• This Blog on The Cuban Economy is dedicated to Cuba's Generation "A". Although inspired by Yoani Sánchez' 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 that was brought to my attention by Andrew Johnston of Ottawa: ".. ... 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."

    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.

EL LEGADO DE FIDEL: BALANCE ECONÓMICO SOCIAL EN 2016

A fin de enmendar el legado de Fidel, a Raúl le queda poco más de un año para acelerar y profundizar sus reformas estructurales.

Fidel Surveying Havana from the Cabana Fortress

Por Carmelo Mesa Lago, Nueva Sociedad, Enero 2017

Original Article: El legado de Fidel: balance económico social en 2016

Con motivo del deceso de Fidel Castro, los medios de comunicación mundiales han ensalzado su legado de soberanía política interna y su rol internacionalista, así como las notables mejoras en la educación y la salud, aunque el juicio es usualmente adverso en cuanto a la economía. En una previa publicación hice un balance económico social de medio siglo de Fidel en el poder (1959-2008) usando 87 indicadores que demostraban que el desempeño económico fue generalmente negativo y el social mezclado alcanzando una cima en 1989 y un deterioro después.1 Aquí se evalúa la situación entre 1989 y 2016, poniendo énfasis en la última década. También se evalúa si las reformas estructurales de Raúl en el último decenio han logrado dar un impulso a la economía y al bienestar social en la Isla

Entre 1960 y 1990 Cuba recibió US$65.000 millones de la URSS, dos tercios de los cuales no era reembolsable; esta ayuda fue superior a la recibida por toda América Latina durante la Alianza para el Progreso. Tras la desaparición del socialismo soviético (el «Período Especial») ocurrió un marcado declive en todos los indicadores económicos y sociales, seguido de cierta recuperación especialmente a comienzos del siglo XXI por la substancial ayuda económica de Venezuela, la cual equivalió al 21% del PIB de Cuba en 20102.He sugerido que a fin de mejorar el pobrísimo desempeño económico es primordial avanzar en las reformas estructurales de Raúl, mientras que los benéficos pero costosos servicios sociales deben hacerse sostenibles financieramente a largo plazo.

En múltiples publicaciones he analizado las reformas estructurales implementadas por Raúl entre 2007/08 y 2016, concluyendo que son las más importantes bajo la revolución, intentan resolver los problemas heredados de Fidel y están bien encaminadas, pero son excesivamente lentas, enfrentan severas trabas, altos impuestos y desincentivos, por cuyas razones no han logrado hasta ahora un impacto palpable en la economía y en los servicios sociales; de hecho ha ocurrido un retroceso en algunas reformas3. La grave crisis económica en la República Bolivariana ha contribuido a esos problemas.

La tasa de crecimiento económico cubana que fue de 12% en 2006, en buena medida por el apoyo económico venezolano, ha exhibido desde entonces una tendencia declinante: 4,4% en 2015 y -0,9% en 2016,4 un quinto de la meta inicial fijada a fines de 2015. La formación bruta de capital promedió 13% anual en 2008-2015, la mitad del requerido 25% para un crecimiento económico sostenido. El índice de producción industrial en 2015 estaba 38% por debajo de 1989; la caída fue más acentuada en fertilizantes (95%), azúcar (80%), cemento (60%), acero (29%) y textiles (25%); por lo contrario, la producción de petróleo, gas natural, electricidad y níquel era superior (pero la última 26% menor que en 2008). Similar declive se observa en la agricultura: cítricos (88%), pesca (70%), leche de vaca (56%), tabaco en rama (42%), arroz (22%), cabezas de ganado (18%) y huevos (13%); sólo eran mayores las hortalizas y los tubérculos. Las estadísticas del sector externo en 2015, comparadas con las 2014, indican una agudización de la crisis: las exportaciones de mercancías cayeron 31%, las exportaciones de servicios profesionales (primer ingreso en divisas de Cuba y vendidos mayormente a Venezuela) mermaron 18%, y el excedente entre el saldo positivo de servicios menos el saldo negativo de mercancías menguó 47%5. Si esto ocurrió cuando la economía creció 4,4%, el deterioro debe haber sido mayor en 2016 con la contracción. Cuba atraviesa la peor crisis desde los años 90.

Las reformas estructurales han tenido efectos adversos en los indicadores sociales. Entre 2008 y 2015, con el fin de recortar el insostenible costo social, la asignación a servicios sociales (educación, salud, pensiones, vivienda, asistencia social) decreció de 55% a 47% del presupuesto y de 37% al 28% del PIB. El salario medio estatal ajustado a la inflación en 2008 era 25% del nivel de 1989 y, aunque aumentó a 38% en 2015, el poder adquisitivo era 62% inferior a 19896. La pensión media en 2008-2015 era la mitad que en 1989. Todos los hospitales rurales y postas urbanas y rurales se cerraron en 2011; entre 2008-2015, el número de hospitales decreció 30%, el personal de salud total menguó 22%, los médicos de familia que proveen la atención primaria se redujeron en 65%, por otra parte el número de médicos creció en 15% (aunque parte está en el extranjero), la mortalidad infantil continuó bajando de 4,7 a 4,3 por mil nacidos vivos, y la tasa de mortalidad materna mermó de 46,5 a 41,6 por 100.000 nacimientos (pero aún mayor que 29,2 en 1989). La matrícula universitaria decreció de 743.979 a 165.926 (78%) entre los cursos 2007/08 y 2015/16. La construcción de viviendas declinó de 44.775 a 23.003 entre 2008 y 2015 y por 1.000 habitantes cayó de 4,0 a 2,0. La asignación a la asistencia social disminuyó de 2,1% del presupuesto a 0,4% y como porcentaje de la población de 5,2% a 1,6%7. La tasa de desempleo declarado que llegó a un mínimo de 1,6% en 2008, creció a 3,5% en 2012 por causa del programa de despedido de 1,8 millones de empleados estatales innecesarios, pero sólo medio millón fue despedido y la tasa disminuyó a 2,4% en 20158. Cuba nunca ha publicado estadísticas sobre distribución del ingreso, pero otros indicadores sugieren que se colocaba a la cabeza de la región en igualdad; las reformas han cambiado diametralmente la situación, debido a un grupo no estatal con altos ingresos y la caída en el salario estata9.

Un importante avance ha sido la condonación o reducción de la mayor parte de la deuda externa por los acreedores; Cuba comenzó a pagar la deuda restante en octubre de 2016 y se ignora si podrá continuar haciéndolo. El aspecto más brillante es el turismo. La normalización de relaciones con los EEUU y las órdenes ejecutivas de Obama, virtualmente han abierto la puerta a los visitantes norteamericanos que saltaron de 95.254 en 2004 a 161.233 en 2015 y a cerca de 200.000 en 2016; además todos los otros principales emisores han crecido, por lo cual el total de visitantes subió 17% en 2015 y alcanzó 4 millones en 2016; así mismo, los ingresos brutos por turismo crecieron 11% en 2015 y se proyecta que alcanzarán los US$4.000 millones en 2016.

En el balance, los factores adversos sobrepasan con creces a los favorables y 2017 será muy tenso. A fin de enmendar el legado de Fidel, a Raúl le queda poco más de un año para acelerar y profundizar sus reformas estructurales. Si Trump revierte las medidas de Obama y no avanzan las reformas, la crisis se agravará en Cuba.

