Tag Archives: Tourism

‘NOW IT WILL ONLY GET WORSE’: CUBA GRAPPLES WITH IMPACT OF UKRAINE WAR

Posted on May 17, 2022 by Arch Ritter

May 17, 2022,  Marc Frank in Havana

Cuba Abstains re Russion Invasion of Ukraine

Russia’s war in Ukraine has created fresh problems for its Caribbean ally Cuba, already shaken by street protests and facing severe financial stress amid tighter US sanctions and a pandemic-induced collapse in tourism.

Cubans have contended with chronic shortages of food, medicine and other basic goods for more than two years, owing to the country’s heavy dependency on imports and lack of dollars to pay. Now, there are fuel shortages, more blackouts and less public transport as the island’s communist government battles to secure costly petrol and diesel supplies.

 “It’s the war. We’re already screwed and now it will only get worse,” said Antonio Fernández as he waited at a petrol station in the Playa area of Havana, the capital, to fill up his battered Chevrolet, which doubles as a taxi.

Russia was originally supposed to be guest of honour at this month’s international tourism fair in the beach resort of Varadero until the closing of western air space to punish Moscow over its invasion made flights to Cuba prohibitively expensive. Thousands of Russian tourist bookings were lost. Tourism minister Juan Carlos García Granda said Cuba was working with Russian operators to see what could be done. “We want to rescue that market, which was the main provider during the pandemic,” he said this week.

Tourism is a mainstay of Cuba’s economy, but just 575,000 visitors arrived in 2021, compared with more than 4mn before coronavirus struck. A quarter of last year’s arrivals were from Russia. Cuba had hoped for 2.5mn tourists this year but the loss of its biggest market makes that a tall order. Russian tourists queue at Juan Gualberto Gomez airport in Varadero. Tourism is a linchpin of Cuba’s economy but visitor numbers have slumped © Yamil Lage/AFP via Getty Images

The worsening situation has fuelled an immigration crisis at the US-Mexico border, with about 100,000 Cubans crossing since October last year. That number is already greater than the number that fled in 1994, the last surge of Cuban migration, and is approaching the 1981 peak. The US has accused Havana of using migration as a safety valve to limit discontent in Cuba.

On the island, many foreign suppliers and investment partners are demanding cash on delivery having not been paid for months. Imports are down 40 per cent since 2019. The director of one Cuban company said his business was “already suffering from cuts in our monthly electricity allocation and last month our diesel was reduced to almost nothing”.

The Ukraine war threatens to torpedo any recovery in Cuba following a 9 per cent fall in gross domestic product in 2020-21. The country suffers triple-digit inflation, caused in part by a devaluation of the peso and demand for scarce goods. Even after the devaluation, the dollar still fetches four times the official rate on the black market.

Various western businessmen say payment problems in Cuba have worsened since the Ukraine invasion as the government struggles with high commodity and shipping costs. Some European traders were being paid via a Russian bank, said one trader, adding that this had now stopped.

“Ministries are going to all joint ventures asking what the minimum is they need to stay open,” said one foreign investor, adding that his Cuban partner had contributed nothing for months.

Economy minister Alejandro Gil admitted recent events were “greatly affecting economic activities”, citing high fuel prices as an example.

Pavel Vidal, a former Cuban central bank economist now at Colombia’s Pontificia Universidad Javeriana Cali, said sanctions against Moscow were weakening Russia’s ability to support Havana and would “add more problems to a balance of payments that has been in crisis for several years”.

 Moscow has sent several cargoes of food and humanitarian aid this year and did so in 2021, although trade and investment remain only a fraction of the levels in Soviet times. Russian president Vladimir Putin and his Cuban counterpart Miguel Díaz-Canel agreed during a phone call in January to deepen “strategic co-operation”, but past promises of Russian investment on the island have been slow to materialise.

The Ukraine war has been diplomatically awkward for Cuba, with its government blaming the conflict on the US and Nato while also calling for the respect of international borders.  Paul Hare, former UK ambassador to Havana, said Cuba, like other Russia- aligned countries, had been embarrassed by the invasion, noting how the island’s government had wanted to deepen relations with the EU. “That perhaps explains why Cuba didn’t vote against the UN General Assembly on March 2 condemning the Russian invasion but abstained,” he added.

Hare, now a senior lecturer at Boston University’s Pardee School of Global Studies, said the war had forced Cuba to pick the wrong side in what the EU considered a strategic threat. Relations with Brussels were already strained because of the draconian prison sentences imposed on hundreds of participants in last year’s anti-government protests.   “Cuba will be seen as complicit in Putin’s attempt to redraw the map of Europe and upend the world order,” he said.

Hal Klepak, a Canadian military historian who has written two books on Cuba, said the island’s armed forces remained heavily dependent on old Soviet equipment and Russian support. The first had been discredited in the Ukraine war and the second was now in doubt because of the invasion’s cost.

 Despite the problems, political change in Cuba 63 years after the revolution that brought the Castro brothers to power seems unlikely.  “Emigration serves as a safety valve for discontent,” said Bert Hoffman, a Cuba expert at the German Institute of Global and Area Studies. “As long as there are no signs of major elite splits then regime continuity is the most likely scenario.”

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CUBA RATIFIES BAN ON PRIVATE TOURIST GUIDES & AGENCIES

Posted on January 15, 2022 by Arch Ritter

January 14, 2022

By Ely Justiniani Perez (El Toque)

HAVANA TIMES – Minister of Labor and Social Security, Marta Elena Feito Cabrera, ratified the ban on practicing as a tour guide in the private sector. A letter dated December 28, 2021, was delivered this week to the six representatives of a large group of tour guides who are calling for their activity to be granted legal status as self-employment. So far they are out of luck.

The letter rules that travel agencies and tour operators “are associated with tourism products developed and commercialized by Cuba’s state tourism business system and, according to the Ministry of Tourism’s policy, these cannot be commercialized by natural persons, nor are they able to work as part of private micro, small and medium-sized enterprises, cooperatives or as self-employed.”

This negative response comes after almost a year since over a thousand persons linked to the sector called for this activity to be legalized. They organized and sent petitions to the corresponding ministries and even engaged in conversations with officials from these institutions. Here is a summary of this process.

Driver, not a Tour Guide

TIMELINE of a NO

February 10, 2021 the Ministry of Labor and Social Security issued a list of 124 economic activities that banned in Cuba’s private sector; including tour operator services and travel agencies. This led to a heated debate from people linked to tourism services.

In the following weeks, dozens of people linked to the sector began to mobilize and send letters to the corresponding bodies. They also shared an online petition for the legalization of private travel agencies and the document was signed by over 1500 people.

