Tag Archives: General Economic Analyses

SUN, SAND AND SOCIALISM: WHAT THE TOURIST INDUSTRY REVEALS ABOUT CUBA

Stuck in the past: The revolutionary economy is neither efficient nor fun.

The Economist, April 1, 2017

Original Article: STUCK IN THE PAST

TOURISTS whizz along the Malecón, Havana’s grand seaside boulevard, in bright-red open-topped 1950s cars. Their selfie sticks wobble as they try to film themselves. They move fast, for there are no traffic jams. Cars are costly in Cuba ($50,000 for a low-range Chinese import) and most people are poor (a typical state employee makes $25 a month). So hardly anyone can afford wheels, except the tourists who hire them. And there are far fewer tourists than there ought to be.

Hotel at Vinales; apparently constructed with Mafia money as part of their major money-laundering 1950s tourism investment project. (Photo by Arch Ritter, 2015)

Few places are as naturally alluring as Cuba. The island is bathed in sunlight and lapped by warm blue waters. The people are friendly; the rum is light and crisp; the music is a delicious blend of African and Latin rhythms. And the biggest pool of free-spending holidaymakers in the western hemisphere is just a hop away. As Lucky Luciano, an American gangster, observed in 1946, “The water was just as pretty as the Bay of Naples, but it was only 90 miles from the United States.”

There is just one problem today: Cuba is a communist dictatorship in a time warp. For some, that lends it a rebellious allure. They talk of seeing old Havana before its charm is “spoiled” by visible signs of prosperity, such as Nike and Starbucks. But for other tourists, Cuba’s revolutionary economy is a drag. The big hotels, majority-owned by the state and often managed by companies controlled by the army, charge five-star prices for mediocre service. Showers are unreliable. Wi-Fi is atrocious. Lifts and rooms are ill-maintained.

Despite this, the number of visitors from the United States has jumped since Barack Obama restored diplomatic ties in 2015. So many airlines started flying to Havana that supply outstripped demand; this year some have cut back. Overall, arrivals have soared since the 1990s, when Fidel Castro, faced with the loss of subsidies from the Soviet Union, decided to spruce up some beach resorts for foreigners (see chart). But Cuba still earns less than half as many tourist dollars as the Dominican Republic, a similar-sized but less famous tropical neighbour.

But investment in new rooms has been slow. Cuba is cash-strapped, and foreign hotel bosses are reluctant to risk big bucks because they have no idea whether Donald Trump will try to tighten the embargo, lift it or do nothing. On the one hand, he is a protectionist, so few Cubans are optimistic about his intentions. On the other, pre-revolutionary Havana was a playground where American casino moguls hobnobbed with celebrities in raunchy nightclubs. Making Cuba glitzy again might appeal to the former casino mogul in the White House.

The other embargo is the many ways in which the Cuban state shackles entrepreneurs. The owner of a small private hotel complains of an inspector who told him to cut his sign in half because it was too big. He can’t get good furniture and fixtures in Cuba, and is not allowed to import them because imports are a state monopoly. So he makes creative use of rules that allow families who say they are returning from abroad to repatriate their personal effects (he has a lot of expat friends). “We try to fly low under the radar, and make money without making noise,” he sighs.

Cubans with spare cash (typically those who have relatives in Miami or do business with tourists) are rushing to revamp rooms and rent them out. But no one is allowed to own more than two properties, so ambitious hoteliers register extra ones in the names of relatives. This works only if there is trust. “One of my places is in my sister-in-law’s name,” says a speculator. “I’m worried about that one.”

Taxes are confiscatory. Turnover above $2,000 a year is taxed at 50%, with only some expenses deductible. A beer sold at a 100% markup therefore yields no profit. Almost no one can afford to follow the letter of the law. For many entrepreneurs, “the effective tax burden is very much a function of the veracity of their reporting of revenues,” observes Brookings, tactfully.

The currency system is, to use a technical term, bonkers. One American dollar is worth one convertible peso (CUC), which is worth 24 ordinary pesos (CUP). But in transactions involving the government, the two kinds of peso are often valued equally. Government accounts are therefore nonsensical. A few officials with access to ultra-cheap hard currency make a killing. Inefficient state firms appear to be profitable when they are not. Local workers are stiffed. Foreign firms pay an employment agency, in CUC, for the services of Cuban staff. Those workers are then paid in CUP at one to one. That is, the agency and the government take 95% of their wages. Fortunately, tourists tip in cash.

