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U.S. – CUBAN RELATIONS ARE ABOUT TO GET WORSE

Ted Piccione, Brookings Institute, April 16, 2018.

Original Article: About to Get Worse

Ted Piccone  Senior Fellow – Foreign PolicyLatin America InitiativeProject on International Order and Strategy

The orchestrated presidential succession underway this week in Cuba, from Raúl Castro to his likely replacement Miguel Díaz-Canel, is prompting a new round of speculation about how the Trump administration should react to the long-awaited departure of the Castro brothers from power. Judging from the heated rhetoric between the U.S. and Cuban delegations at last week’s Summit of the Americas, relations are likely to go from bad to worse.

Shortly before the U.S. presidential election, candidate Donald Trump promised to “cancel” President Obama’s normalization policy. His administration made good on that promise last year with a number of measures rolling back key features of the incipient rapprochement. This included dire travel warnings, a dramatic 60 percent drawdown of U.S. embassy personnel in Havana, and the eviction of 17 staff from Cuba’s embassy in Washington last September in response to unexplained health incidents affecting U.S. diplomats.

These steps loudly signaled the return of Florida’s pro-embargo faction, led by Senator Marco Rubio, at the helm of U.S.-Cuba policy. Now, with the appointment of the more hardline John Bolton and Mike Pompeo to top national security positions, we should expect the White House to double down on its first year’s embrace of punitive regime change.

THE HANDCUFFS OF THE EMBARGO AND DOMESTIC POLITICS

Ever since the nearly six decades of hostilities between Havana and Washington began, the United States has been locked in a narrow band of policy options. Even after the fall of the Soviet Union, the engine driving U.S. strategy remained a deep distrust of Cuba’s closed socialist system, fueled by the hundreds of thousands of nostalgic Cuban exiles concentrated in the swing state of Florida. Domestic politics prevails.

The rationale for tightening or loosening the comprehensive embargo established in the Kennedy administration has shifted, depending on the circumstances. The pivotal moment, however, was Congress’ decision to codify the embargo after the Cuban military shot down a plane piloted by Cuban exiles in 1996. This law—with its unilateral demands for the end of communist rule, the removal of the Castros from power, the establishment of free and fair elections, and full respect for human rights—severely handicapped any attempt by U.S. policymakers to adapt to changing circumstances, let alone construct an alternate route toward reconciliation and change.

 

Until the Obama administration. For a short period of two years, it forged a narrow path between a rock and a hard place, encompassing diplomatic recognition, bilateral cooperation in areas of mutual interest, continued U.S. support for the Cuban people’s claim for more political and economic freedom, and a call for Congress to lift the embargo. Obama took these steps after the Raúl Castro government adopted concrete actions toward reform such as reducing the size of the bloated public sector, opening new avenues for private sector entrepreneurs, and expanding personal liberties for Cubans to buy and sell property, access the internet, and travel on and off the island more freely. These mutually reinforcing dynamics contributed to a flourishing of Cuba’s non-state sector, which grew from a registered 150,000 self-employed workers in 2008 to 580,000 in 2017. Record numbers of Americans began seeing for themselves the realities of Cuban socialism, including thousands of Cuban Americans each year.

Whether or not one agrees with the Obama approach of constructive engagement, it took critics only a few months to declare it a bust for failing to force Cuba to adopt fundamental human rights and market economic reforms. This was, and remains, patently unrealistic. Some progress was made quickly: release of political prisoners; expanded cooperation on matters such as maritime security, drug trafficking, and counterterrorism; new commercial opportunities for American farmers and travel businesses; a significant drop in illegal immigration; and direct support to the Cuban private sector and religious communities.

Beyond these short-term gains, Obama’s strategic gambit was about laying the groundwork for long-term change, especially as a new generation of post-Castro leadership takes the helm this month. It was aimed at removing the Cuban government’s ability to paint the United States as its mortal enemy, a narrative it has used effectively for decades to consolidate its standing at home and around the world. It was also designed to build bridges for dialogue and reconciliation among Cubans on and off the island, which is at the heart of the problem, and triggered a flood of new exchanges and record levels of remittances to struggling Cuban families. Not surprisingly, large majorities in both countries applauded this new approach.

BOLTON, POMPEO, AND RUBIO

For the vocal constituency of Cuban exiles and their families, who bear bitter feelings toward the Castro regime, Obama’s March 2016 handshake with Raúl was sacrilege. They found, among the many Republicans who support their cause, a late convert in Donald Trump who, in the final stretch of his presidential campaign, hardened his position on Cuba, promising a crowd in Miami that he would reverse Obama’s executive orders “unless the Castro regime meets our demands.” The following June, surrounded by veterans of the failed Bay of Pigs operation in the heart of Miami’s Little Havana, President Trump delivered a theatrical rebuke of Obama’s opening toward Cuba and set in motion new rules to restrict individual travel and prohibit any dealings with Cuba’s leadership or military, police, and security officials and their business entities.

For Senator Rubio, the architect of Trump’s hardline approach toward Cuba, this tightening of the screws was not enough. The new rules, for example, allowed any previously negotiated business deals to remain intact, permitted air and cruise ship travel to continue, and kept Cuba off the state sponsors of terrorism list. (Obama’s authorization of unlimited travel and remittances for Cuban Americans, popular in Miami, notably went untouched.) When mysterious ailments affecting over 20 U.S. personnel were reported in the late summer of 2017, Rubio and his allies jumped on the opportunity to demand additional steps to punish the Cuban government for failing to prevent or explain the source of the incidents. Trump ordered diplomats in both countries to go home and issued severe travel warnings. The result: a dramatic reduction in the number of Americans visiting the island, and vice versa. This directly undermines the administration’s purported goal of supporting Cuba’s burgeoning private sector, which U.S. visitors help sustain.

