• 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."

WHAT DOES THE POPE’S VISIT MEAN FOR CUBA?

Ted Piccone, Brookings Institute, | September 18, 2015 12:30pm

The leaders of three odd bedfellows are coming together this week: a 2,000-year old global institution known as a defender of the status quo, a 239-year old revisionist democratic superpower, and a 56-year old Communist revolutionary regime. How will they move the needle toward change? We are about to find out.

Pope Francis’ visit to Cuba this week—followed immediately by a meeting with President Barack Obama on the pontiff’s first-ever trip to the United States and President Raúl Castro’s inaugural appearance at the United Nations General Assembly shortly thereafter—together offer a compelling sequence of events that can move mountains. Or at least a few boulders from the thorny path of U.S.-Cuba relations.

Roll out the tickertape 

Let’s start with the Holy Father’s visit to Cuba, an island he knows remotely through his many years of service as a leading Latin American bishop and his book on Pope John Paul II’s dialogue with Fidel Castro in 1998. The hugely popular pope arrives in Cuba as an agent of change in at least two ways: as a promoter of religious freedom and a more activist church that is already providing critical social services to Cuba’s downtrodden citizens; and as a key facilitator of the breakthrough in U.S.-Cuba relations announced last December.

In the former, Pope Francis builds on the earlier groundwork of Popes John Paul II and Benedict who devoted time and energy to restoring—gradually and incompletely—the place of religious faith in Cuban society. Their man in Havana, Cardinal Jaime Ortega, whose non-confrontational approach has won both critics and fans, has played a critical role in bridging the yawning church-state divide and negotiating the release of over 150 political prisoners.

The Pope’s role as “guarantor” of the normalization process between Cuba and the United States, particularly its human rights elements, helps give the White House some political space to push Congress to lift the embargo even in the face of Cuba’s often violent harassment of opposition figures. The Pope also brings an overwhelmingly positive message of reconciliation among all Cubans on and off the island and a humanistic approach to the excessive depredations of both communism and capitalism. The visit should inject another wave of enthusiasm and hope around the possibilities of gradual but positive change on the island.

The embargo thorn

For the Castro regime, the Pope’s visit is another perceived endorsement of Cuba’s standing as a country that punches well above its weight in international affairs. A longstanding critic of the U.S. embargo against Cuba, the Vatican will help Cuba remind the world that the United States should not only unconditionally end the embargo, but pay up for the all the damages it has caused.

In case the point is missed on anyone, Cuba this week launched its annual campaign for yet another vote at the United Nations this fall condemning the embargo. The vote may not look as lopsided as previous years if other governments choose to endorse the olive branch Obama has extended to Havana. The Pope himself is unlikely to inject himself in the middle of this fight.

 A conversion to more Christian treatment of civil society and free expression looks frustratingly unlikely, despite the Pope’s quiet entreaties.

But his speech to the U.S. Congress on September 24, another first for any pope, offers an irresistible opportunity to call upon legislators to consider, in at least moral terms, the benefits of engagement and reconciliation over isolation and punishment, a point that would fit in nicely with his theme of mercy and forgiveness. The same message, of course, ought to apply to the Cuban government and its heavy-handed treatment of its own citizens. Raúl Castro’s gushing comments of someday returning to the Catholic Church suggests he gets the importance of religiosity in various forms to Cuban society (evangelicalism, Santeria, and Catholicism, among others). But a conversion to more Christian treatment of civil society and free expression looks frustratingly unlikely in the short term, despite the Pope’s quiet entreaties.

In search of positive legacies and soft landings

For President Obama, the big bet to normalize relations with Cuba is shaping up to be a positive legacy the White House will go to some lengths to protect. It is already proving highly popular among Americans of all persuasions and even more popular in Cuba itself. The initial enthusiasm he received—including by other heads of state at the Panama Summit of the Americas last April—has carried the ball forward at a steady clip, as embassies reopened in both capitals this summer and talks proceed to improve bilateral cooperation on several fronts.

With the latest announcement of another round of unilateral measures by Obama to expand travel, remittances, and telecommunications, and trade with Cuba’s emerging private sector, the reality that only Congress can fully lift the embargo is sinking in, and starting to get more attention. As Obama told a business audience on September 16: “my biggest suggestion would be for [the business community] just to start having a conversation on a bipartisan basis about lifting the embargo.” He went on to say, however, that it shouldn’t happen “all in one fell swoop.”

It won’t. With competing bills in Congress for and against weakening or lifting the embargo, and nearly all Republican presidential candidates aligned against such a move, no one should expect any reversion, sudden or otherwise, to a pre-Castro era.

