• 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."

A NEW CRISIS OF CUBAN MIGRATION

Posted on December 8, 2015 by Arch Ritter

By WILLIAM M. LEOGRANDE, New York Times,  DEC. 4, 2015

Original Essay Here: Cuban Migration

zzCuban migrants remonstrated with a Costa Rican immigration official at the border with Nicaragua, in Penas Blancas, Costa Rica, on Monday.

 zzzNicaraguan soldiers and policemen stand guard in Penas Blancas, Guanacaste, Costa Rica, on the border with Nicaragua on November 16, 2015

 Washington — A standoff in recent weeks that has trapped hundreds of Cuban migrants at Costa Rica’s border with Nicaragua as they try to reach the United States is a graphic demonstration that Washington’s migration policy toward Cuba is no longer sustainable. Left unchanged it could produce a crisis on the scale of the 1980 Mariel boatlift or the 1994 balsero (rafters) crisis — if one hasn’t begun already.

Current policy, based on migration accords negotiated with  Havana in 1994 and 1995, commits the United States to accepting at least 20,000 legal Cuban immigrants annually, and to returning to Cuba migrants intercepted at sea as they try to enter the United States illegally.

Unilaterally, the United States also adopted a “wet foot/dry foot” policy, which allows Cubans who arrive in the United States (“dry foot”) to remain in the country under a special status called parole and, a year later, become eligible under the Cuban Adjustment Act of 1966 to seek permanent residency. No other foreign nationality enjoys such privileged status.

The Cuban government has long argued that these policies encourage illegal migration and human trafficking. Still, the problem of Cubans coming to the United States illegally has been relatively minor until recently.

In the years since the migration agreements were signed, about 4,000 Cubans annually have eluded the United States Coast Guard, reached Florida beaches, and claimed “dry foot” status. Some 2,000 to 3,000 others have been intercepted at sea (“wet foot”) each year and returned to Cuba. Because crossing the Florida Strait on rickety rafts or dilapidated boats is so dangerous, and the chances of being caught by the Coast Guard are high, the flow of illegal migrants remained manageable.

It is manageable no longer. The number of migrants has surged since last December, when President Obama and his Cuban counterpart, Raúl Castro, announced their intention to normalize relations. Would-be immigrants fear that reconciliation foreshadows repeal of the Cuban Adjustment Act, prompting Cuban migrants to act now lest they miss their chance.

With that in mind, Cubans have found an air-land route to the United States on which everyone can be a “dry foot” who can expect entry. In the past 12 months, more than 45,000 Cubans entered the United States from Mexico — without having to risk crossing a perilous desert as Mexicans and Central Americans do.  The new route is possible because in 2013, the Cuban government abolished its requirement that citizens obtain government permission to travel abroad. Today, most Cubans can travel to any country that will grant them a visa. Ecuador even admitted them without one until last Tuesday, and Guyana still does.

As a result, would-be migrants have been flying to Ecuador to begin a long, surreptitious trek north, without visas, through Colombia, Central America and Mexico. At the Texas border, they simply declare their nationality and are admitted under the “dry foot” policy.  Hiring “coyotes,” as smugglers of migrants are called, to guide the trek is expensive, but many Cubans have family members in the United States willing to pay. Recently, Cubans armed with cellphones have been crowdsourcing their own smuggling routes by following advice on social media from those who have gone before them.

The current crisis in Central America was triggered on Nov. 10 when Costa Rican authorities broke up a smuggling operation, leaving 1,600 Cubans stranded. When Costa Rica tried to send them north, Nicaragua closed the border. As more Cubans arrive daily, the number stuck there has reached 4,000, with no end in sight.

At a recent meeting of diplomats from the region, Costa Rica proposed creating a “humanitarian corridor” that would allow Cubans free passage to the United States border. Nicaragua rejected the proposal, but even the suggestion of such a plan should be a red flag for Washington. Latin Americans are getting tired of enforcing a United States immigration policy toward Cubans that isn’t working and discriminates against their own citizens. The contrast between Washington’s privileged treatment of Cuban migrants and its coldness toward Central Americans, including children fleeing criminal violence, is indefensible.

18CUBA-slide-8QJE-superJumboEarly morning que for migration visas, American Embassy, February 2015.

Nevertheless, the Obama administration has repeatedly declared that it has no intention of changing current migration policy, for fear that any hint of change will touch off a stampede. United States diplomats reaffirmed that position at a meeting with their Cuban counterparts last Monday. The meeting produced no new thinking about how to resolve the crisis.

There is a solution to this conundrum. If Cuban migrants trying to enter the United States by land were treated the same as those intercepted at sea and returned to Cuba, the incentive to make the long, dangerous passage north would be drastically reduced.

This would not require amending the Cuban Adjustment Act, which allows for the adjustment of status only for Cubans who have been admitted or paroled into the United States. It would require only changing the “dry foot” policy of admitting on parole anyone who sets foot on United States territory. That policy is a matter of executive discretion. To avoid a last-minute exodus from Cuba, it could be rescinded by the attorney general without prior notice.

An end to the “wet foot/dry foot” distinction should be accompanied by a significant increase in the number of Cubans admitted legally, so that those who want to immigrate to the United States have more opportunities to do so safely.

But to do nothing is to face a slow-motion migration crisis that will be interminable. Cuba will not reimpose travel limits on its citizens, and Latin America will not cooperate indefinitely by blocking Cubans’ transit when Washington’s policy is to let in all Cubans who arrive — and keep other Latin Americans out.  For Washington to refuse to change a policy when new circumstances have rendered it utterly ineffective makes about as much sense as King Canute trying to hold back the tide.

zWilliam M. LeoGrande is a professor of government at American University in Washington, D.C., and a co-author with Peter Kornbluh of “Back Channel to Cuba: The Hidden History of Negotiations between Washington and Havana.”