Now, enter John Bolton and Mike Pompeo, stage right. Both have strongly criticized the Castro government and vociferously opposed Obama’s overtures to Havana. Bolton, who was roundly criticized in the 2000s for his unfounded allegation that Cuba was developing biological weapons, wroteas recently as January that “Russian meddling in Latin America could inspire Trump to reassert the Monroe Doctrine (another casualty of the Obama years) and stand up for Cuba’s beleaguered people (as he is now for Iran’s).” Given Russia’s expanding security and economic relationship with Havana, and the general hardening of U.S. policy toward Moscow, this is no longer an abstract notion. Bolton also doubted whether the Cuban regime can survive much longer, a perennial claim used to justify more punitive sanctions, despite Cuba’s ability to withstand five decades of the U.S. embargo, threats, attacks, and assassination attempts.

Pompeo, who initially endorsed Marco Rubio for president, was highly critical of Obama’s visit to the island in 2016 and defended retaining the U.S. detention facility at Guantanamo Bay. Although his Senate confirmation testimony on April 12 promised to improve relations with Cuba and rebuild diplomatic staff, Pompeo made no specific commitments on how or when this would occur.

We should expect a continued mind meld among these three key actors in the U.S.-Cuban drama. Senator Rubio, with colleagues from the Florida delegation, has already called on the White House to “denounce Castro’s successor as illegitimate in the absence of free, fair, and multiparty elections, and call upon the international community to support the right of the Cuban people to decide their future.” Rubio then traveled to the Summit of the Americas in Lima with Vice President Pence, who declared Cuba “a despotic regime” and blamed it for exporting its “failed ideology” to Venezuela and beyond. In response, Cuban Foreign Minister Bruno Rodríguez harshly attacked both Pence and Rubio for decades of “U.S. imperialism,” denounced U.S. political corruption, and blamed the Miami “mafia” for hiding terrorists. Not surprisingly, the region remains divided on how to respond.

From a national security perspective, it is hard to understand why Cuba occupies so much high-level attention, given the much more serious security challenges Washington faces. Cuba can barely keep its armed forces trained and equipped, and is falling short on many economic and social fronts as well, prompting thousands of Cubans to vote with their feet every year and risk the perilous journey to the United States or elsewhere. The deterioration in relations also adds pressure on Cuba to turn to Moscow and Beijing for more help, a prospect that directly runs counter to U.S. interests.

In the end, what matters most to this administration is the power many of those same Cubans wield by supporting politicians who want the total collapse of the Cuban regime. The Bolton-Pompeo-Rubio triangle, hand in hand with Trump and Pence, will gladly meet their needs, and then some.

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AS CASTRO PREPARES TO LEAVE OFFICE, TRUMP’S CUBA POLICY IS A ROAD TO NOWHERE

By Jon Lee Anderson

The New Yorker, March 18, 2018

Original Article: As Castro Prepares to Leave 

The year 2018 is a seminal one for Latin America: two-thirds of the region’s people will choose new national governments, and the citizens of Communist Cuba will be among them. Last Sunday, the island held parliamentary elections to elect a new roster of deputies for the National Assembly of the People’s Power, Cuba’s parliament. It was the penultimate step in a series of complex voting exercises that make up Cuba’s version of political democracy. Twelve thousand ward delegates had already been chosen in a public ballot in November. Next, in a historic final step, scheduled to take place on April 19th, the six-hundred-and-nine-person National Assembly will vote for a leader to replace Raúl Castro, who is now eighty-six and intends to vacate the Presidency. (He has served two five-year terms, which he has declared to be the limit for the office.) Once he does, someone other than a Castro will rule the island for the first time since 1959; In 2006, Raúl succeeded his ailing brother, Fidel, in office, and officially assumed his duties in 2008. Castro’s likely successor is the Vice-President, Miguel Díaz-Canel, a fifty-seven-year-old, second-generation Party stalwart. It’s always possible that someone else will emerge; a number of Castro heirs presumptive have fallen in the past. But it seems improbable now. Díaz-Canel has been in his job for five years, following stints as a provincial Party chief, so his selection would telegraph a message of steadiness to Cuba’s citizens and to the outside world.

In any event, Castro will remain the secretary-general of the Communist Party, meaning that he will continue to be the maximum arbiter of political life in Cuba. Given his age, however, he may not stay in the post for long. He is said to be planning to move to the city of Santiago, on the eastern end of the island, not far from the farmlands where he and his brother were born. Fidel’s ashes are encased in a boulder in a cemetery in Santiago, and Raúl’s final resting place will be in a mausoleum in the nearby Sierra Maestra mountains, where the Castros fought the guerrilla war that brought them to power.

………………………………….

Conclusion:

For much of the past two decades, many of nation’s economic needs were provided for by oil-rich Venezuela, but that supply has been dropping, and, particularly if Maduro loses power sometime soon, Cuba will need a new partner. Coinciding with Trump’s pullback, the Russians, for one, have exhibited a growing interest in revitalizing their own presence on the island. Moscow has resumed oil shipments to Cuba, for the first time this century, and other export and infrastructure deals are under way.