The government says it wants to promote small private businesses. The number of Cubans registered as self-employed has jumped from 144,000 in 2009 to 535,000 in 2016. Legally, all must fit into one of 201 official categories. Doctors and lawyers who offer private services do so illegally, just like hustlers selling black-market lobsters or potatoes. The largest private venture is also illicit (but tolerated): an estimated 40,000 people copy and distribute flash drives containing El Paquete, a weekly collection of films, television shows, software updates and video games pirated from the outside world. Others operate in a grey zone. One entrepreneur says she has a licence as a messenger but wants to deliver vegetables ordered online. “Is that legal?” she asks. “I don’t know.”

Cubans doubt that there will be any big reforms before February 2018, when Raúl Castro, who is 86, is expected to hand over power to Miguel Díaz-Canel, his much younger vice-president. Mr Díaz-Canel is said to favour better internet access and a bit more openness. But the kind of economic reform that Cuba needs would hurt a lot of people, both the powerful and ordinary folk. Suddenly scrapping the artificial exchange rate, for example, would make 60-70% of state-owned firms go bust, destroying 2m jobs, estimates Juan Triana, an economist. Politically, that is almost impossible. Yet without accurate price signals, Cuba cannot allocate resources efficiently. And unless the country reduces the obstacles to private investment in hotels, services and supply chains, it will struggle to provide tourists with the value for money that will keep them coming back. Unlike Cubans, they have a lot of choices.

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UNITED NATIONS ECLAC: PRELIMINARY OVERVIEW OF THE ECONOMIES OF LATIN AMERICA AND THE CARIBBEAN, 2016: CUBA

Document is available here: UN ECLAC 2016, CUBA http://repositorio.cepal.org/bitstream/handle/11362/40826/70/1601259BP_Cuba_en.pdf

ECLAC estimates GDP growth of 0.4% for Cuba in 2016. This was a particularly difficult year for the country’s economy, in an international context where economic expansion was still slow and foreign trade continued to weaken as a driver of growth. A fiscal deficit of 6% is projected (compared with 5.8% in 2015). The current account is expected to yield a surplus again in 2016, but a smaller one of about US$ 1.9 billion. Although economic conditions have caused prices for some agricultural products to rise, price levels generally have remained fairly stable and inflation in 2016 is expected to be similar to the previous year’s (2.8%). The total number of employed remained unchanged, with a tendency for employment to fall in the State sector and increase in the non-State sector. The unemployment rate is projected to be 2.4%.

Disponible en español
Disponível em português

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EL LEGADO DE FIDEL: BALANCE ECONÓMICO SOCIAL EN 2016

A fin de enmendar el legado de Fidel, a Raúl le queda poco más de un año para acelerar y profundizar sus reformas estructurales.

Fidel Surveying Havana from the Cabana Fortress

Por Carmelo Mesa Lago, Nueva Sociedad, Enero 2017

Original Article: El legado de Fidel: balance económico social en 2016

Con motivo del deceso de Fidel Castro, los medios de comunicación mundiales han ensalzado su legado de soberanía política interna y su rol internacionalista, así como las notables mejoras en la educación y la salud, aunque el juicio es usualmente adverso en cuanto a la economía. En una previa publicación hice un balance económico social de medio siglo de Fidel en el poder (1959-2008) usando 87 indicadores que demostraban que el desempeño económico fue generalmente negativo y el social mezclado alcanzando una cima en 1989 y un deterioro después.1 Aquí se evalúa la situación entre 1989 y 2016, poniendo énfasis en la última década. También se evalúa si las reformas estructurales de Raúl en el último decenio han logrado dar un impulso a la economía y al bienestar social en la Isla

Entre 1960 y 1990 Cuba recibió US$65.000 millones de la URSS, dos tercios de los cuales no era reembolsable; esta ayuda fue superior a la recibida por toda América Latina durante la Alianza para el Progreso. Tras la desaparición del socialismo soviético (el «Período Especial») ocurrió un marcado declive en todos los indicadores económicos y sociales, seguido de cierta recuperación especialmente a comienzos del siglo XXI por la substancial ayuda económica de Venezuela, la cual equivalió al 21% del PIB de Cuba en 20102.He sugerido que a fin de mejorar el pobrísimo desempeño económico es primordial avanzar en las reformas estructurales de Raúl, mientras que los benéficos pero costosos servicios sociales deben hacerse sostenibles financieramente a largo plazo.

En múltiples publicaciones he analizado las reformas estructurales implementadas por Raúl entre 2007/08 y 2016, concluyendo que son las más importantes bajo la revolución, intentan resolver los problemas heredados de Fidel y están bien encaminadas, pero son excesivamente lentas, enfrentan severas trabas, altos impuestos y desincentivos, por cuyas razones no han logrado hasta ahora un impacto palpable en la economía y en los servicios sociales; de hecho ha ocurrido un retroceso en algunas reformas3. La grave crisis económica en la República Bolivariana ha contribuido a esos problemas.