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U.S.-CUBA NORMALIZATION ALLOWS MEXICO AND CUBA TO REPAIR OLD TIES

Posted on December 8, 2015 by Arch Ritter

William M. LeoGrande, World Politics Review, Monday, Nov. 30, 2015

Complete Essay Here: Cuban-Mexican Relations WPR 11-30-15

imageCUBAN PRESIDENT RAUL CASTRO AND MEXICAN PRESIDENT ENRIQUE PENANIETO November 15

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HOW THE AMERICAN LEFT FELL IN AND OUT OF LOVE WITH FIDEL CASTRO

Posted on November 25, 2015 by Arch Ritter

By Carlos Lozada, Washington Post, November 25

Review of “FIGHTING OVER FIDEL: THE NEW YORK INTELLECTUALS AND THE CUBAN REVOLUTION” by Rafael Rojas,  Princeton University Press. 312 pp. $35.

Original here: Fighting Over Fidel
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One of the sharpest divides between political and intellectual life is that changing one’s mind is unforgivable in the former and inevitable in the latter. For politicians, consistency is prized; switching positions elicits the dread flip-flopping charge. Among intellectuals, by contrast, dalliances with competing ideologies over the years are an almost required rite before settling on a worldview — ideally one stronger for the journey — that underpins subsequent inquiry.

Historian Rafael Rojas has written an oddly captivating account of the Cuban revolution as a moment when these two worlds clashed, when a political revolt in one nation upended intellectual forces in another. Rather than focus on Fidel Castro, Che Guevara, John F. Kennedy or the other usual suspects of this Cold War era, Rojas tells the story of the left-wing academics, beat poets, Black Panthers and radical journalists in the United States, particularly in New York, who initially embraced Cuba’s transformations only to splinter over Castro’s repression of individual freedoms and the island’s move toward the Soviet orbit. “The complex relation between the New York left and Cuban socialism,” Rojas writes, “oscillated between a sense of the promise Cuba represented for leftist libertarianism and the sense of disenchantment that resulted from Havana’s alignment with Moscow.”

The initial optimism emerged from Castro’s early promises. When the New York Times interviewed him in 1957, in a dispatch from the Sierra Maestra mountains by Herbert L. Matthews, the young revolutionary declared that he held no animosity toward the United States, that his struggle was against dictatorship in his own country. In 1959, during his first U.S. trip, he pledged that elections would come quickly to Cuba, as soon as the revolution’s social transformations to end poverty and improve health and education were underway. “I advise you not to worry about communism in Cuba,” he declared. “When our goals are won, communism will be dead.”

Princeton University Press

At the time, American leftists were inclined to regard the revolution less as a Cold War battleground than as an upstart victory in the global conflict between rich capitalist nations — especially that great imperialist to the north — and colonial or postcolonial countries. So strong was this perspective that in his book “Listen, Yankee,” Columbia University sociologist C. Wright Mills (popularizer of the term “new left”) wrote that “the Cuban Government, as of mid-1960, is not ‘communist’ in any of the senses legitimately given to this Word. . . . The leading men of Cuba’s Government are not ‘Communist,’ or even Communist-type.” By the third printing of the book, Castro had pronounced the socialist character of the revolution and — after the failed Bay of Pigs invasion in 1961 — had lauded the scientific prowess of the Soviet Union, his soon-to-be patron. Waldo Frank, a social critic and historian of Latin America, found himself in a similar plight; his 1960 book “Cuba: Prophetic Island,” arguing that Cuban socialism could develop to be different and independent from the Soviet Union, proved anything but prophetic, as the revolutionary government began evolving into an oppressive one-party regime with a Marxist-Leninist cast.

Condemnation would arrive, though with caveats. In the left-wing journal Dissent, Daniel M. Friedenberg wrote critically of the Castro regime’s “xenophobia, hate campaigns, the retreat into phantasy fears, the dependence on communist support, the swollen Army, the rigid control of radio and press.” But he concluded that such “frightening symptoms of dictatorship” were responses to the colonialist, interventionist mind-set of U.S. foreign policy. The prime mover, the true culprit, was still outside the island; Castro remained absolved.

The beat poets, exemplified by Allen Ginsberg, were less forgiving. Initially impressed by Castro’s meeting with Malcolm X in Harlem in 1960, Ginsberg would soon portray him “as one more Latin American caudillo,” Rojas writes. In his “Prose Contribution to the Cuban Revolution,” published in 1961, the poet decries the mechanisms of social control that he saw in laws and codes against drug use and homosexuality, in communist as well as capitalist systems. “No revolution can succeed if it continues the puritanical censorship of consciousness imposed on the world by Russia and America,” he wrote. And during a trip to Havana in 1965, Ginsberg denounced the regime’s repression of young Cuban writers and even posited that Raul Castro was gay, earning the poet a quick deportation.

Rojas is most energized when discussing the multiple views of the Cuban revolution among African American civil rights activists and leaders of the Black Panther Party in particular, perhaps because their opinions were varied and less easily categorized. Party co-founder Huey P. Newton “advocated subordinating the black cause to a larger socialist cause,” Rojas writes, and admired the mix of nationalism and socialism that he saw in Ho Chi Minh’s Vietnam and Castro’s Cuba. Others such as Stokely Carmichael, however, rejected any prospect of Cold War alliances with the Soviets or did not necessarily link racial emancipation in America to a socialist project, Rojas explains. Meanwhile, Black Panther leader Eldridge Cleaver noted that few of the Cuban revolution’s commanders were black and highlighted the racism in the island’s daily life and ideological rhetoric.

