Author Archives: Miroff Nick

CUBA WANTS MORE BABIES, SO IT’S GIVING PARENTAL LEAVE TO GRANDPARENTS, TOO

By Nick Miroff February 10, Washington Post
Original Article: Grandparents and Fertility Rates!

MEXICO CITY — Cuba is giving parental leave to the grandparents of newborns, the country’s latest attempt to reverse its sagging birthrate and defuse a demographic time bomb.

The island already has one of the most generous parental leave policies in the Americas, allowing mothers and fathers to take more than a year off from work at partial pay. The new decree extends those benefits to maternal and paternal grandparents.

But so far, such attempts haven’t brought any sort of Cuban baby boom.  The island of 11 million has one of the lowest fertility rates in the Western Hemisphere, with 1.7 births per woman. There are several factors that explain this figure, but they mostly come down to a combination of effective socialist medical care and a dysfunctional state-run economy.

Cuba’s health-care system makes contraceptives widely available, and abortions are available on demand. At the same time, Cuban women are a growing portion of the country’s professional workforce, and many choose to delay motherhood until their late 30s, often because they don’t have the financial means to care for children.

It’s hardly the only demographic problem Cuba faces: Some  60,000 to 80,000 Cubans emigrate each year, many of them young people looking for better opportunities in the United States, Europe and Latin America.

The Cubans who stay behind are going gray. Nearly one-fifth of the island’s population is 60 or older, and they depend on a shrinking pool of Cuban workers to keep the state-run economy afloat. Cuba’s life expectancy is 78, on par with the United States, so there’s a larger and larger pool of dependents.

According to the Communist Party newspaper Granma, the decision to extend parental leave to grandparents was necessary “to deal with the high degree of aging among the population, and to encourage fertility in the short term.”  “The challenge of raising the birthrate in Cuba is a challenge that cannot be put off,” Granma said.

The decrees also reduce day-care costs for Cuban parents with multiple children, and provide tax breaks for women who work in the country’s small but growing private sector.

Offering partial salary to Cuban parents on leave is not the kind of burden for the government — which employs about 70 percent of the workforce — that it would be in more prosperous nations.

The average official state salary hovers around $20 a month. Paying parents and grandparents a fraction of that to care for children is costly in a country where economic growth is stagnant, but nothing like the expenditure it would be elsewhere.

The United Kingdom has adopted a leave policy for grandparents who still work, and while a similar law has been proposed in Argentina, Cuba appears to be the first Latin American country to offer the benefits to grandparents.

 

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HOW CUBA IS, AND ISN’T, CHANGING, ONE YEAR AFTER THE THAW WITH THE U.S.

By Nick Miroff December 15 at 7:00 AM

HAVANA — No event in decades shook up Cuba like the announcement last Dec. 17 by presidents Obama and Raul Castro that their countries would begin normalizing long-broken relations. In the 12 months since, Cubans have witnessed scenes few expected to see in their lifetimes, or at least in the lifetimes of Fidel Castro and his brother, Raul.

A U.S. flag snaps once again in the sea breeze outside a U.S. embassy in Havana. Raul Castro and Obama held talks on the sidelines of a hemispheric summit in April. So many U.S. politicians, corporate executives, foreign leaders, tourists and celebrities have visited, that an island long known for isolation suddenly feels it is at the center of the world.

The psychological impact of these events, however, has far outpaced any physical one. So far, U.S. businesses have only completed a handful of new deals. Cuba remains the only closed, one-party state in the Americas, and if anything, normalization with Washington has left communist authorities increasingly anxious about dissent and more determined to stifle it.

Cuba is still very much the same country it was a year ago. And yet, not quite.

“For a lot of my friends who are university graduates, the news was positive, and we saw it as the beginning of a long and complicated process,” said Lenier Gonzalez, a founder of the group Cuba Posible, which advocates gradual reform. But for more of the population, “it produced an unrealistic expectation

That third group of Cubans heard in Obama’s words last Dec. 17 a cue to flee. They fear normalization will put an end to the immigration rules that essentially bestow residency and welfare benefits on any Cuban who reaches U.S. soil.

As many as 70,000 Cubans have left for the United States in the past year, in what appears to be the largest wave of migration from the island in decades.

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The Legal Emigration Route to the USA: Early Morning Queue outside the American Embassy, April 2015

The changes of the past year have set Cuban authorities on edge too, bringing an escalating crackdown on public protest or opposition activity.

Dozens, even hundreds of activists are detained or arrested each Sunday, when the Ladies in White dissident group attempts to march in Havana and another group, the Patriotic Union of Cuba, stages a weekly mobilization in Santiago, the island’s second- largest city.

Though the government generally no longer locks up dissidents for long prison terms, it increasingly relies on short-term arrests to block protests by activists it considers “mercenaries” at the service of foreign interests.

The illegal but tolerated Cuban Commission of Human Rights and Reconciliation tallied 1,447 political arrests or arbitrary detentions in November, the highest monthly total in years.

