Tag Archives: US-Cuba Relations

TRUMP’S CUBA GAMBIT PUSHES CANADIAN MINER SHERRITT TO THE BRINK

Original article: Sherritt could get caught in the crossfire between U.S. and Cuba

Paula Sambo and Danielle Bochove,

Bloomberg News, June 5, 2020

 

Sherritt International Corporation’s nickel mine in Cuba.

Sherritt International Corp. (S.TO), whose executives were once known as Fidel Castro’s favorite capitalists, is paying the price for its close ties to the struggling Caribbean nation.

The Canadian miner, which gets all its revenue from assets in Cuba, is being hit on multiple fronts by Donald Trump’s isolationism, plunging nickel prices and cost overruns. With the stock at 21 cents and its bonds trading at distressed levels, investors are starting to question the company’s viability.

“It all depends how the world unfolds in terms of commodity prices and the U.S.-Cuban relationship,” Chief Executive Officer David Pathe said in an interview this week. “There’s only so much that we can do right now and that’s focusing on the things that we can control.”

The Toronto-based miner is a shadow of what it once was. Long-known as a proxy for Cuba since former CEO Ian Delaney first engaged with Castro in the 1990s to develop the island’s nickel, oil and gas assets, Sherritt prospered as U.S. relations thawed over the past two decades and commodity prices soared.

Revenue jumped to almost $2 billion a decade ago, while the stock traded as high as $18 in 2007. Since then, the stock has dropped 99 per cent amid heightened country risk, a failed project in Madagascar, cost overruns and the collapse of the commodity super-cycle. The company’s bonds are trading at about 30 Canadian cents, according to multiple portfolio managers, implying low recovery in case of a default or debt overhaul.

“We have seen some bonds selling in the context of more aggressive U.S. policy towards Cuba, which has caused holders that have significant interests or operations in the U.S. to get out,” Pathe said. “That is what it is. From our perspective, we are focused on running our business as best we can.”

Sherritt’s debt costs are rising even as the company’s ability to generate cash flow to service that debt falls. Concerns about global growth have knocked the price of nickel down 24 per cent over the last year, reducing the amount of cash Sherritt receives from markets outside Cuba. Meanwhile, a tightening of U.S. sanctions against Cuba this year has resulted in the island nation being unable to pay Sherritt for the energy it produces in foreign currency and has caused bondholders to sell the company’s debt.

“We have deliberately avoided having any presence in the U.S. since Helms-Burton came in 23 years ago,” said Pathe, who is barred from entering the country under a section of the act. Despite this, the company is being caught in the cross-fire as Trump punishes Cuba for its support of Venezuela, and takes aim at trading partners around the world.

Debt Reduction

Having managed to knock around $2 billion off its debt in recent years, the 92-year-old company’s top priority is to continue to see that balance come down and reduce interest expenses, according to its CEO. The next big bond maturity is $170 million in notes in 2021 and the company has a $70 million revolving facility due next year that it anticipates renewing ahead of the maturity, Pathe said.

As it hangs on by its fingernails, some debt investors are seeing a silver lining ahead.

“They are trading below their working capital; the optionality is huge even excluding long-term assets like the refinery” said Paul Tepsich, founder and portfolio manager at High Rock Capital Management Inc. in Toronto, referring to the refinery in Alberta. “I think they get a deal signed with Cuba imminently and that produces strong cash flow on a monthly basis to Sherritt.”

For Tepsich, who owns Sherritt debt, the company has room to buy back bonds. The Moa nickel-and-cobalt mine joint venture should also provide both cash flow and dividends in hard currency, he said. The company produces electricity, oil and gas in Cuba and has a 50 per cent stake in the Moa mine, although it finishes the ore in Canada.

Coal Sale

For more than a decade, Sherritt has fought to reduce its debt, selling all of its coal assets in 2013 as commodity prices languished. A spike in cobalt prices in 2017 helped the company post its first annual profit since 2012 but it fell back into the red last year. Total debt stands at $706 million, less than a third of what it was less than two years ago.

Sherritt’s debt almost quadrupled between 2007 and 2008 as the company developed the massive Ambatovy nickel and cobalt project in Madagascar with Sumitomo Corp. and Korea Resources Corp. From the start, the project was plagued with delays and cost overruns, not to mention a political coup that resulted in the suspension of mining licenses.

Meanwhile, the company’s footprint in Cuba has created constant challenges. In 1996, Sherritt executives and shareholders were the first to be banned from the U.S. under the Helms-Burton law.  Twelve years later, Fidel Castro’s resignation sparked hope for more foreign investment in Cuba but progress, including subsequent American liberalization under President Barack Obama, has recently been overshadowed by a tightening of policy under Trump. The pressure has worsened Cuba’s access to foreign currency; it owed Sherritt almost US$172 million at the end of the first quarter, although Sherritt said a plan is in place to manage payments.

Last April, meanwhile, the White House said it would activate a provision of Helms-Burton that would let Americans sue for land confiscated in the 1959 revolution.  That’s a big deal for Sherritt: The US$88.3 million claim against its nickel mine is now greater than the company’s market capitalization.

 

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TRUMP DECLARES ECONOMIC WAR ON CUBA

April 18, 2019 6.45am EDT

William M. LeoGrande, Professor of Government, American University School of Public Affairs

Original Article: Trump Declares Economic War on Cuba

The Trump administration has declared the most severe new sanctions against Cuba since President John F. Kennedy imposed an economic embargo banning all trade with the communist island in 1962.

Speaking in Miami on April 17, the anniversary of the United States’ failed 1961 invasion of Cuba’s Bay of Pigs, national security adviser John Bolton announced the end of virtually all non-family travel to Cuba and placed new limits on the money Cuban Americans can send to family on the island.  He also said the U.S. will now implement a 23-year-old law aimed at blocking both U.S. and foreign investment in Cuba, first passed by Congress in 1996 as part of a broader sanctions package against Cuba but put on hold because it triggered immense opposition among U.S. allies.

The harsh new sanctions reverse “the disastrous Obama-era policies, and finally end the glamorization of socialism and communism,” Bolton said.

A law too controversial to implement

Trump’s decision activates a long-suspended 1996 provision of U.S. Cuba sanctions that allows Cuban Americans to sue in U.S. courts any company that benefits from private property of theirs confiscated by Fidel Castro’s regime.

Normally, U.S. courts have no jurisdiction over property owned by non-citizens that is nationalized by a foreign government. For U.S. courts to sit in judgment of another government’s actions toward its own citizens in its own territory is a challenge to that government’s sovereignty.

U.S. allies who do business with Cuba vehemently oppose the move.

In 1996, when the U.S. law was first approved, the European Union filed a complaint with the World Trade Organization and adopted a law prohibiting EU members and their companies from complying with the U.S. legislation. Mexico, Canada and the United Kingdom soon passed similar legislation.

In response, President Bill Clinton suspended the lawsuit provision, which is called Title III, for six months, and in 1998 he signed an agreement with the EU that European companies who do business in Cuba would not be targeted.  Since then, every president, Democrat and Republican, has renewed the suspension. Trump himself renewed it three times – until he didn’t.

The president has now reignited international outrage over this sanction, which abrogates Clinton’s agreement with the EU and complicates already rocky U.S. relations with Mexico and Canada.

Who wins?

A small but elite community stands to benefit from Title III: Cuba’s former one percenters – members of the exiled upper class that owned nearly all the land and business in Cuba prior to the 1959 Cuban Revolution.

Most wealthy Cubans fled the country after Fidel Castro’s Communist government nationalized their businesses and confiscated their homes, bank accounts and property. Some still dream of recouping their lost fortunes.  They can now sue Cuban, American and foreign companies that profit in any way from the use of that property.  For example, former owners of Cuba’s nickel mines could seek damages from Canada’s Sherritt International Corporation, which has invested in Cuba’s nickel mining industry. The former owners of Cuban hotels could sue the Spanish hotel company Melia, which manages hotels across the island.

Every U.S. and foreign company that does business with Cuba – or might do so in the future – risks being sued if they make use of property once owned by a Cuban exile who is now a U.S. citizen. According to a 1996 State Department analysis, implementing Title III could flood U.S. federal courts with as many as 200,000 lawsuits.

Trump’s 2020 bet

Most Cuban Americans will gain nothing from Trump’s latest sanctions.  It exempts private residences from compensation. So, if the main thing you owned back in Cuba was a house that was confiscated after Jan. 1, 1959, you’re out of luck.  The exiled owners of thousands of small Cuban mom-and-pop shops nationalized in 1968 won’t see compensation, either, because the law exempts Cuban small businesses that were confiscated.