May 20, 2021 In response, the Ministry of Labor and Social Security wrote a written response to one of its signatories saying that “with the new Social/Economic Strategy to push the national economy in the interest of encouraging local development and production linkages between the public sector and private forms of management, the Ministry of Labor and Social Security, alongside the Ministry of Tourism, are analyzing whether to allow these activities and others relating to the tourism sector.”

June 7, 2021 the Cuban Republic’s Official Gazette published Resolution 132/21 by the Ministry of Tourism (MINTUR), a new series of regulations for “national travel agencies”.

While the regulations don’t explicitly state who can create these agencies; it does recognize that natural Cuban persons (including the self-employed) can be “providers of tour services” that offer “the sale of these in groups, programs, circuits, excursions or other tourist services” via national travel agencies. It doesn’t explain how this relationship would work; but the lack of clarity in these regulations was also a spark of hope for the more optimistic.

August 19, 2021 To many people’s disappointment, the activity of travel agencies and tour operators reappeared on the banned list again within a new series of decrees and resolutions that regulate private sector enterprises (including MSMEs, cooperatives and self-employment).

September 22, 2021 Faced with continuous complaints, officials from the Ministry of Tourism and the Ministry of Labor and Social Security agree to meet with six representatives from the Facebook group Guías Turísticos por su legalización como TCP (Tour Guides wanting legalization as the Self-Employed), which had over 800 members at the time (today, there are 1100). 

At this meeting, MINTUR asked the guides to hand in written project proposals so they can “better understand how far they want to go so they can identify the red-tape that the activity “tour guide” would face as self-employment, to legislate and find a solution to this red-tape and giving them wide-ranging and unrestricted participation,” according to a summary of the meeting that was posted by the group’s members. 

January 7, 2022 Group representatives from Guías Turísticos por su legalización como TCP  who took part in the meeting with MINTUR and MTSS receive a letter from Minister Feito, who ratified the ban on the practice of tour guides and travel agencies, both as self-employment activities, as well as MSMEs and cooperatives.

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CUBAN ECONOMY IN 2022

Posted on January 4, 2022 by Arch Ritter

It is essential to deepen the reforms where reality has shown that what has been done is not enough. Delaying that deepening is not healthy, as we know.

Juan Triana Cordoví

ON CUBA Newws, December 29 2021

Original Article: Cuban Economy in 2022

The good news that the decline in the national economy has stopped thanks to the good performance of the second and third quarters of this year, is doubly good because in general and due to the seasonal nature of our economy the first and the last quarter of each year are the busiest. So in 2021, that performance has changed.

It is also good news that a growth of 4% is planned for 2022, something that will require a significant effort if we take into account that the recovery conditions of the international economy are still far from reaching the years preceding COVID-19; that world inflation, and especially in the United States, seems to be turning into a big headache; and that world trade will continue to suffer from excessively expensive freight, a shortage of containers and high prices for them; foreign investment will continue to have a weak recovery and tourism flows on a world level will still be far from what they were three years ago.

Global inflows of FDI, forecast for 2021-2022. UNCTAD

Macroeconomic stability

Growth is much more than a goal, a slogan or an exhortation, and having done a good planning exercise is not enough. It is necessary to achieve a minimum of macroeconomic stability that reduces uncertainty for all economic agents, that guarantees that the rules of the game will be followed, that discretion will have adequate limits, that the adjustment will produce the necessary changes at the microeconomic level to transform the business system, clean it of inefficient enterprises — because not all those that are in losses are — and that the allocation of resources is guided by efficiency criteria. Efficiency and productivity must be rewarded, and the costs of this adjustment must be cushioned with adequate policies. Condemning efficient enterprises to losses is not the best decision in a country that needs to purge its production system.

Inflation, what to do?

Much has been written about inflation in Cuba this year. Today it is the factor that generates more instability, uncertainty, a reduction in the purchasing power of “reorganized” wages and, logically, social unrest. At least we economists know that speculation is not its cause, in the same way that we know that appealing to the good faith of sellers will not solve, even momentarily, this scourge.

Three exchange rates instead of one, as the design promised, the reincarnation of the CUC in the freely convertible currencies whose access is more restrictive and a passive monetary policy are among its monetary causes. If reality surpassed the design, then the design must be adapted to this new reality.

The other cause is historical, secular and structural, the insufficient supply that has accompanied us since the early 1960s, due to the weak production system and restrictions to import, especially as of the 1990s. Generating a significant increase in supply keeping in mind a speedy recovery of the production system does not seem achievable (500 state companies in losses, and 67% of cooperatives in an “unfavorable” situation indicate the opposite). Production, even in those economies that function with high dynamism, lags behind in relation to demand, it is less elastic in the face of a variation in income. It will not be there where in the short term prices can be dealt with. Improperly regulating them produces worse effects, it has also been proven. The other component of the supply remains, imports, also limited in the state sector by the availability of foreign exchange. But there are reservations and they involve sharing the consumer market and encouraging non-state agents — national and non-national — to have a greater participation and share the risks.

Consolidating and deepening the reforms

In the annual seminar of the Center for the Study of the Cuban Economy, my colleague Antonio Romero synthesized the characteristics of the environment we will have for 2022, taking into account the performance of recent years:

  1. Deep drop in global economic activity in 2020. Record for some regions/countries.
  2. Strong recovery process since late 2020/early 2021 in most regions/countries.
  3. The per capita income levels reached in December 2019 will not be exceeded until 2023.
  4. Asymmetric recovery, and with great risks/uncertainties:
  5. a) Recurrence of outbreaks/peaks of the pandemic
  6. b) High and rising inflation for some sectors/markets
  7. c) Dangers of the process of reducing monetary stimuli (liquidity) by the main central banks
  8.  Tensions in the international energy market
  9.  Problems with some supply chains/logistics internationally
  10. Growing conflict between major global actors (USA, China, EU and Russia).

Inflation in the United States and Mr. Biden’s “forgetting” his pre-election promises are the other two factors that complicate the national situation.

And at the same time he pointed out the opportunities that this same evolution offered to our country:

  1. -Increase in demand for goods and services in foreign partners,
  2. -Increase in the price of some basic export products (sugar and nickel) and
  3. -Revaluation of the health industry (especially the strategic importance of vaccines).

Sugar prices have gone up by 38% from January to October 2021. It is true that our restriction is on production. Save the sugarcane industry! The phrase deserves more than one book. Saving the sugar industry is not recovering it, it is making it new, from the furrow to the shipping terminal. From 2016 to 2020, this industry received investments of 1.035 billion dollars, less than the trade sector (1.563 billion and not to mention 15.541 billion in the real estate sector). Year after year we witness a new unfulfilled plan to recover the sugar industry, hopefully, this time it will be different.

