• 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."

THE US AND CUBA: INCREMENTALISM, REVERSAL RISK AND THE DICTATORS DILEMMA

By Cardiff Garcia                        ,

Financial Times, London, March 21, 2016

Original Article: The US and Cuba_ incrementalism reversal risk and the Dictators Dilemma _ FT Alphaville

Introduction:

To analogize the ongoing diplomatic maneuvering between the US and Cuba to a scenario of mutual hostage-taking doesn’t sound charitable, but it might be the best framework for understanding a relationship long defined by its baffling surrealism.

And it’s a useful lens through which to see not only President Obama’s visit to the island, the first by a sitting US president in almost nine decades, but also the specific actions taken by each side in the time since the intent to normalize relations was first announced on 17 December 2014.

Last week John Kavulich, president of the US-Cuba Trade and Economic Council, described this idea to a roomful of lawyers at the US-Cuba Corporate Counsel Summit in New York. On the US side, Obama clearly wants to make the rapprochement an enduring foreign-policy legacy of his administration, and the Cuban government knows this. It can afford to test Obama on how far it needs to go in the direction of economic and political liberalization before satisfying American requirements to continue deepening the relationship.

But Cuba’s efforts to modernize its economy also depend heavily on the country’s relationship with other countries and with foreign (non-US) companies, and specifically on the potential source of foreign investment they can provide. Except these firms and countries are hesitant to provide much investment while the US embargo is in place and Cuba is locked out of most multilateral institutions.

In other words, Cuba needs the momentum towards diplomatic restoration and the end of the US embargo to continue beyond the end of Obama’s time in office. To ensure this happens, the Cuban government will have to take meaningful and credibly permanent steps towards providing greater economic and political freedoms.

The liberalizations on both sides have been made incrementally to this point. The gradual pace was partly for logistical reasons, but I’m sure it was also the result of suspicions inside of both countries about the intentions of the other side.

 Continue Reading:  The US and Cuba_ incrementalism reversal risk and the Dictators Dilemma _ FT Alphaville

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A POLICY LONG PAST ITS EXPIRATION DATE: US ECONOMIC SANCTIONS AGAINST CUBA

William M. LeoGrande

Social Research: An International Quarterly, Volume 82, Number 4, Winter 2015, pp. 939-966 (Article)

Original Article: US Economic Sanctions Against Cuba, William LeoGrande

ABSTRACT

The embargo against Cuba is the oldest and most comprehensive U.S. economic sanctions regime against any country in the world. It comprises a complex patchwork of laws and presidential determinations imposed over half a century. Presidents have tightened or relaxed it to suit their own strategy—some seeking to punish the Cuban regime by economic pressure, other seeking to improve relations by resorting to soft power rather than hard. The impact of U.S. sanctions has also varied, at times inflicting serious harm on the Cuban economy, and at times being merely as an expensive annoyance. But the embargo has never been effective at forcing Cuba’s revolutionary regime out of power or bending it to Washington’s will.

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OBAMA’S WAVE AND TANGO TRUMP TERRORISM

Brookings Institution, March 25, 2016

By: Ted Piccone

Original Article: Obama’s Wave

As President Obama finally buried the last remnants of the Cold War” in Havana, jihadi terrorists were unleashing suicide attacks against innocent civilians in the heart of Europe. What a powerful reminder that the old wars against communism are long behind us, replaced now by a much more insidious and unpredictable form of warfare, one that strikes terror in the hearts and minds of citizens, whether near or far removed from the latest carnage.

This fear of the undetected radical in our midst is easy fodder for the overheated U.S. elections season. Leading candidates like Ted Cruz and Donald Trump fell over themselves to demand Obama’s return to Washington to “keep us safe,” as if our sprawling national security apparatus shuts down when Air Force One is out of town. Fortunately, the White House is long accustomed to walking and chewing gum at the same time.

The real battle here is over symbols—of tough talk and bluster, on the one hand, and resilience and “steady hands” on the other, as candidate Hillary Clinton put it in her speech at Stanford University.

Electoral posturing aside, there is a more serious message that our leaders are trying to convey when they react to another terrorist attack. “It’s very important for us not to respond with fear,” Obama said when asked why he did not abandon his historic trip to Cuba in light of Tuesday’s bombings. In addition to deploying drones, detectives and deadly strikes against these terrorist groups, he remarked, we need to demonstrate determination to maintain “our values of liberty and openness and the respect of all people.

This is precisely the message Obama conveyed during his visit to our former enemy, Cuba, and our intermittent friend, Argentina. His remarkable speech to the Cuban people, visits with human rights defenders and entrepreneurs, and friendly gestures—such as doing the wave at a baseball game in Cuba and dancing the tango in Argentina—were powerful instruments to win over hearts and minds, not only in Cuba but around the world, about American intentions and values.

It is this kind of comprehensive package of economic, political and security measures that can turn the tide against violent extremism.

Latin America should know. Its history is replete with internal conflicts driven by the despair of the deprived against the despotism of dictators and corrupt elites. The overlay of Cold War power struggles between the Soviet Union and the United States further fueled the flames of violence.