Those who stand to benefit are the oldest, most conservative and wealthiest segment of Florida’s 1.5 million Cuban Americans.  Trump believes these influential Republicans helped him win Florida in 2016 because he promised to take a hard line toward Havana, rolling back President Obama’s restoration of diplomatic and economic relations with the island.

If the president thinks these punishing new sanctions can deliver Florida to him again in 2020, he may have miscalculated.

I’ve studied Cuba-U.S. relations for decades. While activating the law may please Cuba’s former wealthy business owners, Trump’s new sanctions – like limiting the money Cuban Americans can send back to the island – are unlikely to be popular in the broader Cuban American community.  By decisive majorities, Cuban Americans support free travel between the U.S. and Cuba, broader commercial ties and President Obama’s decision to normalize relations. Every year, they send $3 billion to family on the island, and hundreds of thousands of them travel there to visit.  These Cuban-American voters don’t want to inflict more economic pain on the Cuban public, which includes their friends and family.

Hurting everyday Cubans

The punitive aspects of the newly implemented law, which administration officials have for months hinted that they would put into effect, are already having an impact.

Cuban American families who owned the land and facilities at the port of Havana and José Martí International Airport have warned the cruise ship companies and airlines that their use of these properties could put them at legal risk.

Along with money sent from their families abroad, tourism-related income sustains many everyday Cubans.

If travel businesses withdraw from Cuba, and if U.S. and foreign firms hesitate to enter into new commercial relations with Cuba for fear of incurring lawsuits in the United States, Cuba’s already fragile economy would take a serious hit.

That may play well with Cuba’s old elite. But the rest of Florida’s Cuban Americans will feel the hurt, too.

 

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WHY TRUMP’S CUBA POLICY IS SO WRONG

Nacla  May 20, 2019

Arturo Lopez Levy, Visiting Assistant Professor of International Relations, Gustavus Adolphus College, Minnesota.

 Original Article: Why Trump’s Cuba Policy Is So Wrong

Nearly five years have passed since President Barack Obama restored diplomatic relations with Cuba and began relaxing the U.S. policy of unilateral sanctions. Now, the Trump Administration is doubling down on a failed strategy of hostility, reducing engagement with Cuba, and returning to the 1996 Helms-Burton law, one of the most repudiated pieces of “trade” legislation in the world. Trump’s decision to restore the grip of Cold War-era policy to the Strait of Florida caters not to the interests of the Cuban people, but to a small group of voters between Little Havana and Doral—the new Little Caracas—in South Florida.

On April 17, National Security Advisor John Bolton announced in a speech in Miami that the U.S. would be fully implementing Chapters III and IV of the 1996 Helms-Burton law—which allows U.S. citizens to file claims against Cuba’s trading and investment partners for properties nationalized following the revolution 60 years ago. Bolton salted his red-meat speech with new restrictions on U.S. non-family related travel and remittances sent to Cuba. Present in the audience were veterans of the defeated 2506 Brigade, a group of exiles who invaded Cuba in 1961 after receiving CIA training in Guatemala.

Reparations for Exiles Over Citizens in Need

Under Chapter III of the Helms law, American courts will be open to hear any claims for lost properties by Cubans who became American citizens before 1996 after January 1, 1959. The former Cuban economic and political elites seem poised to try to claim all of these properties—except the one for the responsibility of mismanaging a country to the point of revolution.

It is not the United States government’s responsibility or place to force the current or any future Cuban government to prioritize compensating Cuban right-wing exiles over demands for other reparationsThe implementation of this chapter has profound implications for Cuba’s national reconciliation and how Cubans may perceive Washington in the future. Cuban-Americans who lost their properties as result of revolutionary nationalizations were at the time Cuban nationals, living under Cuban jurisdiction and sovereignty. The logical venue for these Cubans to seek remedy for the alleged injustice committed against them is in Cuban courts. No matter what one thinks about the priorities for reparations for Cuban injustices, it is difficult to argue that U.S. courts are the proper place for solving these issues. It is not the United States government’s responsibility or place to force the current or any future Cuban government to prioritize compensating Cuban right-wing exiles over demands for other reparations, such as for slavery or any of the many other abuses committed in Cuban history before or after 1959. Such meddling in issues of exclusive Cuban sovereignty will not sit well in Cuban politics and will feed anti-American nationalist resentment. Whether Cubans would like to use their own resources to compensate wealthy exiles should not be an imposition of the United States government.

This isn’t the first time that U.S. policy has pressured a Latin American government to put appeasing exiles over its own governance. In post-revolutionary Nicaragua in 1994, Senator Jesse Helms imposed a hold on legislation for U.S. aid, with consequences for the government of Violeta Barrios de Chamorro. A significant portion of U.S. economic aid to Nicaragua for development purposes went to compensating anti-Sandinistas who had lost property or investments under the revolution rather than towards poverty alleviation efforts. Bolton’s support for tightening Helms-Burton to allow similar claims for Cuban exiles is similarly misguided.

Unilateral sanctions will not work in Cuba because other countries will not stop trading and investing if there is a profit to make. After 60 years of conflict and hard sanctions, the Cuban communist regime has survived, outmaneuvering every U.S. president who imposed or implemented sanctions since the Eisenhower era. Even though the U.S. is a much more powerful country than Cuba, it is still unable to impose its preferences on its weaker neighbor. Cuba has demonstrated time and time again that despite this asymmetric power, they are well-versed in strategies to delegitimize the U.S.’s position.

As Wayne Smith, the American diplomat who closed the U.S. embassy in Havana in 1961 and later returned to Cuba as Chief of the Special Interests Section (1978- 1982) once wrote: “Cuba seems to have the same effect on American administrations that the full moon once had on werewolves.” Bolton’s April 17 speech in Florida is simply the same howling. It only makes sense as a policy towards Florida, not towards Cuba.

Under Chapters III and IV of the Helms law, right wing Cuban-Americans are trying to internationalize the U.S. embargo against Cuba at all costs. They have brought legal claims against U.S., Canadian, and European Union citizens and companies. Trump’s catering to these interests by returning to this logic is detrimental to U.S. interests in Cuba and Latin America—and to Cuba itself—for a number of reasons.

Cuba in Transition

First, this decision ignores Cuba’s current moment. Most Cubans are eagerly looking to their first post-Castro president, Miguel Díaz-Canel, to address the critical challenges of reforming the country, especially its economy. While the new president has maintained a clear distance from the most audacious reforms, he is aware that the Cuban Communist Party’s rule is not sustainable without a wider opening of the economy to private business and foreign investment, or improving relations with reform-oriented civil society and diaspora groups. At this critical moment, Trump’s aggressiveness will distract the Cuban public debate from Cuba’s internal situation and create an opportunity for the Communist Party to rally the population and its various elites—old and new, pro-market or pro-state-owned corporations, pro or against regulation—behind the patriotic flag.

The more the Trump administration tries to asphyxiate Cuba, the harder the Cuban government will impose political discipline in its ranks and within Cuban civil society. In contrast, in the wake of Obama’s rapprochement, a wide spectrum of autonomous publications emerged. Although this expansion of the public sphere does not amount to democratization and did not result from U.S. policy, a friendly international environment may have played a constructive role in influencing their development.

Patriotic segments of civil society such as the Catholic Church, the majority of intellectuals, LGBTQ activists, and other groups will condemn U.S. policy towards Cuba. Those who do not close ranks with the government against foreign aggression will appear aligned with what Cuban national hero and poet Jose Martí called “the scrambled and brutal north.” Not a good position to be in Cuban politics, isolated with just one foot out of prison.

Sanctions for Sanctions Sake

Most of Trump’s Latin America team do not understand how political asymmetry works in international affairs. Hard power is tremendously important in state-to-state relations, particularly in war. But in many cases, the stronger cannot impose its preferences on the weaker side. Small countries have agency and well-known repertoires of asymmetric strategies that erode and deteriorate the stronger country’s position, without achieving domination.

Relations between the world’s major powers are indeed very important. But sustainable leadership relies also on constructive relationships with small countries. Wasting political, economic, and social capital on mismanaged and unnecessary conflicts not only alienates allies but also pushes neutral and potential non-aligned countries into the arms of rival great powers. Leadership, different from domination, is about attracting others to operate and think within one’s own agenda. That is the role of effective diplomacy.

Trump’s return to sanctions will neither empower any relevant actor in Cuba’s politics nor change the Cuban government’s behavior. Cubans of almost every political persuasion will see Vice President Pence’s announcement that the United States will sanction oil shipments from Venezuela to Cuba as sanctions for the sake of sanctions—a means to create scarcity, desperation, and chaos in the island. Obviously, the Cuban people will suffer if Venezuela is forced to reduce the amount shipped daily to Cuba by some 20,000 to 50,000 barrels. But such sanctions will not peel off Cuba from the Bolivarian Alliance and would in fact encourage more security cooperation with Maduro and strengthen Havana’s alignment with Moscow and Beijing.

