Tag Archives: Infrastructure

SPECIAL REPORT: “Cuba’s little capitalists are ready to rumba”

Fri May 4, 2012 3:30pm IST

By Jeff Franks

HAVANA May 2 (Reuters) – When Ojacy Curbello and her husband opened a restaurant at their home in Havana in late December, not a single customer showed up.

It was a disheartening debut for Bollywood, the first Indian restaurant in the Cuban capital. Curbello worried that their dream of cashing in on recent reforms in this Communist-run country would collapse.

The next day customers began trickling in. As word spread, the trickle became a flood. Many nights the couple had to turn people away or serve them at the family dining table and call in extra help. Today they are planning to increase the 22-seat capacity by expanding their 1950s home and putting tables and a bar in what is now their bedroom.

“It has been amazing how quickly it has taken off,” said Curbello, still looking slightly stunned. She sat with her husband, Cedric Fernandez, a Londoner of Sri Lankan descent, in the main dining area, hung with prints of Indian figures.

Bollywood’s story is an example of how life is slowly changing in Cuba since President Raul Castro launched a string of limited economic reforms in 2010.

Continue reading Here: Mark Frank SPECIAL REPORT Cuba’s little capitalists are ready to rumba

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Cuba’s World Heritage Sites

By Arch Ritter

Havana Fortifications, by Natascha Chaviano, 1997

I think of Old Havana almost every day when I walk over the gates in the Hartwell Locks of the Rideau Canal on my way to Carleton University. This is because the Rideau Canal and its Fortifications, like Old Havana and its Fortifications, is a fully certified “World Heritage Site”!  The Rideau Canal was built in 1834 to provide a secure water route from Montreal to Lake Ontario – secure against the United States, which had just been defeated in the War of 1812 when it tried to capture Canada. The Havana Fortifications were designed to secure the harbor and the Armada against pirates and the British – who in fact had succeeded in capturing Havana in 1762 (see the second last picture below.).

Rideau Canal entering the Ottawa River

Having lived beside the Rideau Canal system in Kingston and Ottawa for over half a century, I took it for granted but was pleasantly surprised when it received World Heritage (WH) status. But in thinking further, perhaps the WH designations have not been debased – at least not in the case of the Canal, which is an amazing piece of 19th century engineering. It was built by British tax-payers, English military engineers, Scottish stone-masons, and Irish navies.  It has been in active service from 1840 to the present. Its sister canal is the Caledonian Canal in Scotland.

Cuba has nine UNESCO World Heritage Sites. The jewel in the crown of course is Old Havana, which is undoubtedly one of the historical wonders of the Western Hemisphere. The work of the “Historian of Havana”, Eusebio Leal, in preserving and reviving the old city is outstanding and perhaps underappreciated. I have visited only a few of the other WH sites in Cuba, so I will not venture any commentaries on the possible debasement of standards in the acceptance of such sites on the part of UNESCO. (One suspects that as more and more sites receive the WH designation, the standards may decline.) Trinidad and Viñales, are destinations for many visitors to Cuba and certainly worth seeing. The inclusion Camaguey and Cienfuegos historic centers was a surprise for me. I have not yet been to the other sites so I will not comment.

Here is a listing of the World Heritage Sites, hyperlinked to the relevant UNESCO web pages

There are also three additional sites in the process of proposal or submission to UNESCO.

Cuba seems to have done very well relative to other Latin American countries in having sites granted the WH status. Only Mexico with 31 and Brazil with 18 have more such sites. Otherwise, the countries with the most designations are the larger European countries with long histories such as the UK with 29 WH sites, France with 37, Germany 37, Italy 46 and Spain 37. The United States has a mere 21 WH sites while Canada has 15. The process for obtaining UNESCO designation appears to be rigorous and impartial (See the Operational Guidelines for the Implementation of the World Heritage Convention.) However, I suspect that the campaigning by national governments to have their sites nominated and accepted is an important factor as well.

Is there an economic value to having sites receive the UNESCO World Heritage designation? Certainly tourist promotion and foreign exchange earnings are perhaps the most obvious economic benefit. Travelers pay attention to the designation and often conclude that sites with the designation are worth visiting. I at one time thought that it would be an interesting challenge to visit all 936 UNESCO sites during my life. If life and finances were infinite I would definitely do so. I am currently at # 97 so I might not make it all the way. However, I will definitely try to visit all of Cuba’s WH sites.

A second benefit is that UNESCO requires that any site with the WH designation has to be taken well maintained. This provides a useful incentive to preserve cultural sites and protecting natural sites. Greater international and national attention to the cultural and physical sites can only be positive.

 Havana Fortifications Castillo de la Fuerza

Fortaleza de San Carlos de La Cabana, La Habana

“His Britannic Majesty’s Land Forces Taking Possession of Havannah (sic.), August 14, 1762 and Sloops of War Assisting to Open the Booms” Artist: Philip Orsbridge.    Less than a year after Havana was captured by the British in the Seven Years War it was returned to Spain in exchange for Florida by the Treaty of Paris. By the same treaty, France chose to retain Guadalupe and Martinique in exchange for Quebec which went to the British.