Trump’s bullying only makes it more likely that the Cubans, with or without a Castro, will do what they have done for the past fifty-nine years: exhibit stubborn pride and, if necessary, forge tactical alliances with any of America’s geostrategic foes who might be willing to watch their back.

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TOURISM BOOMING IN CUBA DESPITE TOUGHER NEW TRUMP POLICY

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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U.S. POLICY IS HURTING CUBA’S ENTREPRENEURS

BY NIURIS HIGUERAS, YAMINA VICENTE, JULIA DE LA ROSA QUESADA AND MARLA RECIO

Miami Herald, DECEMBER 11, 2017

Original Article: HURTING CUBA’S ENTREPRENEURS

NIURIS HIGUERAS IS THE OWNER OF ATELIER RESTAURANT; YAMINA VICENTE IS THE OWNER OF DECORAZON, A DECORATING COMPANY; JULIA DE LA ROSA QUESADA IS CO-OWNER OF LA ROSA DE ORTEGA B&B; AND MARLA RECIO IS THE OWNER OF HAVANA REVERIE, AN EVENT PLANNING COMPANY.

It is a tough moment in Cuba for hundreds of thousands of entrepreneurs and millions of families with relatives in the United States. President Trump’s new Cuba policy, announced in June and recently written into law, and the partial draw-down of the U.S. Embassy, are hurting the private sector and taking a terrible toll on Cuban families.

As business owners and the heads of our households, we’re saddened by the turn of events that are causing so many of our friends, family and colleagues to suffer. We’re tired of hearing about “support for the Cuban people,” while those very policies take money out of our pockets and food off our tables, and separate us from our families.

The new restrictions on travel are crushing the private sector. Limits on individual travel and calls for stricter enforcement have confused and scared U.S. visitors, many of whom are choosing to go elsewhere or canceling their Cuba travel plans. As a way of kicking us while we’re down, an unjust State Department travel warning and the partial closure of the U.S. Embassy in Havana have further affected U.S. travel and hurt our businesses.

The closure of consular services is dividing families, making reunification and family visits nearly impossible. Hundreds of thousands of Cuban families are suffering, not knowing when they will be reunited with loved ones. It also makes it impossible for entrepreneurs to take part in workshops and training programs, cultural groups to tour the U.S. and Cuban students to get visas to study in the States. The accompanying travel warning, which is completely unjustified, is scaring off American visitors.

Together, the travel warning and new restrictions have had a clear impact: Restaurants are empty, occupancy rates are down, events are canceled and freelance guides and taxi drivers and others roam the streets looking for work. Many of us now must decide which of our workers to lay off.

Unfortunately, despite the rhetoric in U.S. policy about support for the Cuban people and support for the private sector, our reality is not taken into account and our wants and hopes fall on deaf ears. Last year, we went to Washington, D.C., to have lawmakers hear our voices and discuss how a more open policy of trade and travel helps Cuba’s private businesses. The country’s top 100 private businesses sent a letter to President Trump making that case, believing as a business person he would understand.

A group of us, Cuban women entrepreneurs, reached out to Ivanka Trump, assistant to the president, hopeful she would understand the importance of empowering women who are business leaders on the island. Our letters and meeting requests to the administration went unanswered, time and time again.

Sen. Marco Rubio claims to be the leading architect of the administration’s policy toward our country. Facing criticism of how the new travel policy would affect Cuban entrepreneurs, Rubio tweeted: “If Cuban people are hurt it will be because the Castro govt doesn’t allow them to own their own business, not because of the new policy.”

We would like Rubio to know that we do in fact own our own businesses, and we are hurt by the new policy.

We have repeatedly requested meetings with Rubio and his staff to share our knowledge and firsthand experiences as entrepreneurs and community leaders in Cuba. Unfortunately, like administration officials, he has ignored our requests to meet.

Policymakers refusal to meet with us and, more important, take our aspirations and livelihoods into account, is symbolic of decades of U.S. policies that aim to punish the Cuban people because of disapproval of the Cuban government. Not only is this way of thinking and acting ineffective and counterproductive, it is cruel and causes real suffering for the people they’re supposedly trying to help.

We call on Rubio to stop trying to divide and separate our two countries. Stop pushing forward measures that harm families, entrepreneurs and average Cubans. We also call on the State Department to immediately lift the unwarranted and politicized travel warning, fully reopen embassies and make clear that the confusing and convoluted new regulations permit individual travel.

Rhetoric, finger pointing, and restrictions are not the type of “support” the Cuban people want and need. What we want are fully functioning embassies and the freedom of travel for Americans and Cubans alike. We can take care of the rest.

NIURIS HIGUERAS

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CUBA’S CRITICAL JUNCTURE: MAIN CHALLENGES

Vegard Bye. Senior Research Fellow Centre for Development and the Environment, University of Oslo. vegard.bye@sum.uio.no

Complete Article: CUBA’S CRITICAL JUNCTURE

Abstract

Cuba is rapidly approaching a critical juncture, where a complete and generational change of leadership is unavoidable (between 2018 and 2021). The country and its Revolution is up against some unavoidable and complicated choices in the coming four years. With the rapidly approaching end of the Castro era, without any clear new leadership structure in sight, and with an apparently unsolvable economic crisis and rapidly shrinking confidence in the political power bloc particularly among the younger generations, a deep legitimacy crisis is looming. What are the principal challenges ahead, and how can and will they be solved?