Which is precisely where the three main actors on the stage—the Pope, Raúl Castro, and Barack Obama—want to be: positioned as agents of gradual but positive change. They all hope for a soft landing for a nation transitioning from decades of trauma and triumph to a more stable, open, and—perhaps—more “normal” future.

yFidel and Pope John Paul, 1998

POPE, PRESIDENT CASTRO GESTURE OUTSIDE PALACE OF REVOLUTION IN HAVANARaul and Pope Benedict XVI, 2012

Image: Pope Francis meets Cuban President Raul Castro at the VaticanRaul and Pope Francis, May 2015

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RESTRICTIONS ON CUBA TRAVEL AND BUSINESS LIFTED BY U.S.

By JULIE HIRSCHFELD DAVIS, SEPT. 18, 2015, New York Times

Original Story

The Obama administration on Friday announced wide-ranging changes to loosen travel, commerce and investment restrictions on Cuba, moving to fulfill President Obama’s goal of breaking down barriers between Washington and Havana even as the American embargo remains in place.

The rules will allow American companies to open locations and hire workers in Cuba, facilitate financial transactions between the nations, and remove limits on the amount of money that can be brought to the island nation. They are to take effect on Monday on the eve of the visit to Washington by Pope Francis, a proponent of the reconciliation between the United States and Cuba who quietly helped broker the agreement last year between Mr. Obama and President Raùl Castro to forge it.

Jacob J. Lew, the Treasury secretary, said the rules could lead to “constructive change for the Cuban people.”

 

“A stronger, more open U.S.-Cuba relationship has the potential to create economic opportunities for both Americans and Cubans alike,” Mr. Lew said in a statement. “By further easing these sanctions, the United States is helping to support the Cuban people in their effort to achieve the political and economic freedom necessary to build a democratic, prosperous, and stable Cuba.”

They also hold out the prospect of new business opportunities for American companies in Cuba, which some observers said were intended to increase pressure on Havana to take corresponding action to open its economy.

The White House is working to show momentum in the rapprochement with Cuba before Dec. 17, the one-year anniversary of when it was announced.

“In addition to expanding our commercial engagement with the Cuban people, these additional adjustments have the potential to stimulate long overdue economic reform across the country,” Penny Pritzker, the secretary of commerce, said in a statement.

American corporations have been working behind the scenes with the Obama administration for months to bring about the normalization the president promised, which began with an initial set of regulatory changes in January. But the new rules exceeded the expectations of some business leaders, who said they had sent a clear message to Cuba that it must do more to hold up its end of the process.

“They’ve gone farther at one time than most anyone expected,” said John S. Kavulich, the president of the U.S.-Cuba Trade and Economic Council. “It’s in keeping with President Obama’s strategy, agree or disagree, which is, ‘I’m throwing the proverbial ball into the Cuban court.’ ”

In Havana, Mr. Kavulich added, the changes are “too much, too fast.”

The regulations will for the first time in decades allow United States firms to do business directly in Cuba, setting up subsidiaries or opening offices or warehouses there, and allowing Americans to have bank accounts and Cubans to maintain bank accounts outside of their country. Cruise ships will be able to travel between the United States and Cuba without making a stop in a third nation. And close relatives will be able to visit family members in Cuba for a wider array of purposes.

The rules will also allow American telecommunications and Internet companies to situate in Cuba and market their services there, as well as to import mobile applications made in Cuba for development in the United States.

The changes came as the diplomatic opening between Washington and Havana inched forward. On Thursday, Mr. Obama received credentials at the White House from the first Cuban ambassador to the United States since 1961. The envoy, José Ramón Cabañas Rodríguez, had been the chief of the Cuban Interests Section in Washington for three years.

 

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LAS COOPERATIVAS NO AGROPECUARIAS Y LA TRANSFORMACIÓN ECONÓMICA EN CUBA: POLÍTICAS, PROCESOS Y ESTRATEGIAS; NON-AGRICULTURAL CO-OPERATIVES AND ECONOMY TRANSFORMATION IN CUBA: POLITICS PROCESSES AND STRATEGIES

Cuba Mar 2014 139POR Mirta VUOTTO Revista de Estudios Cooperativos (REVESCO), Universidad Complutense de Madrid   El link al ensayo es  REVESCO Mirta VUOTTO, COOPERATIVAS CUBA RESUMEN

La contribución de las cooperativas se ha puesto en evidencia desde la década del 70 como principal línea de desarrollo en la producción agropecuaria de Cuba. En contraste, el reconocimiento de las cooperativas urbanas ha sido tardío, aun cuando fuese percibida la necesidad de transformaciones basadas en la realización de la propiedad en diversos escenarios territoriales.

 El artículo analiza los procesos de reforma impulsados en Cuba desde la primera década de 2000 centrándose en las iniciativas tendientes a la promoción, constitución y desempeño de las cooperativas no agropecuarias (CNA). Se examina el potencial y limitaciones propias de las experiencias recientes para reflexionar sobre los procesos y transformaciones organizacionales desde la perspectiva de sus miembros.

A modo de conclusión el análisis plantea interrogantes ace ca de la aptitud de estas cooperativas para sustraerse del impacto de circunstancias anteriores y sobre su capacidad para consolidar estrategias diseñadas por los cooperadores que tiendan a fortalecer los principios de adhesión voluntaria y autonomía en que se fundan estas organizaciones.