Cuban revolutionary intellectuals, for their part, admired America’s militant black civil rights leaders, even devoting a full issue of Pensamiento Critico, a journal edited by Cuban philosophers and Marxists, to the Black Power movement in 1968, interviewing Carmichael, Newton and others. “The revolutionary struggle of American blacks was demonstrating that it was possible to strike the enemy in its own technologically developed heart,” the editors wrote.

“Fighting Over Fidel” is translated from Spanish, and it reads that way. There are sentence constructions and word choices that I suspect flow more easily in the original. (“Desencuentro,” for instance, is a lovely noun in Spanish, connoting failed expectations and sundered connections; “disencounter” just makes a jarring noise on the page.) And the author frequently reintroduces characters we’ve already met, sometimes just a few pages ago.

Such moments are forgiven, however, when Rojas introduces us to relatively obscure left-wing advocacy groups in New York that supported the revolution, such as the Fair Play for Cuba Committee or the unforgettably named League of Militant Poets. League members published the radical magazine Pa’Lante, featuring works by Ginsberg, photographer Leroy McLucas and poet Michael McClure. Alas, Pa’Lante survived but a single issue before its editors became disenchanted with the Cuban revolution — just another example of the oscillations between enthusiasm and disappointment, sympathy and tension, among distant thinkers observing a distant land. As Rojas puts it, a bit awkwardly but by all means memorably: “The socialist conga dance that these intellectuals of the New York Left joined in 1961 ended like the congas of the Havana carnival always end: in dissolution and complaints.”

A warning: If you’re wondering how the evolution of left-wing thought in New York affected the Cuban government or U.S. policy toward the island — indeed, affected anything beyond itself — don’t look here. Rojas admits early on that “New York’s critical debates on the Cuban Revolution naturally had few effects” on Washington’s approach to Cuba. “Fighting Over Fidel” is intellectual history entirely for its own sake, and as such, it succeeds. If you’re more interested in high-stakes national security dilemmas than in special issues of briefly published Marxist journals, go read “Essence of Decision.” But if you’re curious, intellectually or otherwise, stick with Rojas. I suspect you’ll be glad you did.

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CUBA DETENTE CREATES MIGRANT CRISIS IN MEXICO

Posted on November 9, 2015 by Arch Ritter

Financial Times, 9 November 2015

Amy Stillman in Tapachula, southern Mexico

Original article here: Cuban Migrants in Mexico

As Cuban president Raúl Castro met Mexican President Enrique Pena Nieto on Friday to strengthen trade ties and smooth over past tensions, a new political problem was mounting in the south with the huge influx of Cubans flowing across Mexico’s border.

Almost 6,500 Cubans arrived in Mexico en route to the US in the first nine months of the year, more than five times as many as a year earlier, according to official statistics. And the numbers have continued to surge. Mexico’s national migration institute, INM, said that more than 8,000 Cubans have been processed in Mexico so far this year.

The national human rights commission, CNDH, noted that over a thousand Cubans turned up at the Tapachula migratory station in the space of one week in October, overwhelming migration officials’ capacity to attend them.

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Many Cubans have spent days sleeping rough outside the Tapachula station awaiting processing. Local human rights groups have begun to open their doors to them amid the growing humanitarian crisis.

The Cubans are responding to rumours on the island that the US will soon remove their right to automatic asylum upon reaching US soil. The 1966 Cuban Adjustment Act deems Cubans fleeing the island to be political refugees, a product of the Cold War that sits uncomfortably with the recent restoration of diplomatic ties between Havana and Washington.  The law has already been amended once before, when the US implemented the “wet-foot, dry-foot” policy in 1995, enabling Cuban migrants caught at sea to be repatriated.

The Cubans, meanwhile, are sceptical that the gradual lifting of economic restrictions will improve their lives. Political freedom and economic opportunity, they say, are still lacking on the island.

“The [trade] opening is good, but it is not enough to change the culture in Cuba,” said López, 50, who had arrived at the Tapachula migration office with his wife and two grown children after a gruelling, month-long slog through South and Central America.

López, who asked to be identified with a pseudonym, had earned the equivalent of $25 a month working for the government in Havana. Fearing that the US law might change, in September he and his family made plans to join their relatives in North Dakota, selling their car and scrounging all of their savings to afford the trip, which cost $2,500 per person.  Like so many Cubans, López hopes to find better-paid work in the US. “America is a different democracy, it is a different opportunity,” he said.

While trade barriers in Cuba are slowly being chipped away, the US has yet to lift its 53-year old economic embargo on the Communist-run country, and political reform will take time.  Moreover, few people expect Cuba to become a market economy without going through some economic turbulence.

“Cubans understand that there is a good chance things will get worse before they get better,” said Duncan Wood of the Woodrow Wilson Center in Washington.  “Changing the economic culture of the country is going to be enormously disruptive, so I am not surprised that the number of Cuban migrants in Mexico is up.”

The lifting of travel restrictions in Cuba in 2013 has facilitated this process, with many countries along the route now providing Cubans with transit visas.

Also, increasing numbers of Cubans are choosing the circuitous trek across eight borders because it is less risky and cheaper than sailing directly to Miami. Cubans in Mexico told the Financial Times that the journey overland is half the price of the perilous sea voyage along the Florida Straits, which reaches $10,000.

