meier at Columbia Business School in New York. His school is one of several to have taken advantage of the ability for US-based academic institutions to visit Cuba for study trips. In fact, his biggest headache has been running enough trips to satisfy the demand from students, particularly those with US passports who would not otherwise be able to travel abroad.

In three years, Prof Meier has taken 120 students to Cuba. But he could have taken many more, he says. “Cuba is exotic,” he explains.

Downtown from Columbia’s Manhattan campus, NYU Stern has run a similar programme called Doing Business in Cuba. This was the product of lobbying by Stern’s Association of Black and Hispanic Students, and proved somewhat complicated to organise.

To date, the 84 Stern MBA students who have taken the trip to Havana have only been able to do so thanks to connections provided by Ludwig Foundation, a not-for-profit body created to build links between the US and Cuba, primarily in the arts.

Emily Goldrank is one of these student. She has travelled widely, spending time in Argentina and Australia as part of her MBA studies, but claims Cuba — “the one forbidden place” — offered a particular value because it operated so differently to other countries. “How and what we learnt was of a different variety because the whole business environment was so different,” she recalls, adding that this was in itself valuable in that it showed the challenges of operating in such a different economy.

The pace of change in Cuba, where no business school yet exists, is a subject of debate. Tom Pugel, vice-dean of MBA programmes at Stern, is more confident than many of his academic peers and predicts that the country will have its own business school in five years.

“There are already people who are ready to work with that transition,” he claims. “They are well positioned to be the leaders of a business school.”

Carl Voigt, professor of clinical management and organisation at USC Marshall School of Business in Los Angeles, who led the first US business school delegation to Cuba in 2000 and has since taken about 1,000 students on study visits, is less optimistic.

“I feel Cubans would be a little bit suspect of plans to set up programmes in Cuba because they would want to know where the money came from,” he says.

“They are not anyone’s puppet and they do not want to be played.

“Money has been earmarked in the US to help Cuban students study here, but it is felt that there are people in the US government who would use that as a way of brainwashing students.”

There have been opportunities for Cubans to study freely in Europe and the US, Prof Voigt notes, but there has not been a lot of take up of these schemes because students in Cuba lack the funds to study overseas. Thus for the moment, the traffic is likely to be mainly the other way.

Those US students lucky enough to gain a place on Columbia’s Cuba programme have been able to meet some of the country’s small but growing population of entrepreneurs, who are currently restricted to a limited number of service sectors such as restaurants and hotels.

Visiting students have also been able to see first hand what an economy looks like without the capitalist trappings of widespread advertising and credit. “They learn that in a market economy we take a lot of aspects for granted,” Prof Meier says.

Cuba’s newly empowered entrepreneurs would be target candidates should a school like Columbia open in the country, although Prof Meier does not see this happening in the near future.

“I guess we are a long way from teaching an executive programme in Cuba to Cuban managers,” he says. “But they could definitely do with some business school education.”

Although the US has by far the most developed business education market, and almost all the top business schools, it faces significant competition, particularly from Europe.

Barcelona-based Esade, for instance, has been working directly with Cuba’s ministry of higher education on Forgec, a European Commission funded project to strengthen the managerial capabilities of Cuban institutions.

One of the key goals of the project is to establish long-term co-operation in management education between Cuba and Europe. Whether or not this would mean a school such as Esade opening a campus in Cuba is not clear, however, since the project plans to achieve its aims in part by improving the quality of Cuban universities and the ability to run business education programmes.

Schools in Latin American countries also sense an opportunity to serve Cuba as and when it is ready to allow business schools to open.

Carlos Martí Sanchis, academic director at Barna Business School in the Dominican Republic, claims that Caribbean and central American schools like his have expertise in subjects that would likely be of interest to Cuban business students, such as tourism. “Big and prestigious schools will have advantages but I think it will be a great opportunity for medium and small business schools that can have a better fit to the Cuban reality in different dimensions such as cultural, economic, idiomatic and business sectors similarities,” he says.

However, US-based schools are not giving up hope. Brandeis International Business School, for instance, has not just taken students and faculty to Cuba as a part of its Hassenfeld Overseas Fellows Immersion Program. It has also hosted Cuban visitors on its campus.