In an interview published Monday, Obama said that the United States would continue to support Cuban rights activists and that he was considering a trip to the island — but on the condition that he can meet with dissidents. “If I go on a visit, then part of the deal is that I get to talk to everybody,” he said, in an interview with Yahoo News.

“Our original theory on this was not that we were going to see immediate changes or loosening of the control of the Castro regime, but rather that over time you’d lay the predicates for substantial transformation,” said Obama, whom surveys show is a widely popular figure on the island.

Cuban officials this year have tried to push back at public perceptions that Obama is a friend and the United States is no longer a threat or a foe. Relations will not be truly normal, they insist, until Washington lifts its trade embargo, closes the U.S. Navy base at Guantanamo Bay and makes reparations for a half-century of economic sanctions and other grievances.

Yet the rivalry has morphed from hostile confrontation into something more sportsmanlike: a low-intensity contest to set the pace of change, with Washington trying to move faster and Cuba preferring slow, cautious steps.

As Rafael Hernandez, editor of the Cuban journal Temas, put it: “We’ve traded a boxing ring for a chess board.”

For all its revolutionary slogans and lore, Cuba can be a profoundly conservative place, in the strict definition of the term. It is a country where the television programming, food rations and newspaper editorials seem to remain the same, year in, year out. This drives young Cubans crazy. But the continuity is a comfort to some, not least the communist party elders who have ruled for 57 years.

Raul Castro, 84, has pledged to step down in February 2018. Obama has 13 months left in office. That leaves a narrow window for the two men who charted the normalization course to see it through.

Rarely does a week go by without some new chess move. The Obama administration in May took Cuba off the list of state sponsors of terrorism, paving the way for the countries to formally reestablish diplomatic ties in July.

The two countries have signed new agreements on environmental cooperation. They’ve enhanced anti-narcotics enforcement. Direct mail service is set to resume on a trial basis. U.S. and Cuban officials have even started discussing their oldest grievances, opening negotiations to settle billions in U.S. property claims and Cuban counter-claims.

The U.S. secretaries of agriculture, commerce and state have all visited Havana in the past year, along with dozens of U.S. lawmakers, adding up to the highest-level government contacts in decades.

A U.S. tourism tsunami still seems to be building. U.S. travel to Cuba increased by 40 percent since last December, according to industry estimates. Overall tourism to Cuba increased nearly 20 percent, bringing billions in additional revenue for the government.

“Our booking activity has been off the charts,” said Tom Popper, president of Insight Cuba, the largest U.S.-based provider of the licensed “people-to-people” travel permitted under U.S. law.

Most of the U.S. travelers have come to Havana, where a shortage of hotel beds has kicked off a scramble among Cubans and their foreign business partners to buy, renovate and rent properties. Each city block seems to have at least one crew of contractors patching cracks and applying paint.

A deal to reestablish regular commercial flights between the two countries is said to be imminent, with United, JetBlue, American Airlines and other U.S. carriers pledging to begin service as soon as they’re cleared by the two governments.

Cuba established a direct phone link with a U.S. company, IDT, and a roaming agreement with Sprint. It has set up nearly 50 outdoor WiFi hotspots at parks and boulevards across the island, where Cubans gather round-the-clock to chat with friends and relatives overseas.

But the initial Cuba excitement among U.S. companies has been replaced by something more “sober” a year later, said James Williams, president of Engage Cuba, a group lobbying to lift the embargo.

Williams said he knew of at least two-dozen U.S. companies that had submitted formal business proposals to the Castro government, aimed at taking advantage of more flexible rules. “I would imagine it’s probably in the hundreds,” he said.

The companies want to lease office space, build warehouses, dock cruise ships and ferries. Not one has gotten a green light so far, he said.

“Frankly I think the Cubans have been overwhelmed with a surge in interest and the decentralized nature of how that interest is coming to them, with companies calling them up, consultants coming to them, and not a lot of clarity about how to make a deal,” said Williams. “The non-responsiveness has slowed things down.”

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TWO VIEWS ON THE FUTURE OF GUANTANAMO:

II.   Peter McKenna, THE FUTURE OF GITMO

Ottawa Citizen, May 15, 2015

Original here: Gitmo

Guantanamo_bay_satellite_imageI’ve just returned from a visit to Guantanamo City and its outskirts. It is blistering hot in and around Guantanamo City, which surely doesn’t minimize the harsh prison conditions for the remaining 120 or so detainees at the U.S. naval facility in Guantanamo Bay, Cuba. It is not clear what their fate will be if the U.S. base is eventually returned to the Cubans.

Taking up 117 square kilometres, which includes over 1,000 buildings and two airfields, it’s hard to miss in south-eastern Cuba. But will it prove to be a major stumbling block in the way of a normalized U.S.-Cuba relationship?

Interestingly, it is a self-contained U.S. military facility (or reservation) — replete with its own grocery store, movie theatre, church and golf course. It even has its own McDonald’s restaurant, the only one on the island.