  1. Introduction

Cuba is rapidly approaching a critical juncture, as a complete and generational change of leadership seems inevitable between now and 2021. The country and its revolution will be facing a series of complex, unavoidable choices in the next four years. With the end of the ‘Castro era’ and no clear new leadership structure in sight, combined with an apparently unsolvable economic crisis and rapidly shrinking confidence in the political power bloc, particularly among the younger generations,1 a deep legitimacy crisis is looming.

This study analyses some of the main challenges represented by the new international setting particularly concerning relations with the USA and the change from Barack Obama (2008–2016 to Donald J. Trump (2016) in the White House. These issues include how the economic crisis is undermining the welfare state that was once the pride of the Cuban Revolution, and the political challenges that may ensue; and how the monolithic character of the Cuban power structure is being put to the test by the increasing differentiation of interests between the early winners and the early losers of the economic reforms. The study also indicates some of the dilemmas of post-totalitarian political transformation identified in the theoretical literature, and relates these to other similar processes. Finally, we present some paradigm choices facing the next generation of leaders, and then discuss how a game of power, hegemony and legitimacy may unfold in post-Castro Cuba. While the most likely outcome still seems to be the continuation of some type of authoritarian and neo-patrimonial system, it is also possible to imagine some key post-Castro decisions that could take the country in a more pluralistic and participatory direction – although President Trump’s return to confrontationalism is making that even less likely. The harsh choice may be between re-building legitimacy and reverting to a much more repressive system.

Discussing political structures and their possible transformation is highly complicated regarding a system as opaque as that of Cuba, where there is no academic or media tradition of open analysis of power structures or ready access to reliable data. Such discussion may become quite speculative, as it is virtually impossible to underpin crucial observations about power relations with firm quantitative data – turning the choice of methodology towards qualitative analysis. Still, we believe it is worth putting together the available theoretical and empirical elements that may give indications about the future direction of a country that has played such a significant role in world politics and political/ideological discussions – a role quite out of proportion to its small size. Cuba offers a laboratory for the analysis of transformative politics.

……………………………….

  1. Conclusions

As yet, fairly authoritarian scenarios appear to be the likely outcomes of the transformation process. However, there remains the question of how absolute is the power that Cuba’s formal power bloc continues to exercise – and whether other options may emerge, against the odds, as the post-Castro generation prepares to take over the reins. Recently revealed remarks by First Vice President Miguel Díaz-Canel, the most likely presidential candidate in February 2018, leave few expectations for a prompt break with the past.15

The information monopoly has been definitely broken in Cuba – although the information hegemony may still be in place (Hoffmann 2016). Young people, also party loyalists, encounter no problems in seeking alternative information and views about the outside world as well their own country, including about the root causes of the economic failure. This will have consequences for how the next generation of leaders will need to communicate with the populace, and take public opinion into account, if they want to build a new capital of legitimacy. Moreover, the Party’s social hegemony appears to be slipping away, particularly among younger Cubans who hardly care about what happens at a Party Congress or in other formal decision-making bodies. This may even mean an actual loss of absolute political power – how relevant, then, will the three documents of principle discussed at the 7th Party Congress and ‘supported’ by the mid-2017 session of the National Assembly will be for the future of Cuba?

On the other hand, there seem to be no indications of counter-hegemonic forces developing, within or outside of party and state structures. Still, we should remain aware to the possibility that the looming ‘crisis of legitimacy’ in Cuba might become a ‘crisis of hegemony’ or of ‘authority’ (see Gramsci 1999Anderson 1976). It is no simple matter to apply such concepts, originally developed for analysing social and class forces in early industrial Europe, to the transformation process of a post-totalitarian system or an authoritarian socialist system searching for alternatives. However, the alternative Gramscian concepts of a passive revolution vs. the creation of a counter-hegemonic bloc may still be relevant. In the former, the bourgeoisie (or nomenclature in the Cuban case) would allow certain demands by looking beyond its economic-political interests and allowing the forms of hegemony to change (typically in the way the Nordic model was conceived in the 1930s). This would imply that the Cuban power elite might have to look for a similar adaptation of its hegemonic bloc in order to meet the emerging legitimacy crisis, particularly after 2018. The alternative might well be a deep organic crisis, tempting new social forces to set about building a counter-hegemonic historical bloc, leading to what Gramsci called ‘creating the new’ (which in Cuba would be some kind of post-socialism), rather than ‘restoring the old’ through a passive revolution.

One possible source of challenge to the existing hegemony of the Cuban political system would come from civil society, perhaps feeding on the growing self-confidence felt by private entrepreneurs as their critical economic role becomes more visible and recognised by the regime. ‘What is threatening to authoritarian regimes’, noted Przeworksi (1991: 54–55), ‘is not the breakdown of legitimacy but the organisation of counter-hegemony: collective projects for an alternative future. Only when collective alternatives are available does political choice become available to isolated citizens.’ Thus, according to Przeworski and building on the Gramsci concept of hegemony, the emergence of civil society organisations in itself becomes a relevant force for regime transformation only in a situation of falling legitimacy, if civil society organisations manage to organise a ‘counter-hegemonic bloc’. This has not yet happened in Cuba, nor is there any sign that it is about to happen. That being said, however, serious problems of legitimacy at a critical juncture may result in a new situation.

