• The objective of this Blog is to facilitate access to research resources and analyses from all relevant and useful sources, mainly on the economy of Cuba. It includes analyses and observations of the author, Arch Ritter, as well as hyper-links, abstracts, summaries, and commentaries relating to other research works from academic, governmental, media, non-governmental organizations and international institutions.
    Commentary, critique and discussion on any of the postings is most welcome.
    This Blog on The Cuban Economy is dedicated to Cuba's Generation "A". Although inspired by Yoani Sánchez' original blog "Generation Y" this is not dedicated to those with names starting with the letter "A". Instead, it draws from Douglas Coupland's novel Generation A which begins with a quotation from Kurt Vonnegut at a University Commencement:
    "... I hereby declare you Generation A, as much as the beginning of a series of astounding triumphs and failures as Adam and Eve were so long ago."

New Analysis by Francesc Bayo Fornieles, “LAS RELACIONES ECONÓMICAS ENTRE ESPAÑA Y CUBA: ANTECEDENTES Y PERSPECTIVAS”

Posted on November 10, 2010 by Arch Ritter

A recent analysis of Cuba-Spain economic relations has been published by Francesc Bayo Fornieles:

“LAS RELACIONES ECONÓMICAS ENTRE ESPAÑA Y CUBA: ANTECEDENTES Y PERSPECTIVAS”, BOLETÍN ECONÓMICO DE ICE Nº 2995,  DEL 16 AL 31 DE AGOSTO DE 2010

www.revistasice.com/cmsrevistasICE/pdfs/BICE_2995_25-34__2D9DCB3F50615CADB089354D24A747A1.pdf

Here is the summary:

La economía cubana afronta retos muy importantes para superar el estancamiento actual y los problemas estructurales acumulados, que obligan a pensar como asegurar una futura viabilidad. Según las decisiones que acabe adoptando el Gobierno presidido por Raúl Castro, el actual marco de inserción internacional y las condiciones de apertura externa podrían verse afectadas. En las últimas décadas las relaciones económicas entre España y Cuba han seguido una pauta de relativa continuidad, a pesar de los notables altibajos y, a la vez, se han producido frecuentes adaptaciones a los diferentes patrones que las han regido en cada momento. Con estos antecedentes y ante la posibilidad de que puedan abrirse nuevas expectativas, en este trabajo se pretende analizar las perspectivas para avanzar en esas relaciones.

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Still the “Bestest” and the “Worstest” and Maybe the Most Opaque: Cuba in the 2010 UNDP Human Development Report

Posted on November 5, 2010 by Arch Ritter

By Arch Ritter

The 2010 UNDP Human Development Report , published on November 5, 2010, presents the definitive and much-awaited “Report Card” on the social, economic, political, environmental and security dimensions of development for all countries of the world. In this Report, Cuba fares well in some indices, badly on others, but is also “out-of-the-running” on the major UNDP Human Development Indices due to lack of reliable information.

The whole of the UNDP Human Development Report can be accessed here:   2010http://hdr.undp.org/en/mediacentre/

Here are a few of the interesting comparative insights and results for Cuba.

1.      Main Human Development Indices

Cuba is excluded from the main Human Development Indices that the UNDP presents, namely the Human Development Index (Table 1), the Inequality-adjusted Human development Index (HDI) (Table 2) and the Multidimensional Poverty Index (Table 5)  as well as the HDI Trends from 1980 to 2010 (Table 3). This is unfortunate because it is not possible this year to make a comparison of Cuba with other countries or with itself over time.

Due to the existence of the dual exchange rate system in which there is no reasonable single exchange rate, together with the complexity of the highly segmented markets – underground economy, rationing system, farmer’s markets, non-market allocation of some goods and services, and quasi-dollar stores – it was concluded by the UNDP that it was impossible at this time to construct a measure of GDP per capita in purchasing power terms as is done for some 169 other countries. . The UNDP apparently is working with the Government of Cuba to correct this situation. The UNDP’s explanation of the problem is presented in Appendix 1.

2.      Gender Inequality Index

Cuba comes first in Latin America and 47th in the world for this measure, which includes maternal mortality rates, adolescent fertility rate, share of parliamentary seats held by each sex, attainment at secondary and higher education, labor market participation rates, contraception availability, and births attended by health personnel (Table 4).

3.      “Empowerment”” Measures

In a new dimension of its analysis (Table 6), the UNDP brings together a variety of indicators of human “empowerment.”  Cuba fares uniformly badly, and indeed worst in Latin America for many measures:

  • “Democracy”: worst in Latin America;
  • “Press Freedom”: worst in the world, including China;
  • “Satisfaction with Freedom of Choice”: worst in Latin America, with 26% and 28% satisfaction for males and females respectively;
  • “Journalists Imprisoned”: worst in the world with the exception of  China;
  • “Human Rights Violations”: among the worst.

4.      Education

Cuba fares well in education generally (Table 13). One notable feature of Cuba’s comparative experience is that it has the largest tertiary education enrolment in the Hemisphere and the world at 121.5% compared to an average of 36.5% for all of Latin America.

How can this be? Presumably more people than are in the normal tertiary education age cohort are attending colleges or University. This is the result of increasing the supply of tertiary education, by creating alleged “Universities” in every Municipality, plus an increase in the demand for higher education by those who have been put out of work in various areas including the sugar sector. It is difficult to know without further information if the 121.5% figure represents an achievement or a gross misallocation of resources given that Cuba needs to produce real products in agriculture and industry, and seems to be overproducing university graduates – not unlike some higher income countries .

5.      Health

As is well-known, Cuba also fares well in health measures and has been particularly successful in squeezing strong health outcomes from very scarce resources (Table 14).

One interesting measure is the number of doctors per 10,000 people that stands at 64 for Cuba. This again is the highest ration by far in Latin America and the world. Again, this looks like an over-allocation of resources to the “doctor” category in health. However, given that the 30,000 doctors abroad are now the largest earner of foreign exchange for Cuba, it is likely that this over-abundant resource is now being used effectively.

6.      Access to Information and Communications Technology.

Cuba’s performance is in communications and access information is also the weakest in the Hemisphere. Here are a number of indicators noted by the UNDP (Table 16).

  • The access of Cubans to land-line and mobile telephones stands at 13%. This is by far the lowest in the Hemisphere. Even the lower income countries in the region have much higher access to telephones, with Haiti at 33%, Nicaragua 60%, Guatemala 120%; Grenada 86%, El Salvador 131%, Paraguay 103%m and Honduras 96%.
  • The cost of a mobile telephone connection in Cuba is by far the highest in the world, at $120.00.  Obviously this limits the demand for mobile connections and helps explain Cuba’s 13% access rate.
  • Access to the internet is particularly low at 12.9 per 100 persons, though not the lowest in the Hemisphere.
  • The proportion of the population with personal computers was estimated at 5.6 per 100 persons, again low but not the lowest in the Hemisphere.

This illustration shows the HDI trajectories for all countries of the world from 1980 to 2010, excepting Cuba and a few others.
Appendix !: Purchasing power parity conversions and the HDI: an illustration with the case of Cuba (Source: UNDP,  HDR 2010, p.138).