The Cross-harbour Ferry from the Steps of the Russian Orthodox Church

  1. C. Mesa-Lago: Cuba en la era de Raúl Castro: Reformas económico-sociales y sus efectos, Colibrí, Madrid, 2012.
  2. C. Mesa-Lago: «Institutional Changes in Cuba’s Economic and Social Reforms» en R. Feinberg y T. Piccone (comps.): Cuba Economic Change in Comparative Perspective, Brookings Institution / Universidad de La Habana, Washington, DC, 2014, pp. 49-69; «El lento avance de la reforma” en Política ExteriorNº 171, 5-6/2016, pp. 94-104; y con R.Veiga, L. González, S. Vera y A. Pérez-Liñán: Voces de cambio en el sector estatal cubano, Iberoamericana, Madrid, 2016.
  3. Raúl Castro Ruz, Discurso en la clausura de la Asamblea Nacional del Poder Popular, Granma, 28 diciembre 2016, p.3.
  4. Cálculos del autor basados en Oficina Nacional de Estadísticas e Información (ONEI): Anuario estadístico de Cuba 2015, La Habana, 2016; datod de 1989, del Comité Estatal de Estadística: Anuario Estadístico de Cuba 1989, La Habana, 1991.
  5. La CEPAL, Balance preliminar de las economías de América Latina y el Caribe 2016, Santiago de Chile, diciembre 2016, cuadro 4.4, estima un crecimiento de 43% en el salario medio real, el mayor en la región, pero con base en el año 2010 cuando estaba 27% por debajo del nivel de 1989
  6. Cálculos del autor basados en ONEI: Anuario Estadístico de Cuba 2008, La Habana, 2009, y cit.
  7. Basado en C. Mesa-Lago: «El desempleo en Cuba: de oculto a visible” en Espacio LaicalNº 4, 2010, pp. 59-66, y ONEI: Anuario 2015, cit.

8. C. Mesa Lago: «La desigualdad del ingreso y la experiencia de América Latina” en Temas Nº 84, 10-12/2015, pp. 35-43

A Few of Cuba’s Amazingly Talented Musicians

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CUBAN AMERICAN LOST HIS BUSINESS BID AFTER OBTAINING PERMANENT RESIDENCE IN CUBA

Saul Berenthal

BY NORA GÁMEZ TORRES, Miami Herald, 9 January 2012

Original Article: CUBAN AMERICAN LOST HIS BUSINESS BID

Saul Berenthal was to become the first Cuban American investor on the island with a plan to assemble tractors to help small farmers. But his full embrace of his Cuban roots backfired.

The tale of Cleber LLC, a U.S. company that wants to assemble farm tractors in the Mariel Special Development Zone near Havana, is one example of the questions the island’s government will have to face if it wants to attract investments from the Cuban diaspora.

President Barack Obama described the proposal in March by Cleber, owned by Cuban American businessman Saul Berenthal and his partner, Horace Clemmons, as the first business with 100 percent U.S. capital authorized to invest in Cuba in more than half a century.

The goal was to assemble — and in the future produce from the ground up — a line of tractors for small-scale farmers under the Oggun brand, using Cuban labor for the benefit of the Cuban people, Berenthal told the Granma newspaper, official voice of the Cuban Communist Party, in April.

The paper published a report on Berenthal and Clemmons, and praised their idea of using the Open Source Manufacturing Model, which allows easier sourcing of materials. The Juventud Rebelde newspaper earlier published a report on the U.S. investors all but predicting the Cuban government would approve their project.

But Berenthal was told during the Havana International Fair, a business exhibition held Oct. 31-Nov. 4, that the proposal had been rejected.  Berenthal told el Nuevo Herald that the project “was not canceled. More than anything else, it was not authorized.”

The real reason for the rejection was that Berenthal, a 73-year-old retired software engineer who was born in Cuba and lived in the United States since 1960, had obtained permanent residence in Cuba, according to a knowledgeable source who asked for anonymity to speak about the issue.

“Saul got enthusiastic,” the source told el Nuevo Herald.

Berenthal’s “repatriation” put the Cuban government in a difficult position: accept the project, even though it would break its own ban on large investments by Cubans who live on the island, or reject it using an indirect argument. Officials chose the second option.

Berenthal said the government told him the proposal did not meet the Mariel requirements on technology and worker safety.

Berenthal said his repatriation had nothing to do with the government’s decision “because they were aware from the beginning” of his efforts to become a permanent residence. He added that the rejection of the Mariel project “does not mean we will not continue with the project. They suggested we contact the Agriculture Ministry.”  Berenthal’s legal residence on the island — which gave him the right to buy property and obtain free medical care, among other perks — put him at odds with laws that forbid Cubans who live on the island from establishing medium or large-scale companies.

The Justice Ministry’s web pages notes that the Cuban government does not recognize dual citizenship and follows the principle of “effective nationality.” That means a person with dual citizenship, such as Cuban Americans, can exercise only one when they are on the island.  “That does not mean a Cuban citizen cannot have another citizenship, but the valid one here is ours,” the ministry notes.

Although the Cuban constitution does not recognize the right of citizens living abroad to return and reunite with their families, they can be allowed to re-establish permanent residence and recover the benefits the government cancels for those it considers to have emigrated. Cubans with U.S. citizenship who return and re-establish permanent residence are therefore considered to be Cuban citizens only, subject to Cuban laws and regulations.

The Cuban ambassador in Washington, José Ramón Cabañas, told an interviewer in October that more than 13,000 Cubans living in the United States had been approved for repatriation in the previous two years. More applications were being processed, he added.

The impact on the U.S. status of Cubans who repatriate “is zero,” said immigration lawyer Wilfredo Allen. “The problem is that Cuba controls you.”

That control means, as in Berenthal’s case, that those 13,000 Cuban Americans who returned cannot invest their money in Cuban companies — even though the country’s Foreign Investment Law leaves open the possibility that Cubans with other nationalities may invest in areas such as tourism or energy.

Private sector workers in Cuba, known as cuentapropistas (self-employed), are licensed only to work for themselves and cannot legally establish companies to expand their work beyond a small scale. Larger enterprises are allowed only for the government and foreigners.

According to a report on the foreign investment law produced by the National Organization of Cuban Law Firms, “Cuban citizens residing in the country cannot participate as partners in a joint venture.” The report added: “This law is designed to favor ‘foreign investors’ or Cubans living outside the country.”

Cuban American economist Carmelo Mesa Lago said those restrictions are counterproductive, especially at a time when the island’s economy is shrinking.

Cuba’s Economy Minister Ricardo Cabrisas has said that only 6.5 percent of investments planned for 2017 are tied to foreign capital. The Cuban government estimates that it needs $2.5 billion in annual investments for economic growth.

“It is totally crazy. The level (of foreign investments) they are receiving is absolutely minimal,” Mesa Lago told el Nuevo Herald. “The government needs investments in all sectors. They have set priorities and have more interest in big investments than in medium investments, and that is totally absurd.

“They need all kinds of investments,” he added. “Cubans who have the capacity to invest, based on their profits … that should be allowed.”

 

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EIGHT MYTHS ABOUT OBAMA’S OPENING TO CUBA

William M. LeoGrande , Professor of Government at American University, Washington D.C.

9 January 20017, Huffington Post.

Original here: EIGHT MYTHS 

Opponents of President Obama’s opening to Cuba have taken full advantage of the fact-free character of recent political debate in the United States to spread a variety of myths aimed at discrediting Obama’s Cuba policy and convincing President Trump to reverse it. Here are eight of them:

Myth 1: The United States has gotten nothing in return for concessions made to Cuba.

The December 17, 2014 agreement resulted in the release of USAID subcontractor Alan Gross, CIA asset Rolando Sarraff Trujillo, and 53 political prisoners. That’s not nothing.

Since December 2014, the United States and Cuba have signed fifteen bilateral agreements on issues of mutual interest that benefit both countries, including environmental protection, health cooperation, counter-narcotics cooperation, and disaster prevention and response.

The restoration of diplomatic relations benefits the United States as well as Cuba. It allows U.S. diplomats to provide better counselor services to U.S. visitors and Cuban immigrants, to have broader interaction with Cuban civil society, including dissidents, and to travel all over the island to assess conditions outside Havana and to verify Cuban compliance with 1995 migration accord. If we break relations, the United States will have no diplomatic representation in Havana, whereas the Cubans will still have their UN mission in New York.

Obama’s relaxation of travel regulations restores, in part, U.S. citizens’ constitutional right to travel which the Supreme Court has said should only be abridge for compelling reasons of national security.

Obama’s relaxation of restrictions on trade has focused mainly on trade with Cuba’s private sector and trade that benefits Cuban consumers. Expanded trade benefits U.S. businesses and generates jobs, which is why hundreds of companies have been investigating opportunities there. Continued restrictions simply open the door to European and Asian competitors.