Mexican immigration officials warn that the numbers arriving across the border continue to climb. Mario Madrazo Ubach, director-general of immigration control at the INM, said: “If 300 people show up in the same moment at the same station, what can we do, build a bigger station?”

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EMPRESA MIXTA ESTADO-COOPERATIVA: UNA PROPUESTA

Posted on October 30, 2015 by Arch Ritter

This interesting proposal was brought to my attention thanks to Jose Luis Rodriguez.

Ensayo original: http://www.perfiles.cult.cu/article.php?article_id=291#sdendnote2sym

Seida Barrera Rodríguez

Un debate que comenzó con el maltrato a la propiedad social en las empresas cubanas inspiró este proyecto. Fenómeno observado desde la cercanía con las entidades visitadas como fiscal del 2005 al 2008, la búsqueda de responsables y debilidades formó parte de la cotidianidad, pero faltó la perspectiva científica. El profesor que luego se convertiría en cotutor, insistió en profundizar cada vez más en la idea inicial de la autora de mezclar otras formas de propiedad con la estatal, y sugirió la cooperativa como una de las alternativas principales.

Habiendo presentado resultados parciales en un evento, con el ánimo de encontrar una organización que reuniera los requisitos adecuados para implementarlos, una colega mencionó que en su lugar de trabajo se advertían muchas de las características de una cooperativa, por el modo en que colaboraban los distintos establecimientos y la camaradería mutua entre sus empleados. Inmediatamente fueron solicitados contactos y entrevistas, y así se arribó a la Empresa de Producciones Industriales Cabildo, en lo adelante Cabildo. Su máximo dirigente, una persona de pensamiento flexible y vanguardista, enseguida se entusiasmó con la posible conversión de uno de sus talleres hacia una empresa mixta, donde el Estado cubano sería copropietario y cogestor con una cooperativa formada por trabajadores de la propia entidad. Para lograrlo, sería imprescindible el registro del proyecto como piloto para su seguimiento durante al menos un año.

Cabildo es una de las nueve empresas que gestiona la Oficina del Historiador de la ciudad de La Habana y no se encuentra en perfeccionamiento empresarial. Está conformada por quince talleres y una oficina central; su objeto social es muy variado: abarca desde el diseño de interiores hasta la costura, pasando por la fundición de las bellas farolas que iluminan esa parte de la ciudad, o la elaboración de banderas. En pocas palabras, sus empleados toman los inmuebles recién reparados o acabados de construir, y los proveen de todo lo necesario: muebles, lencería o pintura, intentando mantener el espíritu del casco histórico.

Los motivos para enfocar los esfuerzos en este frente pueden explicarse con la ayuda de las estadísticas: el 77% de los ocupados en la economía son trabajadores estatales, 3 millones 873 mil, por lo que constituye la mayor fuerza de trabajo a nivel nacional, y se encuentra tan necesitada de incentivos como los sectores cooperativo y privado, que solo representan el 23%.1 Además, en sus manos se encuentran la mayoría de los medios de producción que, conjuntamente con el capital humano, son las claves para incrementar los indicadores de productividad. Por último, existe carencia o debate sobre propuestas concretas en el sector, lo cual se confirma por el silencio de los legisladores, y la creciente flexibilización de las formas de gestión no estatales.

Esta brevísima introducción resume dos años de búsqueda de fundamentos teórico-metodológicos. Perseguimos el diseño, puesta en funcionamiento, legalización y seguimiento de cooperativas de producción y servicios a nivel local; con ello pretendemos seguir el Lineamiento 25 de la política económica y social, que promueve la creación de cooperativas en diferentes sectores de la economía.2

 Leer mas:  EMPRESA MIXTA ESTADO-COOPERATIVA

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Cooperativa de Omnibus Aliados, cerca 1952

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REP. GOSAR INTRODUCES BILL TO REPEAL ‘WET FOOT, DRY FOOT’ CUBAN AMNESTY

Posted on October 29, 2015 by Arch Ritter

By Zachary Leshin | October 28, 2015

 (CNSNews.com) — U.S. Rep. Paul Gosar (R-AZ) has introduced legislation to repeal “outdated policies” he says “provide amnesty to Cuban aliens” – including the Clinton-era “wet foot, dry foot” policy.

The Ending Special National Origin-Based Immigration Programs for Cubans Act of 2015 would repeal the Cuban Adjustment Act of 1966, which originally allowed any Cubans who had been living in the U.S. for two years to become legal permanent residents.

In 1976, the Act was amended to reduce the residency requirement to one year.

On Aug. 19, 1994, President Clinton announced his “wet foot, dry foot” policy: Any Cubans who landed on U.S. soil (“dry foot”) could remain in the U.S. even if they did not enter the country through the standard legal immigration channels.  However, migrants who were intercepted by the U.S. Coast Guard at sea (“wet foot”) would be returned to Cuba.  More than 2,600 Cubans were returned to the island between October 2014 and June 2015, the Associated Press reported.

“I introduced a bill to terminate three outdated policies that provide amnesty to Cuban aliens and are costing taxpayers billions of dollars,” Gosar said last week in a press release.  “The most disturbing part of this flawed immigration policy is that Cuba does not allow Cuban citizens convicted of crimes in the U.S. to be repatriated to Cuba.”