Moreover, no negotiation scenario is yet on the table in Cuba. Linz and Stepan (1996), Przeworski (1991) and Saxonberg (2013) all introduce the issue of negotiations at specific points during post-totalitarian transformation. Przeworski sees the issue of alliance building between groups willing to negotiate on the part of the regime and civil society as decisive for the outcome of any negotiation: ‘visible splits in the power bloc indicate to the civil society that political space may have been opened for autonomous organization. Hence, popular mobilization and splits in the regime may feed on each other’ (1991: 57).

Cuba has not yet arrived there: power-bloc splits are not evident, nor is there anything like a counterpart with which to negotiate. For that to happen, the combination of regime crisis –perhaps with the prospects of serious repression – and the emergence of a counter-hegemonic alternative would be required. It can only be speculated whether and under what circumstances such a situation might emerge.

Scenario forecasting in Cuba is a highly risky business. Here we make an attempt, identifying three basic scenarios that will gradually emerge with greater clarity as decisions and circumstances unfold in the time ahead:

  1. A neo-patrimonial system, whether ‘socialist’ as in China and Vietnam, or an ‘oligarchic’ variety as in Russia or Angola;16
  2. A transnational neo-authoritarian system: neoliberal capitalism based on massive US and other foreign direct investments, with the full dismantling of the current state and power structure (Cuba as a mini-Florida);
  3. Transformation to a mixed economy with a more pluralist and participatory polity, and the reconstruction of a welfare state: a negotiated process towards some kind of social democratic system.

As shown in Figure 1, we hold that a series of strategic decisions by the post-Castro generation of leaders in favour of more market-oriented economy is what might take Cuba in a less authoritarian direction, while simultaneously helping to rebuild the welfare state.

Vegard Bye

 

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CUBA STUDY GROUP Press Release: STATEMENT ON THE NEW CUBA REGULATIONS

Original Here: THE NEW CUBA REGULATIONS

November 9, 2017

The regulations announced on November 8 2017 are highly counterproductive.

Instead of supporting the Cuban private sector, as the administration has stated, new travel rules harm Cuban entrepreneurs and their employees by making it more difficult for individual Americans to visit the island and patronize their businesses. Rather than deal a lasting blow to the Cuban military, the ban on U.S. interaction with 180 Cuban state enterprises imposes unwieldly, and arguably unenforceable, regulatory burdens on U.S. citizens. More generally, these measures represent a setback to the broader process of normalization, which continues to be overwhelmingly popular with both the U.S. and Cuban people.

The Cuba Study Group disagrees, in particular, with the Trump administration’s decision to ban non-academic educational and individual people-to-people travel. The free flow of people, ideas, information, and goods helps, rather than hinders, the cause of meaningful reform on the island. Moreover, U.S. travelers frequent privately-owned rooms and other small businesses at a higher rate than visitors from any other country. President Trump’s measures will therefore hit the island’s private sector hardest, not the government, as tourists from other countries will continue to patronize state-owned companies and hotels.

Raúl Castro is slated to step down from the presidency in early 2018. At the same time, the country’s internal economic agenda has stagnated, and Hurricane Irma just devastated wide swaths of the island’s northern coast.

At this juncture of uncertainty and transition, it is in the best interest of the United States to remain engaged as the island confronts multiple challenges. By providing the Cuban government an excuse to revive a siege mentality, the Trump administration’s policies ultimately favor those in Cuba in a position to benefit most from the status quo where essential economic and political reforms continue to be neglected. As in the pre-normalization era, the Cuban people, and not the Cuban government, will most keenly feel the results.

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TRUMP’S NEW CUBA SANCTIONS MISS THEIR MARK

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BY WILLIAM M. LEOGRANDE | NOVEMBER 9, 2017

Original Article: SANCTIONS MISS THEIR MARK

REGULATIONS ON TRAVEL AND TRADE WILL LIKELY HAVE LITTLE IMPACT ON CUBA’S GOVERNMENT, HURTING ORDINARY CUBANS INSTEAD.

After two years of restored diplomatic ties, new U.S. regulations on Cuba are bringing back a thicket of travel, financial and trade restrictions – and a tougher stance toward the island. The goal of these restrictions, according to U.S. President Donald Trump, is to starve the Cuban government of money from travel, remittances and commercial ties. But the real victims of the new sanctions will be U.S. residents whose right to travel is curtailed, Cuban families who depend on remittances to survive, the struggling Cuban private sector, and U.S. businesses that will face an even greater disadvantage competing with Asian and European firms.

The regulations issued by the Treasury and Commerce Departments on Nov. 8 re-impose significant limits on educational travel to Cuba that former President Barack Obama relaxed. They also redefine “prohibited officials of the Government of Cuba” expansively, potentially cutting off remittances to hundreds of thousands of Cuban families. Finally, they prohibit anyone subject to U.S. jurisdiction from engaging in any “direct financial transactions” with entities controlled by the Cuban military or security forces that “disproportionately benefits” those entities.

All this marks the implementation of new sanctions Trump announced on June 16, 2017, at a Cuban American rally in Miami. The sanctions were mandated by the National Security Presidential Memorandum the president signed onstage, and included several major changes to the Cuban Assets Control Regulations (CACR), which spell out the operational details of the U.S. embargo.

Educational travel

In January 2011, Obama relaxed restrictions that former President George W. Bush had imposed on educational exchanges with Cuba – restrictions so onerous they eliminated most U.S. study abroad programs. Trump’s new regulations re-impose the Bush era restrictions, albeit with some exceptions for students accompanied by a representative of their U.S. academic institution. When combined with the State Department’s Sept. 29 travel warning advising people not to visit Cuba at all because of the injuries suffered by two dozen personnel at the U.S. embassy, the new restrictions on educational travel could drastically reduce U.S. study abroad in Cuba, which had been on the upswing since 2014.