La tasa de crecimiento económico cubana que fue de 12% en 2006, en buena medida por el apoyo económico venezolano, ha exhibido desde entonces una tendencia declinante: 4,4% en 2015 y -0,9% en 2016,4 un quinto de la meta inicial fijada a fines de 2015. La formación bruta de capital promedió 13% anual en 2008-2015, la mitad del requerido 25% para un crecimiento económico sostenido. El índice de producción industrial en 2015 estaba 38% por debajo de 1989; la caída fue más acentuada en fertilizantes (95%), azúcar (80%), cemento (60%), acero (29%) y textiles (25%); por lo contrario, la producción de petróleo, gas natural, electricidad y níquel era superior (pero la última 26% menor que en 2008). Similar declive se observa en la agricultura: cítricos (88%), pesca (70%), leche de vaca (56%), tabaco en rama (42%), arroz (22%), cabezas de ganado (18%) y huevos (13%); sólo eran mayores las hortalizas y los tubérculos. Las estadísticas del sector externo en 2015, comparadas con las 2014, indican una agudización de la crisis: las exportaciones de mercancías cayeron 31%, las exportaciones de servicios profesionales (primer ingreso en divisas de Cuba y vendidos mayormente a Venezuela) mermaron 18%, y el excedente entre el saldo positivo de servicios menos el saldo negativo de mercancías menguó 47%5. Si esto ocurrió cuando la economía creció 4,4%, el deterioro debe haber sido mayor en 2016 con la contracción. Cuba atraviesa la peor crisis desde los años 90.

Las reformas estructurales han tenido efectos adversos en los indicadores sociales. Entre 2008 y 2015, con el fin de recortar el insostenible costo social, la asignación a servicios sociales (educación, salud, pensiones, vivienda, asistencia social) decreció de 55% a 47% del presupuesto y de 37% al 28% del PIB. El salario medio estatal ajustado a la inflación en 2008 era 25% del nivel de 1989 y, aunque aumentó a 38% en 2015, el poder adquisitivo era 62% inferior a 19896. La pensión media en 2008-2015 era la mitad que en 1989. Todos los hospitales rurales y postas urbanas y rurales se cerraron en 2011; entre 2008-2015, el número de hospitales decreció 30%, el personal de salud total menguó 22%, los médicos de familia que proveen la atención primaria se redujeron en 65%, por otra parte el número de médicos creció en 15% (aunque parte está en el extranjero), la mortalidad infantil continuó bajando de 4,7 a 4,3 por mil nacidos vivos, y la tasa de mortalidad materna mermó de 46,5 a 41,6 por 100.000 nacimientos (pero aún mayor que 29,2 en 1989). La matrícula universitaria decreció de 743.979 a 165.926 (78%) entre los cursos 2007/08 y 2015/16. La construcción de viviendas declinó de 44.775 a 23.003 entre 2008 y 2015 y por 1.000 habitantes cayó de 4,0 a 2,0. La asignación a la asistencia social disminuyó de 2,1% del presupuesto a 0,4% y como porcentaje de la población de 5,2% a 1,6%7. La tasa de desempleo declarado que llegó a un mínimo de 1,6% en 2008, creció a 3,5% en 2012 por causa del programa de despedido de 1,8 millones de empleados estatales innecesarios, pero sólo medio millón fue despedido y la tasa disminuyó a 2,4% en 20158. Cuba nunca ha publicado estadísticas sobre distribución del ingreso, pero otros indicadores sugieren que se colocaba a la cabeza de la región en igualdad; las reformas han cambiado diametralmente la situación, debido a un grupo no estatal con altos ingresos y la caída en el salario estata9.

Un importante avance ha sido la condonación o reducción de la mayor parte de la deuda externa por los acreedores; Cuba comenzó a pagar la deuda restante en octubre de 2016 y se ignora si podrá continuar haciéndolo. El aspecto más brillante es el turismo. La normalización de relaciones con los EEUU y las órdenes ejecutivas de Obama, virtualmente han abierto la puerta a los visitantes norteamericanos que saltaron de 95.254 en 2004 a 161.233 en 2015 y a cerca de 200.000 en 2016; además todos los otros principales emisores han crecido, por lo cual el total de visitantes subió 17% en 2015 y alcanzó 4 millones en 2016; así mismo, los ingresos brutos por turismo crecieron 11% en 2015 y se proyecta que alcanzarán los US$4.000 millones en 2016.