Nickel prices also offer an opportunity (37% increase in their prices from January to October) and world demand seems to maintain a certain dynamism. Our limit is once again in the productive capacity. Mining was allocated 1.413 billion in the same period and not everything was for nickel mining.

Undoubtedly the greatest opportunity could be in the healthcare and pharmaceutical industries. Despite the complicit silence of some international institutions regarding Cuban vaccines, it is indisputable that today it is our greatest strength in the industrial sector.

The recovery of tourist flows on a global scale will depend on the performance of the pandemic, which has once again shown its face in the omicron variant and complicates our source markets again.

World foreign investment flows will not reach the dynamics of before 2019. Competing for scarce flows with other markets is a difficult task. It is true that something has been announced in relation to FDI, but it seems that time does not count and the necessary reform of requirements and procedures did not arrive in 2021. It is not enough to recognize that “the little progress is not attributable only to the difficulties generated by the blockade and, in the last two years, by the international crisis derived from the COVID-19 pandemic, but also internal factors.” And if we know which ones, then why don’t we just eliminate them?

Because there are external factors on which there is no way to influence to achieve favorable changes to our economy, because there are structural failures that will not be resolved in the short term; consolidating the reforms will be decisive. It is a difficult exercise that requires many means, from the timely and adequate coordination of actions and organizations to the competence of the people who work in it; also agreeing to pay unavoidable costs until the resizing of the state business sector is promoted, not only in terms of its size, but also in the way it operates in the economy. This exhortation to achieve greater autonomy must be made really effective. And also that other that demands a greater relationship with the private and cooperative business sector. More than a thousand SMEs in three months, in the worst conditions in which an enterprise can be born, is enough to understand how dynamic this sector can be. More effective support, better incentives — especially tax incentives —, less prejudice and greater spaces for action are still necessary.

Today there are more than seven hundred local development projects. Local governments should understand that having more local development projects and promoting a greater number of small and medium-sized enterprises is decisive for the prosperity of their municipalities. Thinking of the local as the small, as the complementary, does not seem to be the best option. “The local is not the utopia of a development from the small, but the construction of capacities from the territory to promote sustainable development at the municipal, regional, national and international level”1 It is necessary to take a look at the curb of the well and look from there inward and outward.

It is essential to deepen the reforms where reality has shown that what has been done is not enough. Delaying that deepening is not healthy, as we know.

If a 4% growth is achieved, we will still be very far from the growth dynamics we need, far even from what was achieved in a year like 2019 and we all know that even in that year our production was not able to adequately satisfy that part of the demand that depended on it. It will be good to grow and it will be better if all Cubans manage to perceive it.

Note:

1 Carrizo Luis and Gallicchio Enrique (2006): “Desarrollo local y gobernanza. Enfoques transdisciplinarios. Investigación y políticas para el desarrollo en América Latina,” Uruguay, Latin American Center for Human Economy, CLAEH.

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Nuevo Libro: APUNTES SOBRE ECONOMÍA CUBANAY COVID-19

Posted on March 20, 2021 by Arch Ritter

CENTRO DE ESTUDIOS DE LA ECONOMÍA CUBANA, Universidad de la Habana.

COMPILADORES: HUMBERTO BLANCO ROSALES y BETSY ANAYA CRUZ

Febrero de 2021

ISBN: 978-9945-9278-3-2

Complete Text of Book

INDICE:

A modo de introducción: otra pelea cubana contra los demonios/ Humberto Blanco Rosales y Mayra Tejuca Martínez

Reflexiones en torno a la nueva estrategia para el desarrollo económico y social de Cuba/ Betsy Anaya Cruz

Implementación de la nueva estrategia económica y social: una mirada desde la gestión/ Humberto Blanco Rosales

IED en tiempos de COVID-19: ¿qué podemos esperar?/ Juan Triana Cordoví

Cuba: apuntes sobre comercio exterior y COVID-19/ Ricardo Torres Pérez

Alimentación en Cuba: impactos de la COVID-19/ Anicia García Álvarez

El turismo mundial y en Cuba pospandemia/ Miguel Alejandro Figueras

Teletrabajo en tiempos de COVID-19: oportunidades y desafíos para Cuba/ Dayma Echevarría León

Trabajo por cuenta propia. Pre y posCOVID-19/ Ileana Díaz Fernández

La banca comercial tras la COVID-19/ Francisco Fidel Borrás Atiénzar y Oscar Luis Hung Pentón

De los autores

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CUBA’S ECONOMIC CRISIS IS SPURRING MUCH-NEEDED ACTION ON REFORMS

Posted on November 17, 2020 by Arch Ritter

William M. LeoGrande, Tuesday, Nov. 17, 2020

Complete Article:  ACTION ON REFORMS

Cuba’s economy was already struggling before the coronavirus pandemic, due to persistently poor domestic productivity, declining oil shipments from Venezuela and the ratcheting up of U.S. sanctions. But now, the closure of the tourist sector due to COVID-19 has thrown Cuba into a full-fledged recession, deeper than anything since the economic crisis of the 1990s that followed the collapse of the Soviet Union—what Cubans know as the “Special Period.”

Perhaps paradoxically, the downturn also appears to have broken a logjam of disagreement among Cuba’s senior leaders and accelerated the implementation of economic reforms. Reforms entail risks, President Miguel Diaz-Canel told the Council of Ministers this summer, but “the worst risk would be in not changing and in losing popular support.”

In 2011, the Cuban Communist Party approved a new economic policy to promote growth by giving freer rein to market forces; requiring unproductive state-owned enterprises to make a profit, even if it means laying off workers; promoting small private businesses; and attracting foreign direct investment. Over the ensuing years, however, implementation slowed to a glacial pace, at least in part because of resistance from some segments of the Cuban political elite who stood to lose from the changes. With the economy buoyed by cheap oil from Venezuela and a booming tourist sector, the need for reform was less urgent.

See the source image

Still, economic growth lagged. GDP increased at an average rate of just 2.1 percent from 2011 to 2019, and only 1.3 percent since 2016. The anemic growth in recent years reflects those declining oil shipments from Venezuela, which Caracas provides in exchange for medical services from Cuban doctors and technicians. In 2016, then-President Raul Castro had to declare an energy emergency and begin rationing fuel to state-owned enterprises.

The one bright spot in the domestic economy has been the spectacular growth of Cuba’s tourist sector in the past three decades. From 1991 to 2018, the number of foreign visitors increased more than 11-fold, from just over 400,000 to 4.7 million. The tourist sector got another big boost in 2014, when then-President Barack Obama agreed with Castro to begin normalizing relations, and the Obama administration eliminated most restrictions on U.S. travel. The number of non-Cuban American U.S. visitors jumped six-fold, from 92,325 in 2014 to a peak of 637,907 in 2018. Including Cuban Americans, U.S. visitors in 2018 comprised about a quarter of all foreign visitors to the island.