The initial 1903 Cuban-American Treaty, which laid out the terms of the lease agreement, put the annual rental fee at 2,000 U.S. gold coins. The 1934 Lease Agreement set the current cost at US$4,085 and essentially gave the U.S. government a lease in perpetuity for the territory around Guantanamo Bay (for use as only a naval coaling station).

It is said in Cuba that the Castro brothers have either sent the lease cheques back to the Americans or left them un-cashed in a desk drawer somewhere. The Castro governments have always maintained that the lease component of the 1934 revised treaty is illegal.

Since the 1959 Cuban Revolution and the coming to power of Fidel Castro, Cuba has seen the U.S. base as “occupied territory” and has consistently demanded its return. To this day, Cuba’s political leadership views Guantanamo as a matter of national sovereignty and as rightful Cuban territory. And just about every Cuban whom I spoke with feels that same ways about the base, its tarnished colonial legacy, and its connection to Cuba’s identity.

Just in case, the Cubans have military bases (at least three) near and around the U.S. naval facility. There are other trenches, prickly cacti, fences and observation/guard posts to repel the Americans — to say nothing of the deadly minefield.

For the U.S. government, the domestic politics of relinquishing control of Guantanamo would suggest an American resistance to even broaching negotiations over its return. It also still has strategic importance in terms of the Caribbean (and China’s growing involvement in the region), value as a naval training facility, and as a means of keeping a watchful eye on Cuba. Notwithstanding a substantial financial operating cost, it will certainly not be easy for the U.S. to walk away from Guantanamo.

That explains why the Barack Obama White House said plainly in early 2015: “The president does believe that the prison at Guantanamo Bay should be closed down. But the naval base is not something that we believe should be closed.”

However, at a regional summit meeting in Costa Rica in late January, Cuban President Raul Castro was adamant about the transfer of Guantanamo back to Cuban hands. He noted that normal bilateral relations “will not be possible while the blockade still exists, while they don’t give back the territory illegally occupied by the Guantanamo naval base.”

Most Cubans know that the issue of Guantanamo is complicated and not likely to be resolved easily. But they are determined to get it back, which might make it a diplomatic deal-breaker.

Both sides may simply continue to agree to disagree about the base. Or, the prison could be closed down and the U.S. military presence further reduced (or wound down entirely over a set period of time). It is also possible that the stalemate over Guantanamo remains frozen in time — at least in the short to medium term — while an improvement in bilateral relations limps along.

One hopes that a normalization of U.S.-Cuban relations doesn’t get torpedoed by an antiquated lease agreement. But if Cuba and the United States are unable to come to a meeting of the minds on Guantanamo (e.g., essentially a complete transfer back to Cuba), it’s hard to see how a full-fledged rapprochement can take place.

Peter McKenna is professor and chair of political science at the University of Prince Edward Island in Charlottetown.Aerial-view-bay-ships-bw DN-ST-95-01300 BE070079.

II.   Nick Miroff, WHY THE US BASE AT CUBA’S GUANTANAMO BAY IS PROBABLY DOOMED

The Washington Post, May 18, 2015

Original here: Us Base at Guantanamo  Probably Doomed

HAVANA — If the United States and Cuba restore diplomatic ties in the coming weeks, as anticipated, the two countries will still be a long way from anything resembling a “normal” relationship, Cuban President Raul Castro has said repeatedly. His list of grievances is lengthy. But this week Castro said it boils down to two big issues.

The first, of course, is the U.S. trade embargo. The other is the Guantanamo Bay Naval Station, the oldest overseas American Navy base in the world, which the United States has occupied for 116 years.

That one isn’t up for debate, the Obama administration says. But, one can only wonder, for how long?

Scholars and military experts say it’s difficult to see how United States can overhaul its relationship with Havana while hanging on to a big chunk of Cuban territory indefinitely, especially if relations warm significantly in a post-Castro era.

While there are plenty of examples in the world of disputed borders or contested islands, the 45-square-mile American enclave at Guantanamo is something of a global geopolitical anomaly. There is no other place in the world where the U.S. military forcefully occupies foreign land on an open-ended basis, against the wishes of its host nation.

“It’s probably inevitable that we’ll have to give it back to Cuba, but it would take a lot of diplomatic heavy-lifting,” said retired Adm. James Stavridis, a former Supreme Allied Commander of NATO and now dean of the Fletcher School of Law and Diplomacy at Tufts University.

Stavridis was head of the U.S. military’s Southern Command between 2006 and 2009, putting him in charge of the Guantanamo base, which he said remains a “strategic, and highly useful” U.S asset. “It’s hard to think of another place with the combination of a deep water port, decent airstrip and a lot of land,” Stavridis said.

The controversial American detention camp for global terrorism suspects is just one of the base’s conveniences. It is a logistical hub for the Navy’s Fourth Fleet, as well as counter-narcotics operations and disaster-relief efforts. It also functions as a detention center for north-bound migrants intercepted at sea. The base’s location on Cuba’s south coast allows the U.S. military to project power across the entire Caribbean basin. And it’s strategically located next to Haiti, a place that often needs U.S. help.

