Author Archives: Frank Mark

CHINA PILES INTO CUBA AS VENEZUELA FADES AND TRUMP LOOMS

Reuters, Tue Feb 14, 2017 | 8:17 PM EST

Original Article: China piles into Cuba

CUBA ISN’T WAITING AROUND FOR U.S. WHEN IT’S GOT CHINA

By Marc Frank | HAVANA

From buses and trucks to a $500 million golf resort, China is deepening its business footprint in Cuba, helping the fellow Communist-run state survive a crisis in oil-benefactor Venezuela and insulate against a possible rollback of U.S. detente.

Cuban imports from China reached a record $1.9 billion in 2015, nearly 60 percent above the annual average of the previous decade, and were at $1.8 billion in 2016 as the flow of oil and cash slowed from Venezuela due to economic and political turmoil in the South American country.

China’s growing presence gives its companies a head start over U.S. competitors in Cuba’s opening market. It could leave the island less exposed to the chance U.S. President Donald Trump will clamp down on travel to Cuba and tighten trade restrictions loosened by his predecessor Barack Obama.  A deterioration in U.S.-China relations under Trump could also lead Beijing to dig in deeper in Cuba, some analysts say.

“If and when the Trump administration increases pressure on China … China may decide to double down on its expanding footprint in the United States’ neighborhood,” said Ted Piccone, a Latin America analyst at the Brookings Institution think tank.

China, the world’s second largest economy, sells goods to Cuba on soft credit terms. It is Cuba’s largest creditor and debt is regularly restructured, though amounts and terms are considered state secrets.  While Cuba does not publish investment data, the state press has been abuzz with news of Chinese projects lately, covering infrastructure, telecoms, tourism and electronics.

Yutong (600066.SS) buses, Sinotruk (3808.HK) trucks, YTO (600233.SS) tractors, Geely (0175.HK) cars, Haier (1169.HK) domestic appliances and other products are prominent in Cuba, where the main U.S. products on display are cars dating back to the 1950s, thanks to the ongoing economic embargo.

Cubans flock every day to hundreds of Huawei supplied Wi-Fi hot spots and the firm is now helping to wire the first homes.

“Business is really booming, more than we could have ever imagined,” said the manager of a shipping company which brings in Chinese machinery and transport equipment and who asked not to be identified.

The foreign ministry in Beijing described China and Cuba as “good comrades, brothers, and partners,” and said the relations “were not influenced by any third party,” when asked whether U.S. policy was encouraging China to deepen its presence.  “We are happy to see that recently countries around the world are all expanding cooperation with Cuba. I think this shows that all countries have consistent expectations about Cuba’s vast potential for development,” Chinese Foreign Ministry spokesman Geng Shuang told reporters.

The U.S. State Department and White House did not immediately respond to requests for comment.

INCREASED INVESTMENT

Over the past two decades, China has become a major player in Latin America and the Caribbean, second only to the United States in investment flows and diplomatic clout.  But the Asian giant was reluctant to invest in Cuba because of the poor business climate and fear of losing opportunities in the United States, according to Asian diplomats in Havana.

That began to change after Obama moved to normalize relations two years ago and Cuba sweetened investment rules, sparking new interest among U.S. businesses and competitors around the world.  China was well placed because the local government preferred doing business with long-term friends offering ample credit to work with state-run firms.

In return, Cuba has shared contacts and knowledge about the region, and taught hundreds of Chinese translators Spanish.

A report on the government’s official Cubadebate media web site last month said the two countries agreed to strengthen cooperation in renewable energy and industry, with 18 Chinese firms taking part in a three-day meeting in Havana.

Plans for several projects were signed, including a joint venture with Haier to establish a renewable energy research and development facility, the report said.  A few weeks earlier, Cuba opened its first computer assembly plant with Haier with an annual capacity of 120,000 laptops and tablets, state media reported.

Other projects include pharmaceuticals, vehicle production, a container terminal in eastern Santiago de Cuba, backed by a $120 million Chinese development loan, and Beijing Enterprises Holdings Ltd. (0392.HK) venture for a $460 million golf resort just east of Havana.  Shanghai Electric (601727.SS) is providing funds and equipment for a series of bioelectricity plants attached to sugar mills.

Barrio Chino, La Habana

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VENEZUELA’S ECONOMIC WOES SEND A CHILL OVER CLOSEST ALLY CUBA: Warnings of rationing revive memories of post-Soviet austerity in Havana

Financial Times, July 25, 2016

Marc Frank in Havana

The crisis in Venezuela has spread to its closest ally Cuba, with Havana warning of power rationing and other shortages that some fear could mark a return to the economic austerity that traumatised the island nation after the collapse of the Soviet Union.

Only a year after the euphoria that followed the re-establishment of diplomatic relations with the US, hopes of an economic rebound in Cuba have faded and an undercurrent of concern and frustration is evident on the streets of the capital.

“Just when we thought we were going forward, everything is slipping away again,” says Havana retiree Miriam Calabasa. “I am worried people are going to decide enough is enough: then what?”

Government offices now close early, with open windows and whirring fans in lieu of air-conditioners. Already scant public lighting has been reduced further, and traffic in Havana and other cities is down noticeably.