Living History at Fort Henry Kingston

 

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Haroldo Dilla Alfonso, “Cuba’s Collapsing Capital”

January 31, 2012 |  Haroldo Dilla Alfonso*

HAVANA TIMES, from Cubaencuentro, Jan 30 — The recent collapse of a building in the Centro neighborhood of Havana is sad news that speaks to us of dead, injured and homeless – tragic losers of the nation’s “updating” of its model.

But the news isn’t surprising.

The only surprise is that it doesn’t happen more often.

In fact, if this doesn’t happen every day in the Cuban capital, it’s because our architects and engineers left us with a solid housing stock, one proven by the test of time and generations of occupants.

The condition of housing has been complemented by of our fellow citizens, whose one-thousand-and-one ways of shoring up those crumbling buildings will someday have to be chronicled. They somehow manage to continue living in these structures until gravity finally catches up with them, these defiant challengers.

I’m not going to dwell on a balance of accomplishments and failures of the city over this long post-revolutionary era. I’m just saying that, even considering the usual benefits, the city lost much more than what it should have lost to achieve more balanced regional development across the nation as a whole.

It’s missing a lot because it lost the most dynamic segment of its middle and intellectual class; it lost its excellent infrastructure in the heat of neglect and carelessness; and finally it lost its particular metropolitan character due to the mediocre plebeian stoicism of its post-revolutionary political class.

To compensate themselves for their revolutionary efforts, a new leadership layer took special care to redistribute the best homes in the best places and to reserve exceptional sites for their own recreational pleasures.

Havana was sacrificed by a post-revolutionary elite who understood the change as anti-urban stubbornness and who saw the “new man” (to quote Emma Alvarez Tabio) as the noble savage laying constant siege to the city.

We still recall the Havana invaded by farmers, cattle fairs on the grounds of the Capitolio, Fidel’s failed coffee belt around Havana and his ridiculous idea of moving the capital to the small eastern town of Guaimaro.

However, the city ultimately suffered the conversion of architectural gems into rooming houses and government offices, to which were added makeshift garages, sheds in gardens and terraces, rooms where once existed gates and balconies, and the famous “barbacoas” (second floor additions), which have all pushed these buildings to the extreme limits of their physical tolerance.

Restored Old Havana Building. Photo: Caridad

If from the early revolutionary years we can point to a respectable architectural legacy along with achievements on behalf of the urban majority (as evidenced through accomplishments such as the Habana del Este planned community), the Pastorita city-garden, Cubanacan art school), what followed was pathetic: formalized overcrowding (whose most well-known expression is the Alamar “projects”) and one of the most ghastly buildings in the world: the Soviet Embassy.

Due to policing that prevented the growth of slums on the urban periphery, as occurs in almost all Third World cities, the city ended up swallowing its marginality. This is manifested in unprecedented overcrowding that gives life to about 10,000 tenements in which their occupants live in some of the most subhuman conditions.

My fear is that we are beginning to experience another phase of the history of this city. The  “socialist” city (mediocre and boring) is giving way to another city whose “brand” is precisely the metropolitan situation that was denied for five decades – with its glamor, mysteries and nights of sequins and sex.

This is precisely the Havana that City Historian Eusebio Leal restored to the extent of both his own Hispanophile and courtesan inclinations as well as to the present and potential tastes of consumers.

The Havana that’s being designed will lie along the coast with its extensive golf courses and exclusive marinas. It is a Havana that will have little to do with the poor people who lost homes and family members in the recent Infanta and Salud building collapse.

Havana is beginning its gentrification process in the heat of the legalized housing market, which while still lukewarm is nevertheless inexorable. Elegant Havana will again take shape where now live the old political elite and increasingly the new emerging elite, intimately tied together, in the metamorphic process given to us by the general/president with his “updating.”

This is the Havana of future Cuban capitalism.

“Havana A” will bypass those people who — like the victims living on Infanta and Salud — every night fear a disaster. For these people, like for the thousands of victims who exist in shelters, like the hundreds of thousands waiting for a new home or the repair of an already existing one in the capital, what will remain is “Habana B”: a city of the poor and impoverished, one with the worst services and the worst environmental conditions.

They no longer even have hopes for units in Alamar. The Cuban government, in the process of abdicating its social responsibilities, has left only one option to those who live on the island: cheap loans for housing repairs. What’s more, access to this assistance is only possible through this system of shared misery and monopolized power that the degraded Cuban elite insist on presenting as an option for the future.

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Castro Rights Record Intrudes on Rousseff Trade Mission to Communist Cuba (Bloomberg)

Bloomberg; 30 January 2012

Brazilian President Dilma Rousseff, who was inspired by Cuba’s revolution to take up arms against Brazil’s military dictatorship in the 1960s, is making the two-day visit to Havana as Castro takes steps to ease state control of the economy.