As a military installation, though, Guantanamo — Gitmo is its nickname — is no longer essential in a modern era of aircraft carriers, nuclear submarines and drones, Stavridis said. “You wouldn’t launch a large-scale military operation from there,” he explained, adding that many of the other uses Guantanamo provides could be fulfilled by existing U.S. military facilities in Puerto Rico or south Florida.

“I don’t think it’s irreplaceable,” Stavridis said.

U.S. warships sailed into Guantanamo Bay in 1898, and together with Cuban rebels, defeated the Spanish fleet. The Americans essentially never left, conditioning Cuban independence on constitutional provisions allowing the U.S. Navy to occupy the area “for the time required.” Rent was set at $2,000 a year, paid in gold.

A new lease increased the amount to $4,000 in 1934, according to this history of the base by scholar Paul Kramer. But there was no cut-off date for the Americans to leave.

The U.S. government still dutifully sends rent checks to the Cuban government, but the Castros don’t cash them. They don’t recognize the lease, and — like landlords in a rent-controlled Brooklyn apartment — want their tenants to leave. Fidel Castro is said to keep the checks piled up in his desk drawer, using them as a kind of political prop. It’s hard to imagine a more ready-made symbol of U.S. imperialism than a military base whose history is so wrapped up in late 19th-century attempts at American empire.

After Castro’s revolution, the United States had no intention of letting the base fall under communist control. At times of peak tensions during the Cold War, such as the 1962 Cuban Missile Crisis, the base’s fences became a front line for the Soviet-American standoff. Volleys of gunfire were occasionally exchanged between U.S. and Cuban troops. One such event was dramatized in the 1992 film “A Few Good Men,” in which an agitated Jack Nicholson memorably told Tom Cruise he wouldn’t be able to handle the pressures of living under constant threat at Guantanamo.

Castro shut off the water and electricity in 1964, and today the base is completely isolated from the rest of Cuba. Visitors say it resembles a small American city, with the island’s only McDonald’s franchise, as well as a Taco Bell, a Subway and other American chains. The divide from the rest of the island is lethally enforced by land mines, concertina wire and thickets of thorny cactus.

In recent years, President Barack Obama’s unsuccessful attempts to close the base’s prison camp have inspired several dream scenarios of a post-military future for the base. One would converted it to a research center and treatment facility for tropical diseases and epidemics. If returned to Cuban control, it could become a second campus of Cuba’s Latin American School of Medicine, where students from around the world get free medical training from the Cuban government.

Stavridis said a proposal along these lines to “internationalize” the base that retains its value as a logistical center for humanitarian relief would probably be an acceptable future within the Pentagon — at least in the long run. Other optimists say the base’s transformation could serve as an exercise in trust-building between Cuba and the United States as hostilities ease.

Such a move wouldn’t be without precedent. The U.S. reluctantly gave up the Panama Canal Zone, a place far more strategic to military operations and U.S. commercial interests than Guantanamo Bay. Panama converted the military installations into a “City of Knowledge,” a cluster of research labs and campus facilities in partnership with several U.S. universities.

Miroff is a Latin America correspondent for The Washington Post, roaming from the U.S.-Mexico borderlands to South America’s southern cone. He has been a staff writer since 2006.

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DESPITE CHANGES, U.S. BUSINESSES STILL FACE A MINEFIELD OF SANCTIONS IN CUBA

Washington Post,  January 11, 2015

By Joshua Partlow and Nick Miroff

Original here: MINEFIELD      

MEXICO CITY — To the Cuban government, it is “The Blockade,” and sometimes, “The Genocidal Blockade,” as if U.S. Navy gunboats had circled the island and cut off its inhabitants.

The “Cuban Embargo,” as it’s known in the United States, has failed for 54 years to push the Communist government from power. The U.S. economic sanctions have left Cuba neither fully isolated nor able to conduct completely normal business relations with other countries and foreign companies.

Now, as President Obama plans to poke new holes in the patchwork of financial, commercial and travel restrictions first imposed by the Eisenhower administration, American businesses are eagerly awaiting new opportunities on the island. But a maze of regulatory obstacles remains, and the embargo may endure as the defining feature of U.S.-Cuba relations long after an American embassy reopens in Havana.

For American companies, the sanctions look “like a scary forest of monsters,” said Robert Muse, a Washington lawyer who specializes in Cuba trade issues. It is also not clear whether the Cuban government will truly be open for business and ready to allow U.S. firms to regain a foothold on an island where American brands and products are revered but the government remains deeply wary of steamrolling Yanqui capitalism.

With only 11 million people and a gross domestic product about the size of West Virginia’s, Cuba isn’t exactly a grand prize for corporations. But it represents pure potential for the U.S. tourism industry, as well as agriculture companies, firms that can overhaul its rudimentary telecommunications infrastructure, and many others.