 “The Obama Administration continues to rule by executive fiat without any regard for our nation’s immigration laws or our country’s system of checks and balances that was established by the Constitution,” he continued.  “If President Obama has normalized relations with Cuba, why would we treat illegal immigrants from that nation any different than those from other countries?” Gosar asked.   “Cuban nationals should be treated under the same immigration rules as any other person seeking to immigrate to the United States and should not receive preferential treatment.”

Gosar’s bill has been endorsed by the Federation for American Immigration Reform (FAIR). In a statement, FAIR president Dan Stein called the law “an outdated relic of the Cold War. Continuing this policy serves no national interest and is perpetuated purely for domestic political purposes.”

“A recent investigative report by the Ft. Lauderdale Sun-Sentinel provides conclusive evidence that the Cuban Adjustment Act is being widely abused, at great expense to American taxpayers. It is time to end this special immigration policy and treat Cuban nationals the same way we treat citizens of every other country,” Stein continued.

But U.S. Secretary of State John Kerry is opposed to the repeal of the Cuban Adjustment Act. During an August press conference in Havana, where he attended a ceremony marking the reopening of the U.S. embassy, Kerry said: “We support full implementation of the existing migration accords with Cuba, and we currently have no plans whatsoever to alter the current migration policy, including the Cuban Adjustment Act, and we have no plans to change the ‘wet foot, dry foot’ policy at the same time.”

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En Route

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Preparing for Departure, Playas del Este, Havana, August 1994

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CUBA’S LIMITED ABSORPTIVE CAPACITY WILL SLOW NORMALIZATION

Posted on October 22, 2015 by Arch Ritter

Fulton Armstrong*

 Fulton Armstrong is a Research Fellow at the Center for Latin American and Latino Studies. This is the third of four policy briefs that he will write as part of the Center’s Cuba Initiative, carried out with support from the Christopher Reynolds Foundation.  

 October 19, 2015

 As the U.S. embargo—the main obstacle to expanding U.S.-Cuban economic ties—is relaxed by presidential regulatory action and eventually lifted by Congress, limits on Cuba’s own willingness and ability to conduct trade, absorb investment, utilize information technology, and even accommodate tourists risk putting a brake on the normalization of economic relations. Five decades of embargo and failed socialist models have rendered key sectors in Cuba ill-equipped to take advantage of the surge in U.S. business interest in the island. In some areas, the political will to open up and reform is crucial. These problems do not translate into a rejection of normalization but rather into a slower timeline than many on and off the island would hope for.

After 50-plus years of estrangement, bilateral contacts since last December have given rise to high levels of optimism—among U.S. investors, importers, and exporters—about relatively rapid economic engagement. Press reports and information from Cuban and non-Cuban experts suggest that most Cubans, skeptical that their government will make reforms facilitating trade and investment quickly enough, are slightly more pessimistic. But hardly a week goes by that U.S. trade experts, think tanks, and media don’t reflect strong private-sector interest in Cuba. Visiting Havana in October, U.S. Commerce Secretary Penny Pritzker emphasized, “What we’re trying to do is be as open as we can until the blockade [sic] is lifted.”

Cuba has not been shy about its desires either. Secretary Pritzker said Cuban officials “have been very forward leaning and wanting more American direct investment.” Last year, the Cuban government announced its “Portfolio of Foreign Investment Opportunities”—some 246 projects in energy, tourism, agriculture, and industry—for which it seeks US$8.7 billion in investment. Moreover, Havana says it wants growth rates to rise to 4–5 percent per year (from an estimated 1.5 percent in 2014), fueled by at least US$2 billion in annual foreign investment. …….

Conclusion: VISION AND PATIENCE

The limits on Cuba’s ability to absorb a rapid expansion in tourism, trade, and investment are significant, but continuing U.S. controls are also imposing obstacles. The Obama Administration has chosen not to use its executive authority under the Cuban Asset Control Regulations, written into the “Libertad [Helms-Burton] Act,” to expand trade with state-owned enterprises beyond those currently licensed—in agriculture, pharmaceuticals, telecommunications, and for environmental protection. Apart from these exceptions, trade is only permitted with small entrepreneurs, who have minimal capacity to import and export. These limits, which can be reduced through executive action, pose a major hindrance to the broader normalization process.

Cuba’s challenges in taking advantage of new opportunities are not insurmountable—with political will and time. Havana’s approach to change usually has been gradual and halting,

 but change a la cubana has also been significant. Since the start of the disintegration of the Soviet Union in 1989, Cuba’s economy and economic culture have changed more than the government’s socialist slogans would suggest—and further change is certain. The economic contract between the people and the government has changed drastically as hundreds of thousands of workers have been laid off, social services have been cut, and the Cuban people have been admonished by President Castro to embrace reforms “without haste, but without pause.”

The pace of reform and corresponding expansion of Cuba’s absorptive capacity may be maddening slow for many Cubans and Americans alike. But insofar as the U.S.-Cuba normalization process is irreversible, so too is the conviction in Cuba on the need to “update” the systems through reform in order to take advantage of the opportunities it brings.

The challenges implicit in change are not new, and not unique to Cuba’s relations with the United States. Potential U.S. partners eager to engage are about to learn what their European and Canadian counterparts have long known: even with clear incentives on the table, Cuba proceeds at a pace that maximizes its own stability and advantage—which most often means slowly. Those concerns naturally will be especially intense as they inform dealing with the United States, which still rationalizes expansion of commercial ties in terms of the desirability of promoting democracy in Cuba. But Cuban national pride and the Communist Party’s fear of losing control could very well be assuaged as the island experiences the benefits of the engagement. Foreigners, especially the United States, who push too hard, too fast, and too haughtily could fail and even delay this aspect of normalization, just as Cubans who move too passively, too slowly, and too skeptically could stymie the process as well.