Now, after decades of conflict, military rule and abject poverty, Latin America is an emerging region of economic growth and democratic stability. Colombia is close to settling the hemisphere’s longest armed conflict. Even socialist Cuba, which is struggling to enter the 21st century as neither friend nor foe of the United States, understands its future depends on a more open economy and better ties with all of its neighbors. Under the more pragmatic leadership of Raul Castro, it has abandoned the role of renegade in world affairs, renounced any support to international terrorism and pledged cooperation on law enforcement and anti-trafficking. It also has largely succeeded in delivering basic social services to its citizens, including free health care and education, while failing to protect fundamental political rights. In this latter area, it has some catching up to do with its neighbors.

Meanwhile, the radicalization of disaffected youth in the Middle East is occurring in countries long known for their hardline authoritarian rule, suppression of women’s rights, silencing of free media, and coddling of religious fanaticism. The silent majority of Arab citizens, who long for greater freedoms and democracy, are once again marginalized as extremists battle over which armed group will wield the power of the state. Might they have something to learn from the story of democratization in Latin America, where radical terrorism is largely contained and citizens take their complaints peacefully to the voting booths or the streets?

This history explains why so much is at stake in how the United States responds to perceived attacks against its way of life. Do we choose the path of surveilling Muslim communities, as Cruz suggests, or barring Muslims from our borders, as Trump avows? This, some say, is precisely what our enemies want, so they may recruit more disaffected followers to their diabolical cause. Or do we have the confidence in our own values of open competition of ideas, freedom of religion and rule of law to offer the world an alternative model for achieving both peace and security? Much depends on the outcome of our own democratic choices this November.

This piece was originally published by TIME.

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ARTÍCULO DE FIDEL, “EL HERMANO OBAMA”

No necesitamos que el imperio nos regale nada. Nuestros esfuerzos serán legales y pacíficos, porque es nuestro compromiso con la paz y la fraternidad de todos los seres humanos que vivimos en este planeta

28 de marzo de 2016

Granma 30 de marzo de 2016

Articulo original y completo: ARTÍCULO DE FIDEL

 

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HOW FOES OF WARMER RELATIONS WITH CUBA SLOWLY CAME AROUND: Group of Businessmen Reversed Position, Helping Pave Way for Historic Move

By José de Córdoba

Wall Street Journal, March 18, 2016

MIAMI—On his historic visit to Havana on Sunday, President Barack Obama will be accompanied by a group of prominent Cuban-American businessmen who have one thing in common. For years, they all opposed the very kind of trip the president is taking.

The presence of this wealthy and influential group reflects the transformation of Miami, the capital of the U.S.’s economically successful and politically powerful Cuban-American community. For decades, these men opposed any attempt to soften relations with Cuba’s Communist government. And all, at different stages in their lives, changed their minds.

“We had to decide whether we were going to be an obstacle to a transition in Cuba or an asset to that transition,” says businessman Carlos Saladrigas, 68 years old, who in 2000 founded the Cuba Study Group, a nonprofit that pushed for U.S. engagement with Cuba.

Their change of heart mirrors a broader shift among Cuban-Americans. In Miami-Dade County, Cuban-American support for the U.S. trade embargo fell to 48% in 2014, from 87% in 1991, according to polling by Florida International University.

Having support from such an influential group of businessmen helped give the president political cover as he pursued a major shift of policy, say Cuban-Americans and former White House officials.

“They kept pushing us to do more,” recalls Dan Restrepo, a former national security adviser for the Western Hemisphere. Cuban-Americans “influenced the political climate in Miami at the time, and the president’s policies were made easier by the changed political environment.”

Their position is far from universally embraced and passions about the Castro brothers continue to run high. Earlier this week, Cuban-American Rep. Ileana Ros-Lehtinen, (R., Fla.) said President Obama was ignoring repression on the island to “promote more funds going in the pockets of the regime. U.S. policy must focus less on easing regulations and more on putting pressure on the Castro brothers.”

Support for the embargo is a fundamental issue for Florida Sen. Marco Rubio, who dropped out of the Republican presidential race this week. Republican candidate Sen. Ted Cruz also opposes rapprochement, which he says has thrown the regime an economic lifeline. Not until the 2016 presidential election contest is settled will the long-term prospects of the Obama administration’s policy be clear.

Among the Cuban-American businessmen to shift are sugar magnate Alfonso “Alfy” Fanjul, one of the owners of Fanjul Corp., one of the largest sugar producers in the U.S., Mike Fernández, a wealthy health-care entrepreneur who was a major donor to former Florida Gov. Jeb Bush’s campaign, and Carlos Gutierrez, who retired as chairman of Kellogg Co.after a 30-year career to serve as President George W. Bush’s commerce secretary, a position from which he supported the Bush administration’s hard line on Cuba.

Mr. Saladrigas, Mr. Gutierrez and Andres Fanjul, Alfonso Fanjul’s younger brother, will be among the Cuban-Americans accompanying Mr. Obama on the trip. Mr. Obama is expected to meet with Cuban President Raúl Castro, take in a baseball game between Cuba’s national team and the Tampa Bay Rays, and meet with dissidents, members of civil-society groups and Cuba’s fledgling entrepreneurs.

For each of the businessmen, Cuba is a personal and passionate matter. Some had family members executed by the Castro regime; others had relatives who spent years in prison. Some, such as Mr. Saladrigas, came to the U.S. as unaccompanied children, initially juggling lowly jobs and studying at night. All of them lost their homes.