Brazilian President Dilma Rousseff, who was inspired by Cuba’s revolution to take up arms against Brazil’s military dictatorship in the 1960s, is making the two-day visit to Havana as Castro takes steps to ease state control of the economy. Photographer: Adalberto Roque/AFP/Getty Images

Brazilian President Dilma Rousseff will meet today with her Cuban counterpart, Raul Castro, to promise more trade and investment as human rights issues intrude on her first state visit to the communist island.

Rousseff, who was inspired by Cuba’s revolution to take up arms against Brazil’s military dictatorship in the 1960s, is making the two-day visit to Havana as Castro takes steps to ease state control of the economy. Tomorrow she’ll travel to Haiti, where Brazil is leading a United Nations peacekeeping force.

Dilma Rousseff befor a military court, 1970

The death this month of jailed dissident Wilman Villar after a 50-day hunger strike has drawn attention in Brazil’s media to Castro’s rights record and the government’s refusal to criticize it. While Rousseff has so far ignored requests for a meeting from pro-democracy activists, her government last week granted a tourist visa to Yoani Sanchez after the Cuban blogger invoked the president’s experience surviving prison and torture in an appeal to be allowed to leave the island.

“Rousseff is going to be in a very awkward situation by choice,” former Brazilian Foreign Minister Luiz Felipe Lampreia said in a phone interview from Rio de Janeiro. “She didn’t have to go to Cuba.”

Rousseff vowed to make human rights a priority of her foreign policy, and in condemning abuses in Iran distanced herself from the policies of her predecessor and mentor, Luiz Inacio Lula da Silva.

Urged on by his Workers’ Party, some of whose leaders were exiled in Cuba, Lula refused to criticize Fidel Castro or his brother’s government while in power from 2003 to 2010. Following a visit in 2010, which coincided with the death of another hunger striker, the former union leader compared the country’s dissidents to “criminals” in Sao Paulo jails.

While Rousseff, 64, is unlikely to address Cuba’s human rights situation publicly, she’s able to talk productively to Castro about his government’s record behind the scenes, said Julia Sweig, a senior fellow at the Washington-based Council on Foreign Relations.

“There won’t be the kind of back-slapping that we saw when Lula was there,” said Sweig, who is the author of several publications on Brazil and Cuba. “Precisely because of Dilma’s history and her explicit sensitivity to human rights I think she is well positioned for political dialogue.”

Cuba’s government relies on beatings, short-term detentions, forced exile and travel restrictions to repress virtually all forms of political dissent, New York-based Human Rights Watch said in a report this month. Cuba denies it’s holding any political prisoners and considers dissident activity to be counterrevolutionary.

In the run-up to Rousseff’s arrival, Brazilian newspapers published almost-daily interviews with Sanchez and activists from groups including the Ladies in White, in which they called for a meeting with the president’s delegation.

Any such requests will be studied by Brazil’s Embassy in Havana, the foreign ministry said in a statement. Rousseff’s agenda doesn’t include any meetings with activists, and underscoring the commercial nature of the visit, her human rights minister is not among the cabinet officials and business leaders making up her delegation.

Cuba’s rights record won’t necessarily improve if Rousseff speaks out, Brazil’s Foreign Minister Antonio Patriota said.

“There doesn’t appear to be an emergency in Cuba,” Patriota said Jan. 27 at the World Economic Forum in Davos, Switzerland. “There are other situations that are very worrisome, including Guantanamo,” he said, referring to the U.S. detention camp for suspected terrorists on Cuba’s southeastern tip.

While Cuba isn’t among Brazil’s 30-biggest commercial partners, trade between the two countries has been expanding at a 30 percent annual pace since 2006, reaching $642 million last year, according to Brazil’s Foreign Ministry. Together with China and Venezuela, which provides the country with subsidized oil, Brazil has emerged as one of Cuba’s biggest foreign investors.

Rousseff will visit today the deepwater port at Mariel, which is undergoing a nearly $1 billion renovation led by Odebrecht SA with funding from the Brazil’s state development bank. The Salvador, Brazil-based construction and raw materials conglomerate said yesterday that it will also sign an agreement to expand a sugar-cane mill operated by state-controlled Azcuba.

Brazil’s role in helping Cuba create jobs, contrasting with longstanding hostility from the U.S., reinforces positive, albeit slow-paced changes taking place on the island of 11.2 million under Castro, said Sweig.

Since the 85-year-old Castro began handing power to his brother in 2006, the former defense minister has taken steps to open up the economy, which placed 177 out of 179 countries, ahead of only Zimbabwe and North Korea, in a ranking this month of economic freedom by the Washington-based Heritage Foundation.

For the first time in a half-century, Cubans can now buy and sell property and cars. After the 80-year-old Raul Castro began slashing state payrolls with a goal of eliminating 500,000 jobs, they’re able to seek self-employment as janitors and taxi drivers.

The overhaul comes amid declines in tourism and the price of nickel, the country’s biggest export, caused by a global economy whose prospects for recovery have dimmed, according to International Monetary Fund projections. The government expects Cuba’s gross domestic product to expand 2.7 percent this year, below the IMF’s 3.6 percent forecast for Latin America and the Caribbean region.