The top State Department official focused on Latin America, Roberta S. Jacobson, is scheduled to arrive Jan. 21 to begin laying the groundwork for the reopening of a U.S. Embassy on the island. She will be followed by Commerce Secretary Penny Pritzker and a U.S. business delegation on a “commercial diplomacy mission.”

The Obama administration has proposed a few basic changes to the Cuba rules, such as allowing U.S. companies to export building materials for private homes, agricultural equipment for farmers, and telecommunications equipment. The U.S. government will allow new relationships with Cuban banks, and limited imports of Cuban goods such as rum and cigars.

Raúl Castro and other Cuban officials have been quick to temper enthusiasm on the island for Obama’s moves with reminders that the sanctions remain a formidable obstacle to truly normal relations. They can be lifted only by the U.S. Congress.

According to Havana, the sanctions have inflicted $1.1 trillion worth of damage on the island’s economy over the decades — a figure that will almost certainly enter into future negotiations over the billions of dollars’ worth of pending claims by U.S. litigants whose property was seized after Fidel Castro’s 1959 revolution. Cuba claims the sanctions hurt its citizens by depriving them of U.S. medical technologies and pharmaceuticals, although U.S. officials say such sales are generally allowed with export licenses from the Treasury Department.

Though the restrictions block most U.S. commerce with the island, the Castro government, which has a virtual monopoly on foreign trade, does business with other nations all over the world, though not always smoothly. On the streets of Havana, new Hyundai and Kia sedans from South Korea dart among the old Soviet Ladas and battered Chevrolet Bel Airs from the Eisenhower years. Cuban resort kitchens are stocked with Spanish wine, Chilean salmon and filet mignon flown in from Canada. There’s a Lacoste store selling polo shirts under the colonnaded archways of Old Havana.

With shipments of subsidized petroleum, Venezuela, Cuba’s top trading partner, keeps the island’s lights on. From China, the Cuban government can get just about anything. These competitors have eaten away at whatever small beachhead certain American companies gained in Cuba over the past decade or so. After a series of devastating hurricanes in the island nation, Washington made it easier for Cuba to take advantage of exceptions to the embargo, allowing for the purchase of American food on a cash-only basis.

Within a few years, the United States had become one of Cuba’s top 10 import partners. U.S. food sales peaked at more than $700 million in 2008. Today, state-run supermarkets still stock cornflakes, Heinz ketchup and American oatmeal. Apples from Virginia show up in big white boxes at holiday time. Sales have slowed, though, as Cuba has boosted trade with ­Brazil and European countries that can offer financing and credit. American companies sold an estimated $300­­ million worth of food to Cuba last year, nearly half of which consisted of frozen chicken parts.

“We’ve lost a lot of market share over the years, and we want to get that back,” said Mark Al­bertson, director of strategic market development at the Illinois Soybean Association. His organization, and American producers of poultry, soy, pork, corn, milk and other goods, have banded together in a new coalition to try to lobby Congress to end the embargo. Obama’s proposal, although a good step, Al­bertson said, “doesn’t go far enough.”

Even with the new changes, companies expecting to do business in Cuba say they are going to be hamstrung by U.S. restrictions on financing and credit. There are “so many exemptions and hoops we have to jump through that make it not competitive,” Albertson said.

Banking is a big problem. The Obama administration has hit foreign financial institutions with more Cuba-related fines than any previous administration, according to Cuba’s Foreign Ministry. In July, the French bank BNP Paribas agreed to pay an $8.9 billion fine from the U.S. Treasury Department for Cuba-related violations. The German financial ­giant Commerzbank said last month it will pay $1 billion in a similar settlement. The banks broke the law because they routed the transactions through U.S. territory, regulators said.

Muse, the trade attorney, said American banks remain skeptical that Cuba is worth the trouble. The confusing overlay of U.S. laws — from the USA Patriot Act to money-laundering statutes — convinces some that it is easier to avoid the island entirely.

These hurdles, as well as the Communist-ruled island’s difficult business climate, have led some to conclude that the current excitement over the U.S.-Cuba rapprochement is mostly hype and wishful thinking, and that little will change for American businesses seeking to invest in Cuba.

“They’re believing what they hope will be,” said John Kavulich, senior policy adviser at the U.S.-Cuba Trade and Economic Council, a nonprofit group that includes major American businesses. “And they’re forgetting that the Cuban government is not about to say: ‘We’re going to accept everything that you want to do to us, knowing that your goal is to change us.’ ” “The Cuban government will allow only what it believes it can control,” he added.

In an interview, Commerce Secretary Pritzker highlighted travel, agriculture and telecommunications as areas of opportunity for U.S. firms.

Though many are skeptical that Cuba will allow the U.S. government to fiddle with its Internet or cellphone services, given Communist officials’ concerns about spying, Pritzker said there were still opportunities created by the president’s opening. With relatively few Cubans owning cellphones, and even fewer with Internet access, she said, “there’s enormous telecommunications infrastructure that needs to be put in.”

