Presented at Florida International University, Cuban Research Institute Conference: “Beyond Perpetual Antagonism: Re-imagining U.S. – Cuba Relations.”
February 24, 2017
Presented at Florida International University, Cuban Research Institute Conference: “Beyond Perpetual Antagonism: Re-imagining U.S. – Cuba Relations.”
February 24, 2017
BY Leani García |
Americas Quarterly, June 15, 2016
Original Article Here: Cuba Cultivates Startup Scene
Cuba’s startup community is developing despite a lack of funding, equipment or fast internet.
The barriers to founding a tech startup in Cuba are high. For starters, hardly anyone has access to internet connections faster than dial-up.
But that’s not stopping a generation of young entrepreneurs on the island, where a nascent tech community is challenging the idea that tech innovation has to come from places like Silicon Valley.
Two of those entrepreneurs, Eliecer Cabrera Casas and Pablo Rodríguez Yordy, spoke with AQ at a recent tech startup event in Miami about their experience founding the Yelp-like app Conoce Cuba.
“Cuba is an emerging market where there are a lot of opportunities and talented professionals,” Cabrera said. “You can’t invest at the moment, but in a short amount of time conditions can change. We’re preparing the field for the future.”
In addition to the challenges that entrepreneurs face region-wide – from weak infrastructure to innovation-stifling corruption – Cubans like Cabrera face a number of unique obstacles to getting their ideas off the ground.
One of the first hurdles they face is funding. While bank lending on the island is increasing, it’s still not sufficient to meet the needs of the 500,000 registered self-employed Cubans. And having been excluded from Cuba’s recent foreign investment law, tech entrepreneurs don’t have a legal avenue to receive direct funding from foreign companies or investors. Instead, they rely on a combination of state salaries and family connections to support their ideas. An estimated 70 to 80 percent of Cuba’s small businesses are funded with remittances and family money, according to Sergio Lázaro, president of the Cuban software engineering startup Ingenius.
Then there’s web access. Cuba has the lowest internet penetration rate in the region, at just 3.4 percent for authorized households. For businesses like Ingenius, which specializes in cloud computing, the key is to make the most of limited time on the internet. Programmers connect just twice a day, once in the morning to download what they’re working on and again in the evening to push finished products to their clients.
The spotty internet can also create opportunities. Conoce Cuba, which functions as an offline app and website, was built as an upgrade to traditional phone books, one of the few ways to discover business and restaurants on the island. Because Cuba has limited internet and nearly non-existent 3G or 4G cell phone network coverage, the app was first distributed through a network of cell phone repair shops. The shops agreed to act as physical app stores where Cubans could download the latest version of Conoce Cuba.
“Now there are about 70 of these repair shops in Havana that can […] install or update [the app] for users for free,” Cabrera said.
Today, the Conoce Cuba app is also distributed through the paquete semanal — a digital selection of TV shows, movies, foreign newspapers and music known in the U.S. as the internet in a box because it can be downloaded and shared without an internet connection.
The company’s founders acknowledged the difficulties in coding software so smartphones function as if they’re on the web even while not being connected to the internet. But a bigger challenge has been a lack of access to hardware, in part because of the U.S. embargo.
“We weren’t able to see what we’d created come to fruition because we lacked the resources,” explained Rodríguez.
Like many Cubans, however, they said they found ways to resolver, or overcome. By borrowing devices from friends and the repair shops they used to distribute the app, or by purchasing them outside Cuba, Cabrera and Rodríguez found creative ways to test and distribute their product on the island. Now, the task is to convince business owners and consumers that their product deserves a look.
“We were doing something new that people had never seen before, we had to earn their trust,” Rodríguez said. “The biggest challenge for us, and for any entrepreneur in Cuba, is to change the Cuban mentality about how to consume a tech product.”
Papers and Proceedings of the Twenty-Fifth Annual Meeting, July 30-August 1, 2015
All papers are hyperlinked to the ASCE Website and can be seen in PDF format.