Political change has been slower. Speaking at a Communist Party summit on Jan. 29, Castro vowed to maintain single-party rule, adding that multi-party democracy would buoy U.S. “imperialism” in Cuba.

Still, the government last year freed the remaining 12 political prisoners that made up the so-called Group of 75 journalists and rights activists who were jailed during a 2003 crackdown. The Roman Catholic Church helped negotiate the release, and Pope Benedict XVI is scheduled to visit the once anti-clerical island in March.

The 36-year-old Sanchez, a critic of Castro’s government on a blog called Generation Y, referred to Rousseff’s persecution by Brazil’s 1964-1985 dictatorship in her appeal for a visa to attend a screening in Salvador of a documentary she appears in. Sanchez has been blocked from traveling abroad for the past four years.

“I saw a photo of young Dilma, sitting on a bench blindfolded as men accused her,” Sanchez wrote Jan. 24 on Twitter. “I feel that way right now

 Yoani Sanchez

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Cuba legalizes sale, purchase of private property

PAUL HAVEN, Associated Press; Nov. 3, 2011 8:08 AM ET
Original Article available here: Cuba legalizes sale, purchase of private property

HAVANA (AP) — Cuba announced Thursday it will allow real estate to be bought and sold for the first time since the early days of the revolution, the most important reform yet in a series of free-market changes under President Raul Castro.

The law, which takes effect Nov. 10, applies to citizens and permanent residents only, according to a red-letter headline on the front page of Thursday’s Communist Party daily Granma.

The brief article said details of the new law would be published imminently in the government’s Official Gazette. Authorities have said previously that sales will be subject to taxes and the rules will not allow anyone to accumulate great property holdings.

The change follows October’s legalization of buying and selling cars, though with restrictions that still make it hard for ordinary Cubans to buy new vehicles.

Castro has also allowed citizens to go into business for themselves in a number of approved jobs — everything from party clowns to food vendors to accountants — and has pledged to streamline the state-dominated economy by eliminating half a million government workers.

Cuba’s government employs over 80 percent of the workers in the island’s command economy, paying wages of just $20 a month in return for free education and health care, and nearly free housing, transportation and basic foods. Castro has said repeatedly that the system is not working since taking over from his brother Fidel in 2008, but he has vowed that Cuba will remain a Socialist state.

Cubans have long bemoaned the ban on property sales, which took effect in stages over the first years after Fidel Castro came to power in 1959. In an effort to fight absentee ownership by wealthy landlords, Fidel enacted a reform that gave title to whomever lived in a home. Most who left the island forfeited their properties to the state.

Since no property market was allowed, the rules have meant that for decades Cubans could only exchange property through complicated barter arrangements, or through even murkier black-market deals where thousands of dollars change hands under the table, with no legal recourse if transactions go bad.

Some Cubans enter into sham marriages to make deed transfers easier. Others make deals to move into homes ostensibly to care for an elderly person living there, only to inherit the property when the person dies.

The island’s crumbling housing stock has meant that many are forced to live in overcrowded apartments with multiple generations crammed into a few rooms. Even divorce hasn’t necessarily meant separation in Cuba, where estranged couples are often forced to live together for years while they work out alternative housing.

The new law will eliminate a state agency that regulated the exchange-by-barter of homes, meaning that from now on sales will only need the seal of a notary, according to Granma.

The government has also dropped hints in recent months about the new property law, saying it will allow family members to inherit homes even if they are not living in the property.

Cubans who can afford it will be allowed to own one home in the city and one in the countryside.

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Cuba’s Economic Reform Process under President Raul Castro: Challenges, Strategic Actions and Prospective Performance

The Bildner Center at City University of New York Graduate Center organized a conference entitled “Cuba Futures: Past and Present” from March 31 to April 2. The very rich and interdisciplinary program can be found here: Cuba Futures Conference, Program.

I had the honor of making a presentation in the Opening Plenary Panel.  The Power Point presentation is available at “Cuba’s Economic Reform Process under President Raul Castro.”

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Recuperation and Development of the Bahi ́a de la Habana

By Arch Ritter

The Bahia de la Habana has been a centre for international shipping and trade since the early 1500s. It served as a haven from storms and pirates, a fortification against the British, a provisioning center and a gathering point for the Spanish fleet sailing between Seville and Cadiz and the ports of the New World. It is still a hard-working port, handling much of Cuba’s container and bulk shipping, as well as naval installations, cruise ship facilities and industry. After almost 500 years as a working port, however, it appears to be in the process of transformation to a modified and redeveloped tourist and transport center.

“His Britannic Majesty’s Land Forces Taking Possession of Havannah (sic.), August 14, 1762 and Sloops of War Assisting to Open the Booms” Artist: Philip Orsbridge.    Less than a year after Havana was captured by the British in the Seven Years War it was returned to Spain in exchange for Florida by the Treaty of Paris. By the same treaty, France chose to retain Guadalupe and Martinique in exchange for Quebec which went to the British.