“We have to respect the fact that by statute the embargo is still in place,” Pritzker said, but that “commercial engagement can change the diplomatic relations between our two countries.” And, she added, “the president is encouraging us to go.”

Gabriela Martinez contributed to this report.

Joshua Partlow is The Post’s bureau chief in Mexico. He has served previously as the bureau chief in Kabul and as a correspondent in Brazil and Iraq.

Nick Miroff is a Latin America correspondent for The Post, roaming from the U.S.-Mexico borderlands to South America’s southern cone. He has been a staff writer since 2006.

 OLYMPUS DIGITAL CAMERA Manzana_Gomez-Interior,_Centro_Habana_-_April_2003Above two photos: Manzana de Gómez (Gómez Block), Parque Central, Havana’s first shopping mall, converted to apartments, probably on the way back to its original function.

Cuba, Havana  Plaza Carlos III Shopping Mall

Plaza Carlos III Shopping Mall, Central Havana

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Cuba’s ‘resale’ economics: The island’s halfway capitalism has trapped Cubans between private business and the state economy.

The island’s halfway capitalism has trapped Cubans between private business and the state economy.

Nick Miroff, January 23, 2013.

Original Article here:  Cuba’s ‘resale’ economics

HAVANA, Cuba — Cracker Man’s cry echoes down the streets of Havana’s Buena Vista neighborhood, trailed by the clatter of his shopping cart over potholes.

“Crackers! Crackers!” he barks. “Fresh from the oven!”

He’s one of roughly 400,000 Cubans now working as state-licensed entrepreneurs in the communist country’s small but growing private sector.

Cracker Man, as he’s known in the neighborhood (“el Galletero”), sells his product for about $1 a bag. He doesn’t make the crackers, but buys them from the state-owned bakery.

He’s what Cubans refer to as a “revendedor,” a reseller who buys scarce state-subsidized items from government stores to sell at a mark-up.

That’s made many people here angry. Complaints abound in the “letters to the editor” section of Cuba’s Communist Party newspaper Granma, where resellers are disparaged as parasites and good-for-nothing speculators whose main contribution to the economy is to make basic products more expensive for everyone.

They’re also entirely the creation of Cuba’s new halfway capitalism.

Raul Castro’s recent reforms — the government calls them “updates” — have provided a place for market forces to exist alongside the centrally planned, state-controlled economy. Cubans have been granted new opportunities to become tradesman, DVD vendors, pizza makers and licensed small-scale retailers whose tiny shops and stalls have bloomed along Cuba’s main streets and thoroughfares.

Other entrepreneurs navigate pushcarts through the streets as itinerant peddlers, hawking goods under the hot Caribbean sun.

The government wants the private commerce to stimulate Cuba’s moribund economy and substitute costly imports. But experts say the authorities have yet to take the next necessary step: allowing entrepreneurs to innovate and manufacture their own products.

Cracker Man, for instance, has nowhere to buy the kind of industrial ovens, bakery equipment and wholesale supplies he’d need to make crackers. Shipping those items from abroad would trigger steep import duties, never mind the logistical obstacles.

“We still haven’t created the mechanisms for a productive economy,” says economist Julio Diaz Vazquez, a Soviet-trained expert on China and Vietnam’s so-called market socialism. He criticizes the government for wanting to encourage entrepreneurship while tightly controlling it through an obtuse bureaucratic regulatory system.

He believes that’s a lost cause. “You can’t play games with the market,” he says.

The authorities say they want to sharply reduce the number of Cubans working in low-paid, unproductive government jobs by moving them into cooperatives and small-scale private businesses.

They’re setting up pilot programs to convert state-run enterprises into worker-managed cooperatives, and have expanded the range of occupations for which Cubans are allowed to obtain self-employment licenses.

But the list remains very small, with fewer than 200 officially sanctioned professions from which Cubans can choose, including obscure jobs such as “party planner” and “palm-tree pruner.”

Not the kind of thing to lift millions out of poverty or free Cuba from having to import soap, snack foods and other bare necessities on which the government spends billions of dollars abroad while its own state-run manufacturing sector withers.

Many of the newly licensed entrepreneurs sell hardware-store items and household essentials such as bleach and dishwashing detergent. As their stalls have proliferated, many of the items they sell are disappearing from state stores because private vendors are rushing to buy up supplies. The government says it’s working to set up wholesale markets to supply the new businesses, but it has yet to do so, with a few exceptions. The authorities seem nowhere close to allowing island residents to invest in the kind of infrastructure that could help give rise to private manufacturing and industry.

Until that happens, economists say, resale economics will continue to rule.

In one area of Havana known as the La Copa, private vendors offer plumbing supplies and other items not available in the state-owned hardware store next door.

Some of their goods are imported while others — such as crudely fashioned pipe fittings — are made on the island. Like most everywhere else, the rest are bought in government-owned stores.

The vendors respond to criticism about selling state-manufactured goods at higher prices saying that as long as they can show receipts proving they acquired the items legally, there’s nothing illegal about reselling them.