U.S. visitors traveling under the “people-to-people” educational license (for educational travel not leading to an academic degree) can no longer travel on their own. They must now travel with organized groups under the auspices of a U.S.-based, licensed travel provider. Obama had lifted the group travel requirement in March 2016, providing an immediate boon to Cuba’s emerging private sector because individual travelers are much more likely to stay at private B&Bs (casas particulares), eat in private restaurants (paladares), take private taxis, and hire private guides. Most organized groups are too large for private rentals and thus have to be booked into government-owned hotels. Consequently, although Trump’s policy purports to boost Cuba’s private sector, the prohibition on individualized people-to-people travel hits the private sector hardest.

Although Cuban private businesses may suffer, the new travel regulations are not likely to put a huge dent in the number of U.S. visitors. The volume of travelers from the United States jumped dramatically in 2015, up 77 percent over 2014, after Obama and Cuba’s President Raúl Castro announced their intention to normalize relations in December 2014. This surge occurred before Obama ended the prohibition on individualized “people-to-people” travel. U.S. visitors are far more likely to be deterred by the State Department’s travel warning. Even then, a significant decline in U.S. visitors will not do serious damage to the Cuban tourist industry, which hosted four million foreign visitors in 2016 and is on track to host 4.7 million this year, of which only seven percent were non-Cuban American U.S. visitors.

Remittances

The new regulations redefine “prohibited officials of the Government of Cuba” to include all employees of the Ministry of the Revolutionary Armed Forces and Ministry of the Interior, thousands of ordinary Cubans who volunteer as leaders of their local Committees for the Defense of the Revolution, as well as senior government and party officials. The previous regulatory definition of prohibited officials, put into place by Obama in October 2016, was limited to members of the Council of Ministers and flag officers of the Revolutionary Armed Forces. The new definition encompasses hundreds of thousands of people, since the armed forces manage a significant number of commercial enterprises such as the Gaviota hotel chain and TRD Caribe retail stores, especially in the fast-growing tourism sector.

Cubans who are “prohibited” are not allowed to receive payments from U.S. nationals. That includes remittances and gift packages (Cuban Assets Control Regulations,  §515.570), so the new regulations could potentially deprive hundreds of thousands of Cuban families of support from their relatives abroad. However, the actual impact is harder to predict. There is no way to enforce this prohibition since the U.S. government does not have a list of all the people covered in the expanded definition. Moreover, Cuban Americans can carry funds and gift packages to family when they travel or can wire funds through third countries, just as they did in 1994 when former U.S. President Bill Clinton tried, unsuccessfully, to cut off remittances to punish Cuba for the balsero (rafters) migration crisis.

Apart from whether the new prohibition proves effective, it would seem to run counter to the purported aim of Trump’s policy to empower the Cuban people by directing U.S. funds to them, rather than to the Cuban government. Remittances are by far best way to do that because the dollars go directly to family on the island.

Transactions with military-linked enterprises

The most complex regulatory change is the prohibition on engaging in any “direct financial transactions” with businesses controlled by the Cuban military or security forces if they “disproportionately benefit” those forces. This is a potentially significant prohibition because the Cuban armed forces ministry administers commercial holding companies involved in everything from banking and port management to hotels and retail sales. The presence of military enterprises is greatest in the tourist sector, where both U.S. visitors and U.S. companies are most likely to encounter them.

The U.S. Department of State was tasked with creating a list of prohibited enterprises, which it released along with the new regulations. The list includes 180 entities, 58 percent of which are in the tourist sector, including 84 hotels – by far the largest category of businesses included. Some of the entities listed are holding companies for hundreds of retail outlets, but U.S. travelers and companies can still do business with subsidiaries of prohibited entities so long as the subsidiaries themselves are not specifically listed. Quite reasonably, the State Department took the view that it could not expect travelers to know which retail outlets might be subsidiaries of prohibited entities unless they were specifically named.

Senator Marco Rubio (R-Fla.) and Representative Mario Díaz-Balart (R-Fla.), who were the intellectual authors of the ban on transactions with military-linked enterprises, complained that the State Department’s list was not inclusive enough because “bureaucrats” were “refusing” to carry out Trump’s policy. Rubio wanted to see the entire Cuban tourist sector put off-limits because the Minister of Tourism, Manuel Marrero Cruz, is a former military officer. According to Rubio, that means the entire sector is controlled by the armed forces.

The Cuban government was not happy with the sanctions either. Josefina Vidal, Director General for U.S. Affairs in the Foreign Ministry, said the new measures “confirm the serious regress of bilateral relations as a result of the decisions adopted by the government of the President Donald Trump,” and called some of them “subversive.”

In truth, the impact of these sanctions on commercial relations with Cuba is likely to be limited. The Cuban government, adept at coping with U.S. hostility for the past half century, may feel the pinch, but it can look elsewhere for trade partners and tourists. Also, in order to avoid disrupting ongoing business relationships, the new regulations exempt existing contracts from the prohibition on doing business with military-linked enterprises. So, for example, Marriott-Starwood Hotels’ contract to manage hotels owned by holding companies administered by the armed forces ministry is not affected by the new regulations. Moreover, even future contracts will be allowed with military-linked businesses involving ports, airports, and telecommunications, which are the three sectors in which most U.S. businesses (cruise ship lines, airlines, and cell phone companies) now operate.