En el balance, los factores adversos sobrepasan con creces a los favorables y 2017 será muy tenso. A fin de enmendar el legado de Fidel, a Raúl le queda poco más de un año para acelerar y profundizar sus reformas estructurales. Si Trump revierte las medidas de Obama y no avanzan las reformas, la crisis se agravará en Cuba.

The Cross-harbour Ferry from the Steps of the Russian Orthodox Church

  1. C. Mesa-Lago: Cuba en la era de Raúl Castro: Reformas económico-sociales y sus efectos, Colibrí, Madrid, 2012.
  2. C. Mesa-Lago: «Institutional Changes in Cuba’s Economic and Social Reforms» en R. Feinberg y T. Piccone (comps.): Cuba Economic Change in Comparative Perspective, Brookings Institution / Universidad de La Habana, Washington, DC, 2014, pp. 49-69; «El lento avance de la reforma” en Política ExteriorNº 171, 5-6/2016, pp. 94-104; y con R.Veiga, L. González, S. Vera y A. Pérez-Liñán: Voces de cambio en el sector estatal cubano, Iberoamericana, Madrid, 2016.
  3. Raúl Castro Ruz, Discurso en la clausura de la Asamblea Nacional del Poder Popular, Granma, 28 diciembre 2016, p.3.
  4. Cálculos del autor basados en Oficina Nacional de Estadísticas e Información (ONEI): Anuario estadístico de Cuba 2015, La Habana, 2016; datod de 1989, del Comité Estatal de Estadística: Anuario Estadístico de Cuba 1989, La Habana, 1991.
  5. La CEPAL, Balance preliminar de las economías de América Latina y el Caribe 2016, Santiago de Chile, diciembre 2016, cuadro 4.4, estima un crecimiento de 43% en el salario medio real, el mayor en la región, pero con base en el año 2010 cuando estaba 27% por debajo del nivel de 1989
  6. Cálculos del autor basados en ONEI: Anuario Estadístico de Cuba 2008, La Habana, 2009, y cit.
  7. Basado en C. Mesa-Lago: «El desempleo en Cuba: de oculto a visible” en Espacio LaicalNº 4, 2010, pp. 59-66, y ONEI: Anuario 2015, cit.

8. C. Mesa Lago: «La desigualdad del ingreso y la experiencia de América Latina” en Temas Nº 84, 10-12/2015, pp. 35-43

A Few of Cuba’s Amazingly Talented Musicians

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“CUBA 2017: SLOW MOTION ECONOMIC REFORMS PLUS POLITICAL STASIS”

Attached here is a Power Point Presentation on Cuba’s current economic and political situation.  The complete presentation is attached here:  Cuba 2017: Slow Motion Reforms. January 4, 2017

By Arch Ritter

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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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AMID GRIM ECONOMIC FORECASTS, CUBANS FEAR A RETURN TO DARKER TIMES

By VICTORIA BURNETT

New York Times, JULY 12, 2016

Original Article: Darker Times

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A return to the “Black-outs” of the early 1990s?  No, I don’t think so.    Maybe a few but unlikely to be as widespread or longlasting.zz apagon

 

MEXICO CITY — During the economic turmoil of the early 1990s, power cuts in Havana were so routine that residents called the few hours of daily electricity “lightouts.”

Now, grim economic forecasts; the crisis in its patron, Venezuela; and government warnings to save energy have stoked fears among Cubans of a return to the days when they used oil lamps to light their living rooms and walked or bicycled miles to work because there was no gasoline.

Addressing members of Parliament last week, Cuba’s economy minister, Marino Murillo, said the country would have to cut fuel consumption by nearly a third during the second half of the year and reduce state investments and imports. His comments, to a closed session, were published on Saturday by the state news media.

Cuba’s economy grew by just 1 percent in the first half of the year, compared with 4 percent last year, as export income and fuel supply to the island dropped, said Mr. Murillo.

“This has placed us in a tense economic situation,” he said.

Weak oil and nickel prices and a poor sugar harvest have contributed to Cuba’s woes, officials said. Venezuela’s economic agony has led many Cubans to wonder how much longer their oil-rich ally will continue to supply the island with crucial oil — especially if the government of President Nicolás Maduro falls.  Those fears grew last week after Mr. Murillo warned of blackouts and state workers were asked to cut their hours and sharply reduce energy use.

“We all know that it’s Venezuelan oil that keeps the lights on,” said Regina Coyula, a blogger who worked for several years for Cuban state security. “People are convinced that if Maduro falls, there will be blackouts here.”

President Raúl Castro of Cuba acknowledged those fears on Friday but said they were unfounded.