But President Donald Trump immediately pledged to “cancel” Obama’s opening to Cuba when he took office in 2017. The Trump administration launched a concerted “maximum pressure” campaign, designed to systematically cut off Cuba’s principal sources of foreign currency. To deter foreign investors, Trump activated Title III of the 1996 Cuban Liberty and Democratic Solidarity Act last year, enabling U.S. nationals who lost property after the 1959 revolution, including Cuban Americans, to sue Cuban, U.S. or foreign companies in U.S. federal court for “trafficking” in their confiscated property—that is, making beneficial use of it.

Faithfully executed, the reforms could boost productivity significantly over the next year or two, but shorter-term relief for Cuba will depend on circumstances beyond its control.

The administration also targeted Cuba’s energy supply by imposing sanctions on companies shipping Venezuelan oil to Cuba, aggravating fuel shortages. The State Department pressured other countries to end their partnerships with Cuba’s international medical assistance programs—a major source of foreign exchange earnings for Havana—and conservative governments in Brazil, Ecuador, Bolivia and El Salvador quickly obliged. The Brazilian program, by far the largest, involved over 11,000 medical personnel, generating $250 million in annual revenue for Cuba.

But Trump’s most serious blows have focused on travel and remittances. The administration eliminated the people-to-people category of legal travel, thereby blocking the majority of non-Cuban American travelers; severed commercial and charter air links to all Cubans cities except Havana; and banned U.S. cruise ships, which carried some 800,000 people to Cuba in 2018, from docking there. This campaign led to a 20 percent drop in the number of foreign visitors to the island in the early months of 2020 before the onset of COVID-19.

Remittances, which Obama removed limits on in 2009, were capped at $1,000 per quarter. Then, just weeks before the presidential election, Trump announced new rules prohibiting Cuban Americans from sending remittances through Cuban money transfer companies run by the armed forces, which includes almost all of them. The restrictions, which are set to go into effect later this month, would produce deep suffering among the roughly 60 percent of Cubans who rely on $3.6 billion in cash remittances annually for sustenance.

Then came the pandemic. Although Cuba has had considerable success containing COVID-19, by virtue of a health care system premised on prevention and a disaster response apparatus second to none, the impact on Cuba’s economy has been catastrophic. In March, Cuba closed the island to all foreign visitors and has only gradually begun to reopen some of the more remote tourist resorts in the Cuban Keys. The closure has cost Cuba some $3 billion in lost revenue; estimates are that GDP has contracted by 8 percent this year. The shortages of basic commodities, including food and medicine, are severe due to the shortage of foreign exchange reserves, and Cuba has been unable to meet its debt service obligations.

The severity of the crisis prompted the Cuban government to finally act on potentially significant economic reforms it previously promised, but which were delayed due to disagreements within the leadership. Perhaps most significantly, the government has indicated that it will soon eliminate the dual currency and exchange rate system—which includes Cuban pesos for domestic use and convertible pesos that are roughly pegged to the dollar. The Cuban pesos have a 25:1 exchange rate with the convertible peso in the retail sector, and 1:1 rate between enterprises—a distortion of value that stimulates imports while discouraging exports and aggravating the country’s foreign exchange crisis.

In July, the government announced that private and cooperative businesses would be allowed to hold convertible foreign currency bank accounts and import and export directly, rather than having to go through government agencies. To prioritize food security, the government reduced price and administrative controls on private and cooperative farms. To generate and capture more remittances, it lifted the 10 percent tax on U.S. dollars entering the country and opened dozens of stores that accept payment in convertible currency.

Faithfully executed, these reforms could boost productivity significantly over the next year or two, but shorter-term relief for Cuba will depend on circumstances beyond its control: the speed at which the pandemic subsides, allowing the tourist sector to reopen; and the policies of the incoming U.S. president. Cubans celebrated openly when Joe Biden won this month’s election, and the government has signaled its willingness to improve relations. During the election campaign, Biden promised to reverse Trump’s sanctions that disrupted family ties and imposed economic hardship on the Cuban people, which could mean a reopening of travel and elimination of Trump’s restrictions on remittances. That would measurably improve the standard of living for the Cuban people, but sustainable development for the long run depends on Cuba completing the reforms necessary to build a productive economy.

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NO MORE RUM OR TOBACCO, NOR HOTEL STAYS: TRUMP IMPOSES NEW SANCTIONS ON CUBA

Posted on September 24, 2020 by Arch Ritter

BY NORA GÁMEZ TORRES

Nuevo Herald  News Sanctions, SEPTEMBER 23, 2020 05:22 PM

Trump honors Cuban-American veterans who served in 1961 Bay of Pigs invasion - U.S. - Stripes

Trump with Bay of Pigs Veterans

Americans traveling to Cuba will not be able to buy rum or tobacco as souvenirs, nor will they be able to stay in government hotels, according to new restrictions announced by President Donald Trump on Wednesday.

“Today as part of our continuing fight against communist oppression, I am announcing that the Treasury Department will prohibit U.S. travelers from staying at properties owned by the Cuban government,” Trump said in a speech to honor Bay of Pigs veterans at the White House. “We are also further restricting the importation of Cuban alcohol and Cuban tobacco. These actions will ensure U.S. dollars do not fund the Cuban regime.”

The Treasury Department modified the embargo regulations on Cuba to prohibit imports of rum and tobacco, as well as lodging in hotels or properties controlled by the Cuban government, government officials and the Communist Party, or their close relatives.

The properties appear in a new list created by the Department of State. Travel and tourism companies subject to U.S. jurisdiction will not be able to make reservations at these properties.

The list names 433 hotels and properties, including some “casas particulares” (private rentals) that the State Department determined were not independent of the government, said Carrie Filipetti, deputy assistant secretary of state for Western Hemisphere affairs, in a call with reporters on Wednesday.

Top of Form

Bottom of Form

Among the private rentals included is Casa Vida Luxury Holidays, a property advertised on Airbnb that, according to media reports, is linked to Vilma Rodríguez, granddaughter of Communist Party head and former president Raúl Castro.

The measures will deal a harsh blow to Cuba’s tourism industry because the government owns all the island’s hotels. Many travel companies have operations in the United States and will therefore be affected by the measure. Previously, the administration had banned accommodation in hotels run by military companies, but now the prohibition extends to all state-run properties.

Thousands of Cuban Americans who travel to the island every year usually take their families on vacation at these hotels.

“The prohibition on the use of hotels owned by the government of Cuba will also result in fewer airline flights from the United States to Cuba,” said John Kavulich, the president of the U.S.-Cuba Trade and Economic Council.