These include the founder of Cuba’s first private MBA programme, run by the Roman Catholic Church, the director of The Center for the Study of the Cuban Culture + Economy and a distinguished professor from the University of Havana law school.

Bruce Magid, dean of Brandeis, is looking forward to the future. “For academic institutions in the US, particularly business schools willing to make the first move, the opportunity exists to have a profound impact on the next stage of US-Cuba economic relations,” he says. “This is more than just an opportunity. It is a strategic imperative for business schools to make this move. Opening Cuba’s borders to trade and investment is the best way to ensure Cuba prospers.”

Having said that, Mr Magid believes that efforts to build ties with Cuba are part of a broader commitment that Brandeis needs to demonstrate towards the whole of Latin America.

In the past year, the school has announced two memorandums of understanding for joint degree programmes with Eafit in Medellín, Colombia and Insper in São Paulo, Brazil, all of which have added to the school’s roster of partnerships in the region.

For now, Cuba will have to wait.

Cuba Nov 2008 041Open Arms to US Business Schools?

Cuba Nov 2008 040For Now They’ll Have to Wait.

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Reporters without Borders: WORLD PRESS FREEDOM INDEX 2015

logo-enUnfortunately Cuba continues to fare badly on the Reporters without Borders WORLD PRESS FREEDOM INDEX 2015.  It ranks # 169 out of a total of 178 countries, and well at the bottom for the Western Hemisphere. New Picture (2) For detail, see the Reporter’s without Borders 2015 Report: : Full Report:                           https://index.rsf.org/#!/ Commentary on Cuba:      http://en.rsf.org/cuba.html

New Picture (4)

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Brookings Institution: CUBA’S ECONOMIC CHANGE IN COMPARATIVE PERSPECTIVE

Edited by RICHARD E. FEINBERG AND TED PICCONE

Full Document Here: Brookings, 2014:  Cuba’s Economic Change

                         TABLE OF CONTENTS

 Introduction and Overview    Richard Feinberg

Policies for Economic Growth: Cuba’s New Era,  Juan Triana Cordovi and Ricardo Torres Pérez

Economic Transformations and Institutional Changes in Cuba. Antonio F. Romero Gómez

Institutional Changes of Cuba’s Economic-Social Reforms: State and Market Roles, Progress, Hurdles, Comparisons, Monitoring and Effect. Carmelo Mesa-Lago

Economic Growth and Restructuring through Trade and FDI: Costa Rican Experiences of Interest to Cuba, Alberto Trejos

Monetary Reform in Cuba Leading up to 2016: Between Gradualism and the “Big Bang” Pavel Vidal Alejandro and Omar Everleny Pérez Villanueva

Exchange Rate Unification: The Cuban Case. Augusto de la Torre and Alain Ize

New Picture (2)

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DEVELOPMENTS IN US-CUBAN RELATIONS: ARE THERE OPPORTUNITIES FOR BARBADOS?

By Bruce Zagaris and Babak Hoghooghi,  March 29, 2015

Original here: US-Cuban Relations.Opportunities for Barbados

New PictureSUMMARY AND CONCLUSION

As normalization of relations between Cuba and the United States continues, Barbados has some potential opportunities.  Some of these opportunities, as mentioned above, arise from the potential for Barbados to serve as an intermediary for investment into Cuba.  In this regard, the DTA and BIT with Cuba offer advantages, especially if Cuba will respect the provisions of these treaties.

Barbados can take advantage of the fact that it is one of a few countries that has a double tax and bilateral investment treaty with Cuba, under which foreign investors can invest on an advantageous basis.  However, unless Barbados can successfully assert competent authority provisions for Canadians and others using the tax treaty when Cuba does not comply with the treaty provisions, the advantage will be one on paper only.  To that end, the Barbados government and its private sector will need to work with civil society advocates to educate the Cuban government about the benefits of adhering to the provisions of its treaty network, especially with a longtime friend such as Barbados.