Reflections on the State of the Cuban Economy Carlos Seiglie
Los Grandes Retos del Deshielo Emilio Morales
Preparing for a Full Restoration of Economic Relations between Cuba and the United States Ernesto Hernández-Catá
Economic Consequences of Cuba-U.S. Reconciliation Luis R. Luis
El Sector Privado y el Turismo en Cuba Ante un Escenario de Relaciones con Estados Unidos José Luis Perelló Cabrera
Why Cuba is a State Sponsor of Terror Joseph M. Humire
Entrepreneurship in Post-Socialist Economies: Lessons for Cuba Mario A. González-Corzo
Revisiting the Seven Threads in the Labyrinth of the Cuban Revolution Luis Martínez-Fernández
La Economía Política del Embargo o Bloqueo Interno Jorge A. Sanguinetty
Resolving U.S. Expropriation Claims Against Cuba: A Very Modest Proposal Matías F. Travieso-Díaz
U.S.-Cuba BIT: A Guarantee in Reestablishing Trade Relations Rolando Anillo, Esq.
Estimating Disguised Unemployment in Cuba Ernesto Hernández-Catá
Reliable Partners, Not Carpetbaggers Domingo Amuchástegui
Foreign Investment in Cuba’s “Updating” of Its Economic Model Jorge F. Pérez-López
Bienal de la Habana, 1984: Art Curators as State Researchers Paloma Checa-Gismero
Luchas y Éxitos de las Diásporas Cubana Lisa Clarke
By Cardiff Garcia ,
Financial Times, London, March 21, 2016
To analogize the ongoing diplomatic maneuvering between the US and Cuba to a scenario of mutual hostage-taking doesn’t sound charitable, but it might be the best framework for understanding a relationship long defined by its baffling surrealism.
And it’s a useful lens through which to see not only President Obama’s visit to the island, the first by a sitting US president in almost nine decades, but also the specific actions taken by each side in the time since the intent to normalize relations was first announced on 17 December 2014.
Last week John Kavulich, president of the US-Cuba Trade and Economic Council, described this idea to a roomful of lawyers at the US-Cuba Corporate Counsel Summit in New York. On the US side, Obama clearly wants to make the rapprochement an enduring foreign-policy legacy of his administration, and the Cuban government knows this. It can afford to test Obama on how far it needs to go in the direction of economic and political liberalization before satisfying American requirements to continue deepening the relationship.
But Cuba’s efforts to modernize its economy also depend heavily on the country’s relationship with other countries and with foreign (non-US) companies, and specifically on the potential source of foreign investment they can provide. Except these firms and countries are hesitant to provide much investment while the US embargo is in place and Cuba is locked out of most multilateral institutions.
In other words, Cuba needs the momentum towards diplomatic restoration and the end of the US embargo to continue beyond the end of Obama’s time in office. To ensure this happens, the Cuban government will have to take meaningful and credibly permanent steps towards providing greater economic and political freedoms.
The liberalizations on both sides have been made incrementally to this point. The gradual pace was partly for logistical reasons, but I’m sure it was also the result of suspicions inside of both countries about the intentions of the other side.
Forbes, Feb 16, 2016
Original Article : CUBA’S FIRST U.S. FACTORY
Horace Clemmons and Saul Berenthal, both 72-year-old retired software engineers, are slated to become the first Americans since 1959 to set up a manufacturing plant in Cuba. Their plan: produce small, easily maintained tractors for use by family farmers. Under new regulations issued by the Obama administration, the U.S. Treasury Department’s Office of Foreign Assets Control gave the Paint Rock, AL-based partners the go-ahead last week. Once they get final approval from the Cubans, they anticipate that in early 2017, they’ll start building a factory in a special economic zone set up by the Cuban government in the port city of Mariel. In this condensed and edited interview, Berenthal describes his transition from software entrepreneur to Cuban manufacturing pioneer.
Saul Berenthal: I was born and raised in Cuba. I came to the U.S. in 1960 right after the revolution. First I came and then my parents. My family in Cuba is in the cemetery. But I have lots of friends there and I’ve been traveling back and forth since 2007.