Trump’s new sanctions against Cuba replicate the same problems that the embargo has represented since the 1970s. First, the United States is alone geopolitically in its desire to double down on the Cuban embargo. Second, because the sanctions cater to domestic interests, Bolton’s speech repeated unrealistic expectations about imposing American diktat to third countries and provoking the fall of Maduro in Venezuela, Ortega in Nicaragua, and Díaz-Canel in Cuba. Third, limiting travel to the island and capping remittances will mainly harm Cuba’s emerging private sector, providing new incentives for mass migration to the United States. Cubans who are anticipating a sharp economic downturn are traveling to Mexico and Central America and headed north to the U.S. border.

The announcement of sanctions may spark catharsis in some segments of the Cuban and Venezuelan diasporas in South Florida, but history has proven that foreign policy for retribution therapy at the service of traumatized exile groups is not very effective.The announcement of sanctions may spark catharsis in some segments of the Cuban and Venezuelan diasporas in South Florida, but history has proven that foreign policy for retribution therapy at the service of traumatized exile groups is not very effective. A policy towards Cuba should be, well, a policy towards Cuba. For those passive opponents of communism within the Cuban government coalition, it is doubtful that these sanctions will create a wedge between development-oriented nationalists and control-oriented communists. In terms of those Cubans who openly oppose communism, the sanctions will not diminish their isolation from most Cubans, but will certainly increase their internal divisions over how to interact with the United States.

Consequences for Business and International Law

Reinforcing sanctions and threatening litigation over property claims will also make companies wary of doing business in Cuba. This could include the U.S. companies that began to explore business possibilities with Cuba at the end of the Obama administration, and farmers who sought an opening to a substantive market.

Mixing U.S. legitimate compensation claims on properties that were U.S.-owned at the time of nationalization with claims by Cuban citizens who lost their properties and became U.S. citizens later makes a difficult problem intractable. Cuba will never agree to pay for acts that were taken under its jurisdiction after 1959 between parties that were Cubans in Cuban territory. Even the Eisenhower government recognized the Cuban government’s prerogative to nationalize some properties that had been owned by corrupt members of the Batista regime.

When Congress first debated the Helms-Burton Bill in the late ‘90s, the U.S. State Department warned legislators that the sanctions would provoke clashes with other U.S. allies doing business in Cuba, for example in international institutions, such as the WTO. Under Helms-Burton regulations, the United States has sanctioned French, German, and Canadian companies for participating in commerce and investment transactions with Cuba that are plainly legal in their own countries and under international law. Economists and experts have warned repeatedly that the abuse of sanctions by the United States using the primacy of the dollar creates incentives for other actors to seek mechanisms to protect themselves from this financial vulnerability.

Indeed, after the announcement on the application of Chapters III and IV, European commissioners for Foreign Relations and Trade, Federica Mogherini and Cecilia Maelstrom, announced the EU’s intention to take the United States to the legal panel of the World Trade Organization (WTO). The EU and Canada also released a statement affirming that they “consider the extraterritorial application of unilateral Cuba-related measures contrary to international law. We are determined to work together to protect the interests of our companies in the context of the WTO and by banning the enforcement or recognition of foreign judgments based on Title III, both in the EU and Canada. Our respective laws allow any US claims to be followed by counter-claims in European and Canadian courts, so the US decision to allow suits against foreign companies can only lead to an unnecessary spiral of legal actions.”

Trump’s officials like Secretary of State Pompeo and National Security Advisor Bolton are indulging themselves in a 19th-century geopolitical time-warp, pontificating about the Monroe Doctrine while creating conflicts with Ottawa and Mexico City, and disregarding its allies’ positions on Cuba policy. Meanwhile, Russia and China are deploying a 21st century approach to Cuba and Latin America. Every area in which trade and investment in Cuba appears to be profitable is an open space for Russian and China’s technology and data-driven impulses.

Unleashing the illegal extraterritoriality of Helms-Burton law now will only add to the allies’ resentment of and skepticism against the U.S.’ capability to act as a leader beyond the short-term pressures of its domestic politics. It also provides ammunition to rival powers to denounce U.S. double standards. Why should Russia or China or Iran obey international law or UN resolutions if the United States so flagrantly violates them?

Plus, Trump’s sanctions will hamper also multilateral cooperation with Cuba such as the medical collaboration established by the Obama administration against the Ebola pandemics in West Africa in 2013 and 2014. An environment of hostility does not help foster any kind of constructive cooperation.

Non-Family Travel Ban

Finally, Bolton’s announcements in Miami included a ban on non-family travel to Cuba and a limit on family remittances, the amount of money sent by Cuban Americans to their relatives in the island. Limiting Cuban-American remittances is a prime example of double standards, where the United States dictate that the Cuban government curtails its involvement in the personal lives of citizens while trying to regulate how Cubans living in the United States spend the money they earn. U.S. taxpayers’ money will be spent on monitoring and persecuting people who only want to spend what belongs to them and travel to Cuba.

Trump’s prohibition of non-family travel to Cuba also privileges Cuban-Americans over other American citizens, including Cuban-descendant U.S. citizens, who fall into a second-class citizen category when it comes to travel rights. Cuban American legislators who cannot convince their constituencies to not travel to Cuba have pushed a compromise on the Trump administration that would bar other U.S. citizens from going to Cuba, while avoiding the backlash they will get in Miami if the government repeats former President Bush’s mistakes of limiting Cuban Americans’ travel to Cuba. More than 300,000 Cuban Americans travel to Cuba each year and will continue doing so.

It is ironic that average Cubans who live under a communist one-party regime, which Washington has deemed “a closed society,” have been allowed by their government to travel to the United States without limitation since October 2013, while U.S. citizens living under a liberal democracy are barred from traveling freely to Cuba. Most Cubans would like to change many dimensions of their country but not with a U.S. run transition but with their own timing, priorities, and sovereignty. The United States’ best contribution to Cuban democratization is to respect Cuba’s and other countries’ sovereignty and practice the freedoms it preaches.

 

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EL IMPACTO EN LA ECONOMÍA CUBANA DE LA CRISIS VENEZOLANA Y DE LAS POLÍTICAS DE DONALD TRUMP

Carmelo Mesa-Lago,  Catedrático de servicio distinguido emérito en Economía y Estudios Latinoamericanos en la Universidad de Pittsburgh

Pavel Vidal Alejandro, Profesor asociado del Departamento de Economía de la Universidad Javeriana Cali, Colombia

30 de mayo de 2019

Articulo originalLA CRISIS VENEZOLANA Y DE LAS POLÍTICAS DE DONALD TRUMP

 

 

 

Índice

Resumen, Abstract……………………………………………………………………………………….. 2

Introducción ………………………………………………………………………………………………… 3

(1) Antecedentes de la relación económica entre ambos países …………………………. 4

(2) Análisis de la severidad de la crisis económica-social venezolana ……………….. 5

 (3) Evolución del comercio exterior cubano con Venezuela……………………………….. 7

(4) Las medidas de Trump contra Venezuela y Cuba ……………………………………….. 14

(5) Los efectos del shock venezolano ……………………………………………………………….. 18

(6) ¿Viene otro Período Especial? …………………………………………………………………….. 22

 (7) Posibilidad de que otros países (Rusia o China) sustituyan a Venezuela ……….. 23

(8) ¿Hay alternativas viables para Cuba? ………………………………………………………… 24

(9) Conclusiones……………………………………………………………………………………………… 30

 

Resumen

Históricamente, Cuba ha padecido la dependencia económica de otros países, un hecho que continúa después de 60 años de la revolución. La dependencia con la Unión Soviética en 1960-1990 dio lugar al mejor período económico-social en la segunda mitad de los años 80, pero la desaparición del campo socialista fue seguida en los años 90 por la peor crisis desde la Gran Depresión. Este documento de trabajo analiza de manera profunda la dependencia económica cubana de Venezuela en el período 2000- 2019: (1) antecedentes de la relación económica entre ambos países; (2) análisis de la severidad de la crisis venezolana; (3) evolución del comercio exterior cubano con Venezuela; (4) medidas de Donald Trump contra Venezuela y Cuba; (5) efectos del shock venezolano en Cuba; (6) ¿viene otro Período Especial en Cuba?; (7) posibilidad de que otros países (Rusia o China) substituyan a Venezuela; y (8) alternativas viables a la situación. El impacto en la economía cubana de la crisis venezolana y de las políticas de Donald Trump

Abstract

Cuba has historically endured an economic dependence on other nations that continues after 60 years of revolution. Dependence on the Soviet Union in 1960-90 led to its best economic and social situation in the second half of the 1980s, but the disappearance of the socialist world was followed in the 1990s by its worst economic crisis since the Great Depression. This Working Paper analyses Cuba’s economic dependence on Venezuela in 2000-19, as follows: (1) antecedents of the economic relationship between the two countries; (2) evaluation of the severity of Venezuela’s economic-social crisis; (3) evolution of Cuba’s trade relationship with Venezuela; (4) Trump’s measures against Venezuela and Cuba; (5) effects of the Venezuelan shock on Cuba; (6) is another Special Period in the offing?; (7) possibility of another country (Russia or China) replacing Venezuela; and (8) viable alternatives to Cuba.