Given Cuba’s size and its success in education, health care, and culture, Barbados can strengthen its offerings in all these spheres by embarking on exchanges and joint ventures.  Barbados can do this in the context of the Cuba-CARICOM Trade and Economic Cooperation Agreement and the Cuba-CARICOM summit, and by proposing initiatives bilaterally.  Because of the control exercised by the Cuban government of its economy, the Barbados government is a critical actor.

Moreover, the Barbados government and private sector, including its academic institutions, professional organizations and non-profits, in collaboration with other CARICOM organizations, will want to develop connections with the parts of the U.S. community which will look to expand their presence in Cuba, as well as with the Cuban government and private sector, so it can help develop meaningful relationships.  Some civil society groups in the U.S. have been active in Cuba.  These tend to be small and medium-size philanthropies.  In addition, U.S. firms investing and/or exporting to Cuba are likely to be exporting construction and telecommunications equipment, as well as agricultural products and financial services.  It should be noted that Barbados is not the only CARICOM country or even the main one that will try to serve as an intermediary conduit for U.S. investors to Cuba.  Already Jamaica is making a push to do this work.

The Barbados government and Barbados non-profits and academic community should propose and pursue projects that address the mutual interests of both countries and others, such as the U.S., Canada, Brazil, Venezuela, Nicaragua, Bolivia, Russia, China, and international organizations.  Such projects should include environmental protection programs, artistic and cultural exchanges, programs to combat drug trafficking and human trafficking, humanitarian relief in Haiti, responding to the Ebola plague, new ways to generate energy, supporting cooperatives and other structures to achieve economic development, and fostering education and understanding among peoples.

Already, the slow opening of the Cuban economy has resulted in internal calls, both from state enterprises and private businesses, to expand international exchange, liberalize domestic regulations, and reform the currency regime.  These forces for internal change will multiply as trade, investment and tourism expand, business and civil society organizations become active, and ideas flow more freely. They will also change the dynamics of Cuba and inter-American relations.

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WHAT ARE THE CONSEQUENCES OF TAKING CUBA OFF THE STATE SPONSORS OF TERRORISM LIST?

The Huffington Post,  April 27, 2015

Arturo Lopez Levy

Original here: http://www.huffingtonpost.com/arturo-lopez-levy/what-are-the-consequences_1_b_7144090.html

The April 14th decision to remove Cuba off the State Department’s State Sponsors of Terrorism list is the most important, concrete step towards normalization of diplomatic relations with Havana taken by the U.S. government since the Carter Administration. It has both tangible and intangible implications of historical importance to Cuba’s relations with the U.S and its triangular relations with other major international actors.

First, if Cuba is not a terrorist threat, it is difficult to say that it is a threat to the U.S. at all given the asymmetry of power between the two states, and Cuba’s renunciation of nuclear weapons by signing and ratifying the Tlatelolco and nuclear non-proliferation treaties in the late 90s.

Second, it clarifies Cuba in America’s official narrative not as a security threat but a country in transition, which is more in line both with Cuba’s own self-image and how Latin American and European countries see it. Such a description undermines any rationality for the embargo and lends itself to a U.S. policy that emphasizes engagement and people to people contacts.

Third, it enables Obama to stop applying the Trading With the Enemy Act of 1917 to Cuba, the law on which much of the executive branch’s sanctions regime, including limits on American citizens’ right to travel, is based. If next September the president decides not to renew his authority to impose sanctions to Cuba under this law, citizens could challenge in court the prohibition to travel and succeed.

Fourth, it reduces Cuban state’s liability for individual claims in U.S. courts for acts that occurred under Cuba’s jurisdiction; cases that have already cost the island’s frozen accounts in U.S. banks millions of dollars. Taking Cuba off the list of terrorist nations would help an eventual settlement of claims between Cuba and USA, as part of a normalization process.

Fifth, so long as Cuba was falsely designated on the terror list, it would not have agreed to opening embassies. Now the road to embassies in both capitals is open. Similarly, Cuba off the list lessens the regulatory risks and enforcement threats used by the U.S. government to pressure banks not to deal with Cuba, giving the nation greater latitude in gaining finance and benefitting from two-way trade.

