Tag Archives: Military

DOES THE CUBAN MILITARY REALLY CONTROL SIXTY PERCENT OF THE ECONOMY? ANATOMY OF A FAKE FACT

William M. LeoGrande, Contributor, Professor of Government at American University

Huffington Post, 06/28/2017 11:39 am ET

Original Article: Fake Fact

President Donald Trump’s decision to prohibit U.S. transactions with Cuban enterprises controlled by the military has thrown a spotlight on the role of the armed forces in Cuba’s economy. That role is extensive, reaching across a number of different sectors, and it has grown in recent years along with Cuba’s tourism industry, where military-controlled firms are concentrated. These enterprises are managed by the holding company Grupo de Administración Empresarial S.A., GAESA, which reports to the Ministry of the Revolutionary Armed Forces (MINFAR).

The sudden spurt of media interest has produced widespread repetition of the spurious “fact” that the Cuban military controls 60% of the economy. “GAESA is the business arm of the Cuban Revolutionary Armed Forces and controls 60 percent of the island’s economy,” the Miami Herald reported shortly after Trump’s speech and repeated several times thereafter. The EconomistPoliticoThe GuardianThe Times of London, Business Insider, and others repeated it.

Even a cursory review of the composition of Cuba’s Gross Domestic Product demonstrates that this “fact” is ludicrous. Sectors in which the military has little or no participation easily comprise more than half of GDP, and in the other sectors, there are civilian as well as military-controlled firms (Anuario Estadístico 2015).

So how much of the economy do military enterprises really control and where did the 60% claim come from?

The Cuban government does not routinely report the revenue from individual enterprises, but we have a few data points for the largest military holding companies from which we can make reasonable projections.

Total revenue from enterprises managed by the military was reported as $970 million in 1997. Since a large portion of their revenue comes from tourism, let’s suppose that their revenue has increased in tandem with the rapid growth of that sector. In 1997, Cuba had 1.2 million foreign visitors (according to Cuba’s 2004 statistical year book, Anuario Estadístico). In 2016, Cuba had 4.1 million — a 249% increase. At that same rate of increase, projected revenue from military-linked firms in 2016 would be $3.4 billion.

We can check the reliability of this estimate with data from the three main military companies, Gaviota, Cimex, and TRD. Gaviota, the largest military-controlled conglomerate, is concentrated in tourism. Total revenue from the tourism sector was $2.8 billion in 2015 (Anuario Estadístico 2015). While Gaviota is the largest player, it does not hold a monopoly; it controls 40% of all available hotel rooms (though it has a higher proportion of the better ones), plus car rentals, tourist taxis, and restaurants. It is plausible, then, that Gaviota may generate as much as 60 percent of the earnings from tourism, or approximately $1.7 billion.

Cimex had 2004 revenue of $740 million. Using the same projection method based on the growth of tourism, Cimex’s estimated 2016 revenue would have been about $1.3 billion. The Havana Consulting Group, whose President Emilio Morales was formerly an executive at Cimex, estimates its revenue as $1.2 billion.

TRD, a chain of retail stores created to capture hard currency, had sales of $250 million in 2004. Using the same projection method, TRD’s estimated 2016 revenue would have been about $442 million.

Thus we estimate that the three largest GAESA companies taken together would have had 2016 revenue of about $3.45 billion, very close to the $3.4 billion initially estimated from the data on total MINFAR revenue. Emilio Morales at the Havana Consulting Group, using data he has collected over the past 15 years, estimates GAESA’s total current revenue at $3.8 billion.  Using Morales’ estimate, GAESA’s revenue constitutes 21% of total hard currency income from both state enterprises and the private sector, 8% of total state revenue, and just 4% of GDP (Anuario Estadístico 2015). That’s a long way from 60% of the economy, no matter what metric you use.

Where Did It Come From?

So where did the wildly inaccurate claim of 60% come from?

It first appeared in a February 2004 story in the Miami Herald about the head of Gaviota, Manuel Marrero Cruz, being named Minister of Tourism. “Cuba’s armed forces have taken over up to 60 percent of the island’s economy,” the Herald reported, citing the Cuba Transition Project (CTP), a U.S. government-funded project of the University of Miami’s Institute for Cuban and Cuban-American Studies.

In subsequent months, Institute Director Jaime Suchlicki regularly repeated the claim. In the proceedings of a November 2004 CTP conference, he wrote, “Today, more than 65 percent of major industries and enterprises are in the hands of current or former military officers.” In August 2006, he told the Associated Press, “They’re running 60 percent of the Cuban economy. All major industries are in the hands of the military’s active duty or former military people.”