Cuban-American businessman Carlos Saladrigas, seen in his Miami home, supported lifting the embargo and will travel to Cuba with President Obama. Photo: Josh Ritchie for The Wall Street Journal

“The one important thing we all share is that although we left Cuba, Cuba never left us,” says Mr. Saladrigas.

Messrs. Saladrigas and Fernández and a handful of the others involved in the outreach program have vowed not to do business on the island for fear of appearing to profit from their activism. “Because of the importance of what we are doing, we have to stay clear,” says Mr. Fernández.

In 1997, Mr. Saladrigas led Miami Cuban-Americans in opposition to plans by the Catholic archdiocese to send a cruise ship full of Catholics to greet the late Pope John Paul II in Havana the following year. Faced with Mr. Saladrigas’s opposition, the archdiocese dropped the plan.

Mr. Saladrigas says he changed his mind after seeing the pope make a plea in Havana to let “Cuba open itself to the world, and let the world open itself to Cuba.”

As decades passed, the Castro regime survived and pinned blame for the country’s economic failures on the embargo.

Mr. Saladrigas says he and other like-minded business people concluded backing the embargo wasn’t an effective strategy. “A lot of people felt good about beating their chests,” he says. “But it’s not about that. It’s about results.”

When Fidel Castro fell ill in 2006, eventually handing over power to his younger brother Raúl, many Cuban-Americans in Miami believed the elder Castro’s absence would open the door to change. The smooth transition of power led some to conclude that a new approach was needed.

“Nothing had changed,” says Enrique Sosa, 76, a retired executive in the oil and chemical industries. “I thought, this [embargo] is no way to knock these guys out.”ENLARGE

Alfonso Fanjul, one of the owners of Fanjul Corp., a large sugar producer in the U.S., is one of the influential businessmen who changed his mind and supported ending the trade embargo. Photo: John Parra/Getty Images

Many in Miami remain concerned that in pushing for normalized diplomatic relations, the Obama administration will neglect the quest for political and human rights that has long been a prime concern for Cuban-Americans.

“We want to get to the same place,” said senior Obama aide Ben Rhodes to a recent town-hall meeting in Miami filled with young Cuban-Americans, some of whom were skeptical of the opening. Mr. Rhodes was the point man in the negotiations that led to the agreement with Havana 15 months ago.

At the meeting, Mr. Rhodes reiterated the U.S. was no longer in the business of regime change in Cuba. He also said Mr. Obama’s policy would lead to change throughout Cuban society.

While Cuba is no longer their home, Cuban-Americans say it still lays claim to their hearts and memories.

“My father’s house, my grandfather’s house are in Havana. I don’t want them back,” says Pedro Freyre, a lawyer whose brother was one of 1,500 CIA-trained Cuban exiles who fought in the 1961 Bay of Pigs invasion and spent almost two years in prison before he was ransomed.

“I want to see a Havana freshly painted, and I want to contribute my bucket of paint.”

On his first trip back in 2002, Mr. Sosa, the retired executive, and family members drove to Camaguey, a province on the eastern end of the island where his family had been cattle ranchers and sugar farmers.

“I realized I didn’t belong there anymore,” says Mr. Sosa, whose father and brother spent nearly two years in prison after being captured in the Bay of Pigs invasion.

Mr. Sosa believes Cuba faces daunting prospects, including the island’s obsession with maintaining tight control over the country’s economic and political life.

That said, “I came to the conclusion that if in order to help the Cuban people you ended up giving collateral help to the Cuban government, it was an acceptable price,” he says. “I crossed that bridge a long time ago.”

Saladrigas

Carlos Saladrigas

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CUBA ELIMINATES TAX ON US DOLLAR

Havana Times, March 17, 2016 |

HAVANA TIMES — The Cuban government announced today that it will eliminate its 10% tax on the use of the US dollar on the island. The good news for ordinary Cubans and tourists alike comes in response to Washington’s new measures to further relax the economic embargo on Cuba, reported dpa news.

“The Cuban government has decided to eliminate the 10 percent tax that it applies today on US dollars entering our country,” said Foreign Minister Bruno Rodriguez.

He said the decision should enter into force as soon as US authorities allow Cuban state institutions to use the dollar in transactions in the United States, as announced earlier in the week.

The new relaxations on the embargo, announced by the Obama government on Tuesday, officially entered into force on Wednesday.

Besides allowing Cuban institutions to carry out transactions in dollars in the United States the administration also relaxed travel restrictions on US citizens wishing to visit the island.

The gestures by both governments come as a prelude to president Obama’s historic three-day visit to Cuba starting this coming Sunday.

Rodriguez told a press conference in Havana that in the coming days Cuban state institutions will see if in effect the United States has eliminated restrictions on who can use the dollar.

The elimination of the tax in Cuba will be effective only after verification that the Cuban State can use the dollar in its operations passing through the United States, specified Rodríguez. “While there is financial persecution, the tax remains,” he said.

The 10 percent tax on the US dollar was imposed by the government of Fidel Castro in 2004. Many Cubans in Cuba receive dollar remittances from relatives or friends in the United States, and were the most hurt by the measure.

The tax “has served to compensate the Cuban financial institutions for the risks and costs” caused by the use of the dollar by Cuba internationally, Rodriguez noted.