 

 

 

 

…………………………………………..

Conclusiones

Este estudio ha aportado evidencia abundante y sólida (respecto a Venezuela) que ratifica la histórica dependencia económica cubana de otra nación y la necesidad de subsidios y ayuda sustanciales para poder subsistir económicamente.

A pesar del gran peso de la beneficiosa relación económica externa, Cuba no ha logrado financiar sus importaciones con sus propias exportaciones. La ayuda externa resulta, al menos por un tiempo, en un crecimiento económico adecuado (en 1985-1989 con la URSS y en 2005-2007 con Venezuela), pero cuando desaparece o entra en crisis el país subsidiador, ocurre una grave crisis en Cuba. La dependencia sobre Venezuela ha sido menor que la relativa con la Unión Soviética y hay además otros factores que podrían atenuar la crisis resultante de la debacle en el primer país; aun así, Cuba ya ha sufrido

El impacto en la economía cubana de la crisis venezolana y de las políticas de Donald Trump Documento de trabajo 9/2019 – 30 de mayo de 2019 – Real Instituto Elcano 31 desde 2012 una pérdida equivalente al 8% de su PIB y una caída del régimen de Maduro agregaría otro 8%. Las medidas de Trump contra Venezuela no han conseguido hasta ahora derrocar el régimen de Maduro y este ha logrado circunscribir algunas de ellas, pero han agravado la crisis en la República Bolivariana creado una situación peliaguda que se agravará en el medio y largo plazo.

Por otra parte, las políticas trumpistas contra Cuba probablemente tendrán un impacto adverso sobre las remesas externas y el turismo (respectivamente la segunda y tercera fuentes de divisas cubanas), mientras que la aplicación del título III de la ley Helms-Burton generaría costes considerables por las demandas interpuestas y un efecto de congelamiento en la inversión futura.

La reacción de la dirigencia cubana frente a la crisis que se agrava ha sido el continuismo, de lo que no ha funcionado por seis décadas; muy poco se dice oficialmente (aunque se destaca por los académicos economistas del patio) sobre la urgente y necesaria profundización de las reformas económicas fallidas de Raúl Castro, a fin de adoptar algunas de las políticas del socialismo de mercado practicado con éxito en China y Vietnam. Para que Cuba pueda encarar la dura crisis que se avecina a corto plazo y conseguir escapar de la dependencia económica externa a largo plazo, esa es la alternativa más viable.

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FOREIGN INVESTMENT IN CUBA MIGHT BE AT RISK IF U.S. ALLOWS LAWSUITS OVER CONFISCATED PROPERTY

BY MIMI WHITEFIELD

Miami Herald, FEBRUARY 20, 2019 12:00 AM

Original Article: Confiscated Property

Cuba’s efforts to attract foreign investment to boost its ailing economy were limping along even before the Trump administration raised the possibility that it might allow lawsuits in U.S. courts against foreign companies that do business on the island using properties confiscated from Americans or Cubans who later became U.S. nationals.

Now with the clock ticking on a U.S. decision on whether to allow U.S. nationals to sue for monetary damages, Cuba’s investment climate might be about to take another hit.

“I think this would be another layer of concern for potential foreign investors and could chill investment in Cuba considerably,” said Jason Poblete, a Washington area attorney who specializes in federal regulatory matters. “It would be an added complication.”

Every U.S. president since 1996 has routinely suspended Title III — the lawsuit provision — of the Helms-Burton Act fearing fallout from important U.S. allies such as the EU countries, Canada and Mexico whose investors in Cuba could be targeted. Like clockwork, presidents have waived the lawsuit provision every six months for more than two decades. The Trump administration has suspended it three times already.

But in January Secretary of State Mike Pompeo informed Congress that this time, beginning on Feb. 1, there would be only a 45-day suspension of Title III. “This extension will permit us to conduct a careful review of the right to bring action under Title III in light of the national interests of the United States and efforts to expedite a transition to democracy in Cuba,” the State Department said.
The review is being conducted at a time when U.S.-Cuba relations are increasingly frayed and will take into consideration “factors such as the Cuban regime’s brutal oppression of human rights and fundamental freedoms and its indefensible support for increasingly authoritarian and corrupt regimes in Venezuela and Nicaragua,” the State Department said.

Analysts say that indicates that the administration wants to make the case that this goes beyond property rights and foreign investment in Cuba and also has a national security dimension.

The decision could come soon, on or around March 2, because the secretary of state must give Congress at least 15 days notice before a suspension of Title III is to begin.

In a process that ended decades ago, the United States certified 5,913 claims for Cuban properties that belonged to U.S. citizens and were expropriated shortly after the 1959 revolution. Those claims plus interest are valued at about $8 billion in today’s dollars.

But under Helms-Burton, also known as the Cuban Liberty and Democratic Solidarity Act, Cubans who were not U.S. citizens at the time their properties were seized also would be able to file suit if a foreign investor in Cuba is “trafficking” in their former properties.

That would include investors who have joint ventures or partnerships with Cuban entities and companies that use or benefit from disputed properties. It also could target foreign companies that have management contracts for properties with underlying claims.

Excluded from the Title III definition of trafficking are any transactions and uses of confiscated property “incident to lawful travel to Cuba” as well as any property that is used for the delivery of international telecommunications to Cuba.

Those who lost their homes and smaller property owners also would be precluded from filing lawsuits if the value of their confiscated property didn’t exceed $50,000 at the time it was taken.

“It would not be easy to make a Title III claim. It requires time, money and emotional capital,” said Poblete. “This is complex litigation.”

Helms-Burton, which was signed into law in 1996 in the heat of Cuba’s shoot-down of two civilian planes piloted by Cuban Americans, notes that the Cuban government “is offering foreign investors the opportunity to purchase an equity interest in, manage or enter into joint ventures using property and assets, some of which were confiscated from United States nationals” in an effort to gain “badly needed financial benefit.”
Cuba, once wary of foreign investors, has said it needs to attract $2.5 billion annually in foreign investment to meet its development targets, but so far it has fallen short of that goal. From October 2017 to October 2018, for example, Cuba approved 40 new projects, representing a potential investment of $1.5 billion.

For 2018-2019, Cuba has announced it is opening up 525 projects, everything from opportunities in the tourism sector to building pharmaceutical, LED lighting and food processing plants, to potential foreign investors. This $11.6 billion portfolio of investment opportunities is the largest Cuba has ever released, beating the previous wish list for $10.7 billion worth of investment in 465 projects.

After the Cuban economy grew by just over 1 percent in 2018, Cuban leader Miguel Díaz-Canel said that “Cuba’s fundamental battle” is economic and that one of Cuba’s urgent needs is attracting more foreign direct investment.

But not everyone is convinced that Cuba is doing enough if it truly wants to attract foreign investors.

“The Cubans might say that foreign investment is a central part of their economic strategy but they haven’t created a climate that is attractive for foreign investment,” said Richard Feinberg, a professor at the University of California San Diego’s School of Global Policy and Strategy and a Brookings Institution fellow.

“The domestic market is stagnant if not shrinking. For companies interested in repatriating profits? There are already delays in Cuba repatriating profits,” he said.

Potential investors also have complained of a lengthy, cumbersome process for evaluating investment proposals, although Cuba said it is streamlining the approval process. It also has opened a Special Economic Development Zone in Mariel that offers special tax and customs breaks and allows up to 100 percent foreign ownership.

 

“The biggest disappointment with Díaz-Canel so far is that the economy is in serious straits. The Cuban people would like to see light at the end of the tunnel,” Feinberg said.

But in the event that Title III lawsuits are allowed to go forward, he said, “the business climate in Cuba would go from a temperature of 0 to minus 5 degrees. That may be a bit dramatic but already there’s just a trickle of foreign investment coming in.”