Filipetti said the restrictions aim at denying funds to the government, which dominates the hospitality industry as well as tobacco and rum production. She added that the policy intends to benefit owners of private bed and breakfasts.

“The Cuban government profits from properties in the hospitality industry owned or controlled by the Cuban government … all at the expense of the Cuban people, who continue to face repression at the hands of the regime,” said Secretary of State Mike Pompeo in a statement. “Authorized travelers should instead stay in private accommodations, or casas particulares, owned and operated by legitimately independent entrepreneurs.”

The Treasury Department also eliminated a general authorization policy for the participation or organization of conferences, seminars, exhibitions and sporting events. Citizens, residents and companies subject to U.S. law must apply for a specific authorization or license for these activities.

Organizations in favor of more engagement with Cuba quickly pointed out that further restricting travel to Cuba could also hurt the private sector the administration officials say the U.S. wants to lift up.

“To continue limiting American citizens to travel to Cuba is to continue to put pressure on Cuba’s growing private sector, which is already hurting from the domestic economic crisis, the impact of U.S. policies, and the effects of the COVID-19 pandemic,” said María José Espinosa, interim president of Engage Cuba.

The new rules will go into effect Thursday, when they will be officially published in the Federal Register.

MORE SANCTIONS TO CUBA

Cuban leader Miguel Díaz-Canel blasted on Twitter the U.S. “empire” and the new measures “that violate the rights of Cubans and Americans. Its cruel and criminal policy will be defeated by our people, who will never renounce their sovereignty.”

In the last two years, the administration has intensified its “maximum pressure” campaign against the Cuban government, citing human rights violations and its support of Nicolás Maduro in Venezuela.

In June, the Trump administration included Fincimex, a company controlled by the military conglomerate GAESA, on a list of entities linked to the Cuban military. Persons subject to U.S. jurisdiction are prohibited from direct financial transactions with these entities.

The United States also suspended all charter and commercial flights to Cuba, except for flights to Havana. It also limited per person remittances to $1,000 per quarter. And it has sanctioned companies involved in the shipments of Venezuelan oil to Cuba.

U.S. sanctions, the coronavirus pandemic, and the decline in Venezuela’s oil aid have plunged Cuba’s inefficient socialist economy into a deep crisis. The population suffers from a severe shortage of food, medicine and hygiene products, and although the government has promised some economic reforms, none appear to be immediate.

On Tuesday, Díaz-Canel complained to the United Nations General Assembly about the increase in the “aggressiveness of the U.S. blockade. … Not a week goes by without that government issuing statements against Cuba or imposing new restrictions.”

U.S. officials have rejected the Cuban government’s narrative and have pushed back on criticism that the sanctions may aggravate the situation of ordinary Cubans.

What the Cuban people are “going through, it’s a serious humanitarian concern. The embargo has specific provisions to allow Cuba to import food from the United States; it has exceptions for food and medical supplies,” said Mara Tekach, coordinator for Cuban affairs at the State Department in an interview with the Miami Herald on Wednesday. Citing Cuba’s long-standing inability to feed its population, Tekach added that “the regime is the one that ultimately is failing its people.“

The sanctions and the unrelenting attacks on socialism have secured President Trump the support of a significant portion of Cuban-American voters.

“The Obama-Biden administration made a weak, pathetic, one-sided deal with the Castro dictatorship that betrayed the Cuban people and enriched the communist regime,” Trump said in the White House speech. “Today, we reaffirm our ironclad solidarity with the Cuban people, and our eternal conviction that freedom will prevail over the sinister forces of communism.”

Filipetti denied that the timing of the announcement was linked to the upcoming presidential election, as critics of the administration have suggested.

“This announcement, just weeks before the presidential election, shows what the Trump Administration’s Cuba policy is really about,” said Collin Laverty, president of Cuba Educational Travel. “It’s about South Florida and it places absolutely no importance on the well-being of the Cuban people, democracy, human rights or advancing U.S. national interests in the region.”

Follow Nora Gámez Torres on Twitter: @ngameztorres

 

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ASCE (ASSOCIATION FOR THE STUDY OF THE CUBAN ECONOMY), A Selection of Papers from the 2018 Annual Conference

Posted on January 13, 2020 by Arch Ritter

The complete set of papers is here:  ASCE Conference Proceedings for 2018.

A complete set of all the papers from the annual ASCE conferences can be found here:  ASCE Conference Proceedings

Cuba: Los Retos Económicos del Gobierno de Miguel Díaz-Canel Omar Everleny Pérez Villanueva PDF version
Cuba 2018: Entre la Continuidad y la Oportunidad Dagoberto Valdés Hernández PDF version
Cuban Peso Unification: Managed Rate and Monetary Analysis Luis R. Luis PDF version
La Agricultura en Cuba: Transformaciones, Resultados y Retos Armando Nova González PDF version
Principal Elements of Agricultural Reforms in Transition Economies: Implications For Cuba? Mario A. González-Corzo PDF version
Cuba’s Economic Liberalization and The Perils to Security and Legality Vidal Romero PDF version
Growth and Policy-Induced Distortions in The Cuban Economy: an Econometric Approach Ernesto Hernández-Catá PDF version
Comparing The Quality of Education in Pre- and Post-Revolutionary Cuba Using U.S. Labor Market Outcomes Luis Locay and John Devereux PDF version
The Global Economy and Cuba: Stasis and Hard Choices Larry Catá Backer PDF version
Five Keys to Presidential Change in Cuba Arturo López-Levy and Rolf Otto Niederstrasser PDF version
Cuba’s Political and Economic Arteriosclerosis – It Is Not Just The Castros Gary H. Maybarduk PDF version
Cuban Tourism Industry in The Eye of The Storm Emilio Morales PDF version
Experiencias de Cuentapropistas Ted A. Henken PDF version
Cuban Demography and Economic Consequences Humberto Barreto PDF version
     
“The Revenge of The Jealous Bureaucrat”: A Critical Analysis of Cuba’s New Rules For Cuentapropistas Ted A. Henken PDF version

 

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LA ECONOMÍA CUBANA EN 2018: OTRO AÑO SIN COLAPSO Y SIN PROGRESO

Posted on December 17, 2018 by Arch Ritter

Por Pavel Vidal Alejandro, Diciembre de 2018.