The inability to use the dollar in international trade was to date one of the major impediments for Cuba to access markets.

Other ways the embargo still hurts Cuba

Rodriguez also criticized as inadequate the measures taken by the Obama administration to relax the embargo. The foreign minister said a number of restrictions still apply to Cuban institutions, for example their inability to export products to the United States.

The sanctions imposed by Washington on the island in the 1960s came in retaliation for the nationalization of US companies in Cuba after the revolution and can only be lifted by the US Congress. However, the Republican majority still opposes lifting the embargo.

Obama’s trip to Cuba on Sunday, the second by a US president to the neighboring island in 88 years, is part of the historic thaw initiated in December 2014, after decades of sharp differences.xx xxx

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CUBA REPORTS FIRST CASE OF ZIKA TRANSMITTED ON THE ISLAND

By MICHAEL WEISSENSTEIN, Associated Press, March 16, 2016

zzzzz2A female Aedes aegypti mosquito in the process of acquiring a blood meal from a human host.  Photo from the Center for Disease Control and Prevention (AP)

(AP) — Cuban officials announced Tuesday night that they have detected the first case of the Zika virus transmitted inside the country, ending Cuba’s status as one of the last nations in the hemisphere without domestic cases of the disease that has been linked to birth defects.

State media said a 21-year-old Havana woman who had not traveled outside Cuba was diagnosed with the virus after suffering headaches, fatigue and other symptoms. On Monday, her blood tested positive for Zika. She remains hospitalized.

Cuba had previously reported a handful of cases of the disease in people who had traveled to countries with outbreaks of the mosquito-borne virus, particularly Venezuela, and appeared to have contracted it there.

Cuba has close ties to Venezuela, a fellow socialist country that sends hundreds of millions of dollars a year in subsidized oil in exchange for Cuban medical assistance that sees many thousands of people travel between the two countries annually.

Zika is being investigated as a possible agent in cases of microcephaly, a condition in which babies are born with unusually small heads and brain damage, and also in cases of Guillain-Barre, a rare condition that sometimes results in temporary paralysis.

Cuba has thrown more than 9,000 soldiers, police and university students into an effort to fumigate for mosquitoes, wipe out the standing water where they breed and prevent a Zika epidemic.

President Raul Castro has called on the nation to battle lax fumigation and trash collection, turning the Zika fight into a test of the communist government’s once-legendary ability to marshal the entire country behind efforts ranging from civil defense to bigger sugar harvests to disease prevention.

In recent days the streets of Havana have been crisscrossed by teams of green-clad soldiers fumigating houses with mosquito-killing fog. Residents of the capital say fumigators no longer accept excuses of allergies or requests to spray some other day, as frequently happened in the past.

Still, neighborhoods like Central Havana, where the patient in Tuesday’s case lives, are filled with decaying buildings, piles of uncollected trash and pools of standing water.

The Zika announcement comes at a moment of intense international attention on Cuba: President Barack Obama arrives on Sunday as the first sitting U.S. president to visit in nearly 90 years. The Obama administration on Tuesday announced that it was carving a series of broad new exceptions into the U.S. trade embargo on Cuba, removing limits on individual travel that experts predicted would lead to a boom in U.S. visitors.

zzzzzz

 

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COMMERCE AND TREASURY ANNOUNCE SIGNIFICANT AMENDMENTS TO THE CUBA SANCTIONS REGULATIONS Ahead of President Obama’s Historic Trip to Cuba

Amendments Expand the Ability of Americans to Visit Cuba, Bolster Trade and Commercial Opportunities, and Reduce Barriers to Financial Transactions by Cuban Nationals

Original Document:  Amendments to to the Cuba Regulations

Tuesday, March 15, 2016

Office of Public Affairs, 202-482-4883, publicaffairs@doc.gov

Today, the Department ofthe Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) announced significant amendments to the Cuban Assets Control Regulations (CACR) and Export Administration Regulations (EAR).  These changes, coupled with the arrangement recently announced by the Departments of State and Transportation allowing scheduled air service between the United States and Cuba, will significantly increase the ability of U.S.  citizens to travel to Cuba to directly engage with the Cuban people.  Additionally, these regulations expand Cuba and Cuban nationals’ access to U.S. financial institutions and the U.S. dollar from Cuba, and will expand the ability for Cubans legally present in the United States to earn stipends and salaries beyond living expenses.  These amendments further the new direction toward Cuba that President Obama laid out in December 2014.  The changes are outlined below and will take effect on March 16, 2016, when the regulations are published in the Federal Register.

“Today’s amendments build upon President Obama’s historic actions to improve our country’s relationship with Cuba and its people. These steps not only expand opportunities for economic engagement between the Cuban people and the American business community, but will also improve the lives of millions of Cuba’s citizens,” said U.S. Commerce Secretary Penny Pritzker.

“Today’s steps build on the actions of the last 15 months as we continue to break down economic barriers, empower the Cuban people and advance their financial freedoms, and chart a new course in U.S.-Cuba relations.  Since December 2014, the Treasury Department and our partners across the Administration have progressively reshaped our regulations in order to empower the Cuban people and enable economic advancements for Cubans and Americans,” said Treasury Secretary Jacob J. Lew.  “Today we are building on this progress by facilitating travel for additional Americans looking to engage with Cubans; allowing Cuban citizens to earn a salary in the United States; and expanding access to the U.S. financial system as well as trade and commercial opportunities.”