“Nothing will get better any time soon; it can only get worse,” worries Ignacio Perez, a mechanic. “The roads won’t be paved, schools painted, the rubbish picked up, public transportation improved, and on and on.”

President Raúl Castro outlined the scale of the problem this month, telling the National Assembly that “all but essential spending” must cease. He blamed “limits facing some of our principal commercial partners due to the fall in oil prices … and a certain contraction in the supply of oil contracted with Venezuela.”

Fuel consumption has been cut 28 per cent between now and December, electricity by a similar amount and imports by 15 per cent, or $2.5bn, in a centralised economy where 17 cents of every dollar of economic output consists of imports.

But crippling shortages, rampant inflation and an economy that is expected to shrink 10 per cent this year have forced Venezuela’s president Nicolás Maduro to cut back. According to internal data from state oil company PDVSA seen by Reuters, oil deliveries to Cuba are down a fifth on last year.

Venezuela has for 15 years supplied unspecified amounts of cash and about 90,000 barrels per day of oil — half of Cuba’s energy needs. Havana in return sold medical and other professional services to Caracas. Venezuelan aid helped to lift Cuba out of an economic black hole after Soviet subsidies ended in 1991.

“Under current conditions, [Cuban] gross domestic product will dip into negative territory this year and decline 2.9 per cent in 2017,” says Pavel Vidal, a former Cuban central bank employee who is now a professor at Colombia’s Pontificia Universidad Javeriana Cali. “If relations with Venezuela fall apart completely, GDP could decline 10 per cent.”

Although Venezuelan aid is a fraction of Soviet help, mention of the “special period” that followed the fall of the Berlin Wall provokes traumatic memories in Cuba, with many remembering shortages so severe they ate street cats. Karina Marrón, deputy director of the official Granma newspaper, this month warned of possible street protests similar to 1994.

“A perfect storm is brewing … this phenomenon of a cut in fuel, a cut in energy,” Ms Marrón told the Union of Cuban Journalists. “This country can’t withstand another ’93, another ’94.”

So-called rapid response brigades, formed in the 1990s to quell social unrest, are back on alert, according to one brigade member who asked not to be named.

For Mr Castro, the slowdown is a serious blow to the limited market-orientated reforms begun under his leadership, especially the long-planned liberalisation of the peso, which requires a comfortable foreign reserve cushion.

But foreign businesses hope it may speed economic opening. “Venezuela’s problems increase the chance of Cuban reforms. This government only acts when it has to,” says one Spanish investor on the island.

One complication lies in how the government apportions resources.  Cuba relies heavily on tourists, most of whom expect hotels with electricity and air-conditioning. Meanwhile, some 500,000 people, or 10 per cent of Cuba’s workforce, are employed at restaurants, lodging houses and other recently allowed private businesses which need power to ply their trade.

Mr Castro insists residential users will be spared power cuts, for now, while Marino Murillo, who heads the reform commission of the ruling Communist party, says hard currency earning sectors such as tourism and nickel would be spared.

Another problem is that the other countries Cuba exports medical services to, such as Algeria, Angola and Brazil, are also expected to reduce spending. In 2014, medical services earned Cuba about $8bn, or 40 per cent of exports.

“We cannot deny there will be some impact, including worse than currently, but we are prepared,” Mr Castro has said.

Analysts suggest Mr Castro’s warning may in part serve to deflate expectations following the easing of US sanctions. Certainly, a full return to special period-style austerity looks unlikely as Cuba has more diversified income streams, from increased remittances, medical services, tourism to a nascent private sector.

However, “a majority [in Cuba] are still very dependent on state salaries that are now worth a third of what they were in 1989 in real terms”, said Prof Vidal. “[They] are in a situation of extreme vulnerability.”

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CUBA BACKTRACKS ON FOOD REFORMS AS CONSERVATIVES RESIST CHANGE

Reuters, HAVANA, Fri Apr 29, 2016 5:56pm EDT

By Marc Frank

 Original Article: Cuba backtracks on food reform

Cuba decided at a secretive Communist Party congress last week to reverse market reforms in food distribution and pricing, according to reports in official media, reflecting tensions within the party about the pace of economic change.

President Raul Castro unveiled an ambitious market reform agenda in one of the world’s last Soviet-style command economies after he took office a decade ago, but the reforms moved slowly in the face of resistance from conservatives and bureaucrats.  At the April 16-19 congress, Castro railed against an “obsolete mentality” that was holding back modernization of Cuba’s socialist economy. But he also said the leadership needed to respond quickly to problems like inflation unleashed by greater demand as a result of reforms in other sectors.

In response, delegates voted to eliminate licenses for private wholesale food distribution, according to reports over the past week in the Communist Party daily, Granma, and state television. Delegates said the state would contract, distribute and regulate prices for 80 to 90 percent of farm output this year, compared to 51 percent in 2014, according to debates broadcast in edited form days after the event.  Reuters reported in January that Cuba had begun a similar rollback in some provinces, increasing its role in distribution again and regulating prices. The decision at the congress will extend that program.

Data released in March showed that Cuba’s farm output has barely risen since 2008, when Castro formally took over from his brother Fidel, contributing to a spike in food prices blamed on supply-demand mismatch.