“There is speculation and rumors of an imminent collapse of our economy and a return to the acute phase of the ‘special period,’” Mr. Castro said in speech to Parliament, referring to the 1990s, when Cuba lost billions of dollars’ worth of Soviet subsidies.

“We don’t deny that there may be ill effects,” he added, “but we are in better conditions than we were then to face them.”

Mark Entwistle, a business consultant who was Canada’s ambassador to Cuba during the special period, said that despite its dependency on Venezuelan fuel, the island’s economy is now more sophisticated and diversified than it was before the Soviet collapse.

Besides, he said, Cuba has “this phenomenal social and political capacity to absorb critical changes.”

Still, some are perturbed at the prospect of power cuts. None of the Havana residents interviewed over the weekend had experienced power outages in their neighborhoods.

In an unusually blunt speech to journalists this month, Karina Marrón González, a deputy director of Granma, the official Communist Party newspaper in Cuba, warned of the risk of protests like those of August 1994, when hundreds of angry Cubans took to the streets of Havana for several hours.

 “We are creating a perfect storm,” she said, according to a transcript of her speech that was published in various blogs. She added, “Sirs, this country cannot take another ’93, another ’94.”

Herbert Delgado-Rodríguez, 29, an art student, remembered his mother cooking with charcoal in the 1990s.

“I don’t know if it will get to the point where there will be protests in the street,” he said. However, he added, Cubans “won’t tolerate the extreme hardships we faced in the ’90s.”

One worker at a bank said that employees had been told to use air-conditioning for two hours each day and work a half-day. Fuel for office cars had been cut by half, she said. A university professor said that she had been given a fan for her office and told to work at home when possible.

Jose Gonzales, who owns a small cafeteria in downtown Havana, was more sanguine.

“Raúl is simply urging us to cut back on unnecessary consumption, that’s all,” he said, adding that talk of another special period was “just a lot of speculation.”

Not all offices or companies have been affected, and Mr. Murillo said that the idea was to ration energy in some users so that others — homes, tourist facilities and companies — could use as much as they need.

In all, he said, the government aimed to cut electricity usage by 6 percent and fuel by 28 percent in the second half of the year.

Under an agreement signed in 2000, Venezuela supplies Cuba with about 80,000 barrels of oil per day, a deal worth about $1.3 billion, said Jorge Piñon, an energy expert at the University of Texas. In return, Cuba sends thousands of medical and other specialists to Venezuela.

On Friday, Mr. Castro said there had been a “certain contraction” of that oil supply.

How large of a contraction is unclear. Reuters reported last week that shipments of crude to Cuba had fallen 40 percent in the first half of this year. Mr. Piñon said that at least part of the reduction was oil that Venezuela refines in Cuba and then ships out again.

Cuba’s energy problems may also be a product of growing demand on the electricity grid, he said. Electricity consumption has risen dramatically over the past 10 years as Cubans who receive remittances from abroad kept air-conditioners whirring and private restaurants, bars and bed-and-breakfasts added refrigerators and heated food in toaster ovens.

Tourism has soared since the United States and Cuba announced an end to their 50-year standoff in December 2014. The number of visitors rose 13.5 percent in the first four months of 2016 and is likely to rise further when commercial flights from the United States begin this year.

If Venezuela did halt oil exports to Cuba, it would not necessarily precipitate a political crisis, experts and bloggers said.

The United States may offer help in order to prevent instability or a mass exodus of desperate Cubans. The Cuban government might speed reforms and open the door wider to foreign investment, Mr. Entwistle said.

“To extrapolate some dire political consequence is unwise,” said Mr. Entwistle, adding, “There are so many levers that they have to push and pull.”

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DOES CUBA HAVE A FUTURE IN MANUFACTURING?

By Archibald R. M. Ritter

June 7 2016.

 Complete Article Here:  A Futute in Manufacturing? June 7 2016

Cuba has experienced a serious “de-industrialization” from which, by mid-2016, it had not recovered. The causes of the collapse are complex and multi-dimensional. The consequences include job and income loss, the loss of an important part of its economic base, the loss of much of the potential for export expansion and diversification, and rust-belt style industrial and urban decay. Can Cuba‘s manufacturing sector recover from this collapse? What can be done to reverse this situation?