Adams: How did you get the idea to build tractors?
Berenthal: I understood the needs of the Cuban economy. Cuba has to import more than 70% of what people eat. They’re still using oxen to farm the land. Our motivation really is to help the Cuban farmer be more productive.
Adams: But you and Mr. Clemmons are software engineers. How did you know the first thing about farm equipment?
Berenthal: Horace was born and raised on a farm in Alabama. He’s the farming expert and I’m the Cuba expert.
Adams: Just because he was raised on a farm wouldn’t mean he would know how to make tractors.
Berenthal: We hired an engineering company in Alabama that helped us pick up an existing design that was appropriate for what we wanted to do. We brought in state-of-the-art technology and produced the tractors. We have a tractor in Cuba already that’s going to be shown at an agricultural fair in March.
Adams: It sounds like you were motivated less by profit than by a desire to help the Cuban economy and Cuban-American relations.
Berenthal: Yes, our motivation is really to help Cuban farmers be more productive. Through commerce and trade, we can bring Cuban and American people closer together.
Adams: What about making money?
Berenthal: Our business model says we are investing in Cuba and reinvesting any profits we make. We’ll do what we did with our other businesses. We’ll create value and then sell the company.
Adams: What profit margins do you project for your tractors?
Berenthal: We’re aiming for 20%.
Adams: How many tractors do you need to sell before you’re profitable?
Berenthal: We believe we’ll sell 300 tractors in the first year and then we’ll ramp up to 5,000. That includes other light equipment we’ll sell for construction as well. The facility will have the capacity to produce up to 1,000 tractors a year. I think the profitability will come after the first or second year when we start to do production and not just assembly in Cuba.
Adams: But Cuba is plagued by shortages of the most basic products. How will you get tractor parts?
Berenthal: They’re all going to be sourced and shipped from the U.S. The current state of the embargo makes it so we can’t buy parts there. But we think that within the next three years the embargo will be lifted and we’ll be able to source from Cuba, if not sooner.
Adams: Your factory will be in a special economic zone?
Berenthal: It’s called ZED, for Zona Especial de Mariel. It’s built around one of Cuba’s biggest ports and it has a whole bunch of sections dedicated to foreign investment. They provide for a bunch of tax and investment incentives. We’re also taking advantage of Cuba’s commercial treaties with the rest of Latin America, where we’ll be able to ship and provide better pricing than for tractors built in the U.S.
Adams: What kind of tax incentive is Cuba offering?
Berenthal: For the first 10 years we don’t pay any taxes.
Adams: How many local people will you employ?
Berenthal: We’ll start with five and ramp up to 30 within the first year and then probably go up to 300.
Adams: You want to sell the tractors for $8,000-$10,000. How can a Cuban farmer with an ox possibly afford that?
Berenthal: There are a couple of ways. There is financing by the Cuban government and by third countries like Spain, France and the Netherlands. We also count on Cuban-Americans who live in the U.S. who have relatives and friends that run farms. We think they would be happy to contribute to Cubans owning a tractor. We’re also counting on NGOs that help Cuban farmers, like religious groups.
Adams: How much is your initial investment?
Berenthal: We project a $5 million investment and then it will go up to $10 million.
Adams: Where are you getting the money?
Berenthal: It’s private money. We have a couple of investors but we have also sold a couple of companies.
Adams: What did you find when you went to Cuba?
Berenthal: I started meeting with people and I had a lot of contacts in the economics department at the University of Havana. I learned what the Cuban government was proposing to do about readjusting the economy. In 2014, when the opportunity for trade arose, we decided to pursue farming and tractors.
Adams: How difficult was it to get U.S. government approval?
Berenthal: In all honesty it was tedious rather than difficult. We had to wait for the regulations to change so that the proposal we made was covered by the regulations implemented over the last nine months.
Adams: Were you competing with other U.S. companies?
Berenthal: We certainly believe we’re going to compete with the Chinese and Byelorussians, who are the current suppliers of tractors to the Cuban government.