Although no data or evidence was ever produced to support that claim, Suchlicki’s formulation was at least plausible, though misleading, because he included not just enterprises managed by the armed forces, but civilian enterprises and whole ministries led by active or retired military officers. The implication was that these entities were controlled by the armed forces, although there was no basis for such a conclusion. On the contrary, because the military has always been among the most efficient Cuban institutions, it has a long history of exporting managers to the civilian sector, going back to the 1970s.

Before long, the claim of military control devolved into a claim that MINFAR enterprises themselves constituted 60% of the economy. “The University of Miami’s Institute for Cuban and Cuban-American Studies estimates that soldiers control more than 60% of the island’s economy,” the Wall Street Journal reported in November 2006.

Other conservatives picked up the theme. “The military… controls about 60 percent of the economy through the management of hundreds of enterprises in key economic sectors,” wrote Carl Gershman, President of the National Endowment for Democracy (which also received U.S. government funding for “democracy promotion” in Cuba), and Orlando Gutierrez, national secretary of the exile organization Cuban Democratic Directorate. A 2008 Heritage Foundation report declared, “Serving or former military officers direct an estimated 60 percent of Cuba’s business and industry.”

By 2016, Suchlicki himself, who had originally been careful to specify that he was talking about major industries and enterprises run by military officers and former officers, had lapsed into the broad, unqualified claim that “more than 60% of the economy is under military control.”

Various newspapers and web sites repeated the claim over the years, setting the stage for this oft-repeated “fact” to be widely circulated when President Trump’s announcement made the Cuban military’s role in the economy a news story, as exemplified by the Miami Herald’s declaration, “GAESA…controls 60 percent of the island’s economy.”

It’s a case study in how fake facts become legitimated and spread, even without the boost of social media. Promulgated by a university-based center, which gave the claim credibility, it began as an exaggeration of the military’s control, lumping together military enterprises and civilian enterprises run by officers and former officers.

Gradually, those details fell away, perhaps because the flat statement of 60% control was more dramatic, or a better sound-bite, or perhaps because journalists failed to understand the nuances of the claim. As more and more sources quoted it, it gained credibility. By the time of President Trump’s June 16 policy announcement in Miami, it had become conventional wisdom that Cuban military enterprises controlled 60% of the economy, even though that “fact” was spectacularly wrong.

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LAS FUERZAS ARMADAS REVOLUCIONARIAS, LA MAYOR EMPRESA DE CUBA HAVANA TIMES

HAVANA TIMES, Junio 16, 2017 | | | 0  38  0    38

 En Cuba alquilar un coche, dormir en un hotel, hacer submarinismo o comprar en una tienda tienen un punto en común: las empresas que dan esos servicios pertenecen al Grupo de Administración Empresarial S.A. (GAESA) dirigido por las Fuerzas Armadas Revolucionarias, reportó dpa.

GAESA es el mayor holding cubano y suma un conglomerado de más de 50 empresas, todo ello dirigido bajo las leyes del mercado y presidido por el general de brigada Luis Alberto Rodríguez López-Callejas, ex yerno del mandatario Raúl Castro.

La compañía más conocida es la cadena hotelera Gaviota, que tiene más de 29.000 habitaciones en todo el país, muchas de ellas en gestión compartida con compañías extranjeras como Meliá, Iberostar o incluso la estadounidense Starwood, de la cadena Marriott.

La joya de la corona de GAESA es el sector turístico, con una cuota de mercado del 40 por ciento, pero este conglomerado es mucho más amplio de lo que muchos piensan, llegando a casi todos los sectores de la economía, siempre y cuando den beneficios.

Luis Alberto Rodríguez López-Callejas

GAESA es propietaria de una naviera, tiene su propia compañía aérea, empresas de construcción, venta de automóviles, inmobiliarias, bancos o la empresa Almacenes Universales S.A., que controla el tráfico de contenedores en el Puerto del Mariel con su Zona Especial de Desarrollo, la gran apuesta del Gobierno cubano para atraer inversiones extranjeras a la isla gracias a los beneficios fiscales.

En sus inicios, el Ministerio del Interior y el de las Fuerzas Armadas Revolucionarias tenían sus propias empresas, separadas unas de otras, para autofinanciar sus actividades diarias. Asegurar a cada institución una parte del pastel económico garantizaba una paz entre ellas.

El equilibrio existió hasta 2010, cuando CIMEX, el mayor conglomerado comercial de la isla fundado por el Ministerio del Interior, fue absorbido por los militares, con lo que estos aumentaron sus cadenas de tiendas, pero sobre todo los servicios financieros y la capacidad de importación y exportación.

El imperio GAESA aumentó el año pasado con la adquisición de Habaguanex, la compañía que gestiona las empresas turísticas del casco histórico de La Habana Vieja y hasta entonces en manos del poderoso historiador Eusebio Leal.