The HDI uses internationally comparable data on gross national income (GNI) per capita from the World Bank (2010g). These data are expressed using a conversion factor that allows comparisons of prices across countries. This conversion, known as purchasing power parity (PPP), is necessary to take into account differences in the value of a dollar across countries.  Four countries have data on all HDI components except for GNI: Cuba, Iraq, Marshall Islands and Palau. For three of these countries (Cuba, Marshall Islands and Palau) this is due to the fact that they do not participate in the International Comparisons Program. Iraq lacks information about GNI for the last 10 years.
To illustrate the options and problems that arise in attempting to reliably estimate GNI per capita in PPP terms, Cuba is used as an example. One well known approach to estimating GNI—used by the Center for International Comparisons of Production, Income and Prices at the University of Pennsylvania (Heston, Summers and Aten 2009)—is a regression that relies on data from the salaries of international civil servants converted at the official exchange rate. However, because the markets in which foreigners purchase goods and services tend to be separated from the rest of the economy, these data can be a weak guide to the prices citizens face in practice. The Center for International Comparisons of Production, Income and Prices recognizes this problem, rating its own estimate of Cuba’s GDP as a “D” (the lowest grade).
An alternative estimate applies the exchange rate used in Cuba and the PPP conversion of an economy with similar attributes, but this method goes against the principle of using a country’s legally recognized exchange rate and prices to convert its national aggregates to an international currency. Another option is to not apply any PPP correction factor to the official exchange rate for convertible pesos. Both of these options yield far lower estimated income than the PPP correction does. The wide variation in income estimates arising from these different techniques indicates that no single robust method exists in the absence of reliable data.
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Does Sherritt International Have a Future in Cuba?

Posted on October 20, 2010 by Arch Ritter

By Arch Ritter

The joint venture between Sherritt International and Cuba is a cooperative masterpiece that generates great benefits for both parties.  However, when looked at from the perspective of transportation costs – shipping nickel/cobalt concentrate from Cuba to Fort Saskatchewan Alberta – together with the “Helms-Burton” status of the mine, some questions occur as to its long term viability.

The Moa mine was initially constructed by US interests – the Moa Bay Mining Company and expropriated by the government of Cuba in August, 1960. The US Foreign Claims Settlement Commission valued the company at $88,349,000 at the time of the take-over.

Sherritt’s connection with Cuba began in 1991 with purchases of Cuban nickel concentrate for its Alberta refinery.  Sherritt had had insufficient volumes of concentrate for many years and in 1990 a refining contract with INCO expired. In 1994, Sherritt International and the Compania General de Niquel of Cuba established a 50/50 joint venture, which now owns the Moa extraction, processing, and smelting operation, the Alberta refinery and the international marketing enterprise. The President of the company, Ian Delaney, also negotiated agreements with the Cuban Government, permitting Sherritt to enter other sectors of the economy, including electric energy, oil and gas, agriculture, tourism, transportation, communications, and real estate. By 2000, Sherritt International had become a major diversified conglomerate in Cuba.

Sherritt International CEO Ian Delaney and President Raul Castro appreciate a comment.

In this deal, the Cuban Government became and is currently a foreign investor in Canada, as the Compania General de Niquel owns 50% of the nickel refinery, a fact not well known in either Cuba or Canada.

I. The Nickel/Cobalt Operation

The linking of the Moa nickel deposit and part of Cuba’s processing capacity with the Alberta refinery and its access to attractive energy sources was a masterful move and has generated important benefits for Cuba and for Sherritt. Cuba has acquired a market for its nickel concentrate. It acquired access to improved production technologies relative to its older 1950s-vintage US technology and its 1960s-vintage Soviet technology which has generated improvements in productivity, energy efficiency, environmental impacts, and health and safety. The Government of Cuba is now the joint owner of a vertically integrated nickel operation, from extraction through to refining and international marketing. Cuba also has obtained new technologies and managerial skills for oil and gas extraction and utilization, as well as electricity generation.

(Click to enlarge)

The Nickel Refinery at Fort Saskatchewan Alberta, jointly owned 50/50 by Sherritt International and the Compania General de Niquel of Cuba.

Sherritt is able to utilize more fully its Canadian refinery and to use its base in nickel to enter other sectors in Cuba. Its earnings from its Cuban operations are significant. The joint venture has been able to increase metal production and achieve high net operating earnings, which have been in the area of 40 to 50 percent of the company’s gross revenues for most years, depending on international nickel prices.  The following Table presents some information on Sherritt’s Cuban operations, drawn from its Annual Reports.

(Click to enlarge)

II. Petroleum, Natural Gas and Electric Power

Sherritt International’s petroleum and natural gas activities also have been successful. New sources of oil and gas have been discovered and extraction rates have increased through enhanced recovery techniques from 1996 to 2000. Natural gas recovery and utilization has also been improved through the construction of two processing plants, a feeder pipeline network, and a 30 Kilometer pipeline to Havana (Sherritt International, Annual Report, 1997, 13).

Sherritt invested CDN $215 million for the construction of two integrated gas processing and electrical generation systems. The natural gas feedstock previously had been flared and wasted. Commissioned in mid-2002, these operations had a combined capacity of 226 megawatts and generated a significant proportion of Cuba’s electricity. At the same time they reduced sulfur emissions, a potential problem especially at the Varadero site, which is adjacent to the hotel zone. By 2007, installed electricity generation capacity had been further increased to 375 mega watts, following an 85 MW expansion that came on stream in early 2006.

In February 1998, Sherritt acquired a 37.5 percent share of Cubacel, the cellular telephone operator in Cuba for $US 38 million, but this has been resold. “Sherritt Green,” a small agricultural branch of the company, entered market gardening, cultivating a variety of vegetables for the tourist market. Sherritt also acquired a 25 percent share of the Las Americas Hotel and golf course in Varadero and a 12.5 percent share of the Melia Habana Hotel, both of which were managed by the Sol Melia enterprise but these also have been divested.  By 2010, Sherritt’s Cuban operations were large and growing. Gross revenues reached CDN $1,040 million in 2008.

III. Energy Costs, Transport Costs and Potential Relocation

However, there are two clouds on the horizon. First, Cuban nickel concentrate is transported by ship to the East coast of Canada and then overland to the Alberta refinery. This seems to make sense economically at this time low energy prices in Alberta and the existence of the refinery there compensate for high transportation costs. However, if – or when –transportation costs rise with higher energy prices, and when the existing plant becomes obsolete or simply reaches the end of its useful life, would a different location become more attractive?   Low cost energy is also available in Venezuela for example. The Chvez factor is also of relevance. Will a future Cuban post-Raul Government still be enamored of a Chvez or post-Chvez Government in Venezuela? What will be the relative risks of relocating the refinery to another location such as Venezuela?

So far, Cuba is tied to the Canadian location through its 50% joint ownership of the Alberta refinery. Would Sherritt ever accept a transfer of the refinery to Venezuela, if pushed by its Cuban partner?  Perhaps in a more distant future that is difficult to foresee. However, Alberta will continue to have competitive energy prices and low risk for a many years to come.

IV. “Helms-Burton” Status of the Mine Properties.

The second possible problem for Sherritt is that the Moa mine and the concentration plant are “Helms-Burton” properties for which there are US claimants. US-Cuba normalization may require Sherritt to negotiate some sort of compensation package for the original US owners.  In one scenario, the US claimants would simply take over the Cuba-Sherritt operation in Cuba. But this would not be reasonable because at this time, the refinery for Cuban nickel is in Alberta and it is jointly owned by Cuba. To construct another would be costly. My guess, however, is that Sherritt, the Government of Cuba and the US claimants will negotiate an arrangement that will be reasonable for all parties.

In any case, the claim of US interests on the mine property generates uncertainties and will be problematic at some time in the future. Sherritt International may well be one of the very few economic interests that perhaps could lose from US-Cuban economic and diplomatic normalization.

V. “Nickel Pig iron”

As noted in an earlier entry in this Blog, a technological breakthrough in the production of “Nickel Pig iron” (NPI), a substitute for refined nickel is already having an impact on the nickel market and causing reductions in the price of nickel. This technology will likely put a cap on nickel prices in future a as alternate new supplies enter the market. This will likely reduce Sherrittt and Cuba’s foreign exchange earnings from nickel exports in future, and may halt any expansions in nickel nickel mining for some time to come. (See Bad News for Cuba’s Nickel Industry and Sherritt.)