ABSTRACT

Contribution of co-operatives has been demonstrated since the 1970s as the main development line in agricultural production in Cuba. In contrast, there has been a late recognition of urban co-operatives, even if the need of transformations based on the realization of property in different territorial scenarios had been identified. The article analyses the reform processes launched since the first decade of the 21st century focusing on the nature of the initiatives fostering formation and promotion of nonagricultural co-operatives including follow up of their performance.

The potential and limitations of the recent experiences are examined in order to reflect on the organizational processes and transformations from the point of view of their members.

To conclude, some questions are posed about whether these co-operatives are capable of avoiding the impact of earlier employment circumstances and of developing strategies aimed at reinforcing voluntary membership and autonomy on which they are founded.

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z  Dra. Mirta VUOTTO

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THE CHURCH, POPE FRANCIS, AND CUBA

Raul-Castro-Pope-FrancisWorld Affairs Journal September/October Issue, 2015.

José Azel

Eight hundred years ago, the Magna Carta laid the foundations for individual freedoms, the rule of law and for limits on the absolute power of the ruler.

King John of England, who signed this great document, believed that since he governed by divine right, there were no limits on his authority. But his need for money outweighed this principle and he acceded to his barons’ demand to sign the document limiting his powers, in exchange for their help.

King John then appealed to Pope Innocent III who promptly declared the Magna Carta to be “not only shameful and demeaning but also illegal and unjust” and deemed the charter to be “null and void of all validity forever.” Thus from the beginning of the conflict between individual rights and unlimited authority, the Church sided with authority. It is a position that, with notable exceptions has, and continues to characterize the conduct of Church-State affairs.

In 1929, the Holy See signed with Benito Mussolini’s Fascist government the Lateran Treaty which recognized the Vatican as an independent state. In exchange for the Pope’s public support, Mussolini also agreed to provide the Church with financial backing.

In 1933, the Vatican’s Secretary of State Eugenio Pacelli (later Pope Pius XII) signed on behalf of Pope Pius XI, the Reich Concordat to advance the rights of the Catholic Church in Germany. The treaty predictably gave moral legitimacy to the Nazi regime and constrained the political activism of the German Catholic clergy which had been critical of Nazism. Similarly, advancing the Church’s interests in Cuba is the explanation given for the Church’s hierarchy coziness with the Castro regime.

For most of us the Catholic Church is simply a religion, but the fact is that it is also a state with its own international politico-economic interests and views. It is hard to discern the defense of any moral or religious principles in the above historic undertakings of the Church-State.

These doings of the Church, as a state in partnership with authoritarian rule, are in sharp contrast with the Biblical rendition, where Christ was persecuted for his political views by a tyrannical regime acting in complicity with the leadership of His church. Cubans today are also politically persecuted by a tyrannical regime. The question arises as to whether the leadership of the Catholic Church will side with the people or with the Castro regime.

Pope Francis probably, was not thinking of Magna Carta, the Lateran Treaty or the Reich Concordat, when he warmly received General Raul Castro in the Vatican earlier this spring, and he probably won’t be thinking about that foundational document for individual freedoms, the rule of law and for limits on the absolute power of the ruler or how the medieval Church spurned it when he travels to Cuba in September. But the questions of the Vatican’s support for authoritarianism and the Pope’s political ideology will be in the background of his visit nonetheless.

In political terms, Pope Francis is himself the head of an authoritarian state -an oligarchical theocracy where only the aristocracy -the Princes of the College of Cardinals- participate in the selection of the ruler. Most religions do not follow a democratic structure, but the Catholic Church is unique in that it is also a state recognized by international law.

Pope Francis may seem to be sailing against the winds of this structure in some of his carefully publicized “iconoclasms,” but clues he has left as to his political and economic thought regarding Cuba show someone very comfortable with certain status quos.

In 1998, then Archbishop of Buenos Aires, Monsignor Jorge Mario Bergoglio, as the Pope was then known, authored a book titled: “Dialogues between John Paul II and Fidel Castro.” In my reading of the Pope’s complex Spanish prose, he favors socialism over capitalism provided it incorporates theism. He does not take issue with Fidel Castro’s claim that “Karl Marx’s doctrine is very close to the Sermon on the Mount,” and views the Cuban polity as in harmony with the Church’s social doctrine.