The Oficina del Historiador de La Habana, established in 1938 by Dr. Emilio Roig de Leuchsenring for the restoration of historic Havana has played a vital role in restoring Old Havana under the leadership of Eusebio Leal Spengler in 1967. His work has been exemplary, and the historical quarter certainly deserves its UNESCO designation of “World Heritage Site”, awarded in 1982. The restoration and preservation of historic Havana continues to radiate out from the Cathedral quarter and now includes the Plaza Vieja and various locales alongside the Avenida del Puerto to the Iglesia San Francisco de Paula.

It now appears that the whole port area has been designated as a development zone. The old derelict wharves and warehouses are being dismantled and removed. The Arts and Crafts Market has been transferred from close to the Cathedral to the old Almacenes San José into the interior of the port, which have been restored and renovated.  New hotels such as the Armadores de Santander have opened. The new Russian Orthodox Church is in this areas as well

Bahia de La Habana

Removing Derelict Wharves, February 2011, Photos by Arch Ritter

Furthermore, the container port and much of the bulk shipment port will be moved to a new facility in the excellent harbor at Mariel, 50 kilometers west of Havana, which will also generate some regional development impulses in that region. The old Havana petroleum refinery, formerly owned by Esso and Shell, will shut down when to the new refinery in Cienfuegos opens. And the electrical generation plant at the edge of the port, a heavy air polluter for the capital, will relocate to Matanzas. In time, the serious pollution of the port will be reduced, and one hopes cleaned up definitively. [For a glance at current pollution in the harbor, check this web site: Pollution from the Oil Refinery]. This will be an expensive process taking many years. It is also likely that there are significant toxic residues in much of the land used for industrial purposes for past decades. Cleaning this up also will be costly and time-consuming.

At this time, there seems to be no master-plan for the development of the harbor region available to the public. However, there was some talk in February 2011 of such a plan becoming available in May of 2011.

In time, it is expected that new hotels will ring part of the harbor. With normalization of relations with the United States, the port of Havana also will become a key destination for virtually all of the cruise ships entering the Caribbean region. Quick access to Casablanca and the fortifications on the east side of the harbor will likely be provided with transit by improved cross-harbor ferryboat. One could imagine as well circum-harbor excursion ferry boats plying a vigorous trade. With normalization of travel between the United States and Cuba, high-speed hydrofoil passenger transportation and normal traditional ferry boat service from Key West and Miami to Havana will likely be established, providing further stimulus to the port area. A good deal more of the area around the port thus will become an attractive tourist, commercial and perhaps residential zone. It may also be possible that office complexes are eventually developed in the area as well, shifting part of the commercial center of gravity of Havana from the far west back to the harbor zone.

If the redevelopment of the harbor area proceeds with the same deliberativeness as the restoration of Old Havana, we can anticipate a fine citizen- and tourist-friendly extension of the Old Havana zone southwards into the Baha de La Habana and across the harbor to Casablanca, Regla and the Fortaleza San Carlos de la Cabana area.

[Note: The basic idea for this note came from Omar Everley Perez, Centro de Estudios sobre la Economa Cubana on March 8, 2011]

New Artisanal Center at the restored  Almacenes San José, Avenida del Puerto, Photo by Arch Ritter, February 2011

Russian Orthodox Church, Avenida del Puerto, Photo by Arch Ritter, March 2008

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An Overview Evaluation of Economic Policy in Cuba circa 2010

By Arch Ritter

The essay attached and summarized briefly here was presented at a conference at CIAPA, in San Jose, Costa Rica, February 3 and 4, 2009 organized by Paolo Spadonu of Tulane University.

The full essay is entitled An Overview Evaluation of Economic Policy in Cuba, circa 2010, June 30, 2010 and can be seen “HERE”. The Introduction and Conclusion are presented below.

Hopefully, this evaluation will change considerably for the better after the Sixth Congress of the Communist party of Cuba in April.

I. Introduction

The economic development of Cuba has been characterized by high levels of investment in people with successful results, but with weak performance in terms of the production of goods and services generally. Cuba’s achievements regarding human development are well known and are epitomized by the United Nations Development Program’s “Human Development Index” (HDI). On the one hand, this index ranks Cuba at #1 in the world for the Education component (somewhat surprisingly) and #31for the Life Expectancy component. On the other hand, Cuba’s world ranking is for GDP per capita in purchasing power parity terms is #94 with an overall world HDI ranking of #51(UNDP, HDR, 2009, 271.) These rankings underline the inconsistency between the Cuba’s high level of human development on the one hand and its economic underperformance on the other. The strong economic performance of the 2004 to 2008 period appeared to constitute a rapid recovery in terms of Cuban GDP statistics. However, this recovery, while perhaps not illusory, was fragile and unsustainable, based on factors such as support from Venezuela and high nickel export prices, and indeed it has been reversed in 2009-2010.

Given the quality of Cuba’s human resources, the economic performance for the last 15 years should have been excellent. The central argument of this essay is that Cuba’s weak economic performance has been the result of counter-productive public policy. The objective of this essay is to analyze and evaluate a number of central policy areas that shape Cuba’s economic performance, including monetary and exchange rate policy, policy towards micro-enterprise; agricultural policy, labor policy, foreign investment policy, policies towards infrastructure renewal, and the policy approach to self-correction and self-renewal.