Thus, while the near-future looks as bright for Sherritt International in Cuba as the last 10 years or so, these three issues raise ambiguities about its medium and longer term future – at least in the nickel sector.

Ian Delaney: a Sympatico CEO, it would appear

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Jump-Starting the Introduction of Conventional Western Economics in Cuba

Posted on October 19, 2010 by Arch Ritter

By Arch Ritter

I.   Initiation of the Joint Havana-Carleton Universities Economics MA  

As the Cuban economy was sinking into the nadir of its depression following the ending of the “Special Relationship” with the former Soviet Union, the Faculty of Economics at the University of Havana decided that the time was right to introduce conventional economics into University curricula and into Cuba generally. With the collapse of the Soviet Union and the transition to mixed economies throughout Eastern Europe and the Soviet Union, the Soviet version of the discipline of Economics virtually disappeared. Cuban economists were left orphaned with a discipline that had become extinct. They generally were unfamiliar with the near-universal language of economics and found it difficult to communicate in the discipline with their colleagues in Latin America and the rest of the world.

This move to introduce conventional economics was spear-headed by Dra. Lourdes Tabares, who was the Chair of the Economics Department at the University of Havana at the time. It had broad though far from unanimous support within the University.

A meeting was arranged in early December 1993 in Havana to discuss alternative approaches to accelerating the process of developing instruction in conventional economics. Financed by the International Development Research Centre (IDRC), and coordinated by Dr. Gary McMahon, this meeting brought together a number of academics and officials from Chile and Argentina and me from Canada, with University of Havana counterparts.

A decision was reached at that meeting to organize a joint MA program in Economics mainly for young faculty members from Cuban Universities to be given in Cuba at the University of Havana. An agreement was subsequently reached between the President of Carleton University, Dr. Robin Farquhar and the Rector of the University of Havana. Juan Vela, to provide the Carleton program adapted to the circumstances of Cuba.

The program was conceived in December 1993 and was up and running six months later in Havana.

The Economics MA was financed for the first two years by the IDRC and was supported by Gary McMahon and Pierre Beemans. Following that, the Canadian International Development Agency (CIDA) financed another three years of the MA Program. The program received crucial support from the United Nations Economic Commission for Latin America (UN ECLAC), which lent its good name as a co-sponsor of the program and provided about 40% of the faculty at its own expense. Particularly vital was the support of Francisco Leon and the Secretary General Gert Rosenthal of UN ECLAC. The Canadian Embassy in Havana, notably through Ambassador Mark Entwistle and Nobina Robinson, were instrumental in the extension of the program. CIDA was so pleased with the first two IDRC-financed years that it decided to extend the Economics MA for an additional three years.

It also agreed to expand collaboration between Carleton University and the University of Havana for five years and to five other units at the two Universities: Biology, Business, Linguistics, Women’s Studies and Public Administration. Professors were recruited from a number of Latin American countries as well as Canada. Among the contributing professors were

  • Canada: Keith Acheson, Zhiqi Chen, Donald McFetridge, Gary McMahon, Carl McMillan, Soo Bin Park, Simon Power, Arch Ritter, Nicholas Rowe, Larry Willmore (also with the United Nations), and Frances Woolley.
  • UN ECLAC: Ricardo Ffrench-Davis, Michael Mortimer, Bernardo Kosakoff Juan Carlos Lerda, Luis Felipe Jimenez, , Jorge Katz, , Joe Ramos, Daniel Titelman.
  • Argentina: Jose Maria Fanelli. Mario Damill, Guillermo Rozenwurcel
  • Bolivia: Juan Antonio Morales
  • Brazil: Ricardo Paez de Barras
  • Peru: Alberto Pasco-Font

Senior Cuban professors worked with the visiting Canadian and Latin American professors and took over some of the classes. Among the Cuban professors were Felix Marero, Elena Hernandez, Lourdes Tabares, Nelida Gancedo, Vilma Hidalgo, Manuel Miranda, Frank Hidalgo, Ela de Quezada, Raul Sandoval, Celia Fernandez, Ermida Gonzalez and, and Marta Madero.  

 

II. Impacts of the Program

The objective of the five years of the MA Economics Program was to support the introduction of conventional economics into the curriculum of Cuba’s universities. From this perspective, I think that it could be considered to have been reasonably successful. At the University of Havana for example, a program in conventional economics was initiated quickly and is in operation. Similarly the University of Oriente soon established a conventional economics program, under the leadership of the MA graduate Ulisses Pacheco who became Dean of the Faculty. These programs have been producing some impressive graduates and new academics for over a decade.

A substantial number of the MA graduates went on to earn Doctoral degrees in Economics both inside Cuba, notably in a program with the University of Barcelona and outside Cuba at Carleton University, Ottawa Canada. However, significant numbers of the graduates have emigrated and built their lives elsewhere. This is undoubtedly a loss for Cuba, as all were just at the early stages of their productive professional and family lives. (Remittances are small compensation for this loss.) 

Of the 76 graduates of the program, 16 now are employed in Cuban Universities, 22 have other employment in Cuba, most in government, 7 were citizens of other countries and have returned to their own countries, and 31 have left Cuba. The visiting professors were particularly happy with the level of qualification and the strong commitment and motivation of the Cuban students. It was a positive and pleasant experience for all the professors involved. There were of course some minor frictions in the implementation of the program but surprisingly few and most were resolved quickly and satisfactorily. 

One such issue was a conflict with the Ministry of Cooperation and Foreign Investment, MINVEC. The problem was that the University of Havana had entered into an agreement with Carleton and IDRC but had not gone through MINVEC. It was some five months after the beginning of the program in July 1994 that MINVEC finally gave its approval.

Another issue that had to be dealt with has been described by Luis Casaco in a his Blog entitled “historias mínimas – short tales, palabras, amigos y un poco de música”,  and can be seen at the following address: when carleton university knocked my door at  http://kaskouy.blogspot.com/2008/03/when-carleton-university-knocked-door.html.

 

III. Where are They Now: Graduates of the Havana-Carleton Economics MA, 1995-1999

As of October 15, 2010 This listing is based on information mainly from around 2002. Much has happened since then, and undoubtedly there are many inaccuracies. Please forward any corrections that you may be aware of regarding locations and employment or contact information. Please send any corrections or new information to Arch_Ritter@Carleton.Ca

1994-1995 COHORT

  • Raul Ávila Rodríguez, Ottawa Canadá
  • Regino Boti Llanes, Londres, RU
  • Idania Coello Caballero, La Habana, Cuba
  • Ledya Fernández Lleal, Facultad de Economía, Universidad de La Habana, Cuba
  • Luis René Fernández Tabío, Instituto de Investigaciones (CESEU), La Habana, Cuba
  • Nélida Lamelas Castellano. University of Santiago de Compostela, Santiago, España
  • María Rosa Moreno Fernández, PNUD, La Habana, Cuba
  • Ulises Pacheco Feria, Decano, Facultad de Economía, Universidad de Oriente, Santiago de Cuba
  • Carmen Quintela F., (Facultad de Economía, Universidad de La Habana,) Cuba, Deceased
  • María C. Sabourin Jovel, Miami USA 
  • Mario Sánchez Egozcue, Centro de Estudios sobre la Economía Cubana, La Habana, Cuba
  • Juana Sánchez Mesa, PNUD, La Habana, Cuba
  • José Somoza Cabrera, Dpto. del Medio Ambiente, Universidad de La Habana, La Habana, Cuba
  • Magda Valera Cepero, Miami, Estados Unidos
  • Ignacio Vera Paneque, Naciones Unidas, Nueva York