Cuban Foreign Minister Bruno Rodríguez said earlier this week that Cuba is ready if the United States applies Title III: “We have a program, with a predictable plan for the economy until 2030. The Cuban economy has a strong international anchor.”

Even if the U.S. government decides after its review to continue the suspension of Title III, “the threat itself has a chilling effect,” Feinberg said. “For companies contemplating a new investment in Cuba, they must do their due diligence and make sure there is not an underlying claim.”
“This isn’t really about property,” said Phil Peters, president of the Cuban Research Center. “It’s an attempt to squeeze the Cuban economy to hopefully push Cuba over the brink” and bring political change.

If Title III is activated, a person or entity trafficking in confiscated property would get a three-month warning and then would be liable for monetary damages up to three times the value of the property plus interest as well as court costs and reasonable attorneys’ fees.

European hoteliers and Canadian mining operations are expected to be among the biggest targets if Title III goes forward. Investors from as many as 20 countries could be the targets of Title III lawsuits, said John Kavulich, president of the U.S.-Cuba Trade and Economic Council.

But U.S. trading partners are expected to push back against the extraterritorial nature of Title III.  “The EU, Canada, the UK, and Mexico have what are called blocking regulations on their books to countermand an action under Title III,” said Pedro Freyre, a Miami lawyer who represents cruise lines and other U.S. companies doing business in Cuba.

Such blocking regulations, he said, wouldn’t allow defendants to participate in discovery, would block compliance with any U.S. court orders and wouldn’t allow for the enforcement of a judgment. “They generally allow for claw-back as well, which means the defendant would be allowed to sue the claimant for damages and attorney’s fees,” Freyre said.
The EU also could revive a World Trade Organization complaint it filed when Helms-Burton first became law but which it later withdrew.

“The foreign companies will argue that the United States doesn’t have jurisdiction,” said Robert Muse, a Washington attorney who specializes in U.S.-Cuba relations. “This would be a hard-fought issue.”

Sherritt International

 Nickel Mine and Concentrator, Moa, Cuba; Jointly Owned by Sherritt International and Cuba. A “Helm’s-Burton” Property

 

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PRESIDENT TRUMP RISKS ALIENATING ALLIES OVER CUBAN AMERICAN PROPERTY CLAIMS

William M. LeoGrande

February 14, 2019

The Trump administration is seriously considering whether to allow Title III of the Cuban Liberty and Democratic Solidarity Act (Helms-Burton) to go into effect in March, according to National Security Adviser John Bolton. On January 16, Secretary of State Mike Pompeo announced that he was suspending Title III for just 45 days instead of the ususal six months while the administration reviews whether its implementation would promote democracy in Cuba. He warned foreign companies doing business on the island that they had better “reconsider whether they are trafficking in confiscated property and abetting this dictatorship.”

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 profiting from it. If President Trump allows Title III to go fully into effect, he will open the door to as many as 200,0000 law suits by U.S. nationals, most of them Cuban Americans, 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. Once the suits have been filed, there will be no way to undo the resulting legal chaos and the tangle of resulting litigation could take years to unwind.

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 recognizies and that the United States and Cuba 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, when the law was being debated in Congress, angry opposition from U.S. allies Canada, Mexico, and the European Union, 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. 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.

U.S. allies have denounced Title III’s extraterritorial reach. Mexico, Canada, the United Kingdom, and the European Union all passed laws prohibiting compliance with it. The European Union also filed a complaint with the World Trade Organization, which it did not pursue 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. At this very moment, Washington is trying to muster their support in dealing with the Venezuelan crisis, support that could be endangered if the administration picks a fight with them over Title III.

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 conceivably 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. or foreign 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.

When President Trump announced new sanctions on Cuba back in June 2017, 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.

William M. LeoGrande is Professor of Government at American University in Washington, DC, and co-author with Peter Kornbluh of Back Channel to Cuba: The Hidden History of Negotiations between Washington and Havana (University of North Carolina Press, 2015)

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MAJOR LEAGUE BASEBALL, UNION, CUBA REACH DEAL FOR PLAYERS TO SIGN WITHOUT HAVING TO DEFECT

New rules similar to those for players from Japan, South Korea and Taiwan

The Associated Press · December 19

Original Article: Major League Baseball and the Cuban Baseball Federation

[Arch Ritter: Good news.  But I want to see Cuban – and Dominican Republic –  teams in a new international league.]

Major League Baseball, its players’ association and the Cuban Baseball Federation reached an agreement that will allow players from the island to sign big league contracts without defecting, an effort to eliminate the dangerous trafficking that had gone on for decades.

The agreement, which runs through Oct. 31, 2021, allows Cubans to sign under rules similar to those for players under contract to clubs in Japan, South Korea and Taiwan.

“For years, Major League Baseball has been seeking to end the trafficking of baseball players from Cuba by criminal organizations by creating a safe and legal alternative for those players to sign with major league clubs,” baseball Commissioner Rob Manfred said in a statement Wednesday. “We believe that this agreement accomplishes that objective and will allow the next generation of Cuban players to pursue their dream without enduring many of the hardships experienced by current and former Cuban players who have played Major League Baseball.”

Depending on the quality of future players, the agreement could mean millions of dollars in future income for the cash-poor Cuban federation, which has seen the quality of players and facilities decline in recent years as talent went overseas.

The agreement marks a step forward in U.S.-Cuba relations during a time of tensions between Cuba and the Trump administration, which has pledged to undo President Barack Obama’s 2014 opening with the island.

MLB said the deal was allowed by amendments to the Cuban Asset Control Regulations of March 16, 2016, that established the provisions of a general license from the U.S. Treasury Department’s Office of Foreign Assets Control. The league said OFAC confirmed to Major League Baseball in a letter dated Sept. 20, 2016, that an agreement with the Cuban federation would be valid.

“Baseball has always been a bridge between our two nations, facilitating people-to-people connections and larger agreements that have brought our countries closer together,” said Sen. Patrick Leahy, a Vermont Democrat.

the Cuban federation are subject to resolution by the International Chamber of Commerce.

“Establishing a safe, legal process for entry to our system is the most important step we can take to ending the exploitation and endangerment of Cuban players who pursue careers in Major League Baseball,” union head Tony Clark said in a statement. “The safety and well-being of these young men remains our primary concern.”

Only players under contract to the Cuban federation are covered by the agreement, and the Cuban federation agreed to release all players 25 and older with at least six years of professional experience. They would be classified as international professionals under MLB’s labour contract with the players’ association and not subject to international amateur signing bonus pools.

The Cuban federation may at its discretion release younger players to sign minor league contracts with MLB organizations.

A player can decide whether he wants a registered MLBPA agent to negotiate a major league contract. He may use a representative other than an agent to negotiate a minor league deal.

U.S. Sen. Jeff Flake, an Arizona Republican, called it a “homerun agreement,” tweeting “This deal will make life better for Cuban baseball players, who will no longer have to risk unsafe passage to the U.S.”

Players have told stories of harrowing crossings on rafts and rickety boats — some later challenged as exaggerations.

“Today is a day that I am extremely happy,” said a statement from Los Angeles Dodgers outfielder Yasiel Puig, who was smuggled out of Cuba by traffickers linked to a Mexican drug gang, according to court testimony. “To know future Cuban players will not have to go through what we went through makes me so happy.”

Cuban-born players have a long history in the major leaguers, led by Minnie Minoso with nine All-Star selections, Tony Oliva with eighth and Camilo Pascual and Tony Perez with seven each. And while Puig, Orlando and Livan Hernandez, Aroldis Chapman and others became stars in recent decades, others have been big-money busts. Outfielder Rusney Castillo agreed to a $72.5 million, seven-year contract with Boston in 2014 and has appeared in just 99 games with the Red Sox while playing 347 in the minor leagues.

“Words cannot fully express my heartfelt joy,” Chicago White Sox all-star first baseman Jose Abreu said in a statement. “Dealing with the exploitation of smugglers and unscrupulous agencies will finally come to an end for the Cuban baseball player. To this date, I am still harassed.”

Any players allowed to sign with big league clubs can do so without leaving Cuba, and the fee paid by the signing team will be covered by the same rules as in MLB’s other posting systems: 20 per cent of the first $25 million of a major league contract, 17.5 per cent of the next $25 million and 15 per cent of any amount over $50 million. There will be a supplemental fee of 15 per cent of any earned bonuses, salary escalators and exercised options.

For minor league contracts, the fee will be 25 per cent of the signing bonus, and there will be a supplemental fee for any foreign professionals who at first agree to minor league deals that include major league terms that later come into force.