Cuba imports more than 60 percent of the food it consumes.

The Union of Young Communists’ newspaper, Juventud Rebelde, reported late last year that the price of a basket of the most common foods increased 49 percent between 2010 and early 2015.  There are no government statistics on food inflation.

While hurricanes and drought have played a part in poor farm output, some experts and farmers say Cuba did not go far enough in allowing farmers freer access to seeds and fertilizers to increase production.

BACKTRACKING

But demand is rising fast. Relaxation of restrictions on self-employment has led to a boom in small restaurants, at a time when Cuba’s detente with the West is leading to record numbers of tourists and an emerging consumer class.

According to the reports, there was no discussion at the congress of moving ahead with plans to allow farmers to buy supplies from wholesale outlets, instead of having them assigned by the state.  Nor was there mention of another reform, also adopted five years ago and never implemented, to have cooperatives join forces to perform tasks currently in state hands, for example ploughing fields.

The state owns nearly 80 percent of arable land in Cuba, leasing most of it to cooperatives and individual farmers. It has a monopoly on imports and their distribution.

“They never fully carried out the reforms and gave them time to work. They stopped half way and appear unable to come up with any other solution than backtracking,” said a local agriculture expert, who asked to remain anonymous.  He said farmers often had no equipment and few supplies such as seed.

The government reported leafy and root vegetable output at 5 million tonnes in 2015, similar to 2008, and unprocessed rice and bean production of 418,000 tonnes and 118,000 tonnes, compared with 436,000 tonnes and 117,000 tonnes eight years ago. Cuba produced 363,000 tonnes of corn last year, just 3,000 more than when Castro took office.

 Cuba April 2015 044Still the Best Cigar Tobacco in the World:Vinales, above and a Tobacco Farmer near Vinales.  (Photo by A. Ritter, April 2015)
Cuba April 2015 053

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CUBANS LOOK TO COMMUNIST PARTY CONGRESS FOR EVIDENCE OF REFORMS; A month after Obama’s historic visit disenchantment over reforms is setting in.

Financial Times, April 15, 2016 10:38 am

Marc Frank in Havana and John Paul Rathbone in Miami

Original article: Communist Party Congress

Oslavi Ramirez wistfully imagines the day when he can freely buy the cheese, tomato paste and disinfectant he needs to run his two cafés in a poor neighbourhood on the outskirts of Havana.

“They made the reforms but forgot the conditions to make them work,” complains Mr Ramirez of Cuba’s missing wholesale markets where restaurateurs in other countries normally buy their food. “It’s as if they made a [toy] doll and forgot the head.”

A month after the euphoria of US President Barack Obama’s historic visit to Cuba — which raised hopes of an easing of economic sanctions and greater freedoms — disenchantment and frustration are setting in.

Cubans are now looking to the Communist Party Congress, which begins on Saturday, for evidence of a deepening of economic reforms, and for signs the party’s “historic generation” will begin to hand over the baton of power to younger counterparts.

Few, though, have high hopes.

“There is a lot of discontent,” says Omar Esteban, a 30-year-old Havana taxi driver. “There’s scarcity and it’s getting worse, in the entire economy, in everything you need. I doubt the congress will do anything to improve our situation.”

The four-day congress, the first in five years, comes at a critical juncture for the Caribbean island nation.  It will probably be the last presided over by a Castro brother: President Raúl Castro, 84, has said he will retire in 2018; his predecessor Fidel, aged 89, stepped down in 2006. Many expect the gathering of 1,000 party members will elect a new politburo, rejuvenating the current 14-strong body, which has an average age of 70.

“The historic generation is passing its biological capabilities . . . It has to renovate,” says Reinaldo Escobar, news editor of 14ymedio.com, an independent news website. “But which new faces will appear? They are the new wave. That’s why this Congress is important.”

The congress will also set Cuba’s economic course over the next several years. Reform hopes rose after the last meeting in 2011 liberalised some aspects of Cuba’s Soviet-style system, such as allowing small businesses. Detente with the US has further boosted expectations.

 But economic growth has averaged just 3 per cent since then — well below the more than 5 per cent growth rate the government seeks. One reason for the underperformance is the drop in commodity prices. This has squeezed the sale of Cuban professional services, such as doctors, to countries hit by the commodity price slide such as Venezuela, Brazil, Angola and Algeria. Lower revenues have, in turn, forced Cuba to cut its imports, according to diplomats, leading to growing domestic scarcities.

“Nothing has changed. They say produce more, but there are no resources,” says Ramon, a small farmer in the town of Artemisa, west of Havana. “It’s worse than five years ago.”

During last month’s visit, Mr Obama laid down a gauntlet when he spoke publicly of how Cubans “should not fear change [they] should embrace it.” “Even if we lifted the embargo tomorrow, Cubans would not realise their potential without continued change in Cuba,” the president added.

But worryingly for Cubans who struggle to feed their families on average state wages of $25 a month, the government has recently back pedalled on liberalisation. It now wants to increase, instead of reduce, its role in food distribution, likely worsening the shortages of supplies small restaurateurs such as Mr Ramirez face.

“Everyone knows that will not work . . . There are already reports of food rotting,” says a Cuban party member and agricultural expert. “It worries me.”