Continue Reading: Fulton Armstrong US-Cuba Policy Brief 3, October 2015 (003)

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HOW GREAT IT IS TO BE ABLE TO “THROW THE RASCALS OUT”!

Posted on October 20, 2015 by Arch Ritter

By Arch Ritter

The people of Canada just changed governments, voting out the Conservatives under Steven Harper and voting in The Liberal Party of Justin Trudeau.  It was a hard-fought campaign, with the Liberals coming from a distant third place and gradually moving to first place by means of great campaigning, good policies, steadily improving leadership and a widespread dissatisfaction with the government of Steven Harper.  The win by the Liberal party represents generational change, the installation of a new team to form the government, new energy and intellectual entrepreneurship, and a new and improved rapport with the Canadian people.

How great it is to be able to “Throw the Rascals Out”!

The results of the election are illustrated graphically below.

“Old Regimes” in time become mired in their sense of entitlement, self-importance, paralytic conservatism, sclerosis, irrelevance, entrepreneurial lethargy, and intellectual exhaustion.

The regime of the Castro dynasty in Cuba continues to block any opening to an authentic pluralistic and participatory democracy. This is most likely largely because it fears that it would be voted out of office and lose its monopoly of political power and the perquisites of power. How nice it must have been for President Fidel Castro and now his brother Raul to know that they would never have to fight a free and fair election and that they would never wake up the next morning out of office and out of power – despite their long series of policy screw-ups.[i]

But whether Raul’s regime likes it or not, an opposition, though tightly or almost totally repressed at this time, will strengthen. Movement towards genuine participatory democracy will only intensify.  Generational change will come.

If Raul Castro were truly interested in the long term health of Cuba – and his own historical “legacy” – he himself would make moves towards such political pluralism. Unfortunately, this is improbable though perhaps not impossible

[i] Recall Fidel, 1970: ” We have cost the people too much in our process of learning. … The learning process of revolutionaries in the field of economic construction is more difficult than we had imagined.” Speech of July 26, 1970, Granma Weekly Review, August 2, 1970

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SIX LESSONS IN INNOVATION FROM CUBAN ENTREPRENEURS

Posted on October 6, 2015 by Arch Ritter

Ricardo Herrero, Huffington Post, 10/05/2015 5:59 pm EDT

 Original Essay Here: Cuban Innovators

 “Necessity is the mother of all invention” goes the old proverb, and few countries in the world have tested its saliency quite like Cuba. A suffocating half-century mix of communist socio-economic policies and blanket U.S. sanctions have forged a people for whom the need to “resolver” – improvising solutions by repurposing the scarce resources around you – has become more than just a way of life. It is arguably the only way most of them are able to create value in their society.

To many in Cuba, the “resolver” mindset represents the defiant and indomitable spirit of the Cuban people. To others who once took pride in what their country had accomplished before or immediately after the Revolution (depending on their politics), it is a persistent and embarrassing reminder of the failures of their system.

Yet, it turns out that during this time of change for the Caribbean island, this same ethos is increasingly becoming something to celebrate, and more importantly, to study. As Cuba seeks to reintegrate itself into the global economy, its harsh conditions have inadvertently given fruit to one of the greatest assets a workforce can possess in the 21st century: a deep-rooted culture of constraint-based innovation and collective ingenuity – one that often remains at odds with the government’s rigid central planning offices.

Look at today’s most exciting socio-economic currents – the shared economy, the circular economy, the maker movement, financial inclusion, co-creation – and you will find myriad examples of people and companies mastering the art of doing more with less. These frugal innovators are creating low-cost, high-quality goods and services by re-imagining processes and repurposing resources to meet the needs of an emerging global middle class with growing financial constraints and depleting natural resources. In the most comprehensive business study of this practice, Jugaad Innovation, authors Navi Radjou, Jaideep Prabhu and Dr. Simone Ahuja distill constraints-based, or “frugal” innovation into six guiding principles, for which the Cuban experience offers a wealth of case studies:

They seek opportunity in adversity. Frugal innovators identify opportunities within the harsh constraints of their markets to create value. Cuban ingenuity as we know it today was born in the 1960’s, as replacement parts for American products became increasingly scant due to the U.S. trade embargo. Eventually groups like ANIR (Associación Nacional de Innovadores y Racionalizadores) began to form and convene professional scientists and engineers with blue-collar mechanics and technicians to develop alternative solutions to problems created by scarcity. Many of the practices honed by ANIR became public policy during the so-called “Special Period,” when the government distributed manuals that taught Cubans how to “reduce, reuse and recycle” everyday items in order to survive the crushing shortages caused by the loss of Soviet subsidies. After five decades of overcoming extreme hardship, it is safe to describe Cuba as a country of 11 million people with a hacker mindset. Today, they count not just on their creativity to get ahead, but on a growing chain of external suppliers, mostly in Miami, who provide them with the parts, tools, and PDF manuals they need to deliver simple but effective products and services.

They do more with less. Frugal innovators compensate for a lack of resources by finding ways to leverage social networks and their intimate knowledge of their communities to create and deliver value. To get around Cuba’s debilitating lack of Internet connectivity, local entrepreneurs developed El Paquete Semanal, a complex, peer-to-peer distribution system of hard-drives that contain everything from offline versions of Wikipedia to pirate copies of Microsoft Office and the latest season of Shark Tank. This trade is currently the Island’s most lucrative private business, even though it remains illegal. Recently, crafty entrepreneurs barred from advertising on state-run television began to produce homemade video commercials for businesses such as cellphone repair shops and beauty salons to feature them in El Paquete‘s weekly programming.