In order to present a brief overview of the evaluations, an academic style of grading is employed, with an “A+” being excellent through to an “F” representing “failure”.

This evaluation schema is of course subjective, impressionistic and suggestive rather than rigorous. It is based on brief analyses of the various policy areas. However, the schema is similar to the scoring systems widely used in academia, and is used here with no more apology than is normally the case in the academic world.

Before proceeding with the policy analysis and evaluation, a brief overview of economic performance in the decade of the 2000s is presented to provide the context for the examinations of economic policy.

II. General Economic Performance

III.  Evaluation of Some Central Policy Areas

IV.   Summary and Conclusion:

A summary of the evaluations of the various assessment areas yields an overall evaluation of   “D +”. This is not a strong assessment of Cuban economic policies.

1. Monetary & Exchange Rate Policy                  C-

2. Micro-Enterprise Policy                                    F

3. Policy towards Agriculture                              C-

4. Labor Policy                                                        D+

5. Foreign Investment Policy D+

6. Infrastructure Renewal                                   D

7. Capacity for Self Correction                            D

Overall Grade: D +

The result of such weak policies in these areas is weak economic performance. Badly conceived economic policies nullify the potential efforts of the Cuban citizenry. The major investments in human capital, while fine in their own right, are not yielding strong economic performance. Indeed, misguided policies are undermining, sabotaging and wasting the economic energies and initiatives of Cuba’s citizens.

Major policy reforms amounting to a strategic reorientation of Cuban economic management are likely necessary to achieve a sustained economic recovery and future economic trajectory. So far, writing in June 2010, the Government of Raul Castro has made some modest moves, principally in agriculture, as mentioned earlier. Other policy areas such as those relating to micro-enterprise are reported to be under discussion at high levels in the government. On the other hand, the replacement of the reputed pragmatists Carlos Lage, (Secretary of the Council of Ministers) and Jose Luis Rodriguez, (Vice President of the Council of Ministers and Minister of Economy and Planning) and the replacement of Lage by Major General José Amado Ricardo Guerra of the Armed Forces seems to suggest that the Raul Castro Government may be moving towards a less reformist approach to economic management ( Granma International, 2009.)

The types of policy reforms that would be necessary to strengthen the policy areas discussed above would include the following:

  1. Monetary & Exchange Rate Policy: movement towards realistic and unified monetary and exchange rate systems;
  2. Micro-Enterprise Policy: establishment of an enabling and supportive policy environment rather than a punitive policy of containment;
  3. Policy towards Agriculture: further support for small-scale farmers plus a reinvigoration of the abandoned sugar fields with cane for ethanol, among other policies;
  4. Labor Policy: implement the International Labour Organization approach to fundamental labor rights;
  5. Foreign Investment Policy: establish a clearer and more unequivocal rules-based policy framework;
  6. Infrastructure Renewal: strengthening resource flows towards maintenance, especially for housing, water, and sanitation, and facilitating self-managed and do-it-yourself maintenance on the housing stock by liberalizing the trades and making repair supplies available at reasonable cost;
  7. Capacity for Self Correction: permit an authentic implementation of freedom of expression and freedom of association thereby permitting economic analysis and criticism through a free press and media and the formation of alternate “teams” of potential economic managers – some within political parties.

In sum, effective economic management requires new ideas, transparency and criticism, and, indeed, a major policy reform process in order to reverse the current wastage of human energies, talents and resources. Policy reorientations in the directions noted above are unlikely to be forthcoming from the Government of Raul Castro, which appears to be deeply conservative as well as “gerontocratic”. Cuba will likely have to wait for a “New Team” or more likely a “generational change” in its overall economic management before such major reforms can be implemented.


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Fidel’s Phenomenal Economic Fiascoes: the Top Ten

Fidel Castro recently clarified an allegedly erroneous quotation and stated something to the effect that “Yes the Cuban Model does indeed work”. It would have been difficult for Fidel to do a “Mea Culpa” and agree that half a century of his own management of the Cuban economy had been erroneous and counter-productive.

However, as the grand economic “strategizer” as well as the micro-manager of many issues that captured his attention President Fidel Castro was responsible for a long list of economic blunders. Here is my listing of Fidel’s most serious fiascoes.

Next week I will try and produce a listing of Cuba’s Greatest Achievements under President Castro. Unfortunately I find this more difficult than to identify the failures.