Este año el crecimiento económico nuevamente quedará por debajo del plan oficial. Desde el tercer trimestre el gobierno cubano ajustó la meta de 2 por ciento a 1 por ciento, después de obtenerse un crecimiento de 1,1 por ciento en el primer semestre. Se sabía que este iba a ser un año complicado para sectores claves como el turismo y la industria azucarera, y para el sector exportador en general. Se sabía que este año el entorno económico iba a ser desfavorable y que iba a ser difícil encontrar impulsos al crecimiento debido a las secuelas que dejó el huracán Irma en la agricultura, a los problemas por los que sigue atravesando Venezuela (a pesar del aumento en el precio del petróleo), y debido al efecto de las medidas de la Administración Trump sobre el arribo de visitantes. A ello se le une una situación financiera nacional que todavía no se recompone y que obliga a mantener contraídas las importaciones.

Los últimos datos de la Oficina Nacional de Estadísticas e Información (ONEI) confirman la complicada situación por la que atraviesa el comercio exterior cubano, evidenciando que los shocks internacionales (la crisis venezolana y las nuevas restricciones en la política de Estados Unidos) y los atrasos en las deudas comerciales, tienen una alta responsabilidad en lo que sucede con el PIB. Las exportaciones de bienes y servicios presentaron un crecimiento nulo en 2017 (medidas a precios contantes), lo que lleva a acumular cuatro años sin aumento real de los ingresos externos. Ello exige ajustar las importaciones y limita la disponibilidad de insumos para el sector productivo. Las importaciones reales cayeron un 1,6 por ciento en 2017, en 2016 también habían caído (-10,6 por ciento) y en 2014 (-1,5 por ciento).

Probablemente a finales de diciembre se anuncie un dato oficial de crecimiento del PIB algo mayor que cero, que otra vez contrastará con una realidad que se sigue pareciendo más a una recesión. Los enormes problemas para cumplir los compromisos financieros con proveedores e inversionistas, la escasez de productos básicos, y la dinámica de los precios de los bienes de consumo, cada vez coinciden menos con las estadísticas oficiales del PIB y del Índice de Precios al Consumidor.

El crecimiento económico cubano se mantiene en una media de 1,7 por ciento en los últimos cinco años, según unos registros oficiales (que probablemente esconden una ligera recesión). Pero, así y todo, es meritorio ver cómo las autoridades cubanas han logrado mantener a flote una parte de la actividad productiva mientras el principal socio comercial (Venezuela) ya ha perdido la mitad de su PIB. Con la dependencia que aún mantiene Cuba de Venezuela para la exportación de servicios profesionales (médicos, principalmente) y para la importación de petróleo, sigue pareciendo increíble el resultado.

Ciertamente, esta es una capacidad que han desarrollado las autoridades económicas después de tres décadas de funcionamiento bajo restricciones financieras casi constantes. Las estructuras económicas monopólicas y controladas centralmente, las cadenas de suministros administradas por el Estado, los mercados racionados, y las regulaciones financieras y cambiarias se activan al máximo bajo el mando político en épocas de crisis, y se ponen en función de distribuir y en tratar de repartir prioritariamente los escasos ingresos.

Se debe reconocer que es un sistema que ha mostrado ser efectivo para manejar las crisis y evitar el colapso económico, como también ha sido “efectivo” en limitar la iniciativa privada, la innovación y el despegue de la productividad. Es un sistema que tiene el récord de mantener al país con las menores tasas de inversión de América Latina. Y así lleva casi 30 años ya el aparato productivo cubano: no colapsa del todo, pero tampoco hay progreso económico.

Dos amortiguadores del shock venezolano

 En estos últimos años la economía cubana ha logrado, además, encontrar otras dos vías para amortiguar el shock venezolano. En primer lugar, el impulso que alcanzó desde 2015 el arribo de turistas. Un crecimiento promedio de 16 por ciento por tres años ayudó a obtener otras fuentes de ingresos externos (aunque no alcanzó para hacer crecer el total de las exportaciones), y dinamizó al sector privado y a la inversión extranjera directa.

Por eso ha sido tan preocupante que en 2018 el sector turístico se haya desacelerado. Las restricciones de viaje para los ciudadanos estadounidenses y la mala publicidad que generan los supuestos “ataques sónicos”, han tenido un efecto prolongado en el mercado turístico cubano. Desde 2015 hasta 2017, el arribo de visitantes desde Estados Unidos (incluyendo cubanoamericanos) había venido creciendo a una tasa promedio anual de 44 por ciento y había duplicado su participación en el total de visitantes a la Isla (en 2017 llegó a representar un 22 por ciento del total de la demanda). Sin embargo, en el primer semestre de 2018 los visitantes desde Estados Unidos acumulaban una caída del 24 por ciento en comparación con igual período de 2017.

Se puede estimar que, de no ser por la nueva política estadounidense, Cuba podía haber llegado a la cifra de los 5,7 millones de visitantes en 2018, bastante por arriba de los 4,9 a los que se debe llegar este año. Así, el empeoramiento de las relaciones con Estados Unidos, ha implicado recibir alrededor de 785,000 turistas menos en 2018, lo que tiene un costo para la economía cubana de alrededor de US$557 millones, por concepto de ingresos no recibidos (ver Cuba Standard Economic Trend Report, 2018 tercer trimestre). Este es un impacto incluso mayor que el estimado de US$300 millones que se dejarían de recibir por la cancelación del programa médico cubano en Brasil.

Afortunadamente, la tendencia de los últimos datos mensuales de arribo de visitantes internacionales evidencia una significativa recuperación en la demanda por el mercado turístico cubano. Gracias a esta tendencia positiva, ya en el tercer trimestre de 2018 la cantidad de visitantes fue un 5 por ciento mayor que los recibidos en igual período de 2017. Tal resiliencia de la demanda por el mercado cubano es un excelente dato para la economía de la Isla, dado que el turismo será clave para la dinámica de 2019.

En segundo lugar, ha funcionado también como amortiguador la política fiscal expansiva. En 2017 el gasto de gobierno fue el componente de la demanda agregada que más creció a precios constantes: un 2,2 por ciento. Desde 2015 viene aumentando el gasto del presupuesto del Estado y el déficit fiscal como proporción del PIB. Después de años de austeridad fiscal, el gobierno echó manos del gasto fiscal para amortiguar los efectos de la crisis venezolana.

Para reducir los efectos inflacionarios de esta política fiscal expansiva, el Ministerio de Finanzas y Precios ha venido estrenando en grande los bonos públicos. Es decir, ya no se imprime dinero nuevo para financiar el gasto fiscal que no tiene respaldo en ingresos, sino que lo financian los bancos comerciales estatales al comprar los bonos públicos.

Tal política fiscal anticíclica ha amortiguado la caída del PIB, pero lo preocupante es que ha generado un hueco fiscal por encima de 8,000 millones de pesos en 2017 (8,6 por ciento del PIB) y de cerca de 12,000 millones de pesos para 2018 (alrededor de un 12 por ciento del PIB). El déficit fiscal en pesos corrientes es el histórico más alto y, en relación al PIB, es una proporción que no se veía desde la crisis de inicios de los años 90. No cabe duda de que la expansión fiscal ayuda al crecimiento del PIB en el corto plazo, pero sobre una burbuja financiera que se está acumulando en la forma de bonos públicos en manos de los bancos comerciales estatales.