Following Church tradition he severely condemns U.S. economic sanctions, but Pope Francis goes much further. He uses Cuba’s inaccurate and politically charged term “blockade” and echoes the Cuban government’s allegations about its condign evil. He then criticizes free markets, noting that “neoliberal capitalism is a model that subordinates human beings and conditions development to pure market forces…thus humanity attends a cruel spectacle that crystalizes the enrichment of the few at the expense of the impoverishment of the many.” (Author’s translation)

In his prologue to “Dialogues between John Paul II and Fidel Castro,” Monsignor Bergoglio leaves no doubt that he sympathizes with the Cuban dictatorship and that he is not a fan of liberal democracy or free markets. He clearly believes in a very large, authoritarian role for the state in social and economic affairs. Perhaps, as many of his generation, the Pope’s understanding of economics and governance was perversely tainted by Argentina’s Peronist trajectory and the country’s continued corrupt mixture of statism and crony capitalism.

His language in the prologue is reminiscent of the “Liberation Theology” movement that developed in Latin America in the 1960’s and became very intertwined with Marxist ideology. Fathered by Peruvian priest Gustavo Gutierrez, the liberation theology movement provided the intellectual foundations that, with Cuban support, served to orchestrate “wars of national liberation” throughout the continent. Its iconography portrayed Jesus as a guerrilla with an AK 47 slung over his shoulder.

John Paul II and Benedict XVI censured Liberation Theology, but after Pope Francis met with father Gutierrez in 2013 in “a strictly private visit,” L’Osservatore Romano, the Vatican’s semi-official newspaper, published an essay stating that with the election of the first pope from Latin America Liberation Theology can no longer “remain in the shadows to which it has been relegated for some years…”

The political ideology of the Argentinian Monsignor Bergoglio may not have been of any transcendental significance. But as Pope Francis, he is now the head of a state with defined international political and economic interests. These state-interests and personal ideology will be in full display in his upcoming visit to Cuba and the United States.

In “Dialogues between John Paul II and Fidel Castro,” Pope Francis speaks of a “shared solidarity” but, as with Pope Innocent III’s rejection of the Magna Carta, that solidarity appears to be with the nondemocratic illegitimate authority in Cuba and not with the people. This is a tragic echo of the Cuban wars for independence when the Church sided with the Spanish Crown and not with the Cuban “mambises” fighting for freedom. No wonder that when Cuba gained its independence, many Cubans saw the Church as an enemy of the new nation.

In his September visit Pope Francis will have a chance to reverse this history and unequivocally put the Church on the side of the people, especially with the black and mulatto majority in the Island. If he does not, history will judge him as unkindly as it has Innocent III. When the Castros’ tropical gulag finally fades into the past, Cubans will remember that this Pope had a choice between freedom and authoritarianism, just as his predecessor did eight hundred years ago, and picked the wrong side.

Azel_Jose4_

José Azel is a Senior Scholar at the Institute for Cuban and Cuban-American Studies, University of Miami and the author of the book “Mañana in Cuba.”

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A NEW-STYLE CUBAN COOPERATIVE HOPES ROAD TO SUCCESS IS PAVED WITH SPICES

By Mimi Whitefield, Miami Herald, September 2, 2015

Complete Article Here: The Purita Cooperative

purita

 

carlosfernandez

Carlos Fernandez, Founder of the Purita Cooperative

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WHAT YOU MIGHT NOT KNOW ABOUT THE CUBAN ECONOMY

By Jorge I. Dominguez

Harvard Business Review, August 17, 2015

Original Article Here: What You Might Not Know AUG15_17_470622111On the front page of a Cuban newspaper recently there was an item about a two-story home in the old city of Havana that crumbled—and that in the course of its collapse, killed four people. This is a harsh glimpse the physical reality facing many of the buildings across Havana and elsewhere in the country. But it’s also a metaphor for much of the Cuban economy. Cuba is, in many ways, an economy stuck in time and at risk of further unraveling.

Cuba’s economy got a jolt in December 2014, when U.S.-Cuban ties were restored. The U.S. embassy in Havana has reopened. Some travel is easing. Pope Francis will visit in September. So on the surface, it might appear to be full steam ahead for business and beyond.

But in order to understand where Cuba may go, we need to understand where its economy, its people, its governance, and its marketplace have been. Cuba’s growth domestic product per capita in 2015 is approximately what it was in 1985. The short version of Cuba’s recent economic history is that it peaked in the last quarter of 1984 and began a slow slide during the second half of the 80s. It then suffered a catastrophic plunge in the first four years of the 1990s. To the extent that we can estimate, a third of the economy disappeared during this time and a slow recovery followed. There was a spike in the 2000s when Venezuela began to provide petroleum at deeply discounted market prices, and that peaked just before the 2008-09 financial crisis. After 2009, the Cuban economy really didn’t recover. For the most part it has remained at the alleged 2% growth rate, but given the unreliability of statistics from Cuba, it’s likely a lot closer to zero. That’s grim.

Cuba’s population, now shy of 11.2 million, is shrinking and rapidly aging. Cuba has been below the demographic replacement age since 1978. This is not a good scenario for productivity and economic growth. For that, you need people who are in the prime of the workforce. That’s not the Cuban demographic story. Cuba is closing primary schools and opening homes for the elderly, closing pediatric wards and opening geriatric wards. That’s a burden for growth, but also creates business activity and opportunity: Cuba suddenly needs to build retirement communities. Cuba projects a population of 10.8 million in 2030. It is about to go from around two million people over the age of 60 to 3.25 million in 2030.