Sixth, it encourages other countries to foster closer ties with Cuba, as it eliminates the drama involved in having commercial relations with a country designated a sponsor of terrorism by Washington. This will be especially meaningful for the European Union, which is also reviewing its policy towards Cuba, which has always resisted the extraterritoriality of U.S. sanctions on its companies.

Seven: taking Cuba off the list means countries can take the State Department list, a U.S. national security tool, more seriously. Cuba’s inclusion on the list was seen on the island as an insulting lie. Removing this unnecessary barb, that has prevented bilateral relations, will build confidence for more flexible Cuban nationalist positions. The gratuitous inclusion on the list has harmed U.S. soft power, in many sectors of Cuban and Latin American civil society. In Cuba, ending such charade became a nationalist cause. One statement that most hurt Yoani Sánchez, opposition blogger, was her insistence on keeping Cuba on the list of terrorist countries because according to her: “The Castros have not put their guns away.”

Another important element is the effect that taking Cuba off the list will have on American and Latin American perceptions of the power held by pro-embargo Cuban Americans. The legal procedure for removing Cuba from the list dubs them the losers from the start. The president simply gives Congress 45 days advance notice of his intention to remove Cuba from the list of countries that sponsor terrorism. Obama requires the advice of Congress, not its consent.  The president knows how to count and he realized the pro-embargo legislators don’t have the votes to pass a bill or a joint resolution immune from a presidential veto.

In conclusion, President Obama prevails. Legislators can comment, write letters to the president and reflect on Obama’s decision. Thus, opponents such as Senators Marco Rubio, Ted Cruz and Robert Menendez are stuck in the role of the chorus in Greek tragedies: shouting, screaming and crying but not playing a substantial role. Cuba will be off the State Department list of States Sponsors of terrorism. A major roadblock to the rapprochement track between Cuba and the United States has been removed

 

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CUBA’S BLACK MARKET THRIVES

[Apologies: I lost this somewhere in the computer last autumn! AR]

Havana (AFP) Carlos Batista, October 17 2014

Original here: Cuba’s black market thrives

ca536627f7ec7ad1d8f6a66bb6b8a8857cee4e2dFrom foreign DVDs to perfume, rum and coffee, Cuba’s shelves are packed with pirated and counterfeit goods, which are sold as authorities turn a blind eye — using the longstanding US embargo as justification.

The more than 50-year US trade freeze with communist-ruled Havana has bred a healthy appetite for smuggled goods, including TV series, films, music and software — all available at a low cost.

“Here, everything costs one CUC,” the Cuban convertible peso equivalent to one US dollar, explains 28-year-old vendor Jorge, standing before three bookcases packed with CDs and DVDs.

In southern Havana’s October 10 neighbourhood, where Jorge peddles his wares, pirated DVDs featuring current American blockbuster films, children’s movies and Latin music are all on sale to delighted crowds. For Jorge, the cost of doing business is affordable. For 60 Cuban pesos ($A2.59) a month, he can buy a vendor’s licence to sell his goods.

He is one of half a million Cubans who work in the 200 or so independent jobs authorised under President Raul Castro’s economic reforms. Though buying and selling pirated goods is technically illegal in Cuba, the trade is widely known and mostly tolerated, even by the Committee for the Defence of the Revolution officers who rarely punish vendors.

“I pay for my licence on time and no one interferes with my work,” said Jorge, who declined to give his full name.

Like many other merchants, Jorge’s stock extends far beyond entertainment DVDs. He also sells “packages,” which feature hundreds of megabytes of data obtained weekly from overseas sources.

The bundles include television series, sports programs, films, anti-virus software and up-to-date listings from the banned classified sites “Revolico” and “Porlalivre”. The online classified listings, which are officially banned in Cuba, offer interested buyers anything from air conditioners to black market tyres, and even empty perfume bottles to be secretly refilled in off-the-grid factories.

With the help of complicit employees, some of the black market fragrances and other items even find their way to the shelves of government-owned stores.

Every so often, the heavily-censored state-run media report on police busting illegal rings producing fake perfume, rum, beer, coffee or toiletries — items rarely found in supermarket aisles — but authorities mostly ignore the contraband sales.