Some blame the reforms’ timidity and slowness on the tension between allowing economic but not political liberalisation. “They [the government] fears a Yeltsin free-for-all,” says one European businessman with long experience of Cuba, referring to the chaotic period following the collapse of communism in Russia. “They are much more impressed by China.”

Others cite stiff bureaucratic resistance to liberalisation.

“Too many people are used to administrating the system in the old way,” says Rafael Hernández, editor of Temas, a reform-orientated cultural magazine. “Too many people have become comfortable in their positions. They do not want to let go, they do not want to change, they do not want to cede their positions.”

Whatever the case, the public mood has soured. A few days after Mr Obama’s visit, the official newspaper of Cuba’s communist party printed a front-page editorial which argued increasingly vocal public dissatisfaction is “a sign of the democracy and public participation that are the intrinsic characteristics of the socialism we are constructing”. It also acknowledged that only 21 per cent of the 2011 reform programme had been implemented.

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FOTOS del VII Congreso del Partido Comunista de Cuba,

16 de marzo de 2016 (Radio Rebelde)

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POPE FRANCIS FACES DIPLOMATIC TEST ON CUBA TRIP

Marc Frank in Havana, James Politi in Rome and John Paul Rathbone in London

As a parish priest in poor areas of Buenos Aires, Jorge Mario Bergoglio was so struck by Pope John Paul II’s 1998 trip to Cuba that he wrote a book about it. The work, Dialogues between John Paul II and Fidel Castro, was published in Argentina shortly after he became archbishop of Buenos Aires.

Almost 20 years later, the book’s author, who has now become Pope Francis, will make his first visit to Cuba, arriving in Havana on Saturday for a four-day visit before heading to the US.

For the 78-year-old Argentine pontiff, the trip will cap his role helping to broker the thaw in US-Cuban relations, which could lead to an end to the half-century trade embargo. The visit will also test the pope’s diplomatic skills: he will seek to proselytise a universal message of helping the poor, while pushing the socialist government of President Raúl Castro to increase its reforms and give a greater role to the Church.

“In the fast-approaching era of no US embargo, Castro can no longer argue that the revolution needs its restrictive laws,” said Paul Hare, former UK ambassador to Havana, now professor of government at Boston University. “Pope Francis helped to usher in this new era and it is one where the Church will ask increasingly probing questions . . . He wants to launch a new battle of ideas.”

The subtlety of that battle of ideas is foreshadowed by the pope’s early Cuban thoughts. Although, as pontiff, he has criticised capitalism and the unfettered pursuit of money as “the dung of evil”, in his book he called for “corrupt, dictatorial and authoritarian governments” to be replaced by democracy.

Francis, a Jesuit, also harshly criticised socialism and, by extension, Fidel Castro’s atheist revolution for denying individuals their “transcendent dignity”.

“Castro may have become a Marxist, but don’t forget he was educated by Jesuits before that, so you may need a Jesuit to bring him round,” said Jimmy Burns, a former Financial Times correspondent and author of a new biography of Francis, The Pope of Good Promise.

Still, few expect strong criticism during the pope’s sermons, which are expected to be live-streamed on state-controlled media. “These matters can be dealt with without doing so in a big way; discretion can be more effective,” said Father Federico Lombardi, a Vatican spokesman.

Late last week, as a “humanitarian gesture”, the Castro government pardoned 3,522 prisoners, although it does not appear that these included any political detainees. Havana made similar moves before John Paul II’s trip and Pope Benedict’s 2012 visit.

Samantha Power, US ambassador to the UN, signalled this week that the Obama administration was unhappy with Havana’s progress on human rights. “#Cuba sending exactly the wrong signal in advance of @Pontifex visit by detaining @DamasdBlanco for marching in street,” she tweeted, referring to the dissident group Ladies In White.

Dissidents have asked to meet the pope, but no meetings are currently on his agenda.  Mr Burns believes that the pope will make “some reference” for Cuba to “respect human rights”. If not, it could damage his image, even before he lands in the US.

Although Cuba remains a one-party state, much has changed for the Church since John Paul’s visit. Christmas and Good Friday are again national holidays, and believers are no longer stigmatised. Today, the Church is the island’s only leading institution outside state control.

One price paid for this greater space, though, is criticism for being too accommodating with the government. Raúl Castro is expected to be at Francis’s side during the trip; although a self-professed atheist, the 84-year-old leader was so impressed by Francis during a May visit to the Vatican that he said he was considering returning to the Church.

Francis will lead his first service on Sunday in Havana’s Revolution Square at an altar flanked by images of revolutionary heroes including Che Guevara.  His trip will end in eastern Cuba at the shrine of Our Lady of Charity, Cuba’s patron saint.

In the build-up to the trip, Cuban cardinal Jaime Ortega gave a 45-minute TV interview, and state TV on Thursday night ran a video message to the Cuban people from Francis.

Meanwhile, in the central Camagüey province, Cuba’s most Catholic community, pictures of the pope have been posted on doors, and the Communist party has been helping to organise bus transport to masses.

“Everything . . . is well-organised,” said retired nursing professor Anaida Morales.  “People have a lot of expectations and hope because every time a pope comes there is some positive change . . . Look, they have freed some prisoners,” she added.