On balance, the regulatory burden falls most heavily on U.S. academic institutions, whose study abroad programs in Cuba will be curtailed; on U.S. travelers who can no longer travel by themselves on a people-to-people educational license; on Cuban-Americans whose families on the island who will no longer be eligible to receive remittances and gift packages; and on U.S. businesses that may want to sell goods to Cuba in sectors where their counterparts are commercial enterprises managed by the armed forces ministry.

The Cubans who will suffer most are small business owners, suppliers, and employees who cater to individual U.S. travelers; employees of state firms managed by the armed forces ministry and their families, who may lose remittances and gifts; and Cubans who might have found employment with U.S. companies whose potential business deals are now blocked.

The Cuban state will suffer only marginally from Trump’s new sanctions – certainly not enough to force it into the sorts of concessions Washington demands.

 

 

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IS TRUMP USING ‘HEALTH ATTACKS’ ON US DIPLOMATS IN HAVANA AS AN EXCUSE TO PUNISH CUBA?

Published in The Conversation, October 4, 2017

Original article: An excuse to punish Cuba?

By William M. LeoCrande

In a blow to diplomatic relations with Cuba, U.S. Secretary of State Rex Tillerson on Oct. 3 ejected 15 Cuban diplomats from the United States. The expulsion follows his withdrawal of most U.S. personnel from the embassy in Havana after 22 American diplomats and family members there suffered unexplained health problems.

Last November, some U.S. personnel in Havana began experiencing a range of symptoms, including hearing impairment, nausea, dizziness and mild cognitive impairment. The people affected first and most severely were intelligence officers, but later victims held a variety of positions in the U.S. Embassy. Several Canadian diplomats were also affected.

The United States informed the Cuban government of these incidents on Feb. 17, 2017. Four days later, Cuban President Raúl Castro met with then U.S. Charge d’Affaires Jeffrey DeLaurentis and, pledging full cooperation, invited the FBI to investigate.

So far, though, the investigation has been unable to determine the perpetrator or motivebehind the mysterious attacks. Nearly a year after the first incidents, nobody even knows how the attacks were carried out. U.S. officials initially blamed some sort of sophisticated sonic weapon, but scientists have questioned whether sound waves alone could have produced the reported symptoms.

In this context, withdrawing U.S. personnel is arguably a reasonable precaution. But, in my view, expelling Cuban diplomats despite Cuba’s cooperation in the investigation is baseless and counterproductive. During the 40 years I’ve studied U.S.-Cuban relations, domestic politics, rather than foreign policy interests, have often driven U.S. policy, and I believe that’s what is happening now.

Sentence first, trial afterwards

State Department officials doubt that the Cuban government is behind the incidents. No evidence has emerged implicating Cuban officials, and Cuba is cooperating with the investigation.

Nevertheless, opponents of President Barack Obama’s 2014-2016 rapprochement with Cubahave successfully seized upon the mysterious injuries as an excuse to punish Cuba, wreaking havoc on relations that had been improving. As the Red Queen said to Alice in Wonderland, “Sentence first, trial afterwards.”

When the diplomats’ health problems were first reported publicly in August 2017, Sen. Marco Rubio, Republican of Florida and a vociferous opponent of normalizing relations, demanded that President Trump close the U.S. Embassy and expel all Cuban diplomats from the United States.

Instead, on Friday, Sept. 29, Tillerson announced the withdrawal of nonessential personnel, suspended visa processing for Cubans seeking to enter the U.S. and issued a travel warning advising Americans not to travel to Cuba. In a press release, Rubio denounced his actions as “weak, unacceptable and outrageous,” and took to Twitter to demand that Cuban envoys be expelled.

Marco Rubio  ✔@marcorubio
Some at @StateDept want massive drawdown of Americans at @USEmbCuba but allow Castro to keep regime embassy in DC virtually the same 1/2 Marco Rubio ✔@marcorubio
So Castro regime allows attacks on Americans forcing us to drawdown to keep them safe but he gets to keep about same # of people here? 2/2  9:20 AM – Sep 29, 2017

A few days later, on Oct. 3, Tillerson finally did what Rubio demanded. Cuban American U.S. Rep. Ileana Ros-Lehtinen, also a Republican of Florida and an opponent of Obama’s normalization process, pronounced herself “pleased as punch” at the expulsions.

Denormalization

This was not what U.S. diplomats wanted. The American Foreign Service Association, the union representing Foreign Service officers, opposed the withdrawal from Havana as contrary to U.S. interests. “We have a mission to do and we’re used to operating around the globe with serious health risks,” association president Barbara Stephenson told the news network CNN.

The expulsion of its diplomats isn’t the only punishment Washington has inflicted on Cuba. Some half a million Cubans depend on tourism for their livelihood, and it contributes about 10 percent to Cuba’s gross domestic product. The travel warning will deter U.S. visitors from going to the island, hurting the economy at a time when it is already suffering from the damage done by Hurricane Irma.

The sweeping and categorical nature of the travel warning is also unwarranted, considering that the State Department believes U.S. diplomats were the targets of “specific attacks” and no U.S. visitors have suffered any injury.

Canada, by contrast, issued no travel advisory after its personnel were injured, nor did its government withdraw Canadian diplomats from Havana or expel their Cuban counterparts from Ottawa.