A former Cuban federation player under contract to a MLB club may return to Cuba during the off-season. He can play in Cuba during the off-season only with his MLB club’s consent.

Cuban players will need the consent of a series of sports officials in the country before the Cuban Baseball Federation agrees to release them, according to the organization’s president, Higinio Velez. He described the new system as a way of protecting the quality of Cuban baseball while allowing players to head to MLB without resorting to traffickers or breaking ties with their country.

Addressing young players’ families, he said, “This is the legal path, the secure path that we’ve always dreamed of for their children.”  “Today’s contract gives the Cuban player a secure life, a tranquil one, of being able to play in Cuba, be signed by any team in the major leagues, to be able to return, to be with their family, travel with their family, to come and go legally any time they want,” he said.

The departure of young Cuban players to MLB has slowed since limits were placed on signing bonuses for international amateurs starting July 2, 2017.  For 2017-18, outfielder Julio Pablo Martinez got $2.8 million from Texas, and the only other signing bonus over $300,000 for a Cuban-born amateur was $750,000 for shortstop Eddy Diaz (Colorado).

In the current signing period that started July 2, the largest signing bonus for a Cuban-born amateur has been $975,000 for outfielder Jairo Pomares with San Francisco.

“Industriales”

Havana Sugar Kings  of the International League in the 1950s.

Training Ground for Cuba’s baseball genius.

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DEMOCRATIZING CUBA? INTERVIEW WITH ARTURO LÓPEZ-LEVY

Published originally by NACLA (https://nacla.org). This is the last installment of a NACLA series on Cuba’s constitutional reform

Arturo López-Levy is the Bruce Gray Fellow and Visiting Assistant Professor of International Relations at Gustavus Adolphus College, Minnesota. He worked as a political analyst for the Cuban government until 1994. He is a co-author of Raúl Castro and the new Cuba: A Close-Up View of Change (McFarland, 2012.

Arturo López-Levy

During his time as president, Raúl Castro announced a series of reforms. [3] One of these was to overhaul Cuba’s 1976 constitution [4], which was drafted at the height of Cuban socialism and has long been out of sync with the country’s post-Soviet reality. In July, Cuba’s National Assembly unveiled a proposed version for the new constitution [5]. This draft will undergo a process of public debate throughout the fall and should be ratified in February 2019.

The constitutional reform has intensified debates on the island about rights, citizenship, and the new economy. This essay forms part of a running forum NACLA is hosting to offer a range of views on this crucial process at a critical moment in Cuban history.

In this essay, political scientist and international relations expert Arturo López-Levy explains how the constitutional reform reflects the goals and expectations of a new generation of the Cuban political elite.

 

Michelle Chase (MC): In broad strokes, what are the most relevant changes proposed in the new draft of the Constitution?

Arturo López-Levy (ALL): If people outside Cuba want to understand the current process of constitutional reform in Cuba, they should look at the relevant terms of the debate and balance of power within the island rather than impose prescriptive and sometimes utopian views about democracy from the outside.

The first thing I would caution is that we should pay attention to the framing of this debate. While many outside observers, dissidents, opposition, and exile intellectuals focus on substantive issues of liberal democracy (such as the right to organize political parties, freedom of association and expression, etc.), the framing of this debate within Cuba’s political structures is mostly focused on procedures and institutions (term limits, decentralization, separation of a new presidency of the republic, presidency of the Council of State, and premiership and legalizing new institutions and practices of the new economy.)

This is hardly a surprise. Facing the passing of the generation who made the Cuban revolution in 1959, the goal of the Cuban elite is improving the collective character of the leadership and the sustainability of the one-party system. There is a new generation of leaders rising in Cuba, but there is no evidence to suggest that they will dismantle the monopoly of the Cuban Communist Party (PCC), establish an independent judicial system, or willingly adopt a free press. This fact has made many observers of Cuba’s political reform skeptical about the prospects for democratization in Cuba. That is why they dismiss the relevance and implications of the debate that is taking place as non-consequential.  The problem with these analysts is that they are imposing their own priorities and values without observing the process on its own merits. In contrast, a good analysis should emphasize the magnitude of the institutional change being proposed, and how a change in these institutional procedures can produce substantive changes, even if unintentionally, in the long run.

From an institutional point of view, the proposed reforms to Cuba’s current constitution represent a fundamental political liberalization of the current system. The new Carta Magna represents explicit and implied changes of utmost importance in the economic realm and the organizational structure of the Cuban state.

In terms of explicit changes, the proposed amendments redefine the character and goals of the Cuban state. The proposed constitution drops the goal of “building a communist society” and ratifies the adoption of a new model of a mixed economy in which not only private property is legalized but also the role of the state sector in the Cuban economy changes. This goes farther than reforms introduced in 1992, which opened the possibility for some expansion of private property in the country but explicitly excluded some sectors of production from privatization. That list disappears in the new project. This change does not mean that the Cuban state now has a “neoliberal orientation,” as some have argued, but it does legally empower the government with discretion to decide what to privatize, how and when.

The draft constitution also lays out changes in the structure of the state that open the gates for a substantial future decentralization. The new constitution redefines the role and mode of election of the provincial governors and their relations with the municipalities. At the national level, the new text proposes the creation of a presidency, as the top official of the country, centralizing in that office many functions that Fidel Castro has said in the past that should be distributed in a council of notables and representatives of the social organizations under the tutelage of the communist party (the Council of State). Together with this new office of the presidency, the constitutional proposal includes the separation of functions and position of the president of the Council of State and prime minister. This is not a separation of power, as some uninformed observers suggest, but a clearer distribution of functions. The prime minister is subordinate to the president, who is also supposed to be the leader of the party, but the premier’s performance and legacy will be essentially assessed by his performance (better economy, welfare, etc.), not in ideological terms.

MC: How was this draft produced? Who exactly contributed to it and how do we see those interests in the draft?

ALL: The politburo of the Communist Party created a commission six years ago that worked on a blueprint of the most important proposals. Then, at the end of the legislative term in December 2017, the National Assembly created a commission of deputies that included many of the members of the first commission created by the party, plus some relevant scholars of law, history and other matters, and representation from official regional and mass organizations.  In terms of generations, the commission showed an interesting mix of old and new blood (in both political and demographic terms).

Most of the members of this commission are openly and inextricably tied to the orthodox party line of the PCC. The group was not composed of the country’s most prominent jurists, constitutional law scholars, experts, or intellectuals. They were competent loyalists who exercised their power as agenda setters in the dark, with no transparency.

This fact disavows any fiction of separation between the state and the party but it also confirms the relevance assigned by the leadership to the constitution making process and the anticipated changes for the political future of the country. This is a loyalist commission that is conscious of the need for renewal within the limits of the system and took seriously the challenge of legitimation and adaptation under the new conditions of the world and Cuban politics and economy.

The commission submitted its proposal to the National Assembly, which debated it and approved it for submission to the general public as a project for debate. Then a process of discussion throughout the whole country began, in every neighborhood or place of employment. In addition, for the first time and creating an interesting precedent, a website hosted by the ministry of foreign relations is collecting comments from emigres. This final project will supposedly be submitted to a referendum during the first half of 2019.

The process of debate serves many purposes beyond the pursuit of some domestic and external legitimation. One of the most important goals is the collection of information about the positions not only of the antagonists but also about those who are associates in different degree with the system. The discussion allows also some cooptation of civil society’s demands and elites opening space for them within the governing coalition. It also allows the historic generation of the revolution to test the persuasive capability and attraction of the different positions of those rising within their ranks.

MC: Why is the Constitution being revisited at this time? How is it related to Raúl Castro’s reforms, the new presidency of Miguel Díaz-Canel, etc.?

ALL: This proposal of constitutional reform is part and parcel of the gradualist and incrementalist approach to economic and political reform adopted by Raúl Castro. An important part of the new project has to do with the political conception about what type of state Cuba will be. The new Article 1 introduces the notion of a socialist “rule of law,” better interpreted as a socialist rule by law. Although this term has been mentioned several times since 1959, it has never been elevated to the rank of a constitutional principle. The idea—as presented by the most outspoken voice in the commission, the chief of the secretariat of the Council of Ministers Homero Acosta—emphasized constitutional obedience and observance over arbitrary power.

Does talking about a “rule of law” socialist state and the reintroduction of guarantees of important rights such as habeas corpus represent the adoption of a judiciary independent from the Communist Party? Obviously not, but that does not mean that when Cuban leaders speak about a “more democratic system” or a “democratic party of the Cuban nation” or rapprochement with patriotic emigres, they are just babbling demagoguery. On the contrary, this is an acknowledgment that, without the complement of political liberalization, the success of economic reform is at risk. Facing the ideological position presented by former dean of the law school of the University of Havana, Jose Toledo Santander who defended the proposition that the Communist party was above the National Assembly and the constitution is what the party- particularly its Political Bureau- say it is; Acosta proposed a different scheme in which the party lead the discussion of the constitutional reform today and then becomes the main guardian of its strict application in accordance with the will of the people who is the ultimate holder of Cuban sovereignty.