Los cambios irrelevantes en el margen

 Y no se puede obviar la pérdida de dinamismo en las reformas estructurales, lo cual mantiene estancado el potencial de crecimiento de la economía. Es decir, hay factores cíclicos y coyunturales, pero también siguen lastrando el potencial de crecimiento tanto la dualidad monetaria y las ineficiencias del sector empresarial estatal, como las restricciones sobre la agricultura y al sector privado, todo lo que impide acumular más capital físico y hacer un uso intensivo de la tecnología y el capital humano.

El presidente Díaz-Canel, por el momento, se mantiene en la senda de las transformaciones graduales que no tocan la columna vertebral del sistema centralizado y el monopolio de la empresa estatal. Ello coincide con las expectativas de un Presidente que no llega al poder presentando una agenda propia, sino que fue seleccionado por la generación de los “históricos” para darle continuidad al programa definido durante el período de Raúl Castro.

Una manera simple de ilustrar la manera en que se vienen aplicando las reformas es la siguiente. Si hay que cambiar diez cosas para que funcione eficientemente un sector productivo, un mercado o un mecanismo económico, el gobierno cubano va a cambiar solo dos, y estas dos nunca van a ser las más importantes. Con ello, mantienen la imagen de reforma, minimizan los conflictos y divisiones políticas al interior del gobierno y el Partido, pero gastan tiempo y energía en producir transformaciones que no tienen la posibilidad de ofrecer resultados significativos, dado que no se han cambiado las otras ocho cosas que impiden el funcionamiento eficien Lo acabamos de ver este año cuando se deciden realizar modificaciones a la Ley 118 de la Inversión Extranjera con vistas a acelerar la llegada de capital extranjero, y para ello se establece que, en las propuestas de inversión, hay dos documentos que ya no son necesarios presentar al Ministerio de Comercio Exterior (MINCEX), y que ya no hay necesidad de presentar un estudio completo de factibilidad de la inversión, sino un estudio más sencillo de pre-factibilidad.

Sin embargo, las modificaciones no tocan, por ejemplo, el sistema de contratación de la fuerza de trabajo a través de empresas empleadoras estatales que operan con objetivos rentistas y dañan la competitividad, ni van dirigidas a potenciar la inversión con capital de los cubanos residentes en el exterior.

También se evidencia en las recientes medidas para evitar la evasión fiscal del sector privado, en las cuales se considera la obligación de tener una cuenta bancaria por parte de los negocios de mayores ingresos, pero no se atacan las principales fuentes de informalidad y del uso del efectivo, tales como la ausencia de un mercado mayorista, la no autorización para importar insumos, el poco uso de medios de pagos electrónicos y que los negocios no cuentan con personalidad jurídica.

En la agricultura también vimos este año otro ejemplo de medidas en el margen que no van a producir resultados significativos. Se decide ampliar los tiempos del usufructo y las extensiones máximas de tierra asignadas a los privados, pero no se desmonta el sistema centralizado de Acopio estatal, y los campesinos siguen sin contar con un mercado donde obtener los bienes de capital, la tecnología y los insumos suficientes.

El año 2019 tendrá como elementos positivos la recuperación del turismo, la reanudación de entrega de licencias a los privados, el aumento de la inversión extranjera a partir de los proyectos ya aprobados, y las múltiples oportunidades que se abren para generar nuevos servicios a partir de la conexión 3G a los teléfonos celulares.

Una de las mayores ilógicas de la reforma cubana es que solo abrió el sector privado a actividades de bajo valor agregado, teniendo Cuba un capital humano de calidad. Tal vez la conexión 3G sea un punto de inflexión para que esto cambie, y el sector privado pueda aportar más al progreso económico desde el conocimiento y la innovación. Pero para ello se requiere que la política pública se salga del margen y cree un marco regulatorio adecuado, no para restringir, sino para promover la expansión de una de las áreas de la llamada economía naranja de mayor dinamismo a nivel internacional.

Dr.  Pavel Vidal

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THE MAN WHO SAVED HAVANA: EUSEBIO LEAL

Posted on May 1, 2018 by Arch Ritter

AS ITS GREATEST OLD BUILDINGS WERE FALLING DOWN, A FEARLESS HISTORIAN NAMED EUSEBIO LEAL REMADE THE CITY INTO A STUNNING WORLD DESTINATION and WORLD HERITAGE SITE.

Smithsonian, May 2018.
Read more: EUSEBIO LEAL

On a sweltering morning in Old Havana, a courtly figure in a crisp gray guayabera shirt weaves through the Plaza de Armas, the city’s Spanish colonial heart, trying not to attract attention. Although none of the foreigners lolling beneath the banyan trees and royal palms recognize him, a ripple of excitement passes through the Cubans, who nudge each other, smile and stare. Perhaps only on this island obsessed with its operatic past could a historian become a celebrity on a par with a Clooney or DiCaprio. Eusebio Leal is the official historian of the city of Havana, a regal-sounding position that brings with it enormous influence and exposure—he starred for many years in his own TV show where he explored Old Havana’s streets—and he is as far from the cliché of the dusty, isolated academic as it is possible to get. In fact, Leal is credited with almost single-handedly bringing Old Havana from the brink of ruin to its current status as the most ravishing and vibrant architectural enclave in the Western Hemisphere.

Deftly dodging well-wishers, Leal ducks into the Historical Library, where some 50 female workers line up to kiss him on the cheek and offer flustered greetings. In his hectic round of duties, he has come to honor one of Cuba’s countless obscure intellectual champions—a certain Alfredo Zayas Méndez, who founded this archive 80 years ago, an exalted act in a nation with the highest level of education in Latin America. Standing before a plaque, Leal orates off the cuff for 45 minutes about the biblio-hero Zayas, a rhetorical tour de force that includes fond personal anecdotes, philosophical musings on “the importance of memory” and flirtatious exchanges that make the audience collapse into helpless laughter. He then takes questions, poses for snapshots, examines a restoration plan for the Havana Capitol—offering his expert opinion about work on the dome—before dashing off with his minder to a high-level government meeting.

The whirlwind visit leaves everyone a little dazed. At age 75, Leal shows no signs of slowing his notoriously hectic pace. For the last 50 years, almost as long as the Cuban revolution has lasted, his outsized personality has been inseparable from Old Havana itself. Working within the Communist system, he pioneered a capitalist network that would save the district’s architectural heritage at the same time as maintaining its community life so that it would not become a “living museum” like Venice or Old San Juan. A consummate politician, he combined a deft personal touch with the poorest residents while navigating the high corridors of government and hobnobbing with Fidel Castro. Although he has stepped back from direct power in the last couple of years following a serious illness, he is still regularly loaded with international honors, as both Cubans and foreigners—even Miami exiles—fall over themselves to pile him with praise.