But it isn’t all bleak. Cuban life expectancy is approximately what you would expect in North America and Western Europe. That means levels of education are good. It means there is access to basic, quality healthcare. It doesn’t mean that you can have a banquet every day, but that basic nutritional needs are met. There are opportunities for sports. These are the kinds of things that contribute to well-being and that require lots of effective institutional arrangements.

When you put all these pieces together around education and health care, it’s clear that Cuba is likely a champion of investment in the development of human capital—but for the last 50 years it has an extremely low economic return on this investment. If you invest in human capital, whether in your company or in your country, sooner or later it will pay off if you have the right set of incentives. In other words, you need the right organizational design so that all these well -trained, well-educated people will be able to do their work. That’s what Cuba doesn’t have.

But it does have a colossally well-trained work force. It is probably the best, most well-trained workforce at the cheapest labor-market price that any international investor could find anywhere in the world. You could find such first-rate people in Singapore, but they wouldn’t be cheap.

This is true despite the country’s very poor infrastructure. In Cuba, there are seven computers per 100 people — one of the lowest ratios in the Americas. Internet access in Cuba is very expensive. Consider that the median monthly salary in Cuba, when converted into dollars, is a bit below $20 a month. Then think about what you pay for a service like Netflix. For many Cubans even at a discount, half your monthly income would go to Netflix.

So how does Cuba make money? Its current principal source of revenue is the export of healthcare services by means of sending physicians, nurses, and healthcare technicians to countries like Venezuela and Brazil—an item that it has yet to record in its published official statistics.

Cuba’s main resource to engage in the world is no longer sugar cane. It has tourism—beach and sun and one of the communist world’s last Jurassic political systems—but the real asset is the brains of its people. It could be an ideal location for healthcare organizations, but also for those in applied sciences, biotechnology, and pharmaceuticals. We know two things about biotech in Cuba. One is that the quality of applied science seems to be first rate. And secondly, the business model for Cuban biotechnology has been laughably bad. They know how to make new products. They don’t know how to market them effectively. That’s a solvable problem, yet they haven’t been able to do it, and so a partnership with a European or a Canadian or a U.S. pharmaceutical company could be a great asset in the future.

Have the doors opened to U.S. company investment? Well, no. The power to authorize U.S. business investment in Cuba still rests with the U.S. Treasury Department Office of Foreign Assets control (OFAC)—and the fact is this agency’s documentation contains the exact same formulation that it had before December 17. Economic transactions, trade, and investment with Cuba remain prohibited unless they are specifically authorized by OFAC. The Government of Cuba must also authorize each and every foreign investment from any country, and it has yet to authorize one from the United States.

A lot of people get hung up on the issue of travel between the U.S. and Cuba. JetBlue recently launched direct commercial flights from New York. But there have been charter flights from Miami to Cuba since the late 1970s. OFAC has made particular determinations authorizing different airlines as charter flights for many years for various travel programs to Cuba, especially for cultural, educational, and religious groups. There has been a U.S. embargo on economic transactions with Cuba since 1960. There are still restrictions on American tourist travel. Going to the beach is something that the neither the President of the United States nor OFAC can authorize. It requires an act of U.S. Congress. Congress decided in 2000 that it wanted to prohibit beach tourism and it didn’t want the president to have any discretion whatsoever on this point. Now, while more people will be allowed to visit, they still can’t go to the beach.

On the exports side, President George W. Bush authorized U.S. agricultural exports to Cuba in late 2001 under presidential discretion, which exceeded $5 billion between 2002 and 2014. But, oddly, U.S. agricultural exports to Cuba declined by over one-third (if you compare January-June 2014 to the same months in 2015) since the President Obama’s announcement. The boom in U.S.-Cuba trade has yet to materialize. Cuba does have a private sector, which it calls it the “non-state sector.” It includes mixed enterprises (foreign firms and state enterprises) and a “self-employment sector.” In a population just shy of 11.2 million, there are over 500,000 people who have self-employment licenses, according to President Raúl Castro’s report to Cuba’s National Assembly in July 2015. The rule of thumb among Cuban scholars who study this is for any one license there are on average four lawfully-hired employees. That would amount to over two million people in the self-employment sector.

One reason why the average number of employees is four is because, once you reach five or more employees, your tax rate goes up. The Cuban government’s tax collection system is primitive. There is no personal income tax in Cuba. There is no corporate tax in Cuba. There is no value added tax in Cuba. There is no sales tax in Cuba. But there is a tax on the number of your employees. This tax system discourages economic and job growth.