Adams: Where did you get the names for your company, Cleber, and product, Oggun.
Berenthal: Cleber is from our names, Clemmons and Berenthal. It’s clever! Oggun is the name of the deity for iron in the Santeria religion. Santeria is the most popular religion in Cuba. It’s a mixture of Catholic and African religions.
Adams: Do you practice Santeria?
Berenthal: No ma’am. I’m Jewish. We’re called Jewbans
Huffington Post 01/25/2016;
Original Article here: Cuba’s Entrepreneurs
Ted A. Henken, Former President of the Association for the Study of the Cuban Economy (ASCE) and Baruch College (CUNY) Professor
Cuentapropista (a Cuban entrepreneur) is a term that up until a few years ago would not have been used to describe a large sector of Cuba’s centralized and still heavily planned economy. But despite heavy odds, I have recently witnessed the proliferation of Cuban entrepreneurship and its positive effects on the Island. As a Yuma (a Cuban term of endearment referring to visiting Americans), I’ve seen Cuba’s “non-state” sector expand considerably, giving testimony to the entrepreneurial successes that everyday Cubans are achieving, and hunger to expand upon.
Engaging directly with Cuba’s entrepreneurial sector — while we push for an end to our pernicious trade embargo — allows us to remove the U.S. as the Cuban government’s bête noir and empower more Cubans to be the masters of their own fates. Some hardliners in the U.S. would argue that engaging any sector in Cuba is helping the monopolistic and undemocratic Cuban government consolidate its power. However, the last 50 years have shown that isolation has only aided the Cuban government in strengthening its monopolies while deflecting blame for its failing economy onto the U.S. embargo. Engagement with cuentapropistas, on the other hand, gives us the chance to begin to build relationships of trust and mutual benefit with the Cuban people.
In the face of constant economic instability and state control, cuentapropistas are the defining social and economic catalyst for Cuba’s future. They are men and women who display incredible motivation and creativity in their business ventures, and are willing to take risks, often at great personal cost. As a result, the burgeoning private sector is now one of the most productive areas of an otherwise failing economy.
In a fact sheet I recently released in partnership with Engage Cuba and the Cuba Emprende Foundation, we found that while Cuba has the most educated, low-cost labor force in the world, private sector opportunities for Cuban professionals continue to be severely limited. As a result, entrepreneurial Cubans have taken their fate into their own hands and are now estimated to be one-third of Cuba’s total workforce. The rate of self-employment has surged to new heights in the last five years, rising from just under 150,000 to over half a million cuentapropistas by mid-2015.
A surprising area of self-employment growth is in telecommunications. The chronic scarcities and bottlenecks caused by the lethal combination of state socialist planning and the U.S. embargo have resulted in the incubation of a true “maker” culture. Highly trained but underemployed computer programmers and telecom agents have started launching innovative start-ups like AlaMesa and Conoce Cuba or designing “lean” software and offline mobile apps for both a Cuban and international clientele. Aiming to encourage this dynamic phenomenon, new U.S. regulations issued by the Obama Administration during 2015 now allow the contracting of Cuba’s private sector IT and other professionals.
But don’t be fooled. There are still drastic internal barriers for motivated, business-minded Cubans. The tax structure is burdensome, the private sector is legally cut off from international trade (apart from imports and exports via “suitcase commerce”), and cuentapropistas enjoy little reliable access to wholesale goods, rental space, credit, or foreign investment. Basic infrastructure is woefully outdated, and Internet access — the driver of any modern business — is still very limited and costly. Perhaps this is why despite unprecedented growth over the past five years, the cuentapropista sector contracted for the first time in the second half of 2015, falling to 496,400 by January 2016.
There are also serious structural workforce issues. For example, every year over 4,000 information technology engineers graduate across the country, but there are a limited number of state positions available to them. Therefore, many of these graduates are forced to join the historic exodus of young professionals abroad in order to find an economic return on their educations.