“I’m providing a service to my clients and to the government,” says Yormani Alayu, a plumbing-supply vendor who says he pays taxes and goes to great lengths to acquire scarce materials. He points to several rolls of flexible plastic tubing that would be nearly impossible to find in state-run stores.

“These are from Las Tunas,” he says of a city more than 400 miles from Havana.

One customer, Tania Alvarez, says she appreciates personal attention from private vendors, in contrast to the poorly paid clerks at government stores who are often indifferent toward shoppers, if not surly.

“I also appreciate the convenience,” she adds. “I don’t have to go all over town to look for these things.” She says she doesn’t mind paying slightly more.

Other resellers says they’re adding value to products they acquire from state stores.

A 21-year-old hardware vendor named Moises Amador points to colorful rum bottles on his table filled with different kinds of paint, each labeled with instructions. The paint is sold by the gallon in government stores, he explains, but often clients don’t need to buy that much. “And not everyone can afford a whole gallon,” he adds.

“I’m providing a service,” he says somewhat defensively. “I make my own labels and print them. I buy the bottles from a recycler. It’s an investment I make.”

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Cuba: When Bureaucrats Attack

Cuba: When bureaucrats attack

The abrupt closing of a popular Havana business tests Raul Castro reforms.

Ulises Aquino

Original here:  Cuba: When Bureaucrats Attack

Nick Miroff, July 31, 2012 08:44

HAVANA, Cuba— In the new Cuba, the one President Raul Castro and his team of reformers say they’re building, the hard-working entrepreneur is a patriotic figure, a job-creator who’s helping to lift up the island’s feeble economy.

That’s the Cuba where Ulises Aquino thought it would be a good idea to start a business.

With funds earned abroad as an award-winning opera singer, Aquino opened a restaurant and cabaret last year where the company he founded, Opera de la Calle (Opera of the Street) could perform.

He called it “El Cabildo” (roughly, the “meeting place”), transforming a trash-strewn lot into a lively entertainment venue, with an open-air stage, restaurant and bar. Aquino offered free children’s theater and other community activities on weekend mornings, and kept his prices low, charging $2 admission to Opera of the Street shows that feature as many as 80 singing-and-dancing performers.

Aquino was a good socialist businessman too, sharing profits with his 130 employees and paying wages that were three or four times the $20 average monthly Cuban government salary.

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El Cabildo was so innovative that Aquino and his new model of socialist enterprise were featured in a July 12 Reuters article titled “In Cuba, an opera singer builds an empire.”

And that’s when the bureaucrats attacked.

“It may have been the last straw,” said Aquino, of the article. “But they had their eye on me for a while.”

The following Saturday night, on July 21, a team of city government inspectors arrived at El Cabildo and interrupted the show, “like a team of commandos,” said Aquino, a barrel-chested bulldog of a man, who trembled with anger as he re-told the story.

 

The inspectors ordered Aquino off the stage as the audience looked on in shock. Then they shut down the kitchen and froze the cash register for a four-hour inspection.

By the following Monday El Cabildo was closed and Aquino had an order from local Havana officials stripping him of his business license for two years.

The inspectors had determined El Cabildo to be in possession of “more chairs than the permitted number,” and “products whose origin could not be determined” – ie lacking receipts. Two prep cooks who Aquino says were there on a trial basis were found to be “illegal workers.”

Worst of all, Aquino was accused of “enrichment” because he was charging a $2 cover “for personal benefit,” something he was not specifically authorized to do—even though entertainment venues all over Havana routinely charge $5 to $10 at the door.

There was no fine, no appeals process, no legal recourse. It didn’t seem to matter that Aquino had more than $100,000 of his savings invested in the business, or that 130 families would lose their income.

This was the old way in Cuba, where bureaucrats rule.

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Aquino, for one, doesn’t blame Raul Castro. “This goes completely against everything that the government has been telling us,” he said.

“The people who are behind this are the mid-level bureaucrats who know the status quo is endangered by all these new opportunities that offer a change from all the old taboos and prohibitions,” said Aquino.

On Monday, officials from Cuba’s Ministry of Culture issued a statement offering their support for Aquino’s Opera company and its ability to continuing performing at El Cabildo. But they said nothing about his dispute with city authorities and the fate of the businesses that make Opera of the Street possible.

“This place is dead right now,” said Ruben Rodriguez, the opera company’s choreographer, covering up the sound board and lighting controls opposite an empty stage. “Everything’s paralyzed.”

The fate of El Cabildo will be closely watched in Cuba, where Raul Castro’s economic reform process has lost momentum in recent months and Cubans’ initial enthusiasm for starting small businesses has faded.

Officials announced a new pilot program last week that will convert state-run companies into employee-run cooperatives, but the experiment will be limited to just 222 firms.

Meanwhile, a vast state apparatus of government officials who produce nothing of value remain ready to prey upon those who do.