To see the Treasury regulations, which can be found at 31 Code of Federal Regulations (CFR), part 515, please see here.  To see the Commerce regulations, which can be found at 15 CFR parts 730-774, please see here.  Major elements of the changes in the revised Treasury and Commerce regulations include:

Travel and Related Transactions–

  • People-to-people educational travel.  Individuals will be authorized to travel to Cuba for individual people-to-people educational travel, provided that the traveler engages in a full-time schedule of educational exchange activities intended to enhance contact with the Cuban people, support civil society in Cuba, or promote the Cuban people’s independence from Cuban authorities and that will result in a meaningful interaction between the traveler and individuals in Cuba.  Previously, the general license authorizing educational travel required such trips to take place under the auspices of an organization that was subject to U.S. jurisdiction and required all travelers to be accompanied by a representative of the sponsoring organization.  This change is intended to make authorized educational travel to Cuba more accessible and less expensive for U.S. citizens, and will increase opportunities for direct engagement between Cubans and Americans.  Persons relying upon this authorization must retain records related to the authorized travel transactions, including records demonstrating a full-time schedule of authorized activities.  In the case of an individual traveling under the auspices of an organization that is a person subject to U.S. jurisdiction and that sponsors such exchanges to promote people-to-people contact, the individual may rely on the entity sponsoring the travel to satisfy those recordkeeping requirements.
  • Payment of salaries.  Cuban nationals in the United States in a non-immigrant status or pursuant to other non-immigrant travel authorization will be authorized to earn a salary or compensation, consistent with the terms of the particular visa, provided that the recipient is not subject to any special tax assessments in Cuba.  U.S. companies will be authorized to engage in transactions related to the sponsorship or hiring of Cuban nationals to work or perform in the United States similar to nationals from other countries, provided that no additional payments are made to the Cuban government in connection with such sponsorship or hiring.  For example, Cuban athletes, artists, performers, and others who obtain the requisite visas will be able to travel to the United States and earn salaries and stipends in excess of basic living expenses.  Transactions in connection with the filing of an application for non-immigrant travel authorizations will also be authorized.
  • Cuban-origin merchandise. OFAC will authorize certain dealings in Cuban-origin merchandise by individuals for personal consumption while in a third-country, and to receive or obtain services from Cuba or a Cuban national that are ordinarily incident to travel and maintenance within a third country.  This authorization will allow, for example, Americans traveling in Europe to purchase and consume Cuban-origin alcohol and tobacco products while abroad similar to the travel exemptions in other sanctions programs.

Banking and financial services –

  • U-turn payments through the U.S. financial system.  U.S. banking institutions will be authorized to process U-turn transactions in which Cuba or a Cuban national has an interest.  This provision will authorize funds transfers from a bank outside the United States that pass through one or more U.S. financial institutions before being transferred to a bank outside the United States, where neither the originator nor the beneficiary is a person subject to U.S. jurisdiction.
  • Processing of U.S. dollar monetary instruments.  U.S. banking institutions will be authorized to process U.S. dollar monetary instruments, including cash and travelers’ checks, presented indirectly by Cuban financial institutions.  Correspondent accounts at third-country financial institutions used for such transactions may be denominated in U.S. dollars.
  • U.S. bank accounts for Cuban nationals.  U.S. banking institutions will be authorized to open and maintain bank accounts in the United States for Cuban nationals in Cuba to receive payments in the United States for authorized or exempt transactions and to remit such payments back to Cuba.

Trade and commerce –

  • Physical and business presence.  OFAC will expand the existing authorization for “physical presence” (such as an office, retail outlet, or warehouse) to include entities that engage in authorized humanitarian projects, entities that engage in authorized non-commercial activities intended to provide support for the Cuban people, and private foundations or research or educational institutes engaging in certain authorized activities pursuant to sections 515.575, 515.574, and 515.576 of the CACR, respectively.  OFAC will also expand the existing authorization for “business presence” (such as a joint venture) to include exporters of goods that are authorized for export or re-export to Cuba or that are exempt, entities providing mail or parcel transmission services or cargo transportation services, and providers of carrier and travel services to facilitate authorized transactions.  The revised regulations will also clarify that the physical and business presence authorizations permit exporters and re-exporters of authorized or exempt goods to assemble such goods in Cuba.  BIS will make conforming changes to the EAR to generally authorize exports and re-exports of eligible items to establish and maintain a physical or business presence that is authorized by OFAC.
  • Importation of software.  The CACR currently authorizes the importation of Cuban-origin mobile applications.  OFAC will expand this authorization to allow the importation of Cuban-origin software.
  • Shipping.  BIS will generally authorize vessels to transport authorized cargo from the United States to Cuba and then sail to other countries with any remaining cargo that was onloaded in the United States.
  • Cuban private sector.  BIS will adopt a licensing policy of case-by-case review for exports and re-exports of items that would enable or facilitate exports from Cuba of items produced by the Cuban private sector.