Class of 1995-1996

  • Fausto Arias Araluce, “Interholdings” Spain
  • Even Chi Pardo (ciudadano panameño) Universidad de Panamá, Panamá
  • Pablo Crespo Brito, Barcelona, España
  • Bernardo Cutié Rizo, Miami, Estados Unidos
  • Gelvis de Armas O., Facultad, ISRI, La Habana, Cuba
  • Pierre Fils Aimee, (ciudadano haitiano) Toronto, Canadá
  • Idania Gancedo Gaspar, Facultad de Economía, Universidad de La Habana, Cuba
  • Eduardo Hernández Roque, Banco Central de Cuba, La Habana, Cuba
  • Nelson Lim Chang, Departamento de Economía, Universidad de Oriente, Santiago de Cuba
  • Boris Moreno Capote, Iglesia Católica, San Antonio de los banos, Cuba
  • Olga Pérez Soto, Facultad de Economía, Universidad de La Habana, Cuba
  • Amarylis Rodríguez R., Ferris Management Ltd., La Habana, Cuba
  • Maria Sanabria Pis, Banco Central de Cuba, La Habana, Cuba
  • Javier Tella Reyes, USA
  • Jorge A. Uriarte Landa, Gobierno de Canadá, Ottawa, Canadá

Class of 1996-1997

  • Alex Gay Cabrera, ¿Alemania?
  • Yuri Gracia Morales, Integral S. A., La Habana, Cuba
  • Arturo López Callejas, Universidad de Denver, Estados Unidos
  • Ricardo Mansilla Corona, Center for interdisciplinary Research in Sciences and the Humanities of the National University of Mexico (UNAM) Ciudad de Mexico. Web site :  http://www.ceiich.unam.mx/0/13PerCur.php?tblPersonalAcademico_id=12  
  • René Mujica López, España
  • Mahe Parodi Heydrich, Mississauga, Canadá
  • Karel Regalado Alonso, Tembec, Temiskiming, Canadá
  • Judith Rodríguez Marcial, FinTur (empresa financiera) La Habana, Cuba
  • Luciano Rondón Hernández, Montreal, Canada
  • Ana Julia Yanes Faya, Gobierno de Canadá, Ottawa, Canadá

Class of 1997-1998

  • Alexis Aguilera Borges, Cuzco, Peru  
  • Raysa Alcalá Martínez, Investigadora, Oficina Nacional de Administración Tributaria (ONAT), La Habana, Cuba
  • Alberto Baly Gil, ¿Cuba?
  • Luis Casaco, Montevideo, Uruguay
  • Vladimir Díaz, Empresa Seguridad y Protección, La Habana, Cuba
  • Yaimí Farías Dominguez, Miami, Estados Unidos
  • Tania García, Facultad de Economía, Universidad de Oriente, Santiago de Cuba
  • Abel Izquierdo Falcón, Profesor, Universidad Central de Las Villas, Cuba
  • Ernesto Landa Falcón, Gobierno de Cuba, La Habana, Cuba
  • Adrián López Denis, Profesor, Universidad Princeton, Princeton, Estados Unidos
  • Osmel Martínez Trujillo, Toronto, Canadá
  • Cristian Meneses Torres (ciudadano chileno), ¿Chile?
  • Hector Molina, Facultad de Economía, Universidad Central de Las Villas, Cuba
  • Antonio Ruiz Cruz, Facultad de Economía, Universidad de Las Villas, Santa Clara
  • Esteban Salido Gamboa, Miami, United States
  • Víctor Sombart, Faculty de Economía, Universidad de Oriente, Santiago de Cuba
  • Thanh Huong Tran (“Alina”), (ciudadano vietnamita) Viet Nam
  • Eileen Tur, Toronto, Canadá

Class of 1998-1999

  • Maritza Álvares Herrera, Miami, Estados Unidos
  • Hamma Bachra Ahmed, (ciudadano saharaui), Sahara Occidental
  • Maria Boiko, (ciudadana ucraniana) Ucrania
  • Vilma Cervantes R., La Habana, Cuba
  • Marco Díaz Díaz, La Habana, Cuba, (deceased)
  • Kim Frederick, (ciudadano granadino) Grenada
  • Antonio Galis-Menéndez, Estados Unidos Radamés Gonzáles, Santiago de Chile
  • Tatiana González, Ministerio de Comercio Exterior, La Habana, Cuba
  • Luis Gutiérrez Urdaneta, La Habana, Cuba
  • Zoe Medina Valdés, Facultad de Economía, Universidad de La Habana, Cuba
  • Yenniel Mendoza, Instituto Nacional de Investigaciones Económicas, La Habana, Cuba
  • Mavis Morales, Rusia
  • Ana M. Pérez de la Cruz, Panamá
  • Heidi Portuondo C., Barcelona, España Eduardo Ramos D., n.a. Cuba
  • Lester Rodríguez, Business Analyst, Finantix (Italian financial software house),
  • Padua Italy Paul Valdes-Miranda, Market Research Analyst, Ciudad Mexico, Mexico
  • Katty Yeja López, Bahamas

At the Inauguration of the Program, Ambassador’s Residence,September 1994 Gary McMahon, Ambassador Mark Entwisle, Francisco Leon, and Lourdes Tabares

Nicholas Rowe, teaching a Macroeconomics class, October 1994

 

Class of 1996-1997 From left to Right: Nicki; Nicki’s son Junior, (Canadian, not known), Elizabeth Rohr (Carleton University), Rene Mujica, Victor Sombert,  Luciano Rondon,  Ana Julia Yanes Faya, Mahe Parodi, Karel Regalado, E. V. Diaz, Judith Rodriguez, Yuri Gracia,  

Class of 1997-1998   From left to right, Back:  Osmel Martinez, Yaimi Farias Dominguez, Raysa Alcala, Ernesto Landa, Belkis, Alberto Baly, Alina, Paul Valdes-Miranda, Tran Thang Huong, Esteban Salido, Eileen Tur, Alexis Aguilera and Arch Ritter. In front: Ricardo Mansilla, Adrian Denis with Luis Casaco’s son Mauri and Luis Casaco, Guabano, February 1998

Class of 1998-1999 Front row. left to right: M. Bachra-Ahmed, Maritza Alvarez,  Maria Boiko, Kim Frederick, Tatiana Gonzalez, Marcos Diaz Diaz Back row:  Radamez Gonzalez, Vilma Cervantes, Zoe Medina, Katty Yeja, Mavis Morales, Eduardo Ramos, Heidi Portuondo, Ana Margarita Perez. Luis Gutierrez, Paul Valdes-Miranda

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

Posted on October 14, 2010 by Arch Ritter

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

Fidel Castro: The Cowardice of Autocracy

Fidel’s Phenomenal Economic Fiascoes: the Top Ten

Fidel’s No-Good Very Bad Day

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

On September 17, I published and entry on this blog entitled “Fidel’s Phenomenal Economic Fiascoes: the Top Ten” but stated that I would also write a statement on Cuba’s greatest achievements under the leadership of President Fidel Castro. Here it is.

There certainly were economic policy blunders from 1959 to mid-2006 when Fidel Castro stepped aside in favor of his brother Raul. However, as is well known, Cuba made major achievements over these years in socio-economic terms. I will begin with a quick summary of Cuba’s socio-economic performance from 1959 to 1990 and 1990-2010, and then proceed to a listing of the Tip Ten Achievements

I. Socio-Economic Performance, 1959-1990

While the performance of the Cuban economy from 1959 to 1990 period was mixed, major improvements were made in terms of socio-economic well-being. The summary of changes in a few key socio-economic indicators in Table 1 illustrates the absolute and relative improvements achieved in human well-being. Life expectancy and infant and child mortality are summary indications of nutrition, income distribution and poverty and the quality of a nation’s health care system. Literacy and educational attainment are key factors in the investment in human capital and in citizen empowerment in a modern economy.