Castro and other Cuban officials have repeatedly said that recalcitrant bureaucrats will not be allowed to stand in the way of economic change. If they intervene to help re-open El Cabildo, they will send a clear signal that Cuba’s new small businesses deserve encouragement, not strangulation.

But if El Cabildo stays closed, it can send a different message about Cuba’s incipient capitalism in Cuba: that new entrepreneurs here should not be too ambitious with their plans or too proud of their success. And any business, no matter how big, can be shut down on a whim, if a local official orders it so.

In that case, Aquino said, “the loser here won’t be me. It’ll be our country.”

Opera de la Calle

See also Havana Times July 27, 2012,  Cuba Closes ‘Street Opera’ Project

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Russians Commence Petroleum Exploration off the Cuban Coast

Nick Miroff,  June 28, 2012;  from Globalpost.com

The Songa Mercur Drilling Platform

HAVANA, Cuba — For 30 years, generous oil subsidies from Moscow kept the lights on for Fidel Castro’s Cuban Revolution. Until the Soviet Union went kaput. Now, Russian state oil companies may be coming to Cuba’s rescue again.

Oil industry journals reported this week that a Soviet-built, Norwegian-owned drilling platform is headed for Cuban waters this summer, under contract with Moscow-based state company Zarubezhneft. The company has hired the rig, called the Songa Mercur, at a cost of $88 million for nearly a year, with plans to begin drilling in November. That should be enough time to poke plenty of holes in search of Cuba’s elusive undersea oil fields, which are thought to hold billions of barrels of crude but have yet to yield a decent strike.

The rig’s arrival couldn’t come at a better time for the Castro government and its state oil company, CubaPetroleo. The state firm has signed multiple contracts in recent years with foreign producers looking to drill in Cuban waters.

Another drilling platform, the Scarabeo 9, has been working off the island’s north coast this year, but has come up dry, dealing a blow to Havana’s hopes for weaning the island off imported crude.

Cuba currently gets about two-thirds of its fuel from socialist ally Hugo Chavez. But the Venezuelan president has been battling cancer and must campaign for re-election in October.

The Scarabeo 9 has been Cuba’s best hope. The Chinese-built, Italian-owned rig arrived late last year, opening a gusher of anxieties in the US. Environmental groups and Florida tourism operators worried about damage from a potential spill. Anti-Castro lawmakers worried an oil strike would give the Cuban government a cash windfall. Repsol, the Spanish oil company that first hired the rig, was the subject of hearings on Capitol Hill, and the Obama administration made the unusual move of sending an inspection team to visit the platform when it stopped in Trinidad en route to Cuban waters. But the state-of-the-art Scarabeo 9 was made for the Cuba job — literally. It is the only rig in the world designed specifically to comply with US trade sanctions against Cuba, which limit the amount of US technology that can be used in Cuban territory to no more than 10 percent.

So far the rig has come up empty in Cubans waters. Having spent more than $100 million for a dry well and a political headache, Repsol executives have announced they’re pulling out of Cuba.

Scarabeo 9 is now in the hands of Russia’s Gazprom Neft, which is drilling in Cuban waters at another offshore location in partnership with Malaysia’s Petronas. Results may be announced as soon as next month.

The Songa Mercur will be working much closer to shore. Built in 1989 at the Soviet Union’s Vybord Shipyards, its maximum drilling depth is just 1,200 feet of water, according to the rig’s specifications.

Jorge Piñon, an expert on Cuban oil exploration at the University of Texas, said the Songa Mercur was retrofitted and modernized in 2006 in Galveston, Texas, after it was purchased from a Mexican firm by Norway’s Songa Offshore SE. It’s currently working in Malaysia.

Unlike the Scarabeo 9, the Songa Mercur is loaded with US technology, including five Caterpillar generators, General Electric mud pump motors, and cementing equipment made by Halliburton. That will likely leave Russian operator Zarubezhneft in violation of the US’ Cuba sanctions, Piñon said.

Not that there’s much the US government can do about it. “This is a Russian state oil company, and they do not have US assets or interests to safeguard,” said Piñon, a former British Petroleum executive. “Do you think that Zarubezhneft is going to invite the US Coast Guard and the Interior Department to board (the Songa Mercur)?” he said. “How then is [the US] going to validate whether the Songa Mercur meets the embargo regulations?” The area where the platform will be drilling is off the coast of Cuba’s Ciego de Avila and Villa Clara provinces, and adjacent to an area that the Bahamas Petroleum Corporation is also looking to develop, Piñon added.

That location should present less of a threat to US beaches in the event of a spill, according to Lee Hunt, former president of the Houston-based International Association of Drilling Contractors. Shallow water does not eliminate the risk, Hunt said, but ocean currents in that area would likely keep floating crude away from US shores. “What has not changed is the need for blowout prevention,” said Hunt, who advocates closer cooperation between the US and Cuba on oil spill prevention. “The best and safest practices, and preparation for spill capping, capture, containment and cleanup remain risk factors for Cuba and the United States.”

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