Removal of Cuba from the State Department’s list of state sponsors of international terrorism was not a concession, but rather an acknowledgement, backed by the intelligence community, that Cuba no longer fit the statutory designation to be classified as a state sponsor. Ending the designation opened the door to cooperation on countering terrorism and transnational crime through the bilateral law enforcement dialogue. It also enabled the United States and Cuba to cooperate to reach a peaceful settlement of the war in Colombia, the last remaining insurgency in Latin America.

The opening to Cuba dramatically improved U.S. relations with allies across the hemisphere, where the old policy had become an obstacle to cooperation on issues like narcotics trafficking, migration, and trade.

Myth 2: Obama rescued the Cuban regime from economic and political collapse that was imminent because of the collapse of Venezuela.

Even without Venezuelan oil, the Cuban economy is not on the verge of collapse. Pavel Vidal, a respected Cuban economist now living abroad, estimates the loss of Venezuelan oil will cause a 2.9% fall in Cuba’s GDP in 2017. By contrast, Cuban GDP fell 35% during the 1990s when Cuba lost Soviet aid and the regime did not collapse. The Venezuelan shock will hurt, but is not a matter of life and death.

Economic benefits to Cuba from the U.S. opening have been modest, limited to the increase in non-Cuban American U.S. visitors following December 17. Although the number has grown from 91,000 in 2014 to 267,000 in 2016, U.S. visitors still represent less than 7% of the four million foreigners who visited Cuban in 2016—hardly enough to make the difference between economic survival and collapse.

The principal U.S. economic sanctions on investment and trade with Cuba remain in place. U.S. investment is prohibited except in very narrow areas like telecommunications. Cuban state enterprises cannot export to the U.S. market except in the pharmaceuticals sector. U.S. businesses cannot sell to Cuban state enterprises except consumer goods and services for the general public.

Myth 3: The Cuban people do not benefit from tourism; all the money goes to the government.

Even if all the revenue from tourism did go to the government—which it does not—the expansion of the tourist industry generates jobs at the airports, hotels, restaurants, etc., and has a multiplier effect in local communities. This is plainly visible in the relative prosperity of towns near tourist locales outside Havana vs. towns off the tourist track.

Work in the state tourist sector is highly sought after by Cubans because it offers access to convertible currency tips that make it possible to have a decent standard of living. As of 2014, 755,600 Cubans worked in tourism representing 15.2% of the labor force—an increase of 16.9% since 2009. These numbers don’t take into account the increase in U.S. visitors in the past two years.

Private restaurants and B&B rentals are proliferating, with most of the high-end ones catering primarily to foreign visitors. Most of the licenses for self-employment are for restaurants and casas particulares, which together comprise the backbone of the urban private sector That is why some of Cuba’s most prominent private entrepreneurs have urged President Trump not to reverse President Obama’s opening to Cuba.

Myth 4: Obama betrayed the Cuban people and Cuban dissidents to partner with the government.

The Cuban people don’t feel betrayed by Obama’s opening to Cuba; they support it overwhelmingly. In an independent poll commissioned by the Washington Post, 97% of Cuban respondents thought better relations with the United States were “good for Cuba.” Lest you think people were afraid to respond honestly, 48% of these same respondents expressed unfavorable opinions of Raúl Castro and 50% expressed negative opinions of Fidel Castro.

Even among Cuban dissidents, there are those who support Obama’s policy because they see it as helping to create greater political space on the island and undercutting the government’s excuse for limiting political liberties.

Myth 5: The human rights situation in Cuba has gotten worse since December 17, 2014.

The human rights situation in Cuba has not improved for dissidents, but it has improved for everyone else. The Cuban Commission of Human Rights and National Reconciliation tracks arrests of political dissidents and reports that the number in 2014 (before Obama’s policy change) was 8899; in 2015, it was 8616; and in 2016, it was 9940. Typically, people arrested are detained for several hours and released without being charged, so many of the reported arrests are of the same people being detained repeatedly. On this measure, the Cuban government’s human rights record has not improved since U.S. policy changed. However, in previous years, dissidents were frequently charge with serious crimes and sentenced to long prison terms, a practice that has become much less common.

In its 2015/2016 annual report, State of the World’s Human Rights, Amnesty International criticized Cuba’s continuing denial of political liberties, but reported that Cuba had released all of the people Amnesty had designated “prisoners of conscience.”

Cubans today than have greater economic and personal freedom than they had several years ago— freedom to start their own businesses, buy and sell real estate, own computers and cell phones, and travel abroad.

Cubans have far greater access to information as a result of expanded Internet availability, a change that came directly out of the negotiations that produced the December 2014 change in U.S. policy. Internet expansion has also led to the proliferation of independent blogs and digital media sites critical of the government.

Myth 6: Cuba is strategically insignificant, so there’s nothing to lose by taking a tough position demanding democracy.

Cuba and the United States cooperate to combat narcotics trafficking and human smuggling and trafficking through the Caribbean, two of the most important security issues facing the United States in Latin America. That cooperation could be crippled by a return to the policy of hostility.

A return to the policy of hostility would alienate Latin America, whose active cooperation the United States needs to deal with transnational issues like drug trafficking, migration, and environmental protection.

China and Russia are both seeking to expand their influence not just in Cuba, but in the Latin American region. A return to the policy of hostility would give Cuba an incentive to cooperate more closely with China and Russia in strategic as well as economic spheres. It would also provide China and Russia with new opportunities in Latin America generally.

Myth 7: The Castros are creating a family dynasty like North Korea.

Cuba has a constitutional succession process, and neither Fidel nor Raúl Castro’s children are positioned to succeed them.

None of Fidel Castro’s children have positions of political authority.

Raúl Castro’s son Alejandro Castro serves on his personal staff and was responsible for negotiating the agreement with the United States announced on December 17, 2014. He is obviously a trusted aide. But he is only a colonel in the Ministry of the Interior. He is not a member of the Central Committee of the Cuban Communist Party, let alone the Political Bureau, where the key decisions are made. He is not among the 600+ deputies in the National Assembly, let alone its executive body, the Council of State. There is no evidence that he is in line to succeed his father a year from now, as some people speculate.

Raúl’s daughter, Mariela Castro, heads the Cuban National Center for Sex Education and has been an outspoken advocate for LGBT rights. She is a member of the National Assembly, but not of the Party Central Committee, and has confined her public work to issues of sexuality.

Colonel Luis Alberto Rodríguez, head of the economic branch of the armed forces which manages a number of major economic enterprises, is Raúl Castro’s son-in-law. He is a member of the Central Committee, but not the National Assembly, and has no public profile.

Raúl Castro’s other two children have no public roles or positions.

Myth 8: Trump won Florida because Cuban Americans supported his hard line on Cuba.

Cuban Americans do not support a hard line on Cuba. Polls show a clear majority in support of engagement. Florida International University’s 2016 poll found 69% in support of the restoration of diplomatic relations and the 63% opposed to continuing the economic embargo. Even larger majorities favored travel and trade.

Cuban Americans did not vote overwhelmingly for Trump. Hillary Clinton won South Florida by 100,000 more votes than Barack Obama did in 2012. Trump won 52-54% of the Cuban American vote, only a few percentage points better than Mitt Romney and far below the 2-1 margins Republicans used to wrack up before 2012. By contrast, in the predominately white rural counties along the I-4 corridor and in the panhandle, Trump crushed Clinton by huge margins. Trump won Florida for the same reason he won Pennsylvania, Ohio, Michigan, and Wisconsin—high turnout among white blue collar voters.

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LA RECESIÓN CUBANA Y EL ESTRENO DE LOS BONOS PÚBLICOS

Por Pável Vidal,  economista cubano y profesor de la Universidad Javeriana en Cali, en Colombia
IPS Inter Press Service, 6 de enero de 2017

CALI, Colombia, 30 dic 2016 (IPS) – Los datos macroeconómicos de cierre del año proporcionados por el gobierno cubano confirman las proyecciones de que Cuba entraría en una recesión como resultado del shock venezolano.