I.       THE COLLAPSE OF MANUFACTURING, 1989-2014

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II.   CAUSAL FACTORS ANE CONSEQUENCES

III.  THE “LINEAMIENTOS” ON MANUFACTURING

IV. WHAT MIGHT BE THE SUCCESSFUL MANUFACTURING SUB-SECTORS IN FUTURE? 

V.  A POLICY ENVIRONMENT FOR THE PROMOTION OF MANUFACTURING

 CONCLUSION

 Does Cuba have a future in manufacturing?  There are some general comparative advantages as well as disadvantages for manufacturing that Cuba is facing as of mid-2016. First, the disadvantages:

  • Cuba’s manufacturing base has collapsed significantly;
  • Its capital stock and infrastructure generally is decayed and obsolete;
  • Low investment levels impede up-grading the capital stock;
  • Human skills relevant for manufacturing are badly decayed, mis-fitted and obsolete;
  • Cuba’s domestic market size small due mainly low real income levels;
  • Agglomerative and scale economies are minimal.

.But Cuba also has important advantages:

  • Cuba’s citizens generally are well-educated with an incentive for further learning;
  • Many Cuban citizens are energetic, creative, and entrepreneurial;
  • Cuba has a some strong manufacturing sub-sectors such as  pharmaceutical products and traditional products (beverages and tobacco);
  • Cuba has potential in some agricultural products, namely fruits and vegetables;
  • Cuba will be able to capitalize on its locational advantage with respect to the US market;
  • The potential symbiotic relationship between Cubans on the Island and the Cuban-American community will stimulate the future development of economic activities in many areas, including manufacturing.

So, does Cuba have a future in manufacturing?

The answer is “Yes” – if policy reforms are significant and expeditious regarding further enterprise liberalization and taxation and if successful monetary and exchange rate reform lead to currency convertibility.  (However, I am a pathological optimist.)

A broad-based industrial revival for Cuba is possible but will be difficult.

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EL NUEVO EVANGELIO, SEGÚN EL GENERAL SAN RAÚL, EL VERDE OLIVO, PORTADOR DE LA VERDAD REVELADA POR SU ANTECESOR, EL MAGNO ORATE, NOS ANUNCIA UNA “BUENA NUEVA”

Jueves, mayo 26, 2016 |  Miriam Celaya  |

Original Article: El Nuevo Evangelio,

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Raúl Castro habría deslizado los designios del PCC en el tabloide con los documentos analizados y aprobados durante el VII Congreso

LA HABANA, Cuba.- El partido-estado-gobierno cubano acaba de publicar un tabloide que contiene dos de los documentos raigales analizados y aprobados durante el VII Congreso del PCC, el pasado mes de abril de 2016. Se trata del Proyecto de Conceptualización del Modelo Económico y Social Cubano de Desarrollo Socialista y delProyecto Plan Nacional de Desarrollo Económico y Social hasta 2030: Propuesta de Visión de la Nación, Ejes y Sectores Estratégicos.

Sin dudas, estamos ante un caso de “desclasificación parcial”, teniendo en cuenta que los cuatro documentos aprobados en el rito oculto de abril tuvieron un carácter estrictamente secreto y en su discusión y aprobación, producida en condiciones de clandestinidad, participaron alrededor de un millar de ungidos (dizque “delegados”) y –según cifras oficiales– 3 500 “invitados”.

Aún quedan por desclasificar los dos misteriosos pergaminos restantes, a saber, el Informe sobre los Resultados de la Implementación de los Lineamientos de la Política Económica y Social del Partido y la Revolución, con la Actualización de los Lineamientos para el período 2016-2021, y el que contiene el Trabajo del partido en cumplimiento de los objetivos aprobados en la Primera Conferencia Nacional y de las Directrices del Primer Secretario del Comité Central, es decir, los sagrados mandamientos del propio General-Presidente.

Lo primero que llama la atención en la divulgación de este tabloide es la indiferencia de la población cubana, que no ha dado la menor importancia a un documento donde, se supone, quedaron trazados y consagrados los destinos de la nación. En contraste, algunas agencias de prensa extranjeras han desatado una ola de comentarios que tienden a magnificar los referidos documentos como si se tratase del nacimiento de un milagro, centrando el foco de atención sobre lo que consideran la gran novedad: el supuesto reconocimiento del PCC a la “propiedad privada”, incluyendo en esa categoría a pequeñas y medianas empresas. A la vez, sus analistas más audaces sugieren cierta voluntad política del gobierno cubano de potenciar o permitir el desarrollo de este tipo de gestión económica.

Semejante espejismo agitado por los “co-responsables” de prensa acreditados en La Habana –tan diligentes en legitimar el discurso oficial de la cúpula como refractarios a adentrarse en la investigación seria y profunda de la realidad cubana– parte de una errónea interpretación del punto número 91 de la “Conceptualización…”, que expone textualmente “Otra transformación para contribuir a la economía, al empleo y al bienestar de la población es el reconocimiento del papel complementario de la propiedad privada sobre determinados medios de producción…”.