The Cuban government has a list of occupations that are authorized by name; everything else is prohibited or reserved for state-run enterprises. Authorized occupations include plumbers or electricians. These are skilled workers, but the list rarely includes those who studied at the university. Thus in a country that has invested so much in the development of a human capital, it says in effect: if you attended university, then you’re going to work for the state. Let’s say you go to the medical school at the University of Havana. Healthcare is a state sector, it’s not private activity. So what if you decide you want to make more money? You might realize that the one useful skill gained from your time at medical school is learning English. So, you quit as a physician and become a maid at a tourist hotel. You earn more money because your most marketable asset turns out to be that you can communicate in English. This is a tragedy for the individual and for the society. It turns incentives about acquiring skills upside down. You do have people with university training in the private sector, but often not working in the profession for which they trained. There are some exceptions—for example you could be a tutor in the private sector, but you cannot be a classroom teacher. You can, in the private sector, teach foreign languages, but you cannot teach mathematics. Thus the private sector is tiny.

There is also foreign investment, although not a lot. The 2014 foreign investment law finally authorized wholly owned foreign enterprises, but thus far without exception they are all joint ventures with the government. Cuba’s trade reveals its international partners. In 2013 in U.S. dollar-equivalents, Cuba exported $343 million to China and imported $1.5 billion from it. In contrast, it exported $81 million to, and imported $614 million, from Brazil. Cuba exported $2.3 billion to, and imported $4.8 billion from, Venezuela, its top partner.

But China matters in one decisive way. The Chinese government strongly advocates that the Cuban government should reform its economy to achieve a faster, wider market opening. That’s not the way you might have guessed China would be advocating, hut in fact China’s role in Cuba is to try to persuade the Cuban government to emulate its own market opening.

The extraordinary competence of Cuba’s political leaders is sometimes easy to miss. They’re colossally impressive in the management of politics. They’ve remained in power. Who would have known that all communist regimes in Europe would collapse, but that only Cuba and four East Asian regimes would survive?

Cuba has a really, really well-educated and cheap workforce, as well as substantial evidence of entrepreneurial potential. If its political leaders can manage to lift constraints on investment, create the right incentives, and reform its tax code, the country could really boom. But that’s a lot of change to expect for the insular government of an island nation that’s otherwise stuck in time.

Jorge Dominquez - Vice Provost for International Affairs (cq)Jorge I. Dominguez is the Antonio Madero Professor for the Study of Mexico at Harvard University. He is the lead editor of a special issue on the Cuban economy for the journal Cuban Studies (2016).

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U.S.-CUBA AGRICULTURAL TRADE: PAST, PRESENT, AND POSSIBLE FUTURE

Full Document Here: US-Cuba Agricultural Trade, Past, Present and Perspective, USDA,2015

By Steven Zahniser, Bryce Cooke, Jerry Cessna, Nathan Childs, David Harvey, Mildred Haley, Michael McConnell, and Carlos Arnade, all from the United States Department of Agriculture

Abstract

Establishment of a more normal economic relationship with Cuba has the potential to foster additional growth in U.S.-Cuba agricultural trade. Prior to the Cuban Revolution of 1959, bilateral agricultural trade featured large volumes of Cuban sugar and smaller volumes of molasses, tobacco, and pineapple from Cuba and rice, lard, dried beans, wheat, and wheat flour from the United States. In 2000, the U.S. economic embargo on Cuba was loosened to allow for U.S. exports of agricultural products and medicine. As a result, the United States soon became Cuba’s leading supplier of agricultural imports. The remaining prohibitions on issuing credit to Cuba, however, give other exporting countries a competitive advantage in the Cuban market, and the United States slipped to being the second leading supplier in 2013 and the third leading supplier in 2014. A more normal economic relationship between the two countries would allow Cuba to resume exporting agricultural products to the United States, while U.S. agricultural exporters would be able to develop commercial ties in Cuba that approximate their business relationships in other parts of the world.

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OBAMA MULLING OPTIONS FOR CLOSING GUANTANAMO PRISON: WHITE HOUSE

By REUTERS, AUG. 31, 2015, 6:24 P.M. E.D.T.

Original article here:

Guantanamo Bay PrisonWASHINGTON — The White House is considering a “wide array” of options for closing the U.S. military prison in Guantanamo Bay, Cuba, spokesman Josh Earnest said on Monday, declining to rule out executive action as an option.

Earnest said the best route for closing the prison would be winning congressional approval to do so.

The facility, where most detainees have been held without trial for more than a decade, has drawn international condemnation for the harsh treatment of foreign terrorism suspects.  But President Barack Obama, who has repeatedly pledged to close the prison, has faced opposition from congressional Republicans who passed laws blocking any move to transfer Guantanamo inmates to prisons in the United States.

Asked if Obama would consider taking executive action to close the prison if Congress blocks him, Earnest said, “The president and his team are always considering a wide array of options.  “But the fact is the best way for us to do this is for members of Congress of both parties to work effectively with the administration,” Earnest said.