La producción de bienes y servicios en 2016 cayó  0,9 por ciento. Esta es la primera recesión económica desde el año 1993, en que el producto interno bruto (PIB) se hundió  15 por ciento tras la desaparición de la Unión Soviética.

Desde finales de 2014, tras la dramática caída del precio del petróleo y la consecuente crisis de la economía venezolana, la recesión cubana era altamente probable, si además sumamos una respuesta de la política económica cubana insuficiente ante la magnitud del shock que se avecinaba.

Las relaciones con Venezuela están formadas bajo acuerdos muy singulares entre ambos gobiernos, con precios y facilidades financieras que se alejan de las prácticas más habituales en el comercio internacional.

Por tanto, no se trata simplemente de buscar nuevos mercados para el comercio que ya no se puede realizar con Venezuela, sino que hay que hacerlo de una manera diferente e impulsando nuevos sectores económicos, dado que parece bastante improbable alguien más reciba los médicos cubanos y nos venda petróleo bajo las mismas condiciones.

Por eso era tan importante comenzar cuanto antes la diversificación de las relaciones internacionales y la liberalización de las capacidades internas en búsqueda de un incremento de la productividad y mayor eficiencia en la producción nacional. La atracción a gran escala de inversión extranjera, la devaluación de la tasa de cambio oficial y la convergencia monetaria, una reforma más profunda de la empresa estatal y la ampliación de los espacios al sector privado y las cooperativas, eran algunos de los pasos que parecían factibles y coherentes con las reformas ya iniciadas.

¿Por qué no se dieron algunos o todos estos pasos? Pueden esgrimirse múltiples explicaciones.

Porque no hay claridad o convencimiento de hacia dónde dirigir el modelo económico cubano. Porque las fuerzas de resistencia a los cambios han ganado por ahora la partida. Porque las necesidades de tantos cambios sobrepasan la capacidad institucional y técnica para administrarlos todos al mismo tiempo. Porque el embargo estadounidense sigue impidiendo la llegada de inversionistas extranjeros institucionales. Porque de verdad se cree que una reforma muy lenta y haciendo experimentos es la única vía efectiva. Y seguramente se podrían añadir algunas otras explicaciones.

Por la razón que sea, el resultado final es que las reformas han perdido velocidad en vez de apresurarse, y transcurridos 10 años, no hay resultados muy alentadores cuando se examina la productividad, el salario medio o un sector específico como la agricultura.

Los anuncios de nuevas transformaciones son cada vez más dilatados. Cuba parece vivir en una dimensión del tiempo diferente, es como si un año de Cuba equivale a un mes en el resto del planeta.

Sin embargo, el espacio en el que opera la economía no está aislado, compite con otros destinos para los capitales internacionales, se rezaga tecnológicamente, pierde peso relativo en la región, y sufre los ciclos de los mercados internacionales y las crisis de sus principales aliados económicos.

Las perspectivas para 2017 y el rol de los bonos públicos

Para el año 2017 el gobierno planifica una mejoría en la situación de la economía, algo que es contrario a las proyecciones que habíamos efectuados.  El gobierno planifica un aumento de dos por ciento del PIB.

Este aumento del PIB para 2017 está sustentado en dos factores esenciales. Uno, la esperanza que mejore la situación de la economía venezolana tras los últimos aumentos del precio del barril de petróleo; y dos, el gobierno cubano pone en práctica una política fiscal expansiva anticíclica.

En su discurso en la Asamblea Nacional el 27 de diciembre,  el ministro de Economía y Planificación, Ricardo Cabrisas, plantea que: “Las proyecciones de los portadores energéticos para el venidero año permiten respaldar niveles similares a los del 2016…”

Muy probablemente esta perspectiva tiene como punto de partida el incremento que ha presentado el precio del barril de petróleo durante los últimos tres trimestres y algunas proyecciones internacionales que lo sitúan en mayores niveles para el año 2017, lo cual favorece el desempeño de la economía venezolana y abre la posibilidad de que se estabilizarán los envíos de petróleos a la isla y los pagos de los servicios médicos cubanos.

Por otra parte, se proyecta un incremento del gasto público y del déficit fiscal para respaldar el aumento del PIB. Se proyecta un aumento de 11 por ciento en los gastos fiscales, pero que no podrá ser cubierto por los ingresos fiscales, por lo que generará un “hueco fiscal” de 11.500 millones de pesos en el año 2017, lo que representa un valor equivalente a 12 por ciento del PIB.

En términos porcentuales es el déficit fiscal más alto desde 1993; en valores más que duplica el déficit del año 1993 que fue de 5.000 millones de pesos.

Es propicio que después de años de austeridad fiscal el gobierno decida expandir el gasto público para amortiguar el efecto recesivo de la crisis venezolana. Es válido aplicar una política fiscal expansiva en momentos de caída del PIB.

También es atinado financiar el déficit fiscal con emisión de bonos públicos, lo cuales comprarán los bancos estatales cubanos. Este es un nuevo instrumento que desde hace dos años viene estrenando el Ministerio de Finanzas y Precios con vistas a evitar la monetización (impresión de nuevo dinero) como mecanismo de financiación del déficit fiscal.

Tal mecanismo de financiación fiscal tiende a acercarse a las prácticas internacionales, y tiene como principal ventaja que evita un incremento de la cantidad primaria de dinero, con lo cual reduce las presiones inflacionarias.

¿Dónde están los riesgos de la política fiscal expansiva y la emisión de bonos?

Primero, el déficit fiscal puede crecer en épocas de crisis, pero no debe hacerlo de manera desmesurada ni mantenerse alto indefinidamente. Está bien aplicar una política fiscal anticíclica, pero tener un hueco fiscal de 12 por ciento del PIB en 2017 trae dudas sobre la sostenibilidad financiera de todo el mecanismo de financiación que se está poniendo en práctica. Para tener un punto de comparación, se espera que los países conserven, en promedio de varios años, un déficit fiscal menor de tres por ciento del PIB.

Se debe tomar en cuenta que los propios inversionistas extranjeros, prestamistas y proveedores internacionales, serán los primeros que estarán mirando este indicador de equilibrio fiscal. A nivel internacional este es uno de los principales indicadores que se toman en cuenta para evaluar la prudencia de la política económica y que define el riesgo financiero del país.

Segundo, la emisión de bonos públicos reduce los efectos inflacionarios pero no los elimina del todo. Expandir el gasto fiscal en 11.500 millones de pesos por encima de los ingresos sí puede presionar al aumento de los precios dada la ampliación desproporcionada que está activando en la demanda de bienes y servicios.

Tercero, Cuba no cuenta con una regla fiscal que organice y ponga límites al equilibrio fiscal de largo plazo (como tienen otros países en la región), sino que depende de la discrecionalidad del gobierno cada año. Es decir, no sabemos qué va a suceder con los déficits fiscales en el futuro. No tenemos seguridad de que los bonos que se están emitiendo y los próximos que se emitirán serán manejados adecuadamente con el fin de garantizar la sostenibilidad de todo el mecanismo.

Se debe tomar en cuenta que los bancos están empleando los ahorros de las familias para comprar los bonos públicos, por tanto, el gobierno tiene la responsabilidad de obtener ingresos fiscales futuros y equilibrar las cuentas públicas para cumplir sus compromisos con los bancos y, en última instancia, con los ahorradores.

Para tener una idea de la magnitud del déficit y de la emisión resultante de bonos públicos, observemos que en el año 2015 el ahorro de las familias en los bancos sumaba 23.680 millones de pesos cubanos.

Por ende, el déficit fiscal presupuestado para el año 2017 equivale a 48 por ciento del valor de las cuentas de ahorros de las familias. Los bancos, ciertamente tienen también depósitos de las empresas y su propio capital. Aun así, esta proporción de 48 por ciento llama la atención sobre el poco espacio de financiación que a futuro tendría el MFP para soportar elevados déficits fiscales.

En resumen, el crecimiento proyectado de dos por ciento para el año 2017 en la economía cubana depende de una situación que sigue siendo incierta para la economía venezolana, a pesar del aumento del precio del petróleo. Además, viene acompañado de una política fiscal expansiva que de ser bien empleada puede ayudar a manejar la crisis, pero en caso contrario, tendría consecuencias desastrosas para la estabilidad monetaria y financiera del país.