The new president Miguel Díaz-Canel and his team are conscious of the potential problems that a more open Cuba can bring. Let’s not forget that political liberalization, not to mention democratization, can be a destabilizing process for a system like Cuba’s. But Díaz-Canel and the new generation of leaders know that accelerating the reforms adopted under Raúl is their best chance. Many factors are pushing in this direction. The one-party state’s old pillars of legitimacy (personal charisma, the appeal of communist paradigms, the appeal of social equality) have declined. It is also clear that the current political structure is inadequate to cope with challenges associated with these reforms, such as the rise of inequality, the overlapping of race and class in the income gap, the increase of corruption and the divisions between urban and rural areas, tourist and non-tourist sectors of the economy, and sectors that benefit from remittances versus those that do not.

In general, these reforms show that president Díaz-Canel and his generational team are setting the political agenda of the country. Some of these leaders have been candid about the fact that the constitutional reforms are updating the legal framework of the country because politics and law have lagged behind the economic and social changes in the country. This was never a major concern of Fidel and Raúl Castro, or the generation of the so-called “historicos.” It confirms that the new generation of leaders is acting with the support of the old generation but is pressing their own issues forward.

MC: Is it fair to say that the new constitution is moving Cuba toward a more republican, or liberal, concept of citizenship?

ALL: Yes, in the margins. In the liberal sense, it proposes a rule by law, not a rule of law. This is better than what exists now but it is not based on an open and transparent competition of political views within the paradigm of the universal declaration of human rights. In the republican sense, the assessment is more complex. The new project creates a better separation of functions between president and prime minister and improves some mechanisms of horizontal accountability and decentralization. At the same time, by transferring to a president of the republic the previous functions of the council of state, the new constitution will strengthen the individual power of the top executive. This could open the door to bouts of Latin American caudillismo down the road.

However, liberal democracy or republicanism in the western style should not be the main criterion to measure the progress of Cuban political development. Cuba democratizes according to its own history and culture. The concept of political liberalization is better fitted to deal with the transformation taking place in Cuba because it emphasizes issues such as the expansion of choices and human rights as international standards. For instance, the expansion of rule by law provides the country with better institutional mechanisms (courts, police, prosecutors, etc.) to cope with an eventual democratization, regardless of the government’s intention to use it to strengthen one-party rule. In a worst-case scenario, non-liberal reformers will be doing the right thing for the wrong reason. The result could be positive.

MC: What implications do all these changes have for U.S. policy toward Cuba?

ALL: If the international community, particularly Latin America and the United States, want to have a realist policy of democracy promotion towards Cuba, it is essential for their policymakers to abandon false presumptions about short-term democratization in the liberal sense and educate themselves about the real and relevant framework, choices, and scenarios within which Cuba is discussing its constitutional reforms. In such a critical hour, the policies of the Trump administration are the model of what not to do. If they continue to adopt a narrow vision about democratization and rights, the role of most international actors, their positions and interactions will be counterproductive.

At a critical time of debate, which will shape how Cuban politics will unfold and whether there will be more opportunities for democratization in the future, the role of the United States is important mainly for what it shouldn’t do. Cubans will decide their own destiny within the context of a nationalist culture strengthened by the 1959 revolution. If Washington insists on treating the new government as mere continuation of the previous generations, trying to play favorites within Cuban politics and interfering in Cuba’s internal affairs, American policy will be very counterproductive to Cuba’s political development and even detrimental to America’s national long-term interest in a peaceful, stable, democratic, and market-oriented Cuba.

The Trump administration has chosen to reaffirm policies of hostility despite all the promising signs for marketization and political liberalization of more engagement during the last two years of the Obama administration. Washington should reconsider the way it engages with a changing Cuba. It should look at this process of constitutional reform with a flexible vision about the positions and motivations of all Cuban actors, including non-liberal reformers in the government. Rather than dismiss the relevance of the intergenerational transition of leadership, it should engage the new president Miguel Díaz-Canel with dialogue and dignity using this critical juncture for a new beginning and facilitating the deepening of the reforms, not repeating the hostility role so fruitful to the most conservative elements in the Cuban government ranks.

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New Book: CUBAN FOREIGN POLICY:,Transformation Under Raúl Castro

Edited by H. Michael Erisman and John M. Kirk

This volume illustrates the sweeping changes in Cuban foreign policy under Raúl Castro. Leading scholars from around the world show how the significant shift in foreign policy direction that started in 1990 after the implosion of the Soviet Union has continued, in many ways taking totally unexpected paths—as is shown by the move toward the normalization of relations with Washington. Providing a systematic overview of Cuba’s relations with the United States, Latin America, Russia, Europe, the Middle East, Asia, and Africa, this book will be invaluable for courses on contemporary Cuban politics.

THE AUTHORS:

Michael Erisman is professor of international affairs at Indiana State University.

John M. Kirk is professor of Latin American studies at Dalhousie University.

 

PUBLICATION DETAILS:

Rowman & Littlefield Publishers

Pages: 314 • Trim: 6 x 9

978-1-4422-7092-3 • Hardback • April 2018 • $85.00 • (£54.95)

978-1-4422-7093-0 • Paperback • April 2018 • $35.00 • (£23.95)

978-1-4422-7094-7 • eBook • April 2018 • $33.00 • (£22.95)

 

TABLE OF CONTENTS

  1. Historical Introduction to Foreign Policy under Raúl Castro, John M. Kirk

Part I: Key Issue Areas

  1. The Defense Contribution to Foreign Policy: Crucial in the Past, Crucial Today
    Hal Klepak,
  2. Cuba’s International Economic Relations: A Macroperspective on Performance and Challenges, H. Michael Erisman
  3. The Evolution of Cuban Medical Internationalism, John M. Kirk

Part II: Cuba’s Regional Relations

5. Cuba and Latin America and the Caribbean, Andrés Serbin
6. Cuba and Africa: Recasting Old Relations in New but Familiar Ways, Isaac Saney
7. Cuba and Asia and Oceania, Pedro Monzón and Eduardo Regalado Florido
8. Cuba and the European Union, Susanne Gratius
9. Cuba, Oceania, and a “Canberra Spring”, Tim Anderson

Part III:Cuba’s Key Bilateral Relations

10. The United States and Cuba, William LeoGrande
11. Canada and Cuba, John M. Kirk and Raúl Rodríguez
12. Spain and Cuba, Joaquín Roy
13. Venezuela and Cuba, Carlos A. Romero
14. Brazil and Cuba, Regiane Nitsch Bressan
15. Russia and Cuba, Mervyn Bain
16. China and Cuba, Andrian H. Hearn and Rafael Hernández

Part IV: Retrospective and Prospective Views

17. Conclusion, H. Michael Erisman and John M. Kirk

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CUBA’S STALLED REVOLUTION

Cuba’s Stalled Revolution: Can New Leadership Unfreeze Cuban Politics After the Castros?

By Richard E. Feinberg and Ted Piccone

 Foreign Affairs, September 2018

Original Article: https://www.foreignaffairs.com/articles/central-america-caribbean/2018-09-20/cubas-stalled-revolution

For Cuba, 2018 marks the end of an era. For the first time in almost six decades, the country’s president is no longer a Castro—neither the late guerilla fighter, revolutionary caudillo, and international icon Fidel, nor his lower-profile brother Raúl, who succeeded Fidel as president in 2008. This April, the mantle was instead passed to former vice-president Miguel Díaz-Canel, a younger post-revolutionary politician who raised paradoxical hopes of both continuity and change.

Yet for those who imagined that the post-Castro era would quickly bring major reforms, Díaz-Canel’s tenure so far has been sorely disappointing. Five months in, progress in the country has come either slowly or not at all. The island’s economy continues to decline, just as it has since the collapse of the Soviet Union nearly 30 years ago, and this despite the carefully calibrated reforms Raul Castro instituted in 2011. Investment rates are alarmingly low, foreign exchange scarce, and shortages of consumer goods widespread. Many discontented Cubans, especially educated youth, continue to emigrate in search of higher living standards and better career choices, depleting the current and future workforce.