Authorities struggle to contain this Cuban “tradition,” which emerged during the dark days of severe shortages in the early 1990s following the collapse of the Soviet Union, one of Cuba’s staunchest Cold War-era allies.

“The new situation in the 1990s was so sudden, so violent, so unexpected… that people started, with the only means they had, to find ways to fulfill their needs,” said sociologist Mayra Espina in the online newspaper Cuba Contemporanea.

“Certain activities, previously deemed unacceptable or socially negative, started to become legitimate.”

This time of shortages bred a social phenomenon called “la lucha,” or “the struggle,” which has seen Cubans do whatever is necessary to tackle the island nation’s social and economic malaise, Espina said.

Pirated programs have also crept into the state’s sphere, with public media and government-owned cinemas running illegally-obtained shows and films. Some television networks lacking their own means to produce original programming have “resorted for years to carrying shows from American channels without paying for the rights,” Cuban TV director Juan Pin Vilar told AFP.

Indeed, this is one of the fringe benefits of the US embargo — the Cuban TV channels and cinemas could act with virtual impunity, as legal repercussions were unlikely.

“There is a kind of tactical willingness (in the US) not to bother Cuba because culture… is a very effective means of communication,” said Jorge de Armas, a member of a group of Cuban exiles calling for a rapprochement with Washington.

But the flip side, according to Vilar, is that certain stations in Miami — home to most of the Cuban diaspora — air Cuban programs to satisfy their viewers, nostalgic for home. On Miami’s “Calle Ocho,” or 8th Street, in the heart of Little Havana, the Maraka shop sells pirated music, films and television programs brought in from Cuba.

On the other side of the Florida Straits, the international Cuban television network Cubavision offers its signal to satellite suppliers around the world. The idea, said one Cubavision executive, is “to spread our image”.

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MUNICIPAL ELECTIONS IN CUBA: FINE, AS LONG AS WE WIN

BUT  THE LOSERS ALSO HAVE SOMETHING TO CELEBRATE

The Economist, Apr 25th 2015

Original here: FINE, AS LONG AS WE WIN

1429453584_150419045159spcubaelecciones624x351reutersTHE most interesting thing about Cuba’s municipal elections on April 19th was not who won. It was who lost, and who did not even turn up.

Four months after a historic rapprochement between Cuba and the United States, for the first time two openly declared dissidents made it onto the ballot among more than 27,000 candidates competing for 12,589 municipal posts around the country. Predictably, they were defeated. But their participation was an unusually open act of defiance, not just by the two men but also by ordinary citizens who proposed them in a show of hands before the elections.

What is more, the turnout on voting day fell by almost six percentage points compared with the previous poll in 2012, to about 88%. Some claimed rising absenteeism was a crack in monolithic support for the Communist Party.

The opposition candidates, Hildebrando Chaviano, a lawyer and journalist, and Yuniel López, a member of the unauthorised Independent and Democratic Cuba party, were labelled as “counter-revolutionaries” in official publicity. On his party’s website, Mr López claims that voters were pressured not to vote for him. Yet both candidates quickly conceded defeat. “The vote was clean. The people don’t want change. They still want revolution,” Mr Chaviano said.

The elections have an air of futility about them. The winning candidates are rewarded with a thankless job. They face a barrage of complaints from residents about crumbling housing and poor public services, without having the power or money to do much about them. But voters know that if they do not show up, it is likely to count against them—in university applications, for instance.

All the same, many did not. Alina Balseiro, head of Cuba’s National Electoral Commission, said the drop in turnout reflected the absence of tens of thousands of Cubans who had gone abroad as a result of Cuba’s relaxation of travel restrictions. But Yoani Sánchez, a dissident Cuban blogger, said that 1.7m potential voters did not appear, or they cast void or defaced ballots. This “demonstrated that support for the government is not as unanimous as it claims.”

Such dissidence comes at a delicate time for Raúl Castro, Cuba’s president. In September huge crowds will gather for the visit of Pope Francis, whose office helped arrange the thaw in relations with the United States. This could further heighten expectations of change.