Most Cubans have more realistic expectations about what Francis might achieve. He can fix some “little things here and there”, said Nuris Lopez, the 23-year-old owner of a beauty salon in Granma province.

 zApostolic Nunciature of the Holy See (Vatican City) in Havana, Cuba

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 The Cathedral

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FINANCIAL TIMES SPECIAL REPORT ON CUBA, June 16, 2015

Financial Times, June 16, 2015

Document here: Financial Times SPECIAL REPORT on CUBA June 16 2015

Authors:

John Paul Rathbone, Latin America Editor; Geoff Dyer, US diplomatic correspondent; Richard Feinberg, Professor, UCLA San Diego; Marc Frank, Journalist based in Cuba; Cardiff Garcia, FT Alphaville reporter

obama-castroTHAW IN US RELATIONS RAISES EXPECTATIONS; Tentative signs of openness heighten hopes, but is the island ready to do business?

NEW CONNECTION DIVIDES OPINION; President Obama’s overtures play better than expected at home — although not with everyone

STRAITS DEALING BRIDGES MANY GAPS; Retailers in Florida cash in on items needed by customers across the water

GLIMMERS OF GLASNOST BEGIN TO WARM ISLAND; Government retains a firm grip, but there are signs it is loosening a little

NEW PORT ZONE HARBOURS BIG AMBITIONS; A would-be capitalist enclave in a socialist state, the Mariel project is emblematic of change

STATE EXPERIMENTS WITH CO-OPERATIVE THINKING; From garages and restaurants to dealers in exotic birds, co-ops are expanding

CUBA’S NASCENT KNOWLEGE ECONOMY; The island could capitalise on a wealth of expertise in science

US COMPANIES STILL FACE INVESTMENT HURDLES; Bureaucracy, eroded infrastructure and regulatory risk are among hurdles

GOVERNMENT LIKELY TO END TO DUAL CURRENCY; Change would be part of reforms to remove price distortins

COMPENSATION IS KEY TO FUTURE RELATIONS; What now for legal claims by those who lost property in the revolution?

OPINION: WHAT CUBA CAN LEARN FROM VIETNAM; The island has the resources and location to create a balanced economy

 There is a new entry among Cuba’s roll of important dates. Alongside Fidel Castro’s 26th of July movement and the January 1 1959 “triumph of the revolution”, there is now December 17 2014. That was the day when Barack Obama and Raúl Castro, the US and Cuban presidents, announced that they wanted to normalise bilateral relations and end more than 50 years of cold war enmity.

 To be sure, communist Cuba was already changing. After formally becoming president in 2008, Mr Castro began a tentative economic liberalisation process to boost the country’s flagging economy — especially urgent now that Venezuela’s growing crisis jeopardises the $1.5bn of aid it sends every year. But the December 17 announcement lit a bonfire of expectations among US businesses — even if Cuba’s $80bn economy, for all its exotic allure, is much the same size as the Dominican Republic’s. “There is a new sense of excitement, of US companies coming to look and thinking of starting seed businesses,” says one long-established European investor in Havana. “It makes sense. Start small, learn how the system works and then see how it all goes.”

 So, how might it all go? Continue reading:  Financial Times SPECIAL REPORT on CUBA June 16 2015

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CUBA FLIRTS WITH FREE SPEECH

Marc Frank, Havana,  March 22, 2015 4:07 pm

Original here: Cuba Flirts With Free Speech

Cuba is using the internet to experiment with toning down its political censorship in a sign that a glimmer of glasnost has arrived on the Communist-run Caribbean island.

Havana’s decision to open up on the once-taboo subjects of the electoral system and civil society — by allowing Cubans to question policy in two online forums — is reminiscent of the early days of free speech in what was the Soviet Union in the 1980s.

For a number of years there has been public discussion over the pros and cons of market-oriented reforms in Cuba, and ample criticism of the bureaucracy. But public criticism has stopped short of questioning the political status quo, aside from a fledgling dissident press, such as the online newspaper 14ymedio.com, run by writer Yoani Sánchez.

The new forums, run on state-media websites, brought together officials and academics to interact online for a few hours with an audience encouraged to send in questions and views.

The opening has some similarities to glasnost, when Soviet authorities relaxed limits on the discussion of political and social issues and allowed the freer dissemination of news. The difference is that Cuba’s move comes in the age of the internet.

The forums follow an announcement this month that the country is preparing a new electoral law, due to come into force before the next general election in 2018 when President Raúl Castro will step down, in effect ending the Castro era in Cuba that began with his brother Fidel in 1959.

“These openings may be small and experimental, but they signal something important: criticism becomes legitimate discourse,” Bert Hoffmann, a Cuba expert at the German Institute of Global and Area Studies in Hamburg, said.

In a remarkably transparent forum on Cuba’s electoral system, sponsored by the Union of Young Communists’ daily, a participant called GCR said: “I would like to know if direct elections for the principal leadership positions of the country are under consideration . . . as the current system is [in my view] highly unpopular.”

During a forum on civil society, published online this month by the Cuban Workers Federation’s weekly Trabajadores, Joan asked: “How can the Cuban Workers Federation be a non-governmental organisation when its secretary-general is a member of the Council of State?” Another participant, going by the name Tumblr, charged: “The federation is an appendage of the state it represents . . . carrying out the policies of the Communist party.”