La otra absorción fue la del Banco Financiero Internacional (BFI), la principal entidad de su tipo para la gestión de divisas. Ambas adquisiciones hicieron que GAESA continuase copando sectores económicos altamente rentables por su relación con el mercado exterior.

El envío de remesas a Cuba está monopolizado por su Financiera Cimex (Fincimex), que tiene acuerdos con empresas como Western Union.

También Fincimex controla en la isla los procesamientos de las tarjetas internacionales Visa y Mastercard.

Estas alianzas financieras internacionales están ligadas también al sector turístico, porque es vía Fincimex que las empresas que envían remesas pagan en Cuba a los dueños de casas y apartamentos que utilizan los servicios de la compañía estadounidense Airbnb, especializada en alquiler de habitaciones.

Kempinski Hotel, Gaviota’s Newest Five-Star Hotel.

 

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RAUL’S GRANDSON GETS KEY PROMOTION: THE DYNASTY STRENGTHENS

By J.J. Almeida, son of former Raul Castro confidant, deceased Cuban General Juan Almeida, in Translating Cuba, September 6, 2016

To review:

z2— Raul’s son-in-law, General Luis Alberto Rodriguez Lopez-Callejas, runs GAESA, the military’s tourism conglomerate that controls nearly 80% of the island’s business activity;

zz 8D3B4DDC-27B4-440B-B045-D5DEBC20365A_w987_r1_s— Raul’s only son, Col. Alejandro Castro, heads the powerful Commission on Defense and National Security, which oversees the state security apparatus; and now

zz 1439874195_raulito
— Raul’s favorite grandson, Raul Guillermo Rodriguez Castro, heads the General Direction of Personal Security (DGSP).

General Francis is Out of the Game and Raul’s Grandson Ascends 

The most powerful of all the Cuban generals, Division General Humberto Omar Francis Pardo, was replaced in his job as Head of the General Direction of Personal Security (DGSP).

The position is now filled by Raúl Guillermo Rodríguez Castro, who is known by various nicknames, like “The Crab,” “Grandson-in-Chief,” Raulito” and even “The Arnol-mal,” this last one from his frenetic addiction to steroids and exercise.

Before creating the Commission of Defense and National Security, which Colonel Alejandro Castro Espín directs today, the Direction of Personal Security was the invisible apparatus with the most power on the island. Under this nomenclature, like the current “Commission,” ministries, institutions and all the MININT (Ministry of the Interior) divisions were subordinated.

“After a long period of stress, and multiple disagreements, Francis suffered a cerebral stroke. He was admitted to the hospital but now is at home,” said a family member of the dismissed General.

The DGSP, intended to protect the force of the myth, the fiscal and moral integrity of Fidel Castro and the rest of the so-called leaders of the first level, has succeeded in amassing more cash than some armies.

The DGSP’s empire

The DSP relies on a section of the transport police in order to review the fastest road or route for moving the leader. It has a film group, with experts in the art of photography, where they touch up the images of the “untouchables.” Another section is dedicated to documentation and migration matters and also functions as a trip coordinator; an anti-attack brigade consists of snipers and experts in every type of explosive; and a medical department, in addition to having a clinic for everything, has a fixed allocation of doctors, nurses, radiologists, physical therapists, laboratory technicians and other health workers.

They have a division of technology and telephone, workshops, diving masters, gymnasiums, coordinators; a very effective counterintelligence service that, in coordination with other State agencies, looks for, manages and controls all the information of that brotherhood, the family circles and friendships; a department of international relations that coordinates with other secret services the visits to Cuba of people of interest and personalities (friends or not), whether they are presidents, governors, heads of State, members of Congress, religious leaders, etc.; a purchasing group in charge of pleasing even the most bizarre tastes; a department that checks the news that should or should not be released about the Cuban leaders; and a unit to contract service staff (maids) who later work in the houses of those chosen.

With this new appointment, Raúl Castro, in addition to putting his grandson in a key post, captures a vital space reserved uniquely to Fidel, to control even the most insignificant thing, like the ruling class’s privacy in their homes. This method can have a possible boomerang effect, because it also assures the rejection from a good part of a strategic force that, older and in the military, were always faithful to General Francis.

All the body guards of this prestigious group belong to the DSP. Their work consists of taking care of them, protecting them and satisfying them even in their most quirky desires, in addition to spying, recruiting and blackmailing, in order to maintain, at any price, the “moral purity” of the Cuban politicians. This convoy is in charge of avoiding any type of problem of the leader and his closest family. And when I say “any,” it’s any, from the most absurd up to the most complex, whether it’s financial, political or legal.