Miguel Díaz-Canel 

Reformers and hardliners continue to do battle within the Cuban Communist Party. A new draft constitution promises progress, notably on gender and gay rights, but it also reaffirms the hegemony of the Cuban Communist Party and institutionalizes outdated economic thinking. Recent government initiatives further restrict individual freedoms in business, the arts, and media. The Trump administration, meanwhile, has largely returned to the pre-Obama rhetoric of regime change and posture of hostility and isolation.

STAGNATION NATION

Díaz-Canel has inherited an economy in a state of transition. During his decade-long rule, Raúl Castro broke through once-forbidding ideological barriers on economic policy. He actively inserted Cuba into global commerce, opened the island to foreign investment, and promoted a burgeoning domestic private sector. Raúl also relaxed barriers to travel abroad, allowed private markets for real estate and automobiles, and gradually expanded access to mobile technology and social media. The private sector took off. By 2017, it provided jobs and income to as many as four out of ten Cubans of working age. Tourist traffic rose more than 80 percent during Raul’s tenure. Even though U.S. travelers became less common on the streets of Havana over the course of 2017, as the Obama bump gave way to a Trump dip, tourism is once again the brightest feature of the Cuban economy.

The government has not laid out a new economic policy agenda, much less a strategic vision for long-term development.

And yet, the Cuban economy has performed poorly overall. During the decade of Raúl Castro’s rule, Cuba’s GDP grew an average 2.4 percent per year—at least according to government statistics. At times, GDP growth stagnated at below two percent per year. Five percent would be the minimum necessary for Cuba’s growth to be considered sustainable.

The government has failed to create a truly receptive business climate, and outside the flourishing tourism sector, foreign investors remain skeptical. The precipitous drop in Cuba’s merchandise exports bodes particularly ill, signaling that the country’s state-owned enterprises are failing to compete in global markets. In 2016, these exports shrunk to less than $3 billion, their lowest level in more than ten years. In response, authorities slashed imports, from a peak of nearly $15 billion in 2013 to $10.4 billion in 2016. The loss of these imports has left Cuban stores empty of the most basic consumer items, from beer and paper products to spare parts for household appliances. All the while, restrictions on bringing capital goods into the country continue to exacerbate the already serious lack of factory machinery and farm equipment.

Change is unlikely to materialize soon. The Díaz-Canel administration, occupied with managing austerity policies, has not yet laid out a new economic policy agenda, much less a strategic vision for long-term development. In July, the government issued tough new regulations for the island’s emerging private enterprises. Aimed at preventing private companies and citizens from accumulating wealth—and nipping in the bud any potential challenge to the state’s monopoly on economic and political power—the new rules show that Cuban leaders are still extremely wary of, if not outright hostile to, private enterprise.

OLD RUM IN NEW BOTTLES?

Cuban politics are similarly resistant to change. Raúl Castro is still very present—as head of the Cuban Communist Party until 2021 and as leader of the government’s current efforts to revise the constitution. Every step of the relatively smooth succession process seemed designed to signal continuity with the measured pace of change that had marked Raúl Castro’s tenure, encapsulated by his maxim “sin prisa, pero sin pausa”—without haste, but without pause. It’s no wonder, then, that Díaz-Canel told the national assembly upon donning the presidential sash that “comrade Raúl will head the decisions for the present and future of the nation.”

Díaz-Canel has a lighter touch and is less camera-shy than his predecessor, but when it comes to policymaking, he has so far failed to deliver change. He retains a largely inherited team of senior bureaucrats, and his public remarks have been less about programmatic innovation than about maintaining party unity. Granted, this could be a temporary posture meant to reassure the old party apparatchiks while he builds a more autonomous governing class of technocrats. By this interpretation, the 58-year old is cautiously cultivating a power base of his own to set forward in the later portion of his five-year term, especially after Raúl steps down as party chief in 2021.

On the institutional side, recent changes are a mixed bag. The National Assembly chosen in March includes a mix of old and new faces. More than half of the deputies are new, 53 percent are women, and 41 percent are black or of mixed race. Likewise, the council of state, which is headed by Díaz-Canel and effectively governs the country year-round, has three new vice presidents between the ages of 48 and 52—young leadership for a country long ruled by former revolutionaries in their seventies and older. New rules mandate that deputies serve no more than two five-year terms and enter office at an age no older than 60. Taken together, the changes suggest that party leaders understand the importance of making the benefits of public office accessible to younger cadres and of diversifying the ranks of the governing elite.

A proposed constitutional reform, meanwhile, promises a modest but potentially meaningful political opening. The draft constitution divides power between a president serving as head of state and a prime minister who manages the government’s day-to-day functions. It devolves more autonomy over local affairs to provincial authorities, even though governors would still be appointed by the president. Other provisions suggest greater separation between state and party, even though the overlap in personnel would probably remain high. A new national electoral council would improve the image of the country’s elections, if not their actual integrity. Citizens who gather at least 10,000 signatures can propose legislation. Those who gather 50,000 or more will be able to initiate constitutional revisions.

Even if reformers manage to wedge open some cracks in the state’s monolithic apparatus, Cuba will remain a strictly one-party system.

The draft constitution explicitly grants important civil and due process rights, including habeas corpus, the presumption of innocence, the right to seek restitution for violations committed by state agents, non-discrimination regardless of sexual orientation, and religious liberty. But it makes such fundamental rights conditional upon “collective security, general well-being, respect for public order, the Constitution and laws.” The draft document is rife with such contradictory loopholes that ultimately confirm the state’s supreme power to override fundamental human rights.

Make no mistake: even if reformers manage to wedge open some cracks in the state’s monolithic apparatus, Cuba will remain a strictly one-party system. The draft constitution re-inscribes the Cuban Communist Party as the “superior leading force of [Cuban] society and the state.” Cuban socialism and its political and social system remain “irrevocable.” In the economy, the draft charter complements state planning and ownership with some space for domestic and foreign private capital, but these changes stop well short of formally embracing a more genuinely balanced, hybrid regime, such as the market socialist models of China or Vietnam.

At the moment, the Communist Party is holding forums to debate the draft constitution across the island. These forums are generating discussions among interested elites, but they are expected to yield only modest fixes to the issues outlined above. Once ratified by the legislature and by public referendum—likely easy hurdles—the new constitution will mainly cement the Castro legacy in constitutional, legal and de facto terms, while also bestowing some political legitimacy upon the post-revolutionary cohort Díaz-Canel now leads. For the many Cubans yearning for higher wages and more consumer goods, there is little relief in sight.

MISSED OPPORTUNITIES

Havana’s economic and political inertia has left Washington with little room to elicit more progressive reforms. Either the United States can accept Cuba’s reality and find ways of getting along in order to protect its national interests, or it can maintain and perhaps even step up its efforts to pursue regime change through punitive measures. The latter policy, in place for nearly six decades, has demonstrably failed, but it is unfortunately entrenched in U.S. law, thanks to Congress’ codification of the U.S. economic embargo against Cuba in 1996. U.S. President Donald Trump, who has rolled back many of the openings granted by President Obama, has important pro-embargo constituencies in Florida and is unlikely to shift direction any time soon.  In effect, the Miami hardliners have won back the initiative from the diverse anti-embargo constituencies of the Obama era. This is probably fine and well with hardliners in Cuba, as it gives them some breathing space to seek better relations with Europe, Russia and China without Washington in the picture.

The new administration will likely split the country along generational lines.

The United States and Cuba still cooperate in some areas, but such exchanges face significant challenges. U.S. tourism to the island, especially cruise ship travel, is showing signs of recovery, after a sharp decrease in 2017 and in the first half of 2018. Bilateral cooperation in the areas of law enforcement, migration, and environmental affairs continues quietly, but depleted staffing at both U.S. and Cuban embassies, in part due to a wave of mysterious health concerns reported by U.S. diplomats in Cuba last year, has hampered basic diplomatic and consular functions. U.S. congressional activity has stalled, with the exception of efforts to lift financial restrictions on agricultural trade. All told, neither the punishing embargo nor anemic U.S. diplomacy is likely to prod Havana towards more ambitious reforms.

Domestically, the Díaz-Canel administration will likely split the country along generational lines. For many older Cubans, the new government’s commitment to the principles that guided the Castro era is reassuring. Many middle-aged Cubans will welcome the renewed guarantees of state-sponsored economic security and welfare. Some may also perceive glimmers of a more normal, open and, accessible polity, and will take heart in Díaz-Canel’s support for gradual, carefully monitored openings to foreign investment, the internet, and controlled private enterprise. Cuba’s restless youth, on the other hand, are likely to see only more missed opportunities, whether in a constitutional reform that prioritizes continuity over change or in a president who so far has proven more cheerleader for the status quo than agent of reform. Tragically, Cubans of all stripes, including too many of the best and the brightest, will continue to seek opportunities elsewhere.

 

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