Most of those taking part in both forums defended Cuba’s political system, but what was unique was the expression of differing political opinions.

“The debate in these forums signals a willingness on the part of authorities to allow a range of expression and acknowledge a range of opinions that were heretofore not recognised as legitimate,” William LeoGrande, a Cuba analyst at American University in Washington and co-author of Back Channels to Cuba, said. “However, it would be very premature to say it portends any significant change in the political system.”

The small crack in the dam on political discussion comes as the EU’s foreign affairs chief visits Cuba and as Washington and Havana work to normalise diplomatic relations and begin to discuss a range of issues, including human rights and expanded travel and telecoms, such as direct phone calls.

However, discussions on opening embassies in Washington and Havana have dragged on for two months, in part because of Cuba’s continued status as a US-designated sponsor of terrorism and its inability to obtain banking services in the US. A clash with Washington over Venezuela, Cuba’s closest ally, which led Raúl Castro to deliver a fulminating tirade on March 17 against new US sanctions placed on several Venezuelan officials, has not helped.

The Obama administration’s hope that the embassies would open before April’s Americas Summit, which both countries’ presidents will attend for the first time in decades, now appears out of reach. Efforts to lift the trade embargo in Congress also face opposition from the Republican leadership.

Cuba’s new electoral law, the details of which have not been revealed, will be discussed in grassroots meetings along with other measures on the agenda of a Communist party congress set for April 2016, an opportunity to offer a critique the political system.

“We call for the opening of a multi-party system in Cuba: well regulated so that no foreign power or financial company can finance or corrupt electoral campaigns,” the Observatorio Critico de Cuba, a social network of Cuban intellectuals on and off the island, said in a post to the civil society forum.

The policy shift is also taking place as pressure builds on the Cuban government to authorise unlimited internet access. While only 5 per cent of Cubans are estimated to have access to the internet, 30 per cent have access to the government-controlled intranet, with its thousands of local pages and blogs and where the forums are occurring.

“Raúl Castro’s policies include not only economic reform but also a more tolerant relation between state and society . . . and digital non-state media have become tolerated to a considerable extent,” Mr Hoffmann said.
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 Complete Liberty in Discussing Baseball in Parque Central, Photo by Arch Ritter

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CUBA INCHES TOWARD TRANSPARENCY, SEEKING INVESTMENT AND CREDIT

Wed Dec 24, 2014

 By Marc Frank

HAVANA, Dec 24 (Reuters) – Cuba released more information on its fragile external finances this week than it has in over a decade, as it seeks foreign investment and credit following its sudden improvement in relations with the United States.

The government revealed a healthy current account surplus of $1 billion for 2014, supported by remittances and the re-export of oil that it receives on favorable terms from Venezuela, its closest ally. An estimate of foreign currency reserves, normally a state secret, has also surfaced. Western diplomats told Reuters they had seen a figure of $10 billion on what appeared to be an official economic report.

The revelations followed U.S. President Barack Obama’s announcement last week that Washington would restore diplomatic ties with Cuba and lift some economic sanctions in a dramatic about-face after more than five decades of confrontation.

Hungry for fresh credit but in no position to enter the bond market, Cuba has over the past four years restructured billions of dollars worth of debt with China, Japanese commercial creditors, Mexico and Russia, obtaining substantial reductions in what it owed in exchange for payment plans it can meet.

It has also significantly increased tax incentives for foreign investment, although companies say tax cuts are not enough and complain about a lack of information needed to make investment decisions.

Debt negotiations with the Paris Club of creditor nations may begin next year after 18 months of informal contacts, according to European diplomats, but they say Cuba will have to first open its books. It appeared to be making a start this week.

FRESH FIGURES

Diplomats said the reserves figure of $10 billion seemed feasible as Cuba has increased its reserves for fear of economic and political turmoil in Venezuela. It also plans to unify the dual monetary system and devalue the one-to-one exchange rate with the dollar.

Cuba last reported its “active” foreign debt, accumulated after it declared a default in the late 1980s, as $13.9 billion in 2011. It no longer reports its “passive” debt from before the default, which economists estimate at $8 billion.

Pavel Vidal, a former Cuban central bank official who now lives in Colombia but follows Cuba’s finances closely, said he estimates the foreign debt is “somewhere between $25 billion and $30 billion” and that a $10 billion reserves figure is plausible.

The current account showed a surplus of $1 billion this year but will drop to $5 million in 2015 as Cuba increases imports by 13 percent to stimulate growth, according to Economy Minister Marino Murillo, a significant admission for a country that usually waits three years to report such information. He revealed the information in a closed-doors session of the National Assembly last week and it was broadcast by state media on Monday.

Since President Raul Castro took over for older brother Fidel in 2008, Cuba has achieved significant trade and current account surpluses after years of deficits. Exports have risen more than 50 percent while imports have grown less than 8 percent as the government tries to regain international credibility by improving its finances and meeting debt payments.

Remittances totaled $1.7 billion this year and the re-export of Venezuelan oil brought in $765 million, Murillo said in offering a fairly detailed line item review of the current account for the first time in more than a decade.