They think and act flexibly. To innovate in a constraint-based environment, frugal entrepreneurs must quickly respond to changes in their environment with entirely new value propositions. Architects and engineers are prohibited from private sector practice in Cuba, but that has not stopped many of them from leading a quiet urban renewal in Havana, re-imagining, repurposing and renovating old run-down properties into attractive new spaces. They do so by operating under permitted licenses for construction, interior decoration, home sales and masonry, pushing the legal envelope to build many of the capitol city’s most exciting cultural and culinary destinations.

They keep it simple. The “resolver” mindset requires that entrepreneurs focus on developing “good enough” offerings that are accessible and easy to use. While Raul Castro expanded private sector enterprise in 2011, the state’s superior education system has failed to offer ongoing MBA programs or courses in business administration. Nor does it allow private schools that could offer a business curriculum to open in the island. Enter the Cuban Catholic Church, which, recognizing a need to provide practical business training to Cuba’s new entrepreneurs, began offering part-time workshops through its country-wide network of churches and cultural centers. These workshops have taught thousands of entrepreneurs the fundamentals of how to start and manage a business and are fostering a vibrant entrepreneurial ecosystem in Cuba.

They include the margin. Frugal innovators search for ways to include marginal segments of society, not just out a sense of empathy, but because it makes business sense for them. Cuban entrepreneurs are rising up to the challenge of addressing the unmet needs of their most disadvantaged countrymen and women. Thanks to remittances, the informal economy, and a burgeoning private sector, approximately a third of Cubans have the means to purchase imported food and personal hygiene products. Everyone else, especially rural Cubans, continues to depend on government rations of goods for basic subsistence, over 70% of which is also imported due to poor agricultural policy. While many independent businesses make headlines for serving the needs of Cuba’s tourists and emerging middle class, the vast majority of private businesses cater to the less affluent. Agro-ecologist Fernando Funes Monzote serves both sectors. Through his Finca Marta, a lucrative 20-acre solar-powered urban farm in Caimito, Funes Monzote not only provides Havana’s top paladares with organic produce, he also seeks “to give Cuban farmers a way to make a living at a time when so many have given up on it and moved to urban areas.” Funes Monzote is working on developing a weekly produce basket to distribute to individual families, providing an effective and healthy alternative to the government’s basket.

They follow their hearts. Frugal innovators take risks, trust their intuition, are passionate about what they do, and believe they pursue a high cause in the process. X Alfonso is a singer, song-writer and multi-instrumentalist who dreamed of building a “factory of ideas” in Havana that would showcase films, theatrical productions, contemporary art, runway shows, plus include a dance studio, literary hall, café, nightclub and concert stage. He also envisioned his “great gallery of all arts” as a place where local artists with “few resources and plenty of heart” would find the financial and material support needed to turn their creations into life. His Fábrica de Arte Cubano (or “F.A.C.”) opened in early 2014 and has quickly established itself as the most compulsively creative arts-space south of Brooklyn. F.A.C. has disrupted the local arts and nightlife industries, and established Alfonso as a talented visionary with an innate empathy for the needs of local artists in Cuba. “We wanted to demonstrate to people that yes we could have a change in mindset, that we could achieve things through hard work,” says Alfonso, “building spaces that fill young people with the illusion of that they can grow and do important things.”

As Cuban entrepreneurs start to enjoy greater access to the American private sector, they will undoubtedly gain an abundance of insights that will help their businesses scale and succeed. But their own ingenuity and approach can also be leveraged in more formal environments to produce innovative solutions that do more with less. U.S. entrepreneurs looking to build and sustain growth in today’s increasingly complex and volatile business landscape would be well served to seek inspiration in the creativity, resilience and resourcefulness of the “resolver” mindset.

Casa Miglis, HavanaAn Innovative Paladar Seating Arrangement

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(This looks like my kitchen once did.)

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Innovative Balseros!

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One Great Innovation from the Planned Economy” El Camello!

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Toy Cars from Cristal Beer Cans

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Self-explanatory

Ric Herrero is the Executive Director of #CubaNow.

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THIS IS CUBA’S NETFLIX, HULU, AND SPOTIFY – ALL WITHOUT THE INTERNET

Posted on October 5, 2015 by Arch Ritter

How media smugglers get Taylor Swift, Game of Thrones, and the New York Times to Cubans every week. VOX; Original article here: CUBA’S NETFLIX, HULU, AND SPOTIFY By Johnny Harris on September 21, 2015

In Cuba there is barely any internet. Anything but the state-run TV channels is prohibited. Publications are limited to the state-approved newspapers and magazines. This is the law. But in typical Cuban fashion, the law doesn’t stop a vast underground system of entertainment and news media distributors and consumers.

“El Paquete Semanal” (The Weekly Package) is a weekly trove of digital content —everything from American movies to PDFs of Spanish newspapers — that is gathered, organized, and transferred by a human web of runners and dealers to the entire country. It is a prodigious and profitable operation.

I went behind the scenes in Havana to film how El Paquete works. Check out the video above to see how Cubans bypass censorship to access the media we take for granted.

There are two Paquete king-pins in Havana: Dany and Ali. These two compete to develop the best collection of weekly digital content and in the fastest turnaround time possible for their subscribers. It’s a competitive market playing out in the shadows of a tightly controlled communist economy.