La activación de una política fiscal anticíclica y la emisión de bonos públicos es acertada, pero parece exagerado un déficit fiscal que equivale a 12 por ciento del PIB y a 48 por ciento del ahorro de las familias en los bancos.

No habría posibilidades de repetir la expansión fiscal en el año 2018, más bien será indispensable realizar un ajuste fiscal que disminuya significativamente el déficit en los próximos años.

Por tanto, el gobierno solo está ganando un año de tiempo, en el cual deberá aplicar algunas de las reformas estructurales pendientes y necesarias para sacar en firme a la economía de la recesión.

Pavel Vidal

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“CUBA 2017: SLOW MOTION ECONOMIC REFORMS PLUS POLITICAL STASIS”

Attached here is a Power Point Presentation on Cuba’s current economic and political situation.  The complete presentation is attached here:  Cuba 2017: Slow Motion Reforms. January 4, 2017

By Arch Ritter

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CUBA’S FIRST EXPORT TO THE UNITED STATES SINCE 1961: ARTISANAL CHARCOAL

Artisanal charcoal will become the first legal Cuban export to the United States in decades under a deal announced Thursday between Cuba’s government and the former lawyer for imprisoned U.S. government contractor Alan Gross.

Attorney Scott Gilbert, who has sought to build economic ties between the two countries since Gross’ release, said a company that he founded will buy 40 tons of charcoal made from the invasive woody plant marabu. The charcoal is produced by hundreds of worker-owned cooperatives across Cuba and has become an increasingly profitable export, valued for its clean-burning properties and often used in pizza and bread ovens.

Gilbert’s company will pay $420 a ton, which is significantly above the wholesale market price of about $360. The first delivery is scheduled for Jan. 18, two days before the inauguration of Donald Trump as U.S. president.

Products of privately run or cooperative farms in Cuba can be exported to the United States under measures introduced by President Barack Obama after the Dec. 17, 2014, declaration of detente with Cuba. The measures loosen a 55-year-old trade embargo on Cuba.

The charcoal is sold by cooperatives to a local packager, which sells it on to state-run export firm CubaExport. Each middleman takes a 1 percent or 2 percent commission, CubaExport general director Isabel O’Reilly said. CubaExport said the charcoal would be the first legal export to the United States in more than five decades, and it hoped to expand the deal to include honey and coffee.

The charcoal will be sold to restaurants and online to consumers in 33-pound bags under the brand name Fogo, Gilbert said.

Cuba sells about 40,000 to 80,000 tons of marabu charcoal annually to buyers in Italy, Germany and about a half dozen other countries, O’Reilly said.

Attorney Scott Gilbert

“I think that once they have examined this situation and looked at all the facts, that they will be supportive of increased engagement and the economic changes that it will bring,” Gilbert said.

Under Obama’s changes, American visitors to Cuba can return with unlimited rum and cigars, but state-run companies cannot export those products to the U.S.

A man prepares artisanal charcoal at a farm on the outskirts of Havana, Cuba, on Jan. 5, 2017. Artisanal charcoal will become the first Cuban export to the U.S. this month under a new deal between the Cuban government and the former lawyer for imprisoned U.S. government contractor Alan Gross.

(Ramon Espinosa / AP)

Associated Press

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MY FAMILY’S TEARS OF JOY AND SADNESS FOR CASTRO’S CUBA

Son of a Cuban émigré, John Paul Rathbone asks what Fidel’s death means for the republic’s people

John Paul Rathbone, Financial Times, December 2, 2016

Original Article: Joy and Sadness for Castro’s Cuba

It has been many years since my family celebrated the usual exile toast which tacitly imagined Fidel Castro’s death — “To next Christmas in Havana!”

My mother’s family left Havana in the autumn of 1960 — 18 months after Castro came to power — expecting to return soon. But as the years passed, the toast I heard as a child growing up in London grew heavier with irony. By the end of the 20th century, it was repeated only because the repetition was comic. Then, last Friday at 10:29pm, Castro really did die. His younger brother, President Raúl Castro, made the announcement on national television.

I learnt the news on Saturday morning, in New York. My phone was lit up with texts and emails. In Miami, the night before, my niece had rushed out of her apartment in the Cuban district near Calle 8 to join the euphoric crowd. In Madrid, a cousin celebrated in a Cuban dive bar with a hip audience and politics far to the left of his own — and those of the owner, a black Cuban in his early 60s who served the crowd cocktails but kept his satisfaction to himself. From Havana, the mother of a friend left a strange message on his answering machine: “Fidel is dead”, and then a long silence before she hung up.

“DEAD” was the bald Miami Herald headline on its special edition. There was little more to say. Cuba has been “post-Fidel” since he retired from public office in 2006 because of ill-health, formally handing over power to Raúl in 2008. One friend who heard the news on Friday night simply went back to sleep. The revelry outside Miami’s famous Versailles restaurant soon rang hollow. It was a moment instead for grief, that churning of old emotions whenever a major figure in your life dies.

I called my mother in London. Although she left Cuba several years before the revolution for reasons that had nothing to do with politics, she often returned and had cheered Castro’s jubilant rebels and thrown flowers in their path when they had marched into Havana 57 years ago, the dictator Fulgencio Batista vanquished. She claims to have hugged Camilo Cienfuegos, the most-loved rebel leader, that day. But then Castro nationalised my grandfather’s store, and soon her parents and siblings and their children left too. “So many memories,” she told me.

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Camilo  Cienfuegos  and  Fidel  Castro, January  1 1958

I returned to Miami on Sunday evening. Driving home from the airport, I asked my Uber driver, a 26-year-old who left Havana four years ago, about his weekend. He was dismissive. “I understand the celebration. It’s not of a person’s death. It is of the end of someone who has caused so many people so much pain. But nothing really has changed. I stayed at home.”

Charismatic defiance

There is still, though, the public weighing of Castro’s life, the lengthy consideration of this versus that. Hero or villain?

First, we need a necessary correction of perceptions. Even Cubans who dislike him sometimes take a strange pride in Castro. “Fidel embodied the best and worst of us,” wrote Achy Obejas, a Cuban-American novelist, in a New York Times column this week. “We hated his ambitions and loved that he had them. Hang out with a bunch of Cubans, and the minute someone gets imperious, someone else will call her out for the ‘little Fidel’ in her.” It’s in every Cuban, really.

Castro (left) is shown in file photo dated May 1963 holding the hand of Soviet leader Nikita Khrushchev during a four-week official visit to Moscow. Castro resigned on Feb. 19, 2008 as president and commander in chief of Cuba in a message published in the online version of the official daily Granma.

Castro (left) is shown in file photo dated May 1963 holding the hand of Soviet leader Nikita Khrushchev during a four-week official visit to Moscow. Castro resigned on Feb. 19, 2008 as president and commander in chief of Cuba in a message published in the online version of the official daily Granma.

Castro was epic, especially from afar. He seemed to rule forever. He was the Quixote whose defiance of the Yankee monster warmed the cockles of the hearts of the red, the young and the poor. His charisma was inarguable.

There were also the achievements, especially Cuba’s lauded education and health systems, and the fight against South African apartheid. His longevity — outlasting 11 US presidents — won him the respect of Latin American leaders. European, African and Asian politicians played court too.

Up close, however, his portrait becomes like the picture of Dorian Gray. There were the summary executions in the early days of the revolution; the stifling ideology that followed; the neighbourhood snooping; and the official discourse with its sledgehammer words like “conflict” and “struggle” but never “prosperity”, “reconciliation” or “harmony”. There were, and still are, the desperate escapes across the Florida Straits in makeshift rafts, the stultifying economy, the drain of the talented and the young seeking a life for themselves as exiles, and the fact that while Cuba’s island population is 11m, another 2m live abroad.