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Cuba’s rankings for these indicators in 1960 were relatively high in the Latin American context so that it was building on reasonably strong foundations.

However, despite improvements in the rest of Latin America, Cuba raised its relative ranking for all five of the socio-economic indicators vis-à-vis the rest of Latin America (excluding the English-speaking Caribbean.)  However Cuba’s economic ranking – in terms of the purchasing power of GDP per person – fell well down the list in 1990 placing Cuba at the 14th rank. As a result, Cuba placed at #10 in the UNDP Human Development Index.

II.        Socio-Economic Performance 1990-2010

Despite the economic difficulties of the 1990s, Cuba continued to improve its socio-economic performance in relative and absolute terms, at least as these are measured by the indicators in Table 2. Cuba continued to lead the Latin American countries in infant mortality and the education indicators. The improvements in education and health indicators and rankings occurred despite weakening of resource allocations and problems of maintaining quality. Cuba’s success in these areas was due largely to the quality and quantity of the educational systems built up in the previous1960-1990 period and institutional momentum.

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III.             Top Ten Achievements

Here is a listing of the Cuba’s socio-economic and economic achievements under the Presidency of Fidel Castro. They are not presented in order of importance. Some are the result of specific policy decisions or design or negotiations of Fidel Castro, though others are not.

#1        The 1961 Literacy Campaign

#2        Reorganization of the Health Sector

#3        Redesign of the Educational System

#4        Rapid Expansion of the Tourism Sector

#5       Provision of Medical Services to Latin America and Other Countries

#6        Survival in the Face of the 1989-1993 Economic Melt-Down

#7        Winning Economic Support from the Soviet Union, 1961-1990 and Venezuela, 2004-2010

#8        Establishment of the “Polo Cientifico” and the Development of the Bio-Technological Sector

#9        Dedication to their Jobs by Cuban Citizens during the Catastrophic Decline in Real Wages and Incomes after 1990

#10      Fruitful Collaboration with Foreign Enterprises


IV.             Achievements in Detail

#1        The 1961 Literacy Campaign

The 1961 literacy campaign was an inspired approach to improving educational levels among the relatively large proportion of the population that was illiterate in 1959. This was done at relatively low cost with strongly motivated volunteers. It quickly improved literacy rates immensely, though there is some disagreement as to the quality of the literacy that was achieved.

#2       Reorganization of the Health Sector

Cuba succeeded in reorganizing its medical system so as to provide universal access to health services, and managed to obtain excellent results relative to the amounts of resources that it was able to devote to the health sector.  As a result, Cuba’s health indicators improved quickly and remain among the very best in Latin America (See Tables 1 and 2)

#3        Redesign of the Educational System

Cuba’s reorganization and expansion of the educational system in the early 1960s also made education universally accessible and increased investment in people (human capital.) As a result, Cuba moved from 5th place in Latin America in terms of literacy and school enrolment in 1970 to 1st in 2007 – a fine achievement.

#4        Rapid Expansion of the Tourism Sector

As a result of the 1989-1994 economic melt-down, it was decided to earn foreign exchange by expanding the tourist sector. This required massive involved massive investment by both Cuba and foreign enterprises and the rapid shifting of resources to the sector. This was done and by 2008, Cuba was earning almost MN 2.4 billion from tourism.

#5        Provision of Medical Services to Latin America and Other Countries

By the latter 1990s, Cuba had a major surplus of medical personnel, with doctors and nurses posted in small tourist hotels and day care centers. However, this was converted into a major humanitarian asset, with Cuba’s provision of medical assistance to many countries in need, and expanding the Latin American Medical School outside Havana. The services of medical personnel are also exported to other countries – paid mainly by the Government of Venezuela. The foreign exchange earnings from medical (and educational) service exports amounted to MN 6.1 billion, almost half of Cuba’s foreign exchange earnings in 2008, as indicated in the accompanying chart.

#6        Survival in the Face of the 1989-1993 Economic Melt-Down

With the loss of Soviet subsidization and the near 40% decline in income per capita from 1989 to 1994, Cuba reorganized its economy, “depenalizing” the use of the US dollar, legalizing farmers’ markets, liberalizing self-employment and promoting new economic activities and exports etc. With no support from the international financial institutions of which it was not a member, thanks to the embargo with the United States, Cuba survived, at a cost borne almost directly, immediately and totally by its citizens.

#7       Winning Economic Support from the Soviet Union, 1961-1990 and Venezuela, 2004-2010

As noted in an earlier blog, The “FIDEL” Models Never Worked; Soviet and Venezuelan Subsidization Did posted on September 9, 2010 ,  Cuba received generous subsidization from the Soviet Union for a substantial period of time. An estimate of the amount of the subsidization is presented in the accompanying chart.  Presumably President Fidel Castro is responsible for negotiating this support. Similarly, Cuba has received substantial support from President Chavez of Venezuela through export and investment credits, low-cost oil imports and generous payments for Cuba’s exports of medical services.  How beneficial any of this assistance has been is debatable partly because it has been and is unsustainable and it has made possible the continuation of economic policies and institutions that have been counterproductive in the longer term. Fidel Castro can undoubtedly take the credit for these special relationships.

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#8        Establishment of the “Polo Cientifico” and the Development of the Bio-Technological Sector

To my knowledge, there has been no careful analysis of Cuba’s huge investment in the “Polo Cientifico” and the Bio-Technological sector. Indeed, I have not seen any analysis of the investment in the sector so I cannot judge accurately if it has been commercially viable so far or not.

However, Cuba is beginning to achieve major exports of pharmaceutical products amounting to MN 296.8 million pesos vis-à-vis MN 233.4 million for sugar in 2008.  These exports should continue to increase in future and the investment in the sector may be valuable. Moreover, Cuba’s investment in the “Polo Cientifico” has built a professional and institutional foundation for future success in pharmaceutical and other scientific areas.

#9        Dedication to their Jobs by Cuban Citizens despite the Decline in Real Incomes after 1990

I have always been impressed at the professionalism of many Cuban citizens that I have known over the years since 1990. In the face of huge declines in the purchasing power of their incomes, they continued to work seriously and with dedication in medicine, the Universities, the schools, the public service, or other employment. Many professionals and others in effect subsidized their state sector employers by earning other incomes that permitted them to survive in the unofficial economy. We have all heard of the doctors and engineers forced to provide taxi services on the side in order to make ends meet and continue to function in their professional capacities. The dedicated work of countless citizens over the difficult years of the Special Period, 1990-2010, is essentially what has brought about some recovery since the depths of the depression in 1993.

#10      Fruitful Collaboration in Nickel, Oil, Gas and Electric Power Generation with Sherritt International

Cuba opened up to foreign direct investment in joint venture arrangements with state firms. This has paid off handsomely, most notably with Sherritt International (nickel, cobalt, oil, gas, and electric power) and other enterprises as will be argued later in this Blog.

 

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Review: Cuban Currency: The Dollar and Special Period Fiction, by Esther Whitfield.

Posted on October 12, 2010 by Arch Ritter

Cuban Currency: The Dollar and Special Period Fiction. By Esther Whitfield. Minneapolis: University of Minnesota Press, 2008. Pp. 217. $22.50 paper. ISBN: 9780816650378


Esther Whitfield

I must confess that when I first noticed the volume Cuban Currency: the Dollar and Special Period Fiction, I thought it was an analysis of Cuba’s monetary system, not having read the title carefully. To my trepidation, Esther Whitfield focuses instead on literature, but in the context of Cuba’s dual-currency pathology. Her survey of recent fiction has turned out to be a delight, even for an economist with little direct knowledge of Cuban literature.