Paquete subscribers pay between $1 and $3 per week to receive the collection of media. It’s either delivered to their home or transferred at a pickup station, usually in the back of a cellphone repair shop, a natural cover for this type of operation.

Dany relies on data traffickers to deliver the files, but said he didn’t know how those sources obtained the content in the first place. I gathered that most of it is being digitized via illegal satellites that are hidden in water tanks on rooftops. It’s unclear how they get ahold of the content sourced from the internet (digital news publications, YouTube videos, and pirated movies, for example). Only 5 percent of Cubans can access the uncensored World Wide Web, and when they do, the connection is horrendously slow. It’s not the type of connection that would support downloading hundreds of gigs of content every week. Instead, some speculate that content is physically brought onto the island by incomers from Miami.

I sat down with Dany in his pink-walled apartment in Havana. While I expected a mob-like character to be at the root of this extensive black market of pirated media, I found a 26-year-old guy who looked more like a stoned surf bum than the conductor of a giant black market operation.  Dany’s office shows off a lot more brawn than he does. It’s a simple room with two gigantic computers, their innards visible, tricked-out lights arbitrarily flickering. Hard drives are littered around the room, stacked and labeled. Two large screens are full of Windows file directories, and in the corner of one of the screens is a live feed from Telemundo, a popular Spanish-language station, with the words “Grabando” (recording) in the corner.

“Everybody has their responsibility,” Dany told me. “Everyone gathers a certain type of content, and they bring it to me. I organize it, edit it, and get it ready for distribution. And then we send it through our messengers.”

This is hard work. “A lot of the time is spent finding and embedding subtitles” he laments. Much of the content is pirated from American TV and movies. He and his team have scour the internet for any existing subtitle files.

The government hasn’t tried to stamp out El Paquete, and Dany works to keep it that way. “We don’t put anything in that is anti-revolutionary, subversive, obscene, or pornographic. We want it to stay about entertainment and education,” he says, and I catch a glimpse of the shrewd business behind the baby face and board shorts.  It might as well be Netflix

A look into an edition of El Paquete reveals a vast array of content ranging from movies that are in US theaters right now to iPhone applications. Havana-based artist Junior showed me around. He’s a pensive and gentle 34-year-old who is remarkably talented, judging by the stunning art pieces that hang from the wall. Junior paints and tattoos full time but he used to be a Paquete dealer. He’s now just a consumer. He takes me through the 934GB of data he has recently transferred from his provider.

I’m immediately struck by how polished the Paquete system is. As Junior files through the meticulously organized files, I realize it mirrors the consumption of a typical internet user. He opens the movie folder, and we browse through dozens of movies, many still in US theaters. All of them come in HD and with subtitles and poster art as the thumbnail of the file. The videos are high-quality with accurate subtitles. I have to remind myself that we are not browsing Netflix, but instead looking at an offline computer that is displaying content that has physically traveled to get here. The methods couldn’t be more different, but the result is strangely similar.

He moves on to TV shows. “So do you think they have—” I start, but am interrupted. “They have everything,” Junior says emphatically. Sure enough, the show I was thinking of, Suits, was there, with the latest episodes ready to watch.

zzzzzzzDany

We continue to browse and look into some of the more routine but most interesting parts of El Paquete: There are folders dedicated to antivirus software that can be updated weekly to the latest versions. “But there’s no internet, so there can’t be viruses,” I say. “Most of this stuff has touched the internet in some way. This software protects against anything that has snuck its way on into the content,” Junior says.

Junior clicks over to the “Apps” folder and shows me a smorgasbord of iOS and Android apps. Many are gaming apps with updates that can be loaded in every week. But there is another called “A la mesa,” a Yelp-type app that helps connect clients to restaurants in Cuba using maps, reviews, and in-app menus. Then there’s the PDF folder, which holds newspapers, magazines, and screenshot material from dozens of online publications, everything from tech news to sports. It’s the internet in a box.

In addition to the subscription fees, revenue for El Paquete comes from a classifieds section called “Revolico.” Within El Paquete, you click a file that opens Revolico in your browser. But it’s an offline version that runs from a file structure on your local computer. There, you can click around as if you were browsing Craigslist, looking at thousands of listings of everything from house rentals to big-screen TVs to car tires.

Sellers pay to list their items, and you can get a premium listing if you pay more. Revolico is the cash cow of El Paquete. It also happens to be one of the first semblances of an advertising market for Cubans who have lived in a world of central planning and price control.

The depth and breadth of El Paquete is astounding, so much so that I, an American who lives and works on the uncensored internet, feel a twinge of envy that I don’t have El Paquete delivered to my house every week for $2.

When I asked Dany if he is afraid that the internet will wipe out his operation, without missing a beat, he replied, “Nah. We offer a product that is like one giant webpage where you can see all the content you want for a very low price. The internet might take over some clients, but we offer something different and very effective.”

“Speed is key to beating the competition,” Dany said. When asked how quickly he can get a movie or TV show after it airs in the US he says, “The next day.” Last year, Dany started sending a hard drive on a plane to the far corners of the island.

After spending a week in Cuba, it was refreshing to talk to someone with the appetite to grow an enterprise. Most people I spoke to in Cuba work for the state and have zero incentive to deliver anything above the bare minimum. They get paid the same either way. Even the private restaurants lack the fervor of a competitive business, since the economic environment they work in is still completely controlled even if they themselves are private.

But in Dany’s office, I felt the thrill of cunning innovation and strategy at work. I got the sense that something big is happening. And indeed, I wasn’t just standing in some dingy apartment, but rather in what may be largest media distribution company in the history of Cuba.

 zzzzzzzz

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