The possibilities for these young entrepreneurs will be virtually limitless once the island is equipped with a modern telecommunications infrastructure — something that can be made possible with the help of American investment. But in order for U.S. telecommunication services and other businesses to help bring meaningful change in Cuba, Congress needs to lift the trade embargo.
Because while American entrepreneurs and businesses await an end to the embargo, both Americans and Cubans are missing out. It is estimated that the U.S. is currently forgoing 1.6 billion in potential sales to Cuba annually due to current policy. Americans from across political parties have duly noted this fact. According to a Pew Research Center report, 72 percent of Americans, including 59 percent of Republicans, favor ending the Cuban trade embargo.
It is ironic that many embargo supporters rightly critique the Cuban government for restricting the free market inside the Island while simultaneously supporting an embargo that unfairly restricts American businesses abroad and any benefits they could bring to Cuba’s struggling entrepreneurs and its people. By allowing Americans to bring business and investment to the Island, we will grow our own economy while supporting the Cuban people, including cuentapropistas, in the process.
Ted A. Henken, Ph.D., is the President Ex-Officio of the Association for Study of the Cuban Economy (ASCE) and co-author of the book “Entrepreneurial Cuba: The Changing Policy Landscape.” Henken is a member of the Policy Council of Engage Cuba, a bipartisan organization dedicated to mobilizing American businesses and non-profit groups to support the ongoing U.S.‐Cuba normalization process.
Mauricio A. Font y Mario González-Corzo, Editores, Con la asistencia de Rosalina López
New York: Bildner Center for Western Hemisphere Studies, The Graduate Center, The City University of New York, 2015
Documento Completo: Reformando el Modelo Economico Cubano
Introducción, Mario González-Corzo
Del ajuste externo a una nueva concepción del socialism Cubano, Juan Triana Cordoví
La estructura de las exportaciones de bienes en Cuba 29, Ricardo Torres
Relanzamiento del cuentapropismo en medio del ajuste structural, Pavel Vidal Alejandro y Omar Everleny Pérez Villanueva
Las cooperativas en Cuba, Camila Piñeiro Harnecker
La apertura a las microfinanzas en Cuba, Pavel Vidal Alejandro
Hacia una nueva fiscalidad en Cuba, Saira Pons
In 2011, Cuban President Raúl Castro began the process of reforming policies toward entrepreneurs and small, private enterprises. Join Ted Henken and Archibald Ritter as they present their book Entrepreneurial Cuba: The Changing Policy Landscape,* which analyzes the evolution of Cuban policy since 1959.
Henken and Ritter will discuss Cuba’s fledgling non-state sector, the underground economy, the new cooperative sector, Cuban entrepreneurs’ responses to the new business environment, and how Obama’s new policy of entrepreneurial engagement might impact Cuba’s “cuentapropistas.”
April 2, 2015, Americas Society, 680 Park Avenue, New York NY USA
Book order form: Ritter-Henken-Entrepreneurial Cuba wdisc pdf
Here is the link to the web cast of the event: http://www.as-coa.org/events/entrepreneurial-cuba-discussion-cuba%E2%80%99s-emerging-non-state-sector
AU-SSRC Implications of Normalization: Scholarly Perspectives on U.S.-Cuban Relations April 2015
TED A. HENKEN AND GABRIEL VIGNOLI
Original here: ENTERPRISING CUBA
After cautiously consolidating his new government once becoming president in 2008, Raúl Castro made a series of unprecedented moves in late 2010 to encourage the reemergence of private self-employment (known as trabajo por cuenta propia or cuentapropismo in Cuba)—explicitly ending Cuba’s previous policy under Fidel Castro that, according to Raúl’s own bold assessment, had “stigmatized” and even “demonized” it.
Subsequently, both the number of legally allowed private occupations (up from 178 to 201) and of Cubans licensed to practice them have grown significantly, with the island seeing a veritable “boom” in entrepreneurial activity between 2011 and 2015. Indeed, in that time, the number of Cuba’s cuentapropistas (self-employed workers or micro-entrepreneurs) has more than tripled, growing from less than 150,000 in 2010 to nearly half a million by early 2015. Additionally, 498 new non-agricultural cooperatives have been authorized to operate on the island between 2013 and 2014, with another 300 under review at the start of 2015.