Grants and awards –

  • OFAC will authorize the provision of educational grants and awards, and clarify that an existing authorization applies to the provision of grants and awards for the humanitarian projects authorized in OFAC’s regulations.  This step will further enable U.S. support for educational projects in Cuba and U.S. participation in philanthropic efforts.
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U.S.-CUBA NORMALIZATION AND THE ZIKA VIRUS RISK: PROBABLE IMPACTS ON CUBAN AND CARIBBEAN TOURISM

By Arch Ritter, March 14, 2016

Tourism has been the spectacular growth sector for Cuba since the beginning of the “Special Period” in 1990.  Tourist numbers have increased 10-folds in the quarter-century from 1990 to 2015, as illustrated in Chart 1.  Foreign exchange earnings from tourism have increased correspondingly.  Canada has been by far the largest source of tourists. Indeed, Cuba’s best friend throughout the “Special Period” has been the Canadian winter.

Now with full normalization of U.S. – Cuban relations “en route,” huge prospective increases in U.S. tourism will have major impacts on Canada but also perhaps on other Caribbean tourist destinations.  What might these impacts be?

Chart 1. International Tourist Arrivals, 1990-2015, Thousands. y Source: Oficina Nacional de Estadisticas, Government of Cuba, various issues, Access3ed February 23, 2016

The Coming U.S. Tourism “Tsunami” to Cuba!

Full normalization of U.S. – Cuban relations in time will bring unrestricted travel for U.S. citizens to Cuba. This will lead to a deluge of US visitors. Among the varieties of U.S. tourists would be the following:

  • Curiosity tourists. There will be a huge tourist influx of US citizens wanting to see Cuba for the first time since 1961. Relatively few US citizens appear to have broken US travel restrictions so that the pent-up demand is enormous.
  • Family Reunification tourists. When all controls are lifted on the US side for travel to Cuba, a further increase in short-term visits by Cuban-Americans for family purposes is likely to occur – following major increases already.
  • Sun, Sea and Sand tourists. Many US citizens, especially from the North Eastern and Central parts of the country will likely follow the winter-escaping Canadians to Cuban beaches for one to two week periods.
  • “Snow-bird” tourists. Some US citizens, mainly retirees, will spend several of the winter months in Cuba.
  • Retirement tourists. With normal U.S.- Cuban relations, some citizens of the northern part of the United States, especially Cuban-Americans in new Jersey, may decide to reside for half the year or so in Cuba returning to the U.S. for the other half of the year or even the whole year in Cuba, if their pensions permit it.   Permitting the purchase of time share condominiums would facilitate both snowbird and part-time retirement tourism.
  • Medical tourists. There may be some travel to Cuba for access to medical services which will likely continue to be inexpensive relative to the United States.
  • Convention tourists. Short-term visits for conventions could increase significantly.
  • Cultural and Sport tourists. One might expect more visits for purposes of interacting with and experiencing Cuban art, music, cinema, and sports.
  • Educational tourists. It is likely that American students and teachers at various levels would enroll or visit Cuban institutions of higher learning or cultural and sports centers for courses, years abroad, sabbaticals, language training etc., in much greater numbers than have been possible under the embargo.
  • March-Breaker” tourists. Students from the US are likely to try a visit to Cuba for the March Break, instead of the Maya Riviera, Florida or elsewhere.

One can only guess at the future volumes of U.S. tourists to Cuba. One could imagine it quickly doubling the 2015 Canadian level (1,300,092 tourist arrivals) and then redoubling again to 5.2 million and then beyond, as Cuba’s capacity to accommodate more tourists expanded. The total number of tourists then could reach about 8 million by 2022 – or many more if tourism from other countries also increases and does not get “squeezed out.”  (However, U.S. “curiosity tourism” will peak and then subside over the next four or five years following complete normalization.)

This would perhaps lead to an increase Cuba’s total foreign exchange earnings from tourism to about $US 8.0 to 9.0 billion by 2022, up from the estimated level of $US 2.98 billion in 2015 (extrapolating from ONE’s 2014 statement of tourism earnings and 2015 total numbers of tourists.)  This would replace the foreign exchange earnings and the semi-obscured subsidization that Cuba has been receiving from Venezuela which looks totally unsustainable at this time.

The expansion of tourism is great news for Cuba, and will lead to

  • increased foreign exchange earnings for the country,
  • a construction boom in resorts and tourist facilities,
  • a major increase in incomes for the growing private sector servicing tourism (bed and breakfasts, restaurants, travel and guide services among others),
  • higher tax revenues of many sorts, and
  • generalized improvement as real incomes of citizens improve.

The downside is that success in the tourism sector may reduce the urgency of reviving the manufacturing sector which is still operating at close to 50% of the level it had achieved in 1988 before the economic meld-down.

 Will “El Cheapo” Canadian Tourism be Squeezed Out?

Will the increase in U.S. tourism to Cuba crowd out the Canadian tourists who constituted 37% of all tourists to Cuba in 2015%.  Maybe. But U.S. “curiosity tourism” will most likely focus on Havana and the historical areas of Cuba rather than the beaches so that the Canadians at the beach resorts would not be pushed out for some time, at least mot physically!

 yy Source: ONE Anuario Estadistico de Cuba, 2015 Table 15.3), Accessed February 23, 2016

 Most Canadian tourists head to the beach with a package tour – going to Havana or another city on a day’s excursion.  For this reason, they have been sometimes derided as “el cheapo” tourists who spend as little as they can in the Cuban economy.  There may be some truth in this, but most other tourists also are in similar package tours. If prices were to rise significantly with the influx of U.S. tourists, one could expect that some Canadian tourists would switch to other Caribbean destinations. This could indeed happen to some extent, especially if the winter-time “sun, sea and sand” tourism from the United States increases greatly.