More than anything, though, there has been the terrible breaking apart of families — and Cuba, under all the politics, is a family affair. I think of this analogy. At his height, Castro was the father of the nation — the man who shaped everyone’s lives. Yet he was also an abusive father. On Tuesday night, as I watched the state funeral in Revolution Square on the television, I noticed that Raúl never used the word “brother” during his tribute speech. With Castro, it was politics all the way.

FILE - In this April 19, 2016 file photo, Fidel Castro attends the last day of the 7th Cuban Communist Party Congress in Havana, Cuba. Fidel Castro formally stepped down in 2008 after suffering gastrointestinal ailments and public appearances have been increasingly unusual in recent years. Cuban President Raul Castro has announced the death of his brother Fidel Castro at age 90 on Cuban state media on Friday, Nov. 25, 2016. (Ismael Francisco/Cubadebate via AP, File)

FILE – In this April 19, 2016 file photo, Fidel Castro attends the last day of the 7th Cuban Communist Party Congress in Havana, Cuba. Fidel Castro formally stepped down in 2008 after suffering gastrointestinal ailments and public appearances have been increasingly unusual in recent years. Cuban President Raul Castro has announced the death of his brother Fidel Castro at age 90 on Cuban state media on Friday, Nov. 25, 2016. (Ismael Francisco/Cubadebate via AP, File)

Cuba waits

Castro’s death at the age of 90 is, of course, one of the most unsurprising news events ever. The obituaries were written long ago. Nothing happening this past week on the island has been improvised either, even if most Cubans had probably not expected to trudge through nine days of state-mandated mourning, with alcohol sales banned.

On Wednesday, after tributes from foreign dignitaries the night before, Castro’s ashes were driven off in a cortege on an 870km tour across the island. On Sunday, his ashes will be interred at the Santa Ifigenia cemetery in Santiago, in a tomb next to José Martí’s: Castro has thereby sought to appropriate the legacy of the poet and man of letters who is Cuba’s most famous independence hero.

Castro’s own legacy will be disputed for years. For every argument in its favour, there is a riposte. What is inarguable is that the island is physically crumbling, and the economy in desperate need of investment and funding. Socialist Venezuela, Cuba’s closest ally, faces an economic crisis. Soon Caracas may no longer provide Havana with the aid and subsidised oil it needs.

When I last visited Cuba in July, there were blackouts. A euphoria I sensed in February, an expectancy of change triggered by President Barack Obama’s historic visit and the prospect of subsequent US rapprochement, had faded. The significant but small economic reforms launched by Raúl have stalled. The generals still control the most lucrative sections of the Cuban economy. When Raúl steps down as president in 2018, as he has promised, the system will probably be much the same as now. But perhaps it will be otherwise.

Cubans also face the prospect of Donald Trump. The US president-elect has threatened to reverse Mr Obama’s detente. “If Cuba is unwilling to make a better deal for the Cuban people, the Cuban/American people and the US as a whole, I will terminate the deal,” Mr Trump tweeted this week.

It is hard to see the logic of how a return to a US policy that failed when Castro was alive will succeed now that he is dead. Squeezing Cuba again will more likely prompt the turtle to shrink back into its shell. But does Mr Trump really want that for the island nation anyway, even if many Cuban American Republicans do?

It is only a straw in the wind, but Maria Romeu, who concierges yacht charters to Cuba from Florida, continues to take lots of bookings from her largely Republican clients. On a recent Havana trip, the 58-year old Cuban American took four wealthy Trump voters on a city tour where they imagined where the Trump Tower might be built. “They were quite elated and the possibility of not going to Cuba next April did not cross their mind,” says Ms Romeu, who adds that the bookings for next summer are intact. “I’m taking their lead.”

It is ironic that the death of one of the 20th century’s most charismatic nationalists, the narcissistic father figure Fidel, coincides with the rise in the US of another charismatic nationalist, Mr Trump. For some, it is a worrying symmetry; a populist playbook seen before.

“I don’t care if Castro is alive or dead. That was already a done deal for me,” a family friend wrote on Facebook. “Instead I care about those who still think he was great. That is bothersome, and dangerous, because it is a trap. A trap that can ruin lives — like those who think Donald Trump is great, [believe his promises] and yet you see the train wreck coming.”

I left for Cuba on Friday, with no great expectations, but wanting to witness Castro’s passing. His death, it seems to me, truly marks the end of the 20th century and also of certain attitudes that already seemed old-fashioned and outdated many years ago.

joyn-paul-rathbone

John Paul Rathbone

 

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ACADEMICS FROM CARLETON UNIVERSITY HELPED “JUMP-START” WESTERN ECONOMICS IN CUBA AFTER THE COLLAPSE OF THE SOVIET UNION.

How Carleton profs brought Western economics to Cuba

zzzzzzzzzJustin Trudeau speaks to a University of Havana audience plus officials in the Aula Magna, Universidad de la Habana, November 16, 2016

Here’s how it happened: after the Soviets ended their “special relationship” with Cuba, the faculty of economics at the University of Havana wanted to introduce supply-demand micro and macroeconomics into its curriculum.

This was no small problem. Soviet economics had virtually disappeared, and Cuban economists were left orphaned. They didn’t even speak the language of Western economics, and they found it difficult to communicate with their counterparts in the rest of the world.

Carleton economist Archibald “Arch” Ritter, an expert in economic development, was at the first meeting in Havana in December 1993. The meeting brought together academics from Canada, Chile, Argentina and the University of Havana as well as officials from the International Development Research Centre (IDRC) to hammer out a plan.

The  group decided to organize a joint master’s program in economics, mainly for young faculty members from Cuban universities, to be offered at the University of Havana. Carleton’s then-president Robin Farquhar approved the agreement. The program was up and running six months later.

Financed for the first two years by the IDRC and in its final three years by the Canadian International Development Agency with support from the United Nations Economic Commission for Latin America, the program was later expanded to include biology, business, linguistics, women’s studies and public administration. Professors were recruited from Canada and Latin American countries.

 “It was neat to jump-start the introduction of Western economics to Cuba,” says Ritter, who taught in Havana part-time for five years. “And we did it on a shoestring budget.”

The project had broad support at the University of Havana, but it was far from unanimous, says Ritter. The students, however, “were all most congenial and very keen.”

In his blog, former student Luis Casaco, who now lives in Uruguay, recalls the day a stranger arrived in a classroom while he was making a presentation. She identified herself as a member of the communist party. The presentation continued, but there was a confrontation and the students defended their position that Cuba needed a radical transformation towards a market economy and a democratic system.

The woman angrily left the classroom. The next day, Casaco was called in for an urgent meeting.

“The woman started speaking in an irritating, slowly and softly way on the importance of the program, while emphasized the interest of some sectors in the university to dismantle it,” Casaco recalled. “She started to get angry, and said that the university belongs for the revolutionary people.”

Casaco’s professors came to his aid, including Ritter. “If they threaten you and intend to force you to stop free-speaking, I will shut down this program,” he recalls Ritter saying. “And then he added: ‘This is not a class of the communist Cuban party; this is a Carleton University class.’”

The program ran until 2001. Between 1991 and 1997, there was a shortage of food in Cuba after subsidies from the Soviet Union ended. “People were very thin,” said Ritter.

Many of the Cuban graduates went on to earn PhDs in economics both inside Cuba and at Carleton. Some left Cuba and built their lives elsewhere. According to Ritter’s count, 31 of the 76 graduates had left Cuba to go to Canada, the U.S. and countries in Latin America as of 2010.

“We contributed to a change in the climate of opinion, and changed the teaching of economics,” says Ritter.

zzzzzzzzzzzzzzzzzzzzzzzzCarleton University economics professor Arch Ritter, pictured in Cuba in 2015 in a 1955 Chevrolet, taught part-time for five years at the University of Havana.

Ritter is often called upon to answer questions about Cuba. So, what will happen in the wake of Fidel Castro’s death?

Ritter doesn’t think it will change much. Castro has been mostly out of the picture since he became ill about a decade ago. Castro’s brother Raúl, now 85, served under his brother for 46 years. He was officially made president in 2008, and instituted a major set of reforms in 2010-11, which have liberalized small businesses.