The White House said last month that it would soon be sending a plan to Congress to close the prison. A unilateral move by Obama to close the prison would be sure to set off a firestorm in Congress.  Some Republicans have already begun to push back against suggestions being floated by the administration as possible U.S. sites to house the prisoners.

Defense Secretary Ash Carter said on Aug. 20 that he sent a small team of officials to visit a potential facility in Leavenworth, Kansas, and the group would soon tour the U.S. Naval Consolidated Brig at Charleston, South Carolina.

In response, Republican South Carolina Governor Nikki Haley told a news conference, “We are not going to allow any terrorists” to be housed in Charleston.

The prison at the U.S. Naval Base in Guantanamo Bay, Cuba, was opened by President George W. Bush after the Sept. 11, 2001 attacks to house suspected al Qaeda and Taliban members rounded up overseas. With a current prisoner population of 116, it now holds less than half of the number of prisoners it did when Obama took office in 2009.

One of the main thrusts of Obama’s strategy for closing the prison has been sending home or resettling elsewhere as many as possible of the 52 prisoners who have been ruled safe for release.

Guantanamo-Backpacks-8-13-016(Reporting by Julia Edwards and Matt Spetalnick in Washington and Roberta Rampton aboard Air Force One; Editing by Bill Trott and Tom Brown)

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CUBA: NOW COMES THE HARD PART.

The new Havana embassy is the last big move left for the White House to make. Any progress after this won’t be so easy.

 Original essay here: Now Comes the Hard Part

 By Carl Meacham

 APTOPIX Cuba US Relations

 In 1961, Washington severed diplomatic relations with Havana. More than 50 years later, embassies in Washington and Havana have officially reopened. And today, Secretary of State John Kerry travels to Havana to raise the American flag over the embassy.

The flag is a powerful symbolic gesture, widely seen as the opening of a new chapter in the complicated, tense relationship between the U.S. and one of its nearest neighbors.

But in the messy universe of Cuban politics and policy, there’s another way to look at it. At least for the short term, Kerry’s ceremony is as likely to be the end of something as the beginning.

Since last December, when President Barack Obama and President Raúl Castro announced that they would lead the two countries toward bilateral normalization, events have moved at light speed, at least by diplomatic standards. We’ve had new regulations passed, prisoners released on both sides, and formal channels open for diplomatic negotiations. The Obama administration removed Cuba from the U.S. Government’s list of state sponsors of terrorism. Travel, money transfers, and bilateral interactions are all easier than at any point since the Cuban Revolution.

A lot has been achieved in very little time, and it’s easy to imagine that the change will only snowball. But so far the momentum has come almost entirely from the White House, and the newly opened embassies mark the final big step that Obama can take by himself. Reopening the embassies, as well as taking Cuba off of the list of terrorist sponsoring countries, were decisions that resided within the jurisdiction of the executive branch. Now the most significant next steps are going to lie with Congress, and get tangled up in the 2016 presidential race. They won’t be so easy.

The issues now hanging between the countries are serious ones with strong constituencies aligned against further movement. The big one is the embargo—or as Cubans call it, “the blockade.” Changing or ending the embargo has the biggest potential to transform the relationship, but it requires Congress to change the laws that put the embargo in place. And the likelihood of Congress moving to change that in the next 18 months is minimal.

A number of senators and representatives on both sides of the aisle are pushing for legislation that would ease elements of the embargo. But the Senate majority leader is set against normalization, so it’s unlikely that he would make time on the Senate floor to discuss measures that would strengthen the new approach.

One of the obstacles is substantive: many in Congress see any normalization as a concession to an authoritarian government with a poor record on human rights. The many outstanding issues between Cuba and the U.S. also include claims on expropriated property from US citizens which have not been settled.

And another obstacle is that in the political landscape right now, Cuba simply isn’t important enough to justify floor time in Congress. This fall’s Congressional agenda is already packed with the nuclear deal with Iran and the fight against ISIL, both of which require urgent foreign policy attention—not to mention ongoing battles over funding the government and the potential for government shutdown, new climate regulations, and government funding for women’s healthcare. Ultimately, these issues all trump maneuvers to lift (or ease) the embargo.

Finally, the window between now and the start of presidential primaries is very short. The Iowa Caucus is scheduled for late January or early February 2016. The Republican base, and the party’s leadership, are deeply divided on Cuba policy. As the primary season heats up and candidates jockey for political positioning, Cuba will only become more controversial and polarizing. All of these factors hamper the potential for any major new Cuba legislation.

So what could come next?

It’s likely that trade measures to facilitate commerce, which don’t require Congressional approval, would be the next meaningful step. By setting ground rules related to trade facilitation through bilateral negotiations, Washington and Havana could start to establish a formal framework for their nascent relationship.

The new embassies will help, though there are still a few key obstacles. The Cuban judicial system, which is far from independent, is a significant hurdle, and the two countries have nothing in the way of a bilateral dispute settlement mechanism. The absence of an independent judiciary poses a big risk for investors and businesses seeking to operate in Cuba. And though Cuba is a member of the World Trade Organization, its government hasn’t historically shown a commitment to attracting foreign investment.