Chart 3 Tourist Arrivals, Major Caribbean Countries, 1995 – 2013

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Table 1. Caribbean Tourist Arrivals and Earnings, 2010 and 2014 yyyy1

Source: United Nations World Tourism Organization, Annual Report 2014, p.6.  http://www.e-unwto.org/doi/pdf/10.18111/9789284416899, Accessed February 29, 2016

Will Other Caribbean Destinations Lose Out to Cuba?

There has been some fear that other Caribbean tourist destinations would lose when U.S. citizens start flocking to Cuba.  This indeed is a legitimate fear.

A glimpse at the past 25 years suggests that the impacts on other Caribbean destinations in general may be mixed. A glance at Chart 3 indicates that some other major destinations, including the Dominican Republic, Jamaica and the other “Caribbean Small States” in general have been able to withstand the growing competition from Cuba and have continued to expand significantly in terms of tourist arrivals over the 1995-2013 period. The expansion of tourism in the Dominican Republic is especially notewortheyPuerto Rico is the major exception along with The Bahamas.  Both have lost its shares of tourist arrivals and of revenues in the brief 2010-2014 period as indicated in Table 1.  Surprisingly, Cuba increased its share of tourists in the region, but its share of tourist revenues actually declined.

There is one reason for optimism with respect to the other Caribbean destinations.  Much of the prospective U.S. tourism to Cuba will not be of the “sun, sea and sand” variety, but will be of the other varieties especially “curiosity tourism.”  But what most of the other Caribbean Islands offer is a beach “escape-from-the-winter” holiday. They may therefore be less vulnerable to a tourism “shifting to Cuba” effect.

A small compensation will be that if Canadians are squeezed out of tourism in Cuba with the onslaught of U.S. beach resort tourists, they will likely go to other Caribbean destinations. However, there is also great affection on the part of many Canadians for Cuba as a tourism destination, and the return again and again and again!

Furthermore, international tourism generally has been growing steadily in the post-World War II period and there is little likelihood that this will cease unless the world enters a deep and prolonged recession.  Tourism in the Caribbean generally has been increasing steadily as well.  The overall expansion of tourism in the region should help compensate for any diversion of U.S. tourists from the other Caribbean islands to Cuba.

Will the Maya Riviera be hit with a diversion of U.S. tourists to Cuba?  This may well happen to some degree.  However, the Mexican Yucatan region is a highly attractive tourist waterfront destination with other major attractions. A beach holiday can be combined with archaeological tourism with a visit to the ancient Maya cities of Uxmal and Chichen Itza (both World Heritage Sites), Tulum, to less well-known but quite incredible Calakmul (another World Heritage Site) and Kohunlich and innumerable smaller sites. As well as this is the Colonial legacy in many small towns as well as Merida and Campeche (still another World Heritage site.)   In the long term, the Yucatan should certainly be able to hold its own.

 The Zika Virus Risk to Cuba’s Population and Tourism

While it is not known whether or not the  Zika Virus, linked to birth defects elsewhere in Latin America, has arrived in Cuba, there can be no doubt that it will. If, as seems increasingly certain, the Zika virus is primarily transmitted by the female Aedes aegypti, then pregnant women in Cuba would be at grave risk. This would likely have a major impact on the tourist sector and the Cuban economy generally – as well as tourism elsewhere in the Caribbean and tropical parts of the world, as suggested by the accompanying map.

Cuba has had long and reasonably successful experience in containing the dengue virus that has affected many people and also the rarer Chikungunya virus, a disease that causes fever and severe joint pain.  Both are also spread by some branches of the Aedes aegypti mosquito.  This has been achieved with frequent fumigation of homes, public and buildings and clean-up of stagnant waters that are the breeding grounds of the mosquitos.

 Map 1. Probable Occurrence of Aedes Aegypti in the Caribbean Region zika 2

Source: Wikipedia, Zika Virus, accessed February 29, 2016

Note: Global Aedes aegypti predicted distribution. The map depicts the probability of occurrence (blue=none, red=highest occurrence).

 On February 23, a public program was announced to deal with the potential problem. This involves:

  • using the army to expedite fumigation spraying,
  • calling on the somewhat moribund neighborhood associations – the Comites por la Defensa de la Revolucion – to promote public education,
  • a general clean-up of the streets and stagnant waters and
  • improved garbage disposal arrangements.

Judging from recent reports from Cuba these programs have been implemented quickly and people are already adjusting their behavior to eliminate the mosquito vector of the disease and in their normal living arrangements (using mosquito nets at night for example.)

Cuba’s public health system is very strong and its actions already seem to be determined and serious.  Cuba will probably be able to deal with the mosquito and the disease very effectively. Obviously effective action is imperative to protect Cuba’s people and future generations.

What will be the effect on Cuba’s tourism and its tourism-dependent economy?  Already there are concerns on the part of young women and especially of course pregnant women regarding travel to Cuba. This will undoubtedly have an impact, very minor one hopes, on Cuba as well as on the rest of the countries in the region.  But it is probable that Cuba’s public health system will minimize and hopefully eliminate the problem. If so, tourism will not be affected that seriously.