“Eusebio Leal is a legendary figure in the preservation world,” says Joshua David, president of the World Monuments Fund in New York, who visited Havana for a workshop on architectural restoration in February 2017. “He pioneered innovative ways to fund restoration in Old Havana, which at the same time supported social programs like health clinics and old age homes.” “He’s an incredibly complex, brilliant man,” declares Gregory Biniowsky, a left-wing Canadian lawyer who has worked in Havana since 1995 and has dealt with Leal and his Office of the Historian (OHC) regularly. “He’s the best of the revolution.” Leal’s own workers are intensely loyal. “He inspires everyone,” says Mariela Mulet, the chief of the Prado Investment Group working on the Capitol. “He saved Old Havana though his own willpower. There won’t be another one like him in a long time.” On the street, the support is even more effusive: “Leal is the only person who Cubans would erect a monument to while he is still alive,” declares Alian Alera, a young librero, or bookseller. “When I was a boy, I was there when he personally came and presented my father with his book-selling license.” “Without Leal, Havana would be nothing like what it is today,” sums up the American historian Nancy Stout, who worked with his office on several books. “A lot of Cubans would do anything for him.”

The original article: : https://www.smithsonianmag.com/travel/man-who-saved-havana-180968735/#2rcuoRIt648z7XX9.99

Plaza Vieja,  under revival, 2011

Plaza Vieja 2018

But still enough work to do, especially in Central Havana

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TOURISM BOOMING IN CUBA DESPITE TOUGHER NEW TRUMP POLICY

Posted on January 22, 2018 by Arch Ritter

Published 1:15 PM ET Fri, 19 Jan 2018, The Associated Press

Original article: Tourism Booming In Cuba

  • 2017 was a record year for Cuban tourism, with 4.7 million visitors pumping more than $3 billion into the island’s otherwise struggling economy.
  • But the tourism dollars from big-spending Americans seem to be heading into Cuba’s state sector and away from private business.
  • That’s largely due to tougher Trump policy requiring “people-to-people” travel to take place only in tour groups, which depend largely on Cuban government transportation and guides.

On a sweltering early summer afternoon in Miami’s Little Havana, President Donald Trump told a cheering Cuban-American crowd that he was rolling back some of Barack Obama‘s opening to Cuba in order to starve the island’s military-run economy of U.S. tourism dollars and ratchet up pressure for regime change.

That doesn’t appear to be happening. Travel to Cuba is booming from dozens of countries, including the U.S. And the tourism dollars from big-spending Americans seem to be heading into Cuba’s state sector and away from private business, according to Cuban state figures, experts and private business people themselves.

The government figures show that 2017 was a record year for tourism, with 4.7 million visitors pumping more than $3 billion into the island’s otherwise struggling economy. The number of American travelers rose to 619,000, more than six times the pre-Obama level. But amid the boom — an 18 percent increase over 2016 — owners of private restaurants and bed-and-breakfasts are reporting a sharp drop-off.

“There was an explosion of tourists in the months after President Obama’s detente announcement. They were everywhere!” said Rodolfo Morales, a retired government worker who rents two rooms in his home for about $30 a night. “Since then, it’s fallen off.”

The ultimate destination of American tourism spending in Cuba seems an obscure data point, but it’s highly relevant to a decades-old goal of American foreign policy — encouraging change in Cuba’s single-party, centrally planned system. For more than 50 years, Washington sought to strangle nearly all trade with the island in hopes of spurring economic collapse. Obama changed that policy to one of promoting engagement as a way of strengthening a Cuban private sector that could grow into a middle class empowered to demand reform.

Cuba’s tourism boom began shortly after Obama and Cuban President Raul Castro announced in December 2014 that their countries would re-establish diplomatic relations and move toward normalization. U.S. cruise ships began docking in the Bay of Havana and U.S. airlines started regular flights to cities across the island. Overall tourism last year was up 56 percent over Cuba’s roughly 3 million visitors in 2014.

While the U.S. prohibits tourism to Cuba, Americans can travel here for specially designated purposes like religious activity or the vaguely defined category of “people-to-people” cultural interaction.

Obama allowed individuals to participate in “people-to-people” activities outside official tour groups. Hundreds of thousands of Americans responded by designing their own Cuban vacations without fear of government penalties. Since Cuba largely steers tour groups to government-run facilities, Americans traveling on their own became a vital market for the island’s private entrepreneurs, hotly desired for their free spending, heavy tipping and a desire to see a “real” Cuba beyond all-inclusive beach resorts and quick stops on tour buses. The surge helped travel-related businesses maintain their role as by far the most successful players in Cuba’s small but growing private sector.

Trump’s new policy re-imposed the required for “people-to-people” travel to take place only in tour groups, which depend largely on Cuban government transportation and guides.

As a result, many private business people are seeing so many fewer Americans that it feels like their numbers are dropping, even though the statistics say otherwise.

“Tourism has grown in Cuba, with the exception of American tourism,” said Nelson Lopez, a private tour guide. “But I’m sure that sometime soon they’ll be back.”

While Trump’s new rules didn’t take effect until November, their announcement in June led to an almost immediate slackening in business from individual Americans, many Cuban entrepreneurs say. The situation was worsened by Hurricane Irma striking Cuba’s northern coast in September and by a Cuban government freeze on new licenses for businesses including restaurants and bed-and-breakfasts. Cuban officials say the freeze was needed to control tax evasion, purchase of stolen state goods and other illegality in the private sector, but it’s had the effect of further restricting private-sector activity in the wake of Trump’s policy change.

Cuban state tourism officials did not respond to requests for comment.

Trump’s policy changes did not touch flights or cruise ships. Jose Luis Perello, a tourism expert at the University of Havana, said more than 541,000 cruise ship passengers visited Cuba in 2017, compared with 184,000 the previous year. Even as entrepreneurs see fewer American clients, many of those cruise passengers are coming from the United States, he said.

Yunaika Estanque, who runs a three-room bed-and-breakfast overlooking the Bay of Havana, says she has been able to weather a sharp drop in American guests because a British tour agency still sends her clients, but things still aren’t good.

“Without a doubt our best year was 2016, before the Trump presidency,” she said. “I’ve been talking with other bed-and-breakfast owners and they’re in bad shape.”

A Great Casa Particular, my Home for Cuba visits from 1997 to 2017, undoubtedly still thriving due to its excellence.

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