Sin embargo, es sabido que la verdadera propiedad privada solo es posible en sociedades donde los individuos, grupos o entidades empresariales estén en condiciones de ejercer el derecho de poseer, controlar, heredar, administrar y hacer producir sus bienes y capitales con el fin de alcanzar riquezas. Derechos estos que incluyen la posibilidad de ampliar sus propiedades en dependencia de sus capacidades, o de adquirir (incluso importar) materias primas, maquinarias, equipos y cualquier elemento necesario para el desarrollo de su actividad comercial o productiva, lo cual implica la existencia de un marco jurídico que ofrezca garantías legales a los “propietarios”. No es el caso de Cuba, como deberían conocer los corrillos de la prensa acreditada.

De hecho, el documento recién publicado refrenda todo lo contrario de lo que cabe esperarse allí donde existe la verdadera propiedad privada, cuando expone en el punto número 104: “No se permite la concentración de la propiedad y la riqueza en personas naturales o jurídicas no estatales conforme a lo legislado, de modo consecuente con los principios de nuestro socialismo”. Y, por si esto no bastara, se coloca otro clavo sobre el ataúd de la ilusoria “propiedad privada” en el punto 201, cuando dicta: “el Estado regula la constitución, disolución, liquidación y reestructuración de las personas jurídicas de todas las formas de propiedad, define sus ámbitos de actuación y actividades principales”.

Pero precisamente el valor más relevante del “Proyecto de Conceptualización…” es la enorme suma de elementos contrapuestos y excluyentes entre sí, lo que refleja con claridad meridiana no solo la magnitud y profundidad de la crisis socioeconómica cubana, sino la imposibilidad de darle solución desde el marco político-jurídico establecido en los últimos 57 años.

Esto se hace evidente a lo largo de todo el documento, pero bastan unas pocas cuestiones esenciales que contradicen los presupuestos ideológicos sobre los que se pretende construir el “Modelo”. Pongamos por caso las inversiones extranjeras, una “forma de propiedad” que ahora se reconoce oficialmente por el gobierno como “una fuente de desarrollo y vía de acceso a capitales, tecnologías, mercados y experiencia gerencial, que tributa a la solución  de importantes desequilibrios estructurales y a encadenamientos productivos…” (Punto número 90).

No obstante, se mantiene el principio de que el sistema de dirección de la economía es planificada, regulada y controlada desde el Estado, que también controla las relaciones con  la economía internacional (punto 203).

Es decir, que la solución a la crisis estructural del socialismo cubano se encuentra en las formas de producción capitalistas, pero la distribución de la riqueza que se obtenga de las relaciones de mercado a través del comercio exterior y de la inversión extranjera (capitalista) será ejercida por el Estado socialista. Luego, la riqueza obtenida de la capacidad de producción capitalista sería de propiedad estatal-socialista, ya que, como expone el punto 124, “el Estado actúa como representante del dueño, que es el pueblo”.

Y como, además, “Dada su condición de representante del dueño, el Estado decide y controla los destinos de las utilidades de las empresas propiedad socialista de todo el pueblo, una vez cumplidas las obligaciones tributarias y otros compromisos” (punto 148), se mantiene la colosal estatificación de la economía.

Esta “representatividad” incluye la regulación y control de las instituciones, empresas y medios de comunicación, como recurso estratégico del Estado –es decir, el monopolio estatal de los medios–, “según la política trazada” por el PCC, “preservando la soberanía tecnológica, con observancia de la legislación establecida en materia de defensa y seguridad nacionales” (puntos 110 y 111), en lo que presupone la ratificación de la Ley 88 (Ley Mordaza).

Desde luego, ese papel del Estado (a la vez gobierno y partido único) como  “padre” administrador de la riqueza y de las propiedades en virtud de “representante del pueblo” es más que discutible en una nación donde no se realizan elecciones para el cargo de Presidente desde hace más de 60 años, y donde más del 70% de la población nació después de 1959 y nunca ha tenido la posibilidad de legitimar semejante paternidad.

Precisamente esto determina que la “nueva” propuesta –absurdamente futurista, pero casi idéntica a toda la retórica discursiva de las décadas precedentes– desde la misma cúpula octogenaria y retrógrada, no despierte interés alguno entre los cubanos comunes. ¿A qué “debatir” acerca del mismo viejo hecho consumado?, se preguntan con la apatía que domina a la sociedad cubana.