 Conclusion

In summary, if managed wisely, Cuba can look forward to greatly expanded and economically beneficial tourist boom with full normalization of relations with the United States. This may generate some collateral damage for Canadian tourists who may face a crowding out and pricing out effect, but this will likely be modest and would likely benefit other Caribbean countries. Within the Caribbean region, some countries may feel pressure from the diversion of U.S. beach resort tourists, but most of the bigger destinations have held their own in the last few decades and will continue to do so.

A question mark and potential risk for the tourist sector – and more importantly for the whole population and for future generations in Cuba and many tropical regions is the Zika virus. This will likely hit Cuba in time if it has not already. But resolute policy, education and action have begun to deal with Zika.  Cuba’s past successful programs for controlling the dengue virus should facilitate rapid and effective action against Zika.

With respect to tourism in summary, the positive economic impacts of the coming U.S. tourism tsunami should far outweigh any possible effects of the Zika virus, which will likely be successfully controlled.

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Cuba’s Best Friend of the 1990s: The Canadian Winter

z Playa-Guardalavaca-vista

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Cuba’s Best Friend of the 2016 Onward: The Curious American Tourist !

> on February 26, 2015 in Havana, Cuba.

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WHITE HOUSE ADVISER: OBAMA MAY INVOKE CUBAN EXILES IN HAVANA

By Carol Rosenberg, Miami Herald, March 11, 2016.

Original here: Obama May Invoke…..

Expect President Barack Obama to invoke the ingenuity and success of Cuban-American exiles in his address later this month in Havana, a key White House aide said in Miami on Friday during a listening tour ahead of the president’s historic three-day trip to Cuba.

Deputy National Security Adviser Ben Rhodes said there’s no agreement yet on whether state-run Cuban radio will broadcast Obama’s speech in Cuba, a first by an American president since the 1959 revolution. But Rhodes, a sometimes speechwriter for the president, said he has a role in the address, which is being influenced by his talks with South Floridians.

 “I’ve been struck by how much that speech is a focus for people,” said Rhodes, who spent the day in downtown Miami, mostly on the Miami Dade College campus, inviting input and trying to assure anxious or angry exiles ahead of the president’s March 20-22 visit to Havana.

He held a succession of meetings, many closed, with students, activists, journalists and religious and community leaders, where he reminded them that the White House goal isn’t to topple the Castro government but to open up society through renewed diplomatic relations, trade and other ties.

Of the speech, he said, “There has not been an opportunity for an American president to stand in Cuba, in Havana, and speak to the Cuban people, and to speak to the Cuban people in Cuba and in the United States. We feel that weight.”

So he laid out several themes to expect in the speech, from “some reckoning with history” to “the history and example of the Cuban-American people and the success they have had here in Miami and across the country.”

The two sides have not yet settled on a site for the speech. Rhodes, however, predicted the venue would be indoors, citing logistics and security reasons, and setting to rest the possibility that he would follow in the footsteps of Pope Francis’ September visit. The pontiff did his open-air Mass in Havana’s Plaza de la Revolución — with a huge portrait of Che Guevara staring down.

“I think he’ll want to speak to a very complicated history that kind of led us to where we are today,” said Rhodes. “How do we find ourselves at this moment. Some of that history is a powerful and positive shared experience. But some of it is a very painful and complicated and contentious experience.”

In one meeting hosted by Cuban American National Foundation chairman Jorge Mas Santos, Rhodes huddled with critics of the regime. “We are one people,” Mas declared, once journalists were allowed inside to listen. “Do not allow the regime to marginalize us.”

In the room at the time were dissident Martha Beatriz Roque, in town for just a few days, as well as Santiago Province activist Carlos Amiel Oliva Torres of the Union Patriotic de Cuba, and Leticia Ramos of the Ladies in White, both of whom arrived in Miami on Thursday and were returning to the island Saturday.

Rhodes cast the speech as proposing a vision for future relations between the two countries and the two peoples. “He’ll be saying this not as a president who wants to impose a political system on Cuba,” he said. Rather, he’ll show the Cubans “what we believe in.”

Rhodes sent mixed signals on how far the administration would go to ensure that Miami-based journalists, especially Cuban-born reporters who have been unable to get visas, would be allowed on the island to cover Obama in Cuba.

The schedule was still in flux but Rhodes said Obama would attend an exhibition baseball game put on by the Tampa Bay Rays. Rhodes said he expected Raúl Castro to attend, noting “baseball is a language that is shared by Americans and Cubans.”

Rhodes also disclosed in Miami that Obama would be accompanied by the first lady, and four Cabinet members — Secretary of State John Kerry, Agriculture Secretary Tom Vilsack, Commerce Secretary Penny Pritzker and Maria Contreras-Sweet, administrator of the Small Business Administration. Rhodes pledged a bipartisan representation of Congress would also accompany the president, but said the list was not yet set.

“There is no question we have profound differences with the Cuban political system,” Rhodes said. But he insisted again and again that White House policy was to help empower a civil society by easing isolation and reaching out to the self-employed. “Our engagement is both with the government and people of Cuba.”

Rhodes said the topic of returning the U.S. Navy base at Guantánamo Bay, Cuba, was not up for discussion in the three-day visit, although he said the Cuban government would no doubt raise it.

 

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