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MORE BAD NEWS FOR NEW IDEAS IN CUBA: EUSEBIO LEAL SIDELINED

BY PAUL HARE

In Cuba Today, August 29, 2016

Original Essay: BAD NEWS FOR NEW IDEAS IN CUBA z111

Havana historian Eusebio Leal escorts U.S. Secretary of State John Kerry around Old Havana during a tour of the city last year. Ismael Francisco AP

Very few without Castro in their name have survived in the leadership of the Cuban Revolution as long as Eusebio Leal. And he didn’t do it by the conventional means of silence and obedience. He brought loyalty but also ideas to the Castros. Now the military-run business empire has asserted itself in Old Havana as elsewhere and Leal appears to have been outmaneuvered.

Uniquely among Cuban leaders Leal has cared about other things beyond preserving the Castro Revolution. He has been as fascinated by Cuba’s past as its future. He has received numerous overseas cultural awards but his stature in Cuba has been that he thought differently.

In 2002 the British embassy in Havana staged a two-month-long series of events to commemorate 100 years of diplomatic relations between Cuba and the United Kingdom. We were told it was the largest such festival by an overseas country ever held in Cuba. Leal was our indispensable ally for venues, organization, contacts and vision. At times the Revolution’s agenda surfaced and he negotiated hard. But his heart was in the history of both our countries. Leal even created a garden in Old Havana in memory of Princess Diana. And as a historian he loved the story of the British invasion of Havana in 1762.

The military conglomerate GAESA will now assume business control over Leal’s beloved Old Havana project. This has been a labor of love and ingenuity. But it has also depended on his versatile role at the heart of revolutionary politics. He proved a man of taste, of determination but also shone as a contemporary entrepreneur in a Cuba which despises individualism.

His versatility served him well. A teenager at the time of the Revolution, he chose to prove that innovation and a love of past cultures and elegance could coexist with the new era. He admired Fidel, a fellow intellectual, and — not accidentally — he was chosen by the official Cuban media to eulogize his old friend again on his 90th birthday. Typically, the Revolution was extracting a declaration of loyalty from a man who was feeling pretty disgruntled.

Times are changing in Cuba and the undermining of Leal’s control has wider implications.

Times are changing in Cuba and the undermining of Leal’s control has wider implications. He may not be a household name outside Cuba and he may be in failing health. But his project showed he knew the Castros would never allow private sector growth to restore the largest area of Spanish colonial architecture in the Western Hemisphere.

His only chance was to harness funds from tourist visitors and foreign investors. There is still much to do but the current rush of tourists to Cuba owes much to achievement.

Leal’s fate is nothing new. Set in the 57-year context of the Cuban Revolution, many able and loyal leaders have been discarded. Felipe Pérez Roque, Carlos Lage and Roberto Robaina are recent examples. But Leal had survived and appeared to be growing in stature with Raúl. His walking tour of Old Havana with Obama received worldwide publicity.

Leal’s bonding with the U.S. president may have irked the Castros. The disintegration of Venezuela and loss of subsidies under Nicolás Maduro gave the military companies the opening they needed to swoop for Old Havana. Now, effectively Raúl Castro’s son-in-law will rule the roost and U.S.-operated cruise ships will soon be occupying many berths in the Old Havana harbor.

But perhaps the saddest lesson from Leal’s marginalization is the signal it sends to Cuban innovators and foreign investors. The restoration of the Revolution is still more important than the architectural jewels of past eras. Almost at the same time as Leal’s demise, a far less visionary but unquestioning loyalist, Ricardo Cabrisas, was promoted. These are indeed depressing times for Cubans hoping for some new ideas and less of the same.

Z11111Dr. Eusebio Leal Spengler, Historiador de La Habana

Paul W. Hare is a former British ambassador to Cuba and currently senior lecturer at the Frederick S. Pardee School of Global Studies at Boston University

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Cuba’s Reward for the Dutiful: Gated Housing

 By DAMIEN CAVE FEB. 11, 2014; New York Times

Original Here: Cuba’s Reward

HAVANA — In the splendid neighborhoods of this dilapidated city, old mansions are being upgraded with imported tile. Businessmen go out for sushi and drive home in plush Audis. Now, hoping to keep up, the government is erecting something special for its own: a housing development called Project Granma, featuring hundreds of comfortable apartments in a gated complex set to have its own movie theater and schools.

“Twenty years ago, what we earned was a good salary,” said Roberto Rodríguez, 51, a longtime Interior Ministry official among the first to move in. “But the world has changed.”

Cuba is in transition. The economic overhauls of the past few years have rattled the established order of class and status, enabling Cubans with small businesses or access to foreign capital to rise above many dutiful Communists. As these new paths to prestige expand, challenging the old system of rewards for obedience, President Raúl Castro is redoubling efforts to elevate the faithful and maintain their loyalty — now and after the Castros are gone.

Continue reading: Cuba’s Reward for the Dutiful, Gated Housing

aa Apartments at a new housing development in Havana called Project Granma are for loyal Communists, families tied to the military and the interior ministry. Todd Heisler/The New York Times

 

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