Whitfield’s central argument is that the “Special Period” in Cuba generated a boom in cultural exports, including literature, due to a number of factors including the opening of Cuba’s economy and society, the subsequent expansion of international tourism and the popularity of all things Cuban, as well as the decriminalization of the use of the dollar in 1992, its adoption as a legal currency, and its quick ascent to supremacy over the “old peso.” Special Period literature then became market-driven—like many other activities in Cuba—with authors’ incomes dependent on foreign sales and hard-currency contracts, rather than on Cuba’s literary bureaucracy, membership in the writers’ union and the domestic market.

The dominance of the foreign market was further strengthened by the shrinkage of the domestic peso market for books because of declining incomes. This new foreign-market orientation was formalized by legislation in 1993 that permitted authors to negotiate their own contracts with foreign publishing houses and to repatriate their royalties under a relatively generous tax regime. Like other Cuban citizens, authors responded quickly to these new incentives.

In very simple terms, a key message of the book is that money talks and literary types listen. Or in “Special Period” Cuba, literary types chase dollars – like most other Cubans in this era, dollars having had greater purchasing power than “old pesos” in Moneda Nacional.

Special Period fiction is set in a “real Cuba” of interest to foreigners, namely in the Cuba of a behavior-warping dual-currency system, urban decay, dysfunctional Soviet-style economy, and political gerontocracy, together with a vibrant Afro-Latin culture and time-immemorial tropical eroticism. Ironically, the international boom in Cuban fiction during the sunset of the Revolution was a sequel to the literary boom of the 1960s, which was set in the confidence and vigor of the youthful Revolution.

Whitfield begins with an analysis of the circumstances of the Special Period that pushed authors into this external orientation. She then focuses on the works of Zoé Valdés, especially her award-winning I Gave You All I Had (1966), published in exile in Paris, which allows Whitfield to trace the central role played by a U.S. one dollar bill and its symbolic relevance for the culture of the Special Period. Short stories are the subject of the next chapter, with particular attention to the work of Ronáldo Menéndez. His story, entitled “Money,” is also set in the world of the doble moneda and doble moral, but criticizes the reliance on foreign markets and worries about the jineterización (or prostitution) of the writer-publisher relationship and possible debasement of “true” Cuban literature. Whitfield goes on to examine the work of Pedro Juan Gutiérrez, notably the five books of his Ciclo Centro Habana. Gutiérrez writes for a foreign readership, but also critiques it, placing the reader in the position of voyeur into the “lives of sexual disorder, moral depravity and economic despair” of Havana (98). In her final chapter Whitfield meditates on artists’ depictions of Cuba’s urban decay and on critical analyses of such depictions.

Whitfield has produced a fine analysis of how economic circumstances generated new problems and new possibilities for Cuban authors, who have risen to the challenge and produced a literature of broad international appeal. Whitfield’s writing is engaging, her knowledge seems profound, and her subject is enchanting. However, I am not a competent critic of Cuban literature or literary criticism, and cannot tender a confident evaluation of its value for scholars in these fields. Her book, linking socio-politico-economic circumstances of the Special Period to Cuban literature, will nevertheless interest a broad range of social scientists, as well as the more literary-minded.

Is the international market for Cuban fiction as transitory as one might expect or hope that the Special Period itself may be? Perhaps. It may be that when Cuba escapes the Special Period – now 20 years running – and becomes a “normal country” with a normal monetary system, the special interest in its literary portrayal may diminish. However, the difficulties of economic and political reform are likely to continue for some time, and are likely to take various twists and turns that will hold our interest for some time to come.

I hope that Cuba’s fiction writers are there to illuminate the process for a world readership.

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New Essay by Pavel Vidal and Omar Everleny Perez on Fiscal Adjustment, Structural Change and Self-Employment

Posted on October 11, 2010 by Arch Ritter

An essay entitled “Entre el ajuste fiscal y los cambios estructurales: se extiende el cuentapropismo en Cuba”
by Pavel Vidal Alejandro y Omar Everleny Pérez Villanueva of the Centro de Estudios sobre la Economia Cubana has just been published in the Digital Supplement of Espacio Laical,   the CONSEJO ARQUIDIOCESANO DE LAICOS DE LA HABANA, Suplemento Digital No.112 / Octubre 2010.

Here is the web address for the article:

( “Entre el ajuste fiscal y los cambios estructurales: se extiende el cuentapropismo en Cuba” . )

The web address for Espacio Laical is

Espacio Laical: http://espaciolaical.org. (Then if necessary go to the October 2010 edition first page.)

This essay is well worth reading, outlining the general economic situation in Cuba provoking the September 2010 liberalization of the restrictions on self-employment, summarize the regulatory changes, and present a number of comments on the policy changes, summarized below in Spanish:

1. Una gran parte de la población y especialistas coincide que la lista publicada en Granma de 178 actividades es aún demasiado precaria
y reducida para poder asimilar el medio millón de desempleados estatales. Son necesarias nuevas categorías y agilizar la creación de
las cooperativas no agrícolas.

2. Las categorías son demasiado específicas y ello frena la iniciativa individual. Sería preferible una lista de categorías generales que le
dieran espacio a los cuentapropistas y microempresarios para proponer y perfilar una oferta de bienes y servicios diversa. Esta tiene queser lo suficientemente flexible como para poder adecuarse a una demanda cambiante en el tiempo y heterogénea en lo local, y que es indescifrable para cualquiera que se lo proponga centralmente.

3. Las actividades permitidas son poco intensivas en conocimiento y no permiten aprovechar la inversión en educación que ha hecho el
país por décadas. Muchos de los desempleados estatales serán graduados universitarios que necesitarán una opción acorde con su
calificación.

4. Se permite el crédito bancario, pero el sistema financiero tiene problemas de liquidez, y habría que ver cuánto del ahorro todavía está comprometido en los créditos que se dieron para la sustitución de equipos electrodomésticos dentro de la llamada Revolución
Energética. Como alternativa, se requiere agilizar y promover la colaboración internacional en el tema del microcrédito.

5. No se va a crear un mercado mayorista de insumos para las PYME´s. Hoy los mercados de insumos para las empresas estatales sufren de desabastecimiento como consecuencia de los problemas económicos y financieros del país. Por tanto, es muy difícil pensar por ahora en un apoyo estatal en este aspecto. Pero si se promueve el microcrédito con colaboración internacional, ello significaría una entrada de divisas al país que posibilitarían abrir la importación para los cuentapropistas, microempresarios y cooperativistas. En Cuba operan suficientes proveedores extranjeros que podrían abastecer un mercado de insumos para las PYME´s. Los mismos mercados mayoristas que hoy existen para las empresas estatales podrían darle entrada a las PYME´s. La doble moneda no es un problema para las PYME´s pues tiene abierta la convertibilidad del peso cubano y el peso convertible en las casas de cambio (CADECA).

6. La medida considera pocos incentivos a la legalidad. Algunas actividades, por su naturaleza, son más visibles y tendrán por obligación ue legalizarse y pagar impuestos. Pero hay otras que tienen como único incentivo la incorporación a la Seguridad Social.
Evidentemente, para los que ya reciben una jubilación, este no tiene ningún efecto. El microcrédito y el mercado de insumos, precisamente serían incentivos a la legalidad, pues se necesitaría estar registrado y pagar impuestos para acceder a ellos. Las PYME´s internacionalmente son apoyadas tributaria e  institucionalmente. La asesoría legal, económica, informativa y otras ayudas promoverían la legalidad y el desarrollo de las mismas.

7. Falta acompañar estos cambios con leyes que creen confianza para la inversión de esfuerzos y dinero en emprendimientos privados, y que garanticen, tanto al Estado como a los ciudadanos, el cumplimiento de derechos y deberes.