“I don’t see much of change in the short run,” says Ritter. “Raúl will pretty much pick his successor. The succession will follow Raúl’s line. Raúl is very cautious. It took him almost five years to decide on the reform package.”

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U.S.-CUBA RELATIONS UP IN THE AIR AS TRUMP THREATENS TO REINTRODUCE SANCTIONS

Barrie McKenna

The Globe and Mail, Sunday, Nov. 27, 2016 9:06PM EST

Fidel Castro is gone, but the economic thaw between the United States and Cuba remains tenuous amid threats by Donald Trump to roll back Barack Obama’s efforts to normalize relations with the Communist regime.

The president-elect is warning he may reimpose some sanctions and reverse last year’s historic reopening of the U.S. embassy in Havana after 54 years unless Cuba agrees to major political and economic reforms.

“We’re not going to have a unilateral deal coming from Cuba back to the United States without some changes in their government – [on] repression, open markets, freedom of religion, political prisoners. These things need to change in order to have open and free relationships,” Reince Priebus, Mr. Trump’s chief of staff, told Fox News on Sunday. “And that’s what president-elect Trump believes and that’s where he is going to head.”

Read more: From Brazil to Venezuela, Fidel Castro’s influence felt across Latin America

John Ibbitson: Trudeau’s words on Fidel Castro a reminder Canada willing to go own way on Cuba

Read more: Respect and affection tie the Trudeau family, Quebec and Fidel Castro

Many Republicans in Congress have long opposed the détente with Cuba without a full dismantling of the regime. Florida Senator Marco Rubio vowed on Sunday to try to reverse much of Mr. Obama’s legacy on Cuba. “We want to take a look at all the changes that were made,” he told NBC.

Since 2014, Mr. Obama has used his executive powers to re-establish diplomatic relations, resume direct flights, liberalize banking links and drop restrictions on imports of Cuban cigars and rum. He had planned to go much further, eventually lifting the broader trade and investment sanctions, a step that would require Congress to rewrite laws.

Mr. Trump would likely face a backlash from the business community. And if the Cuban economy falters, the United States could also face a renewed exodus of boat people from the island.

U.S. companies have embraced the easing of sanctions, rushing in after the United States resumed diplomatic ties and loosened some economic sanctions two years ago. Airlines now offer direct flights from U.S. cities, Airbnb is doing business there, telecom companies have roaming coverage, Marriott International Inc. has a joint venture to manage some Cuban hotels and a Miami cruise-ship line now sails to Havana. Many other U.S. companies are actively exploring potential deals.

The resumption of relations has also been welcomed by most Cubans, who can see their relatives more easily and could improve economic prospects.

Cuba’s economy is relatively small at less than one-tenth the size of Canada’s, and the country has struggled to gain traction since the former Soviet Union stopped propping it up in the 1990s. Its rich agricultural land, beaches and proximity to the United States make it a draw for investors and major trading partners, which include Canada, Venezuela, China and Spain.

Mark Entwistle, who was Canada’s ambassador to Cuba from 1993 to ’97 and helps businesses set up there, said the regime will likely “shrug off” any crackdown by Mr. Trump – the 12th U.S. president since the revolution. “I predict business as usual,” he said.

Likewise, Canadians doing business in Cuba say Mr. Castro’s death won’t dramatically alter the slow pace of economic liberalization.

“I don’t think his passing will have a huge impact on economic reform or Cuba opening up for foreign investment,” Gregory Biniowsky, Canadian law firm Gowling WLG’s lead lawyer in Cuba, said from Havana. Mr. Biniowsky said while Gowling has attracted an array of U.S. clients hoping to establish operations on the communist island, its clients are in for the long haul. “They have to be ready for a very slow process forward,” he said.

Mr. Trump has sent mixed signals on what he wants from Cuba. After initially suggesting he supported easing of sanctions, Mr. Trump later attacked normalization of relations as too weak. And last week, he named Cuba hard-liner and sanctions advocate Mauricio Claver-Carone to lead his transition team at the Treasury department.

As a businessman, Mr. Trump actively explored opportunities for golf courses and other ventures in the late 1990s and again more recently – in apparent defiance of the U.S. economic trade and investment embargo.

A Trump administration will slow down the rapprochement with Cuba, and may reverse some of what Mr. Obama has done, said Pedro Freyre, head of international practice at law firm Akerman LLP in Miami. “There is an internal struggle going on. People are tugging from all directions,” he said.

A resumption of tough sanctions could easily backfire on the United States. Undoing the past two years would undermine U.S. commercial interests throughout the Americas and won’t likely succeed in prodding the Cuban government any further toward economic or political reforms, argued Allan Culham, a former Canadian diplomat and ambassador to the Organization of American States from 2010-2014. “If Trump chooses to reimpose the isolationist policies of the past, the recent goodwill generated in the Americas would be lost,” Mr. Culham said.

More effective in pushing Cuban President Raul Castro to change, Mr. Culham said, will be the end of subsidized oil it gets from Venezuela – something that is probably inevitable given Venezuela’s faltering economy.

A hard line by Mr. Trump could also trigger a new wave of boat people, particularly if he tightens the economic screws on Cuba and clamps down on the legal flow of immigrants to the United States, according to Julia Sagebien, an associate business professor at Dalhousie University and an expert on Cuban economic reforms. “Keeping Cuba afloat is in the national interest of the United States,” Ms. Sagebien pointed out.

 

 

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HOSTILITY, SECRET TALKS, REGRETS: FIDEL’S TUMULTUOUS RELATIONSHIP WITH THE U.S.

Time Magazine, William M. LeoGrande and Peter Kornbluh, 11/26/16

No foreign leader was more associated with conflict and confrontation with the United States than Fidel Castro. His legendary defiance and lengthy tirades against U.S. “imperialism” became an integral part of his lengthy reign in power. He made a political career by appealing to nationalism, wrapping himself in the Cuban flag and “hitting the Yanquis hard.” He aligned Cuba with the Soviet Union, Washington’s global adversary during the Cold War—an alliance that brought the world to the brink of nuclear annihilation during the 1962 missile crisis. Behind the scenes, however, the historical truth of Fidel Castro’s relationship with the United States is far more complicated.

The long saga of Fidel Castro’s confrontation with the United States began in 1958 when Castro and his small guerrilla band were still in the Sierra Maestra mountains fighting against General Fulgencio Batista’s dictatorship. Planes supplied to Batista’s air force by the United States dropped bombs and fired rockets at the guerrillas and their peasant supporters, enraging Fidel. The planes symbolized not only Washington’s years of support for the brutal Batista regime, but U.S. political and economic domination of Cuba dating back to the Spanish-American War. From the Sierra, Castro wrote to confidante Celia Sánchez, “When this war is over a much wider and bigger war will commence for me, the war I am going to wage against them [the United States].”

Yet when the revolution triumphed in January 1959, Castro harbored guarded hope that Washington might accept his vision of a new Cuba—less dependent on the United States and built on social justice. “At that time, we believed the revolutionary project could be carried out with a great deal of comprehension on the part of the people of the United States,” Castro told journalist Lee Lockwood, explaining why he came to the United States in April 1959. “[I went] precisely in an effort to keep public opinion in the United States better informed and better disposed toward the Revolution.”

z33Then-Cuban Prime Minister Fidel Castro smokes a cigar during interviews with the press during a visit of U.S. Senator Charles McGovern in Havana in this May 1975 file photo. Reuters

“Fidel went to the United States full of hope,” recalled his press secretary, Teresa Casuso. The public response was overwhelming. Everywhere Fidel went, he was met by cheering crowds. Fifteen hundred people were on hand when he arrived at Washington National Airport; 2,000 greeted him at Penn Station, New York; 10,000 turned out to hear him speak at Harvard; and 35,000 attended his outdoor address in Central Park. Fidel was delighted. “This is just the way it is in Cuba,” he marveled, wading into the crowds to shake hands.

The meetings between Castro and suspicious U.S. officials were less successful. President Dwight D. Eisenhower left town to avoid meeting Castro, delegating that task to Vice President Richard Nixon. Nixon came away from his two-and-a-half-hour meeting with Fidel convinced that Castro was inexperienced, naive and dangerous. But Nixon also was impressed with Castro’s charisma, according to the secret report he sent to Eisenhower. “Whatever we may think of him he is going to be a great factor in the development of Cuba and very possibly in Latin American affairs generally,” Nixon wrote.