Cuban laws stand in the way of smooth commercial relations. Foreign entrepreneurs, for example, are prohibited from directly hiring Cuban employees—a disadvantage for firms that want to set up shop in Cuba. The size of the Cuban market is challenging, too: Cuba’s GDP per capita is just $5,800—half of the Latin American average. Cuba is a promising market for the United States, but its economy’s capacity is limited—so its impact is limited, in kind.

Whatever happens next, it will have a lot to overcome. The history of the bilateral relationship is complicated and tense: the Cuban Missile Crisis, the Bay of Pigs invasion, Guantanamo, Cuban efforts to export its revolution in Latin America and Africa, and its continued role in Venezuela have all played a role. Even after the Soviet Union’s fall, the two countries have remained isolated from one another for decades.

But they also have a long shared history and culture, and even with all these obstacles, we’ve seen some logistical progress in the relationship. March saw the re-establishment of direct telephone links, an important first step in developing infrastructure and communications between the two countries. Stonegate, a small regional bank headquartered in Florida, now works directly with the Cuban government, allowing Cubans to function outside a cash-only basis when operating in the United States.

These steps suggest how the relationship might proceed for now even without doing away with the embargo, and during a very political presidential primary season. Transparency is key. Setting clear rules and regulations that govern how U.S. businesses operate in Cuba (and vice versa) will allow for a boost in confidence—and a parallel boost in investment. And ultimately, this would ideally include a process for settling disputes.

Finally, Washington and Havana can build on the financial reform efforts that have already been implemented. Though banking and financial services are already simpler, further easing the flow of money and investment would go a long way.

There’s a lot left to do. The first act may be over, but Cuba and the United States are slowly but surely just getting started.

Carl Meacham is director of the Americas Program at the Center for Strategic and International Studies (CSIS).

 

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EL LABERINTO DEL SISTEMA IMPORTADOR CUBANO/ CHALLENGES POSED BY CUBA’S LABYRINTHIAN SYSTEM OF IMPORTS

DR. OMAR EVERLENY PÉREZ VILLANUEVA

AUGUST 13, 2015; Published in “From The Island.

Complete document in English here:  Cuba’s Labyrinthian System of Imports

Spanish version:       Sistema Importador Cubano

INTRODUCTION

The international market allows countries with limited internal markets, such as Cuba, to take advantage of economies of scale. That means there is a need to harmonize increases in exports with the substitution of imports. As a result, it is important how leading export items in international trade are supported, while at the same time maintaining the necessary flow to guarantee the import of inputs for that balance.

Cuba’s foreign trade sector, which currently maintains trade relations with more than three thousand foreign companies, possesses the characteristics of an open economy. It is thus greatly relevant that trade policy be designed to contribute to a necessary improvement in productivity and to increase economic efficiency. To that end, it is essential that the methods applied match the goals of economic policy.

The international environment, the national economic structure and the regulatory framework are factors with notable impact on the performance of foreign trade. In particular, the role of institutions is especially important to the effectiveness of regulations in this sector of the economy. In the Cuban economy, it should be noted, the only entities that import products into the country belong to the state, despite the stated intent of Cuban authorities of having the non-state sector occupy a larger portion of the economy.

In Cuba, new Resolutions issued by the General Customs of the Republic (Aduana General de la República or AGR) that took effect on September 1st, 2014 have raised a number of concerns among the Cuban people. The following is a brief overview of this controversial issue.

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CONCLUSIONS

The weakness that currently persists in Cuba’s productivity, such as obsolete technology, insufficient quality, and logistical problems; combined with complexities in the international arena, highlight the urgency to act on domestic conditions and on improving adaptability to external conditions.

It is imperative that the new dynamics of the international context and their impact on the country’s economic and social performance be considered in the gradual changes made to the Cuban economic model.

The development of trade regulations should not lose sight of the significance of achieving the greatest possible consistency between what is required and what the priorities are for the economy, generally, but for the citizens in particular.

The state itself has made it evident that there is a set of activities that should not be administered by the state, but rather in a cooperative way or through the private sector, and it has created the mechanisms to develop it, though in a restricted manner. Thus the question that could be asked of the state is, if these non-state entities create wealth for everyone, why can’t they gain access to inputs through imports that are so necessary for their productivity or services? No doubt the answers they’ll be able to raise are about the lack of foreign currency loans to carry out said imports. Another question could be, why not allow those imports to enter the country with natural persons, and then use the tax system to collect revenue once those services or goods have been provided?

These contradictions should lead to reflection on the part of those who formulate policy. In an economy like the Cuban economy, it is vital to increase imports so that they facilitate the creation and growth of national wealth, independent of the type of property involved. That, in turn, will lead to an improvement in everyone’s well-being.

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OMAR EVERLENY PÉREZ VILLANUEVA

 

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