Yet the Castro government may also feel that elections can be a useful outlet—so long as the ruling party continues to win. Eusebio Mujal-Leon, of Georgetown University in Washington, says it may be learning a warped version of democracy from its socialist ally in Venezuela, convincing itself that it can remain an autocracy while using elections to stay in power. The road ahead for Cuba’s nascent opposition is not an easy one.

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TIME: FIVE FACTS EXPLAINING THE ECONOMIC UPSIDES OF AN OPENED CUBA

Ian Bremmer,  April 20 2015

Original here: The Caribbean country could be the next frontier of global business

Taking Cuba off the list of nations that sponsor terrorism is the latest development that will attract foreign companies to the island. So who wants in? These five stats explain which industries present the most opportunities as Cuba opens for business.

1. Remittances

One of the immediate benefits of renewed relations with Cuba is the increase in permitted remittance flows. The most recent figures put annual cash remittances to Cuba at approximately $5.1 billion, a level greater than the four fastest growing sectors of the Cuban economy combined. Now, permitted remittance levels from the U.S. will be raised fourfold, from $2,000 to $8,000 per year. This will help drive an increase in spending power in Cuba, which is expected to grow at a compound annual rate of 4.6% through this decade. For global companies seeking a foothold anywhere they can, more money in the pockets of Cubans means more fuel for expansion. Take Coca-Cola. With an open Cuba, Coke could be legally be sold in every country in the world save one: North Korea.

2. A lot more visitors

Just 110 miles off the coast of Florida, Cuba should be a natural magnet for American travelers. Despite needing to meet special criteria to receive a visa from the State Department—allowable categories include educational and journalistic activities—170,000 Americans visited the country last year. As the restrictions slacken, the sky is literally the limit. JetBlue already charters flights to Cuba from the U.S., but the budget airline wants to start running regular commercial flights. American Airlines Group now flies to Cuba 20 times per week, a 33% increase in flights compared to just a year ago. More flights—and more competition—will make airfare more affordable, driving additional tourist traffic.

Cuba Mar 2014 011April 2014: the Capitolio, under renovation, to be the new home of the National Assembly; the Centro Gallego (old community center for Cubans of Galician origin), being restored to its former glory; a hop-on hop-off Tour bus; 1950s American automotive beauties and a Russian Lada.

Missing from this photo: a Chinese Geely, currently taking over Cuba’s automotive market. 

3. Communication breakthroughs

Only one in ten Cubans regularly use mobile phones and only one in twenty have uncensored access to the Internet. Even state-restricted Internet penetration currently stands at just 23.2%. The telecom infrastructure is so underdeveloped that an hour of regulated Internet connectivity can cost up to 20% of the average Cuban’s monthly salary. There’s serious demand for the major infrastructure investments needed to improve these numbers. Some start-ups are making waves in spite of shoddy internet. Airbnb, a website that lets people rent out lodging, announced that it has started booking rooms in Cuba with over 1,000 hosts. It gets around the lack of Internet by teaming with middlemen who have long worked to link tourists with bed and breakfasts.

4. A cure for Cuba

Cuba has the third highest number of physicians per capita, behind only Monaco and Qatar. They’re even used as an export: Venezuela pays $5.5 billion a year for the almost 40,000 Cuban medical professionals who now make up half of its health-care personnel. Cuban doctors lack access to most American pharmaceutical products and, importantly, to third-generation antibiotics. For its part, Cuba’s surprisingly robust biotech industry makes a number of vaccines not currently available in the U.S. With the normalization of relations, Cuba can look to fully capitalize on its medical strengths.

5. Foreign investment

Cuba currently attracts around $500 million in foreign direct investment (FDI)—good for just 1% of GDP. Given its tumultuous political history and underdeveloped economy, it is difficult to accurately predict how quickly investors will flock once the embargo has been lifted. But a good comparison might be the Dominican Republic, another Caribbean nation with roughly the same size population as Cuba. The Peterson Institute for International Economics estimates that Cuba could potentially attract as much foreign capital as the Dominican Republic, which currently receives $17 billion in FDI ($2 billion from the U.S). But this won’t happen overnight—in the Heritage Foundation’s Index of Economic Freedom, Cuba ranks 177th out of 178, ahead only of North Korea.

 

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