Moreover, on December 17, 2014, as part of a momentous diplomatic thaw between Washington and Havana, the Obama Administration announced a new policy of engagement targeted explicitly at “empowering” Cuba’s new class of private entrepreneurs by allowing U.S. companies to “support the emerging Cuban private sector,” in Obama’s historic words.
How might Washington’s new policy of “empowerment through engagement” and the larger bilateral process toward normalization impact the island’s emerging entrepreneurs as well as the emergent “non-state sector” of its economy? While there are many potential economic benefits of concerted U.S. private sector engagement with Cuba’s cuentapropistas, the monopolistic Cuban government poses significant challenges to those who want to do business on the island, reach out to island entrepreneurs, and hire Cuban workers—as many European and Canadian companies can already attest. How will this work in practice, who will be the likely winners and losers (both in Cuba and abroad), and how can the Cuban government deal effectively with the growth in socioeconomic inequality that will inevitably follow an expanded private sector?
Direct U.S. engagement with Cuban entrepreneurs through freer travel and more remittances; access to banking and other financial services; increased exports of badly needed inputs to island cuentapropistas; the import of private or cooperatively produced Cuban goods and services to the U.S.; and technology and know-how transfer are all encouraging elements of Obama’s new Cuba policy. These changes have the potential to both “empower” individual entrepreneurs—the stated goal of the U.S. policy shift—and incentivize the initial, if exceedingly cautious, private sector reforms already begun by the Cuban government.
However, to increase Cuba’s economic independence and overall prosperity, the U.S. should focus on addressing the specific economic needs of Cuban entrepreneurs, rather than framing its engagement as a way to effect “regime change” by other means. That is, given the need to build bilateral diplomatic trust after more than fifty years of mutual antagonism, Washington should eschew any “Trojan horse” approaches to entrepreneurial engagement that aim to empower the Cuban people by undermining the government. Such an antagonistic and divisive approach has not worked in the past and could derail Obama’s promising effort to encourage the incipient pro-market reforms already underway.
At the same time, a U.S. policy based on empowerment through economic engagement—even when motivated by the best and most transparent of intentions—will be a dead letter if the U.S. Congress insists on clinging to the outdated and counterproductive embargo and the Cuban government stubbornly refuses to ease its own auto-bloqueo (or “internal embargo”) against island entrepreneurs. As it implements a self-described economic “updating of socialism,” will Cuba continue to hold fast to its monopolistic “command and control” economic model—one that “ya no funciona ni para nosotros” (“no longer works even for us”), as Fidel Castro himself famously admitted in a rare moment of economic candor in 2010?
Continue reading: AU-SSRC-Henken-Vignoli-Enterprising-Cuba-FINAL
April 2, 2015
AS/COA; 680 Park Avenue; New York, NY View map
Registration: 12:00 p.m. to 12:30 p.m., April 2, 2015
Lunch and Discussion: 12:30 p.m. to 2:00 p.m.
In 2011, Cuban President Raúl Castro began the process of reforming policies toward entrepreneurs and small, private enterprises. Join Ted Henken and Archibald Ritter as they present their book Entrepreneurial Cuba: The Changing Policy Landscape,* which analyzes the evolution of Cuban policy since 1959. Henken and Ritter will discuss Cuba’s fledgling non-state sector, the underground economy, the new cooperative sector, Cuban entrepreneurs’ responses to the new business environment, and how Obama’s new policy of entrepreneurial engagement might impact Cuba’s “cuentapropistas.”
*Copies of the book will be available for purchase.
Event Information: Sarah Bons | firstname.lastname@example.org | 212-277-8363
Press: Adriana La Rotta | email@example.com | 212-277-8384
Cancellation: Contact Juan Serrano-Badrena at firstname.lastname@example.org before 3:00 p.m. on Wednesday, April 1, 2015