He also said the payment of dividends to foreign joint venture partners would increase from $120 million this year to $447 million in 2015. Most surprisingly, Murillo, Castro’s point man charged with dismantling the old Soviet-style economy and building one similar to Asian communism, said Cuba obtained $5.7 billion in credit to cover the same amount in debt payments in 2015.

“To open the international financial gates Cuba will have to be much more transparent in releasing economic data, especially on its balance of payments,” said Richard Feinberg, the author of several studies on Cuba’s need to join the international financial community. “This new data release is a step in the right direction.” (Reporting by Marc Frank; Additional reporting by Daniel Bases in New York; Editing by Daniel Trotta and Kieran Murray)

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EUPHORIA GRIPS CUBA AMID DOUBTS OVER DETENTE

Marc Frank in Havana and John Paul Rathbone in London

Financial Times, December 18, 2014 6:14 pm

Original Article Here: EUPHORIA GRIPS CUBA

In 1980, Mariel was the site of a massive refugee exodus to the US. Today, however, it is better known for the $800m free trade zone and container port that opened there last year – just as Washington was midway through secret talks with Havana. These culminated with this week’s US announcement that it would ease trade sanctions against the island.

“It’s going to change things around here a lot,” said Pedro Cordero, a machine operator, as he mused about Mariel’s future and the prospect of better US trade relations. “Soon we are going to have everyone here: Brazilians, Chinese, Panamanian . . . and Americans.”

Like Mr Cordero, Cubans reacted with hope and occasional euphoria to Wednesday’s announcement by President Barack Obama that the US was in talks to re-establish diplomatic relations with Cuba and improve commercial ties after a five-decade freeze.

 “It’s great, great, great. Everyone is thrilled, happy, excited,” exclaimed Anaida Gonzales, a nurse, in the provincial capital of Camaguey, after learning the news.

Mr Obama’s move, which follows 18 months of back-channel talks, does not end the US embargo, which requires an act of Congress. Nonetheless, Havana’s decision to sink scant resources into Mariel’s modern container terminal – and to build new marinas and golf courses elsewhere – suggests Raul Castro, president, decided long ago to make an all-out effort to normalise commercial relations.

The need for the boost this would bring has grown as Mr Castro’s limited economic reforms – which include liberalising small businesses and allowing some co-operatives – have failed to kickstart Cuba’s stalled Soviet-style economy.

The economic crisis in Venezuela, Cuba’s largest benefactor, has compounded the problem. Caracas will potentially soon be unable to afford the millions of dollars worth of subsidised oil it sends to Havana each year.

The easing of US-Cuban commercial relations “sends a very strong signal to the international community about the future of the Cuban economy and also the profitability of investments, especially with the US market so near”, said Pavel Vidal, a former Cuban central bank official, who now teaches at Javeriana University in Cali, Colombia. “If investment does increase, growth could rise to five or six per cent a year.”

Mr Vidal said he expected the biggest short-term boost would come from Cuban-Americans. Under the new rules they can send $2,000 every three months to their relatives on the island – four times the current limit.

Cuba’s potential removal from the US list of national terrorist sponsors would also trigger the end of some of the financial sanctions that have deterred foreign investment and trade.

Diplomats believe Washington and Havana hope to see relations fully restored by the time Mr Obama leaves office in 2017, or by 2018, when Mr Castro has said he will step down. However, they are cautious about the prospect of the congressional approval needed to end the US embargo and about the speed of change in Cuba.

For one, the most complicated elements of Mr Castro’s reform programme are yet to be put in place — unifying Cuba’s myriad exchange rates and granting full autonomy to state enterprises. And, despite revamping its foreign investment law in July to lure business, Cuba has not announced a single new deal.

From past experience, Havana is likely to move slowly as it balances the need for economic reform against the political risks of liberalisation. “The agenda on the far side of the Florida Straits we now know in detail, but the internal one remains, as it so often does, hidden and secret,” wrote Cuban dissident blogger Yoani Sanchez from Havana.

Other Cubans voiced disquiet amid the euphoria, fearing that the rapprochement could prompt a wave of emigration by Cubans who want to take advantage of current rules that make gaining US citizenship relatively easy, amid concern that these might change.

“I’m worried about a new immigration crisis over the next few months as people rush to set foot in America,” Alexis Fernandez, a local tour guide, said.

Nonetheless, the general mood in Cuba is one of ebullience, with small-scale entrepreneurs rubbing their hands at the prospect of more US visitors and others hopeful that their daily hardships might end.

“Everyone is grinning, some people are crying,” said said Ileleny Santiesteban. “This is wonderful . . . that it will be easier for everyone in the future, here and over there. That, maybe, it is finally over.”

What happens next

Travel and commerce American internet and telecoms companies, as well as banks, will be able to start doing business with Cuba. US visitors will be able to bring back $100 worth of cigars, writes Geoff Dyer.

Official meetings Roberta Jacobson, US assistant secretary of state for the western hemisphere, will visit Havana in January. John Kerry, secretary of state, will likely follow soon after and the White House has not ruled out a presidential visit.

A new embassy The US already has a large Interests Section in Havana. It wants to upgrade this into a proper embassy.