Pocos se han detenido a pensar que con “el debate” popular que, según se dice, se producirá en torno a estos documentos, la casta gobernante persigue “legitimar” la consagración del capitalismo de estado para su propio beneficio, y mantenerse aferrada al poder más allá de las posibilidades biológicas de los bandoleros verde olivo. Así parece quedar expresado en la presentación del mamotreto en cuestión: estamos ante el  legado estratégico de la “generación histórica” a las nuevas generaciones.

No es posible agotar en un solo texto todos los ambiguos vericuetos que se deslizan a lo largo de los 330 puntos del Proyecto de Conceptualización. Baste, por el momento, con resumir que ellos constituyen la “buena nueva” que nos anuncia San Raúl, el verde olivo, portador de una verdad que seguramente le ha sido revelada por su antecesor, el Magno Orate: si nos apegamos al concepto de “Revolución” de aquel sabio anciano, si se cumplen los “Lineamientos” y si los resultados de la implementación de éstos resulta efectiva, para el año 2030 los cubanos estaremos en condiciones de “construir una nación soberana, independiente, socialista, democrática, próspera y sostenible”.

No se sorprenda nadie si en las semanas venideras se incrementa exponencialmente el número de emigrados desde esta ínsula imposible.

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Partido Comumunista de Cuba: CONCEPTUALIZACIÓN DEL MODELO ECONÓMICO Y SOCIAL CUBANO DE DESARROLLO SOCIALISTA y PLAN NACIONAL DE DESARROLLO ECONÓMICO Y SOCIAL HASTA 2030: PROPUESTADE VISIÓN DE LA NACIÓN, EJES Y SECTORES ESTRATÉGICOS

Partido Cumunista de Cuba

May 2016

Complete Documents: Cuba PCC, May 2016, CONCEPTUALIZACIÓN DEL MODELO ECONÓMICO

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CUBA’S ECONOMIC PROSPECTS IN THE AFTERMATH OF THE VII PARTY CONGRESS: A FEW TENTATIVE REMARKS

 By Alberto Gabriele

Introduction

 This article proposes a synthetic and tentative interpretation  of  Cuba’s present economic perspectives. Its approach is meant to be an intrinsically dialectic one. As such, it emphasizes the diverse roles played by exogenous and endogenous, domestic and external, economic and political factors, and by their reciprocal interactions. In my view, such a methodological approach can be fruitful to analyze the development of any distinct socioeconomic formation unfolding in a unique moment in time, but particularly so in the case of Cuba, a small island whose history has been and is still shaped very strongly by its uneven relation with the US and by the weight of ideology in economic policy.

Every country’s economic trajectory is the product of the dialectical interaction of several sets of endogenous and exogenous, domestic and external factors. From the subjective viewpoint of economic policy-makers, endogenous factors are to be interpreted as those that can be shaped by their own present and future actions. Obviously, policy-makers constitute a small but very influential group of technicians-politicians. Yet, they are endowed with limited degrees of freedom, due to a host of constraints stemming not only from the external world, but also from their cooperative/conflicting relations with other branches of the government, from the contradictions and tensions internal to their own group, and from the impact of non-governmental societal forces and movements.

The latter forces and movements  (whose composition and relative strength differs  markedly from  one country to another)  can condition and affect the economic policy-making process through a number of formal and informal channels, only some of which clearly manifest themselves as belonging to the political sphere. This phenomenon can be interpreted as the endogenization of societal factors into the policy-making machine. In the case of Cuba, where no formal multiparty democracy exists but the social and cultural fabric is not monolithic, the main channel through which endogenization works is the interaction between the Party and the rest of the  population.

Exogenous factors are both domestic and external.  Domestic exogenous factors are shaped mainly by the natural environment and from history. At any given point in time, each country’s climate and its endowment of physical and human capital are partly due to its geographic, geological, climatic and other structural characteristics, and partly to the cumulative results of human actions carried out by domestic and external agents. For instance, the availability and fertility of arable land depends at least in part from past agricultural and urbanization policies. Human capital is the product of past and present education policies. The balance of payments is the result of the interaction of many domestic and foreign economic forces and of the policy decisions taken in the past to cope with them.

Economic, financial and political external factors, for most countries, are largely but not exclusively the product of  forces beyond the control of their own government and policy-makers. In the case of Cuba, the present reality of the embargo and – more broadly – the more or less aggressive  stance of the US and their allies are, from the latter’s vantage point, the result  of Cuba’s resilience and foreign policy actions since the Revolution. Therefore, notwithstanding its traditional David vs Goliath relation with her powerful neighbor, the island’s ability to influence US Cuban policy stance should not be underestimated.

Continue Reading: Gabriele, CUBA CONGRESS 25 05 2016

 

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