Top Ten Economic Fiascoes

Fiasco # 10     The Instant Industrialization Strategy, 1961-1963:

Fiasco #9        The 10 Million Ton Sugar Harvest Strategy, 1964-1970

Fiasco #8        The “New Man”

Fiasco #7        The “Budgetary System of Finance”

Fiasco #6        The “Revolutionary Offensive” and the Nationalization of Almost Everything

Fiasco #5        Revolucion Energetica

Fiasco #4 Shutting Down Half the Sugar Sector

Fiasvco #3 A Half Century of Monetary Controls and Non-Convertibility

Fiasco #2        Suppression of Workers’ Rights

Fiasco #1        Abolition of Freedom of Expression


Fiasco # 10     The Instant Industrialization Strategy, 1961-1963:

Cuba’s first development strategy, installed by the Castro Government in 1961, called for “Instant Industrialization”, the rapid installation of a wide range of import-substituting industries, such as metallurgy, heavy engineering and machinery, chemical products, transport equipment and even automobile assembly.

The program proved unviable as it was import-intensive, requiring imported machinery and equipment, raw materials, intermediate goods, managerial personnel, and repair and maintenance equipment. Because the sugar sector was ignored, the harvest fell from 6.7 million tons in 1961 to 3.8 in 1963 generating a balance of payments crisis. The end result was that Cuba became more dependent than ever on sugar exports, on imported inputs of many kinds and on a new hegemonic partner, the Soviet Union.

The strategy was aborted in 1964.

Fiasco #9        The 10 Million Ton Sugar Harvest Strategy

The failure of the “Instant Industrialization” strategy led to an emphasis on sugar production for export with a guaranteed Socialist Bloc market for 5 million tons per year at a price well above the world price – from 1965 to 1970. The over-riding preoccupation became the 10 million ton goal, which according to President Castro was necessary for “defending the honor, the prestige, the safety and self-confidence of the country” (February 9, 1970.)

Fidel seemed happiest when conducting a campaign military style as he did during the effort to produce 10 million tons of sugar.

If it had been implemented in a measured way, a strategy to increase export earnings from sugar would have been reasonable. However, as 1970 approached, the implementation of the 10 million ton target became increasingly forced. Other sectors of the economy were sacrificed as labor, transport capacity, industrial inputs, energy, raw materials and national attention all focused on sugar.

This strategy was aborted in 1970.

Fiasco #8        The “New Man”

In order to mobilize human energies for the 10 million ton harvest a radical “Guevaraist” approach was adopted involving the construction of the so- called  “New Man.” The idea behind this was a vision of the Cuban Nation as a guerrilla column marching behind Fidel – somewhat like his marches down the Malecon in 2000-2006 – single-mindedly pursuing a common objective, willingly sacrificing individual interests for the common good and with the esprit de corps, discipline and dedication of an idealized guerrilla band. To promote this revolutionary altruism, the government used public exhortation and political education, “moral incentives” instead of material incentives and proselytizing and enforcement by the Party and other “mass organs” of society.

By 1970, it was apparent that people could not be expected to sacrifice their own and their family’s material well-being and survival for some objective decreed and enforced by the Party. The approach was dropped in 1970.

Fiasco #7        The “Budgetary System of Finance”

In a simultaneous experiment, a so-called “budgetary system of finance” was installed under which enterprises were to operate without financial autonomy and without accounting, neither receiving the revenues from sales of their output nor paying for their inputs with such revenues – somewhat like University Departments.

Without a rational structure of prices, and without knowledge of their true costs or the value of their output, neither enterprises nor the planning authorities could have an idea of the genuine efficiencies of enterprises, of sectors of the economy, or of resource-use anywhere. The result of this was disastrous inefficiency.  In President Castro’s words:

“..What is this bottomless pit that swallows up this country’s human resources, the country’s wealth, the material goods that we need so badly? It’s nothing but inefficiency, non-productivity and low productivity.” (Castro, December 7, 1970)

This system was also terminated in 1970.

Fiasco #6        The “Revolutionary Offensive” and the Nationalization of Almost Everything

In the “Revolutionary Offensive” of 1968, Fidel Castro’s government expropriated most of the remaining small enterprise sector on the grounds that it was capitalistic, exploitative, and deformed people’s characters, making them individualistic instead of altruistic “New Men”. The result was true living standards were impaired, product quality, quantity and diversity deteriorated, enterprises were pushed into the underground economy,  theft from state sector and illegalities become the norm and citizen’s entrepreneurship was suppressed. This policy was changed in 1993, then contained by tight regulation, licensing and taxation after 1985,.

Again in September 2010, the government of Raul Castro appears ready to expand the small enterprise sector in hopes that it will absorb most of the 500,000 workers to be laid off from the state sector.

Fiasco #5        “Revolucion Energetica”

President Castro’s “Revolucion Energetica” included some valuable elements such as conservation measures, re-investment in the power grid and the installation of back-up generators for important facilities such as health centres. A questionable feature of the plan is the replacement of large-scale thermal-electric plants with numerous small generators dispersed around the island. But the use of the small-scale generators likely constitutes a major error for the following reasons:

  • The economies of large scale electricity generation are lost;
  • Synchronizing the supply of electricity generated from numerous locations to meet the minute-by-minute changes in electricity demand is complicated and costly;
  • Problems and costs of maintaining the numerous dispersed generators are  high;
  • Logistical control and management costs escalate as the national grid is replaced with regional systems.
  • Expensive diesel fuel is used rather than lower cost heavy oil:
  • Diesel fuel has to be transported by truck to the generators around the island;
  • Investments for the storage of diesel fuel in numerous supply depots are necessary;
  • Problems of pilferage of diesel fuel may be significant, and costs of security and protection may be high.