8. El estancamiento económico que vive el país es otro de los obstáculos para la creación de nuevas PYME´s. La oferta de bienes y servicios de los cuentapropistas, las microempresas y las cooperativas necesita de una demanda. Con estancamiento económico y aumento del desempleo es muy difícil pensar en una demanda suficiente desde las familias o desde las empresas estatales. Una gran parte de la demanda ya hoy está cubierta con una oferta desde la ilegalidad

Omar Everleny Perez and Pavel Vidal

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State Sector Lay-offs then Private Sector Job Creation: Has Raul Got the Cart before the Horse?

Posted on September 22, 2010 by Arch Ritter

On Monday September 13 2010, the Cuban Labour Federation announced a new government policy on lay-offs in the state sector and expansion of self-employment and cooperative sector employment.( Pronunciamiento de la Central de Trabajadores de Cuba.) As is now well known, the policy calls for the lay-off of some 500.000 workers, about 10% of Cuba’s entire labor force and their re-incorporation into self-employment activities mainly, but also some co-operative activities. This of course marks a major strategic re-orientation of Cuba’s economic structure. The economy already was a “mixed economy” though with a small self-employment sector outside of agriculture, but it will now shift further towards a “marketization.” Raul basically is asking the small and harassed self-employment to come to the rescue of the Cuban economy by generating productive employment because the state sector ostemsibly has failed to do so. Many questions can be and have been raised by outside observers as to how this new approach will be implemented. A couple of questions are noted here. I. Has Raul Got it “Bass Ackwards”? 1.      Prior to any state sector lay-offs, would it not be wise to redesign the framework within which small enterprise operates so that it will be in a position to expand and absorb the laid-off state sector workers? Firing state sector workers and hoping that they somehow will be reabsorbed somewhere sounds distinctly un-socialist. 2.      If workers’ efforts and productivity are low, is this due mainly to sloth and laziness? Or is it instead due to a dysfunctional incentive structure in which workers are paid very little in Moneda Nacional, but somehow have to acquire  “Convertible Pesos” to survive with purchase in the Hard Currency (formerly dollar) stores? As the old saying goes:  “They pretend to pay us and we pretend to work.” Maintenance Workers at the Australia Sugar Mill, November 1994; Certainly working hard, but probably laid off in 2002 when the Mill was converted to a museum;  visited with Nick Rowe who “blogs”  at “Worthwhile Canadian Initiative” and Larry Willmore, who “blogs” at “Thought du Jour” (Photo by A. Ritter) 3.      Is low productivity also due to mismanagement that wastes human effort? Is inefficiency also the result of low capacity utilization in enterprises  for example, in state stores that have little to sell, in offices with little to do, or in industrial enterprises idled through poor maintenance, insufficient imported inputs, breakdowns etc.? (Note the diagram below that illustrates the reduction in non-sugar industrial output since 1989. Despite allegations of record economic growth in the late 2000s, industrial output remains around half of its 1989 level.) II.   Who will be laid off and how will it be done? 1.      Will those who are laid off be good candidates for creating their own self-employment small businesses? 2.      Will those laid-off be offered “severance packages” or “buy-outs” that would provide them with an amount of capital to begin their own small businesses? 3.      Will older workers be offered “early retirement packages” that would assist them in starting a small business or co-operative? 4.      Will workers be free to self-select – with a “severance package” – so that they can start a small business? 5.      Will those who are laid off be the truly redundant and unproductive workers, in which case they may not have the aptitude to start their own small business? 6.      If laid-off workers can self-select, will the state sector enterprises or bureaucracies then lose their more capable and industrious workers? 7.      How generous will the unemployment benefits be and how long will they last while workers look for new jobs or attempt their own job-creation? In any case, the process of laying people off will be most difficult. The anxieties generated among the population must be intense and the Workers Assemblies now discussing these issues must be acrimonious. III.   Creating an “Enabling Environment” for Micro, Small and Cooperative Enterprise Since 1995, public policy has been aimed at containing small enterprise – after liberalizing it in 1993 – by licensing limitations, tight and vexatious regulations, onerous taxation, harassment by inspectors and negative political and media stigmatization. This has not been an easy environment for the functioning of self-employed to operate. Major changes will be necessary if the small enterprise sector is to expand in order to be able to absorb the lion’s share of the displaced state workers. How can this be done? A previous Blog outlined some possible measures: Raul Castro and Policy towards Self-Employment: Promising Apertura or False Start? Here are some of the key policies that would be necessary to generate a flowering of the micro, small, and cooperative enterprise sector. Additional policies regarding advertising and vending 1. Liberalize Licensing: Let anyone and everyone open a small enterprise ( Result: competition will push prices downwards and quality upwards); 2. Permit All Types of Self-Employment, including Professional and High-Tech while maintaining state medicine and health systems intact; 3. Raise the limit on employees to 5, 10 or 20; 4. Provide legal sources for the purchase of Inputs; 5. Permit access to imported inputs (outside TRDs and at the exchange rater available for the state sector); 6. Eliminate silly and vexations restrictions; 7. Make microenterprise taxation simpler and fairer; 8. Establish micro-credit institutions; 9. Establish a “Ministry for the Promotion of Small Enterprise.” Photographer, at the Capitolio circa 1996, (Photo by A, Ritter)

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New Publication on Cuban-Canadian Relations

Posted on September 21, 2010 by Arch Ritter

A New publication has just appeared on Canadian-Cuban relations. It is a Special Issue of Canadian Foreign Policy edited by Professor Lana Wylie. Political Science, McMaster University, Hamilton Canada. The journal is produced by the Norman Paterson School of International Affairs, Carleton University, Ottawa. This issue is a bi-national production with Cuban authors as well as Canadians.

Canadian Foreign Policy: http://www.carleton.ca/cfpj/issue-current.html#1

Unfortunately the electronic version is available only by  subscription to the journal, but most University web sites provide  access to this.   What follows are the Abstracts – sometimes abbreviated – to the articles.Volume 16, Issue 1 (Spring 2010)

SPECIAL SECTION – The Politics of Canada-Cuba Relations: Emerging Possibilities and Diverse Challenges

INTRODUCTION

SHIFTING GROUND: CONSIDERING THE NEW REALITIES IN THE CANADIAN-CUBAN RELATIONSHIP

Guest Editor: Professor Lana Wylie

The articles in this issue of Canadian Foreign Policy consider the current relationship as well as survey the history of Canada’s association with Cuba, touching on the highs and lows of the relationship and making suggestions about the future direction of Ottawa’s policy toward the island state. In selecting the articles that would appear in this issue, the editorial team at the journal and myself, as special editor for this issue, strove to ensure that the issue reflected a range of approaches and perspectives. The nine scholars who penned the following articles thus write from the perspective of six different disciplines: Geography, Political Science, History, Spanish and Latin American Studies, Business, and Economics. Even more interestingly, they tackle the relationship from both the Canadian and the Cuban perspectives, and bring fresh epistemological approaches to the study of the issues.

Peter McKenna, John Kirk, and Archibald Ritter are well-established Canadian scholars with careers that have been  devoted to the relationship. Not only have each of them spent much time in Havana, but they have done so in many capacities, from being visiting scholars at the University of Havana to advising the Canadian government about the direction of policy. In this issue they give us important perspectives on how the history of Canada’s approach toward Cuba is likely to shape the current direction of policy. The various approaches taken by Heather Nicol, Calum McNeil, and Julia Sagebien and Paolo Spadoni both challenge established ways of making sense of the relationship and complement the perspectives taken in other articles of the issue.  Each of these scholars has contributed much toward our knowledge  of Cuba, and in this issue they make crucial observations about the  various ways in which we have to come to understand the relationship. However, it was especially important that an issue devoted to furthering our understanding of the Canadian-Cuban  relationship reflect on it from both the Canadian and Cuban  perspectives. Luis René Fernández Tabío and Raúl Rodríguez help  us appreciate the view from Cuba. The two articles by the Cuban  contributors further demonstrate that what Canadians take as  given facts about Cuba, or about Cuba’s relationship with Canada, are notsettled at all.