The possibility of reaching a modus vivendi between revolutionary Cuba and the United States proved fleeting, smashed on the twin shoals of Castro’s anti-American rhetoric and Washington’s intolerance of Fidel’s impudence. By late 1959, the CIA had already begun plotting against Castro. The era of confrontation followed, marked by the familiar litany of the Bay of Pigs invasion, the missile crisis, CIA assassination plots, Operation Mongoose’s secret paramilitary war and the economic embargo.

But throughout the ensuing half-century of hostility, Fidel Castro and successive U.S. presidents kept up a secret dialogue to deal with issues that required cooperation and, occasionally, to explore the possibility of rapprochement. Every U.S. president since Eisenhower engaged in talks with Cuba. And when each new U.S. president entered the White House, Fidel Castro sent out feelers– often privately through secret emissaries– to see whether reconciliation might be possible. More than once, he sent the new president a box of his best Cuban cigars to break the diplomatic ice.

Castro regretted his role in the breakdown of relations. “I must acknowledge that I may have had some responsibility for our first divorce,” Castro admitted to U.S. diplomat Wayne Smith. “In retrospect, I can see a number of things I wish I had done differently. We would not in any event have ended up close friends. The United States had dominated us too long. The Cuban revolution was determined to end that domination,” Fidel reflected. “Still, even adversaries find it useful to maintain bridges between them. Perhaps I burned some of those bridges precipitously.”

Over the years, secret talks between Havana and Washington produced a wide variety of agreements on issues of mutual interest. Periodic crises of uncontrolled migration led to a series of migration accords. Other agreements included an anti-hijacking agreement in 1973, a maritime boundaries agreement and an exchange of diplomatic missions in 1977, a Coast Guard agreement in 1978 and an agreement to fight narcotics trafficking in 1999.

Yet these successes never led to normal relations. Two serious attempts, during the presidencies of Gerald Ford (led by Secretary of State Henry Kissinger) and Jimmy Carter, ended in failure. In both instances, Washington was motivated by the futility of the policy of hostility, by pressure from U.S. allies and Congress, and by a hope that Cuba might be enticed out of the Soviet orbit. Although Castro wanted better relations with Washington, it was not his only foreign policy priority and he was willing to pay only a limited price to achieve it. The approaches that Kissinger and Carter set in motion were both disrupted when Cuba sent troops to Africa to defend allies from invasion, first in Angola, then in Ethiopia.

Kissinger was so shocked and offended that Castro would throw the entire architecture of détente into jeopardy and defy the United States this way that he ordered the Pentagon to prepare plans for bombing and blockading the island. “I think we are going to have to smash Castro,” he told President Ford in the oval office on February 25, 1976. “We probably can’t do it before the elections.”

“I agree,” the president replied. But Ford lost that election to Jimmy Carter and Kissinger’s plans to “clobber” Cuba were never implemented.

Instead, within weeks of his inauguration, Carter ordered his government to open a dialogue with Cuba to normalize relations. When Castro sent troops to Ethiopia, derailing those negotiations, some speculated that Fidel simply did not want better relations—that his heroic persona of David defying the imperialist Goliath was too valuable at home and abroad to sacrifice. Castro acknowledged that battling United States had its advantages: “If the United States makes its peace with us, it will take away a little of our prestige, our influence, our glory,” he admitted to U.S. journalists in 1985.

Yet even after Cuba’s involvement in Ethiopia, Castro sent secret emissaries to Washington to try to revive the normalization talks. Knowing President Carter’s commitment to human rights, Castro released more than 3,000 political prisoners without asking for any quid pro quo. A series of secret meetings followed, but faltered over the U.S. demand that Cuba withdraw from Africa. Castro was simply unwilling to sacrifice the rest of his foreign policy as a quid pro quo for improving relations with Washington.

Fidel could never understand—or at least, could never accept—why Cuba should not to be free to help its friends, just as the United States did, and why bilateral relations should be held hostage to Cuba’s policies in Africa. In reality, however, Cuba’s role in Africa shoring up socialist governments with Soviet logistical support tilted the global balance against the United States in the Third World—something no president could ignore.

After the Cold War, Castro’s interest in improving relations with Washington grew. As Cuba sought to diversify its economic relations after the loss of Soviet aid, the potential for trade and investment from the United States was enticing. Absent the imperative of the Cold War, however, Washington was less interested in relations with Cuba, good or bad. The rise of the powerful Cuban-American lobby in the electoral battleground state of Florida transformed the Cuba issue from one of foreign policy to one of domestic politics.

And so it remained for the next 20 years. President Bill Clinton tried to improve relations at the margins by expanding societal contacts, including remittances from Cuban-Americans to family still on the island, travel opportunities and cultural and educational exchanges. But Clinton was torn between his recognition that the hostility policy no longer made sense, and his politician’s instinct to break the Republicans’ electoral lock on Florida. “Anybody with half a brain could see the embargo was counterproductive,” he told a confidante in the Oval Office. However, “Republicans had harvested the Cuban exile vote by snarling at Castro.” Clinton understood the political imperative to snarl, and ultimately placed a higher priority on electoral votes in Florida than he did on relations with Havana.

Then-Cuban President Fidel Castro laughs during the year-end session of the Cuban parliament in Havana in this December 23, 2005 file photo. Reuters

When Cuba shot down two small planes that had violated its airspace, killing four Cuban-Americans from the anti-Castro group Brothers to the Rescue, Clinton signed the Cuban Liberty and Democratic Solidarity Act of 1996 (also known as Helms-Burton) which wrote the embargo into law. From then on, no president could simply lift the embargo and normalize relations with Cuba at his discretion; that would now require an act of Congress.

Over the years, as Fidel Castro jousted with a succession of 10 U.S. presidents, he managed to raise Cuba’s international standing dramatically. He repaired relations with Latin America, which initially supported the U.S. embargo but by the turn of the century was virtually unanimous in condemning it and demanding Cuba’s reintegration into the inter-American community. Despite dramatic ups and downs, Castro rebuilt Cuba’s ties to Europe, also severed in the 1960s when the NATO countries followed Washington’s lead. In the 1990s, when Cuba opened up to tourism and foreign investment, Europe’s ties with Cuba expanded.

In the Third World, Castro’s activism on behalf of small, poor countries won him enormous prestige. “What Fidel has done for us is difficult to describe with words,” said South African President Nelson Mandela. “In the struggle against apartheid he did not hesitate to give us all his help.” Cuba was twice elected to chair the Movement of Nonaligned Nations, and sent thousands of medical personnel abroad on aid missions. He repaired relations with China and Russia.

But the main prize always lay just beyond Fidel’s grasp. He was never able to normalize relations with the United States, never able to win recognition and acceptance for himself and for the Cuban revolution. The task of repairing relations with Washington fell to his brother Raúl, who reached the dramatic agreement with President Barack Obama last December to take the first step toward normality—restoring diplomatic relations broken in January 1961.

Fidel Castro deserved his share of the blame for the half-century of antagonism between Cuba and United States, but he must also get some of the credit for making reconciliation possible. He survived Washington’s best efforts to overthrow him, demonstrating the futility of the policy of hostility, and his policies abroad rallied literally the entire world against the U.S. embargo. The diplomatic cost Washington was forced to pay, especially in Latin America, ultimately proved too costly and convinced President Obama that the time had come to open a “new chapter” in U.S.-Cuban relations. By abandoning more than five decades of a policy of hostility and replacing it with a policy of engagement and dialogue, the United States has finally accepted Cuba as a fully sovereign and independent country. That is, after all, what Fidel Castro wanted from the beginning.

William M. LeoGrande is professor of government at American University, and Peter Kornbluh is director of the Cuba Documentation Project at the National Security Archive in Washington, D.C. They are co-authors of Back Channel to Cuba: The Hidden History of Negotiations between Washington and Havana (University of North Carolina Press, 2014).

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