No other country in the world has adopted this method of generating electricity, suggesting that it does not make sense economically.

The energy master-plan also ignores a possible role of the sugar sector in producing ethanol and contributing to energy supplies. The experience of Brazil indicates that at higher petroleum prices, ethanol from sugar cane becomes economically viable. The shut-down of some 70 out of Cuba’s 156 sugar mills in 2003, the moth-balling of another 40 and the contraction of the whole sugar agro-industrial service cluster is also a major loss for electricity generation.

Fiasco #4        Shutting Down Half of the Sugar Sector

In 2002, Castro decided that there was no future in sugar production, a decision prompted by low sugar prices at the time and undoubtedly the continuing difficulties in the sector. He decreed the shut-down of 71 of 156 sugar mills, taking some 33% of areas under sugar cane out of production and displacing about 100,000 workers. It was hoped that land-use would shift to non-sugar crops, that remaining mills would become more productive, and that displaced labour would be reabsorbed elsewhere.

In any case, sugar production has continued to decline which is unfortunate given high prices in recent years. There has not been a shift into ethanol production. The physical plant has continued to deteriorate. The cluster of activities surrounding sugar must be near collapse.  The sugar communities are left without an economic base and some face the prospect of becoming ghost towns.

Fiasco #3        A Half Century of Monetary Controls and Non-Convertibility

Responsibility for Fiasco #3 is shared in part with Che Guevara, who as President of the Banco Nacianal de Cuba, presided over imposition of monetary controls and implementation of the policies that made Cuba’s peso non-convertible for half a century.

Cuba’s monetary system has been and is a serious obstacle to the freedom of Cuban citizens. Citizens’ incomes have had purchasing power outside the country only when permitted to be exchanged for a foreign convertible currency and then only at a discount for some decades. As is well known, the official exchange rate for Cuban citizens has been in the area of  22 pesos (Moneda Nacional) to US $1.00, so that the purchasing power of the average monthly salary – 415 pesos in 2008 (Oficina Nacional de Estadisticas, 2009, Table 7.4) is about US$20.00.

Fiasco #2        Suppression of Workers’ Rights

Thanks to the regime implanted by President Castro, Cuban workers do not have the right to undertake independent collective bargaining or to strike. Unions are not independent organizations representing worker interests but are official government unions. Independent unions and any attempts to establish them are illegal.

Cuba has signed the Universal Declaration of Human Rights and is a member of the International Labor Organization.  The basic United Nations Declarations support freedom of association for labor. The International Labor Organization’s Declaration on Fundamental Principles and Rights at Work includes, as the first fundamental right of labor, “freedom of association and the effective recognition of the right to collective bargaining”

The central function of independent labor unions is to provide countervailing power to oligopolistic or monopolistic employers in wage determination and in the setting of the terms and conditions of work. Unions have been successful in western countries in raising wages, improving the equity of income distribution and improving work conditions.

In the Cuban case, workers have confronted a monopolistic employer – the state – that also controls their unions which are in effect “company unions.” By controlling the unions and containing their wage demands, wages have been held down. The absence of independent unions has permitted the government to implement counterproductive economic policies year after year and has muted the urgency of undertaking economic reforms.

Fiasco #1        Abolition of Freedom of Expression

An important requirement for the sustained effectiveness of an economic system is the ability to freely, openly and continuously analyze and criticize its functioning.  Open analysis and criticism in a context of free generation and diffusion of information provide a necessary spur for self-correction, exposing illegalities, flawed policies and errors.  Free analysis and criticism is vital in order to bring illicit actions to light, to correct errors on the part of all institutions and enterprises as well as policy makers and to help generate improved policy design and implementation. This in turn requires freedom of expression and freedom of association, embedded in an independent press, publications systems and media, independent universities and research institutes, and freely-functioning opposition political parties.

Unfortunately this has been lacking, thanks to the Castro regime.  The media and the politicians have largely performed a cheerleader role, unless issues have been opened up for discussion by the President and the Party.

The near-absence of checks and balances on the policy-making machinery of the state also contributes to obscuring over-riding real priorities and to prolonging and amplifying error.  The National Assembly is dominated by the Communist Party, meets for very short periods of time – four to six days a year – and has a large work load, so that it is unable to serve as a mechanism for undertaking serious analysis and debate of economic or other matters. The cost for Cuba of this situation over the years has been enormous.  It is unfortunate that Cuba lacks the concept and reality of a “Loyal Opposition” within –the electoral system and in civil society.  These are vital for economic efficiency, not to mention, of course, for authentic participatory democracy.

NOTE: For additional articles on various aspects of Fidel Castro’s presidency, see:

Fidel Castro: The Cowardice of Autocracy

Cuba’s Achievements under the Presidency of Fidel Castro: The Top Ten

Fidel’s No-Good Very Bad Day

The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did

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