CANADA AND THE CUBAN REVOLUTION: DEFINING THE RULES OF ENGAGEMENT 1959-1962 RAÚL RODRÍGUEZ RODRÍGUEZ

The triumph of the Cuban Revolution in 1959 was a turning point in the history of the Cuban republic; a new Cuban government started a process of socio-economic and political transformations. The initial reaction of the United States government—with the additional support of the Cuban propertied class—led to the deterioration of  the United States-Cuba bilateral relation.

As the US economic sanctions were instituted, the Cuban government turned to other Western states, Canada among them, to try to minimize the economic impact of US policy. Canada’s export-oriented economy was poised to benefit from the new  opportunities offered by the Cuban market, and Cuba offered  Canada a means to assert its sovereignty by forging an independent  foreign policy stance. Canada was forced to observe  restraint and allegiance to its NATO partners, and especially to its closest ally, the United States—the state most hostile to the outcome of the Revolution in the context of Cold War. This complex scenario started to unfold in 1959, and was fraught with challenges and opportunities for Canada Cuba bilateral relations.

THE CHRÉTIEN YEARS:EVALUATING ‘CONSTRUCTIVE ENGAGEMENT’     PETER MCKENNA AND JOHN M. KIRK

For most of Prime Minister Jean Chrétien’s ten years in office, his approach toward revolutionary Cuba was predicated on a policy of constructive engagement, or principled pragmatism. The piece begins by outlining the nature and extent of Canada-Cuba engagement, exchange, and dialogue during the Chrétien period. The article will then identify what worked in terms of bilateral relations and what did not, and in light of the Chrétien highs and lows, it will highlight the key lessons learned and explain why. Lastly, it will conclude with a series of policy recommendations for Canadian governments (current and future) to contemplate if Ottawa—especially given the changing United States-Cuba dynamic—hopes to enhance and strengthen ties with a post-Fidel Cuba.

CANADA-CUBA RELATIONS: AN AMBIVALENT MEDIA AND POLICY     HEATHER NICOL

This study examines Canadian newspapers and Parliamentary texts dating from 2000 to 2009. It suggests that there is, and has been, a consistent relationship between media portrayal of Cuba issues since the mid-1990s, but that in recent years as Canada’s  certainty of, and support for, Cuba has declined, a contradictory press facilitates an ambivalence towards Cuba that reflects the current state of Canada-Cuba relations.

Since 2000, less than one percent of all newspaper articles published in all Canadian major dailies have discussed Cuba. This lack of media coverage is striking, considering that Canadian companies have invested largely in Cuba and that Canadians have been among the largest groups of vacationers to the island for quite  some time. The Canadian International Development Agency (CIDA) has invested millions in official development assistance, while the current Conservative Government plays upon human rights issues on the island and the inherent failures of former rounds of Canadian constructive engagement to resolve these. The maintenance of normalized relations with Cuba has been  consistently challenged in Parliamentary debates by Conservative MPs. The latter have linked human rights abuses on the island with an increasingly critical approach to Canada’s traditional policy of constructive engagement.

CANADA’S ECONOMIC RELATIONS WITH CUBA, 1990 TO 2010 AND BEYOND     ARCHIBALD R. M. RITTER

During the Colonial era, from Independence to 1959 and throughout the regimes of Presidents Fidel and Raúl Castro, Canada and Cuba have maintained a normal and mutually beneficial economic relationship. During the first half of the 1990s, this relationship was invaluable for Cuba as it adjusted to the loss of Soviet subsidization and to its disconnection from the former Soviet Bloc. In these years, Canadian participants were enthusiastic and optimistic about future economic relations. However, in the 2000s this was replaced by greater realism and some skepticism concerning the possibilities for deepening economic interaction.

Following a brief review of the evolving relationship from 1959 to 1990, the nature of the economic relationship between Canada and Cuba is analyzed in more detail for the 1990 to 2009 era. The future economic relationship is then explored, focusing on Cuba’s economic recovery and policy environment, and the probable impacts of normalization with the United States.

CANADIAN–CUBAN ECONOMIC RELATIONS: THE  RECOGNITION AND RESPECT OF DIFFERENCE      LUIS RENÉ FERNÁNDEZ TABÍO

Despite geopolitical and ideological obstacles, the economic relationship between Canada and Cuba has, for the most part, been characterized as a prosperous and positive exchange for the two countries and its people over time. This paper suggests that Canadian-Cuban relations hold the potential to function within a different framework as a kind of new paradigm for North-South relations in the Western hemisphere in the face of US hegemony and its confrontational policy toward Cuba. With Canada and Cuba having benefited from a practice of good business, perhaps this exchange has provided a stable and prosperous base for the two nations to critically analyze structures to build upon for future relations. The significance of this relationship could be explained as a kind of mutual understanding the two have in the making of a new history, the outcome of the two countries having shared a common geographic position in relation to the United States.

TO ENGAGE OR NOT TO ENGAGE: AN (A) EFFECTIVE ARGUMENT IN FAVOUR OF A POLICY OF ENGAGEMENT WITH CUBA     CALUM MCNEIL

This paper seeks to explore the role of emotion in Canadian and American policy toward Cuba, with specific consideration of the emotional and normative dynamics associated Canadian-Cuban policy during the 1990s, and with the Cuban Democracy Act of 1992 and the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996. A key point of comparison of this analysis is the assumption shared by both Canadian and American policy toward Cuba that regime change is inevitable, and that it will invariably correspond to the norms predominant in the domestic political systems of both states. It is my contention that a consideration of emotion allows us to gain insight into the decision-making behaviour in both states—and amongst the mass publics contained within them. It also allows us a means to more fully understand the possible particularities that distinguish the rational calculus of one state’s policies from another. By broadening our understanding of these, I illustrate how a policy of engagement is preferable to either embargo or constructive engagement.

THE TRUTH ABOUT CUBA?    JULIA SAGEBIEN AND PAOLO SPADONI

The search for truth in and about Cuba is an elusive and puzzling pursuit primarily affected by: 1) competing narratives of contested events; 2) the emotional distress that accompanies the experience of cognitive dissonance; 3) the Cuban cultural propensity towards vehement disagreement; and 4) the syncretic capacity of Cubans to inhabit several worlds at the same time. Canadian Cuba observers must strive to develop a balanced understanding of these competing narratives about Cuba and of the people who tell them.

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Fidel’s Phenomenal Economic Fiascoes: the Top Ten

Posted on September 17, 2010 by Arch Ritter

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

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

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

Top Ten Economic Fiascoes

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

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

Fiasco #8        The “New Man”

Fiasco #7        The “Budgetary System of Finance”

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

Fiasco #5        Revolucion Energetica

Fiasco #4 Shutting Down Half the Sugar Sector

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

Fiasco #2        Suppression of Workers’ Rights

Fiasco #1        Abolition of Freedom of Expression


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

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

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

The strategy was aborted in 1964.

Fiasco #9        The 10 Million Ton Sugar Harvest Strategy

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

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

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

This strategy was aborted in 1970.

Fiasco #8        The “New Man”

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

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

Fiasco #7        The “Budgetary System of Finance”

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

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

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

This system was also terminated in 1970.

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

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

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

Fiasco #5        “Revolucion Energetica”

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

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

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

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

Fiasco #4        Shutting Down Half of the Sugar Sector

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

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

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

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

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

Fiasco #2        Suppression of Workers’ Rights

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

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

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

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

Fiasco #1        Abolition of Freedom of Expression

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

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

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

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

Fidel Castro: The Cowardice of Autocracy

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

Fidel’s No-Good Very Bad Day

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

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