Finally, by temporarily suspending visa processing for Cubans seeking to enter the United States, Washington risks violating the 1994 migration accord, which commits the United States to accept a minimum of 20,000 Cuban immigrants annually. That commitment will be almost impossible to meet now.

Predictably, as the United States has ratcheted up these punishments, the tone of Cuba’s response has become defiant. In Granma, Cuba’s Communist Party newspaper, the Foreign Ministry on Oct. 3 condemned the expulsion of its diplomats as “unfounded and unacceptable,” and rejected “categorically” any Cuban responsibility for the incidents.

Noting the absence of evidence as to perpetrator or means, Cuba for the first time questioned whether any attacks had even occurred.

The Trump administration has let a legitimate concern over the safety of U.S. diplomats become an excuse for reversing key elements of Obama’s policy of engagement, caving in to the political demands of those who, like Rubio and Ros-Lehtinen, opposed normalizing relations with Cuba from the outset.

By so doing, I think the administration has fallen into a trap. Whoever is responsible for the attacks on U.S. diplomats in Havana almost certainly did it to disrupt the rapprochement between the United States and Cuba. The U.S. response is handing that shadowy adversary a victory.

Lineup to enter the Consular Service at dawn at the US Embassy in Cuba, March 2011. Presumably the withdrawal of US diplomats will damage the consular service for Cubans wishing to travel to or migrate to the United States. (Photo by Arch Ritter)

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WILL TRUMP OPEN A PANDORA’S BOX OF LITIGATION OVER CUBAN PROPERTY?

If the president fails to continue the suspension of Title III, business relations will be disrupted far more severely and irreparably than they would be by any regulatory change.

William M. LeoGrande,  Professor of Government at American University

Huffington Post, 07/10/2017 02:34 pm ET |

Original Article: Pandora’s Box of Litigation?

Signing the “Helms-Burton Bill”

Long before the Departments of State, Treasury, and Commerce finish writing the new regulations that President Trump ordered to restrict trade and travel to Cuba, the president will face another decision on relations with Havana that could be far more consequential for U.S. businesses. By July 16, he will have to decide whether to continue suspending certain provisions of Title III of the Cuban Liberty and Democratic Solidarity Act of 1996 (also known as Helms-Burton, after its sponsors).

If he allows Title III to go fully into effect, he will open the door to as many as 200,0000 lawsuits by U.S. nationals whose property was taken by the Cuban government after 1959.

U.S. courts would be swamped, the ability of U.S. companies to do business on the island would be crippled, and allies abroad might retaliate for U.S. suits brought against their companies in Cuba. The tangle of resulting litigation would take years to unwind.

Title III allows U.S. nationals to file suit in U.S. courts against anyone “trafficking” in their confiscated property in Cuba—that is, anyone assuming an equity stake in it or profiting from it. The U.S. Foreign Claims Settlement Commission has certified 5,913 claims of U.S. nationals whose property was seized. These are the claims that Cuba and the United States had begun to discuss during the Obama administration.

But Title III takes the unusual position of allowing naturalized Cuban Americans who lost property to also file suit against alleged traffickers. Normally, international law recognizes the sovereign right of governments to dispose of the property of their own citizens. According to the Department of State, by including Cuban Americans who were not U.S. citizens when their property was taken, Title III creates the potential for an estimated 75,000-200,000 claims worth “tens of billions of dollars.”

Back in 1996, angry opposition from U.S. allies Canada, Mexico, and Western Europe, whose companies doing business in Cuba would be the targets of Title III law suits, led President Bill Clinton to insist on a presidential waiver provision in Title III when Congress was debating the law. As a result, the president has the authority to suspend for six months the right to file Title III law suits, and he can renew that suspension indefinitely. Every six months since the Cuban Liberty and Democratic Solidarity Act was passed, successive presidents, Democrat and Republican alike, have continued the suspension of Title III.

The Morning Email

Bottom of Form

If President Trump does not renew the suspension by July 16, however, claimants will be free to file Title III law suits by the tens of thousands. Once the suits have been filed, there will be no way to undo the resulting legal chaos.

When the Cuban Liberty and Democratic Solidarity Act was passed, U.S. allies in the Americas and Europe denounced its extraterritorial reach. Mexico, Canada, and the United Kingdom passed laws prohibiting compliance with it. The European Union filed a complaint with the World Trade Organization, which it dropped after President Clinton suspended Title III. In fact, the principal justification both President Clinton and President George W. Bush offered for continuing the suspension was the need to maintain cooperation with European allies.

If President Trump does not renew the suspension, all these old wounds with allies will be reopened as U.S. claimants try to haul foreign companies into U.S. courts for doing business in Cuba. We already have enough tough issues on our agenda with Mexico, Canada, and Europe without adding another one.

U.S. businesses would not be exempt from potential liability. A Cuban American family in Miami claims to have owned the land on which José Martí International Airport was built, so any U.S. carrier using the air field could be sued under Title III. Another family that owned the Port of Santiago could file suit against U.S. cruise ships docking there.

Moreover, it would be almost impossible for a U.S. company to know in advance whether a proposed business opportunity in Cuba might become the subject of Title III litigation. “This will effectively end for decades any attempt to restore trade between the U.S. and Cuba,” attorney Robert Muse told the Tampa Bay Times.

Explaining the new trade and travel regulations that President Trump announced on June 16, senior administration officials said they were designed “to not disrupt existing business” that U.S. companies were doing in Cuba. If the president fails to continue the suspension of Title III, business relations will be disrupted far more severely and irreparably than they would be by any regulatory change.

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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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