US Congress Some leading Republicans in Congress, who are deeply critical of the opening to Cuba, have threatened to block funding for an embassy and to hold up nomination of an ambassador.

Sanctions President Obama went almost as far as he could within the law in reducing restrictions on dealing with Cuba, but ultimately a real relaxation of the embargo will require approval of a Congress that contains many sceptics.

mariel.jpg 2Old Mariel

mariel

The New Mariel Container Port

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AS CUBAN ECONOMY STAGNATES, ECONOMISTS PRESS FOR DEEPER REFORMS

By Marc Frank HAVANA (Reuters Oct 24 2014) –

Some of Cuba’s best-known economists are openly questioning the very core of the Soviet-style command economy and saying market reforms under way are too modest to boost weak growth.Emboldened by freer debate in the country, they are increasingly vocal in criticizing rigid instructions coming down from the top and the uneven management of policies across the economy, from banking to agriculture. Their influence on government policy-makers is difficult to gauge due to the secretive nature of the ruling Communist Party, but they clearly have been given leeway to call for changes.

Seeking to build a “prosperous and sustainable” socialism, President Raul Castro pushed through a 311-point reform agenda that was adopted by the Communist Party in 2011. It has led Cuba to liberalize farming and retail services by turning much of them over to cooperatives and allowing small private businesses. The Caribbean island is also actively seeking foreign investment. Castro, who took over from his older brother Fidel in 2008, has repeatedly said he despises false consensus and has encouraged debate as long as it takes place within the system.

The economists now talking out are generally members of the Communist Party and some have contact with high-ranking officials, suggesting they may be able to influence the debate inside government on the speed and scope of reforms.They have called for economic reforms for years, but never targeted so sharply the very pillars of the system.

Juan Triana, one of the best-known and most influential economists, says the government’s reforms have signaled a reliance on market mechanisms but officials have still not embraced competition for core parts of the economy and more than 2,000 state companies. “The cost of not recognizing the importance of competition for development are paid in lower rates of growth than the potential, the incorrect assigning of resources, lower than possible rates of productivity and efficiency, and most of all a lack of incentives for innovation, one of the principal motors of development,” he said in a recent presentation to mid-level government officials and peers at a seminar in Havana. The seminar was hosted by the Havana University Center for the Study of the Cuban Economy (CEEC), known for its bold stand for reform over the last 15 years and its criticism of the status quo.

Speaker after speaker joined Triana in urging deeper reform, according to copies of presentations seen by Reuters. Central planning, the government’s sway over strategic company decisions and the state’s monopoly in foreign trade were all criticized.

Frente-CEECCentro de Estudios sobre la Economia Cubana (CEEC), Universidad de la Habana

 “Probably, the so-called state monopoly on foreign trade is a big obstacle to the diversification and growth of exports,” said Miguel Alejandro Figueras, winner of Cuba’s top economics prize in 2007.

While Castro’s reforms have raised the expectations of many Cubans, they have largely disappointed. Public frustration over a lack of well-paid jobs has contributed to a sharp increase in the number of Cubans risking dangerous and illegal journeys on home-made boats in search of better opportunities in the United States. “Most Cubans support the reforms but are coming to realize that much more needs to happen. I think everyone from top to bottom is concerned with the numbers and reality on the ground,” said one Cuban economist, who asked to remain anonymous due to a prohibition on talking with foreign journalists without permission.

The economists generally believe Cuba’s leaders are listening, in part because the reforms so far have failed to lead to growth. They say they hope to reinforce the more reform-minded leaders in closed-door debates at the highest levels. Many liken Cuba’s process to the first years of reform in China and Vietnam, when partial measures proved ineffective and eventually gave way to deeper reforms. But Castro has moved at a deliberate pace, and despite official calls for a more critical press unorthodox views rarely get aired in the state-controlled media. The government revised down its economic growth forecast for this year to 1.4 percent, a second straight year of slowing growth, and food prices are rising on average 10 percent a year. Meanwhile, more than 70 percent of the economy remains in state hands, usually in the form of monopolies.

At the recent seminar, economist Jorge Mario Sanchez criticized state monopolies as out of step with a growing mixed economy and international competition. “The state-centrist culture of production and trade by the state and for the state should begin to transition to another broader mode from and for society,” he said.

Others say harsh U.S. economic sanctions against Cuba are only partially to blame for a lack of state financing and delays in the arrival of supplies and parts, which lead to disruptions in production and shortages. “Our top leaders are very aware of these problems, but unsure how to proceed without creating greater inequality,” said the economist who asked to remain anonymous.

Hal Klepak, a Canadian military historian and author of two books on the Cuban military and Raul Castro, said he thought Castro and other leaders “find criticism welcome not because it is comfortable but because it allows them to push for more and faster movement of a deeply cutting kind.” “There will be more and deeper reform since there is really little hope for any other option,” Klepak said.

Another outside expert differed, doubting that major changes were coming any time soon. “There is still no blueprint as to where the major state-controlled sectors will be in 5 or 10 years time,” said Paul Hare, a former British ambassador to Cuba who now teaches at Boston University.

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Juan Triana, CEEC

Jorge Mario SanchezJorge Mario Sanchez, CEEC

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