• 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."

ADDRESSING RACIAL DISCRIMINATION IN CUBA

Posted on March 24, 2015 by Arch Ritter

Original here: HavanaTimes

By Pedro Campos

Victor Fowler Victor Fowler

HAVANA TIMES — Another gathering sponsored by the Cuban journal Espacio Laical (“Secular Space”) was recently held at the habitual venue in Havana’s Felix Varela Cultural Center, formerly the San Carlos Seminary. On this occasion, participants addressed the racial question in Cuba. The panel was made up by academics and experts Rodrigo Espina, Mayra Espina, Victor Fowler, Tato Quiñones and Antonio Martinez (from the Aponte Commission).

The speakers described the current state of the problem and delved into the ways it expresses itself and possible solutions. They also referred to a number of initiatives that are currently underway, aiming to advance local and State solutions.

No one who attended the gathering could have left with any doubts on this matter: racial discrimination continues to exist in Cuba. The country has not been able to overcome the problem. In fact, it seems to have become worse as a result of the social differences accentuated by the Special Period and the recent reform measures: black people continue to be among the poorest sectors of society.

The issue has not reached public awareness or received the attention from the press and government that it deserves. There is also no concerted official effort addressing the problem, even though there is an official commission (the Aponte Commission) that has convened and presented Vice President Diaz-Canel with their work on the matter.

Espacio Laical will publish the lectures offered by the panelists and the comments made by the public.

In this post, I will touch on the basic premises behind the brief and improvised comments I made as a member of the audience, with more or less these words:

After congratulating the journal for reopening this space for debate, I mentioned that, if Mayra, Victor and Tato were parliamentary representatives, these problems and proposals would surely be debated at parliament and solutions would likely be found within that context.

If the writings of Mayra, Victor and Tato were published by the official press, the issues addressed would be broadly known and debated on by the population.

If the lectures offered by Mayra, Victor and Tato at the venu were quoted by the news or addressed in a television program, people would have no doubt that they are current and relevant issues and people would offer their comments and push for solutions.

For this to happen, however, many changes to our current conception of government, State and country would have to take place. To begin with, we would have to have freedom of expression and association, and to elect our government representatives, and this would require a change in the current political system, Constitution and electoral law. We would especially need to change Article 5 of the constitution, which establishes that the Cuban Communist Party is the guiding entity of Cuban society, something which has served to justify Party control over elections, grassroots organizations, People’s Power organizations, the printed press, radio, television, companies, industry, tourism, agriculture and the whole of the economy in general.

We would also need to change the economic conception which continues to view the State as the main owner of the means of production, and the centralized and monopolistic control over markets, part of a model that discriminates against and stands in the way of the economic empowerment of citizens, which, needless to say, includes black people.

These are the basic changes to our current, centralized political and economic system that could create the conditions needed to overcome the serious problems of racial discrimination that we still face.

I stated that I believe that, if we do not empower citizens politically and economically, we will not overcome the racial discrimination problems we have – nor will we solve the issue of poverty that also affects whites, women, people from Cuba’s eastern (and less privileged) regions or elderly pensioners, who are forced to sell cigarettes at street corners to survive.

We won’t be able to empower citizens if we do not democratize the country’s politics and socialize its economy, such that everyone can participate in and make decisions about political and economic issues at different levels of government, particularly if working people continue to be denied the right to own, administer and manage the incomes generated by businesses, be these small, medium-sized or large.

It’s not that the racial problem doesn’t have its own, particular characteristics and shouldn’t be treated in a special and delicate manner (owing to its impact on human life) or shouldn’t be addressed through race-specific policies, quite the contrary.

The point is that, in order to truly arrive at such policies and come up with a comprehensive solution, we would have to change the whole of the statist philosophy we currently have, which, to date, in the course of more than fifty years, has limited itself to eliminating the phenomenon of racism by decree, appointing a handful of black and mixed-race people to high government positions, and, more recently, tasking a commission with studying the matter and advancing proposals – proposals that will later be applied by those who have never understood the problem to begin with.

We will begin to solve the problem when the most important thing and the goal of all policies are human beings and not the State, as is the case in this distorted philosophy which has made us understand socialism as a form of State monopoly capitalism.

If this group of government officials had been appointed not on the basis of their skin color (allegedly to represent the interests of black people) but because they understand these issues, because they feel part of the problem and wish to represent those who suffer and those who have assessed the causes behind it and sincerely thought of solutions to it, then everything would be quite different.

In view of this, I believe that all who are interested in this issue ought to think about a solution to this general, political problem that colors all other specific problems faced by society, be them social, economic or cultural.

I didn’t mention this during the debate, but I wish to remind the “Leninists” in government that the Bolshevik leader once wisely said that, in order to solve specific problems, the general problems first needed to be solved. We still have to solve the general, basic problems that affect Cuban society: the democratization of politics and socialization of the economy, such that everyone, without any kind of discrimination, can realize themselves fully and develop their individual faculties to the fullest.

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CUBA FLIRTS WITH FREE SPEECH

Posted on March 23, 2015 by Arch Ritter

Marc Frank, Havana,  March 22, 2015 4:07 pm

Original here: Cuba Flirts With Free Speech

Cuba is using the internet to experiment with toning down its political censorship in a sign that a glimmer of glasnost has arrived on the Communist-run Caribbean island.

Havana’s decision to open up on the once-taboo subjects of the electoral system and civil society — by allowing Cubans to question policy in two online forums — is reminiscent of the early days of free speech in what was the Soviet Union in the 1980s.

For a number of years there has been public discussion over the pros and cons of market-oriented reforms in Cuba, and ample criticism of the bureaucracy. But public criticism has stopped short of questioning the political status quo, aside from a fledgling dissident press, such as the online newspaper 14ymedio.com, run by writer Yoani Sánchez.

The new forums, run on state-media websites, brought together officials and academics to interact online for a few hours with an audience encouraged to send in questions and views.

The opening has some similarities to glasnost, when Soviet authorities relaxed limits on the discussion of political and social issues and allowed the freer dissemination of news. The difference is that Cuba’s move comes in the age of the internet.

The forums follow an announcement this month that the country is preparing a new electoral law, due to come into force before the next general election in 2018 when President Raúl Castro will step down, in effect ending the Castro era in Cuba that began with his brother Fidel in 1959.

“These openings may be small and experimental, but they signal something important: criticism becomes legitimate discourse,” Bert Hoffmann, a Cuba expert at the German Institute of Global and Area Studies in Hamburg, said.

In a remarkably transparent forum on Cuba’s electoral system, sponsored by the Union of Young Communists’ daily, a participant called GCR said: “I would like to know if direct elections for the principal leadership positions of the country are under consideration . . . as the current system is [in my view] highly unpopular.”

During a forum on civil society, published online this month by the Cuban Workers Federation’s weekly Trabajadores, Joan asked: “How can the Cuban Workers Federation be a non-governmental organisation when its secretary-general is a member of the Council of State?” Another participant, going by the name Tumblr, charged: “The federation is an appendage of the state it represents . . . carrying out the policies of the Communist party.”

Most of those taking part in both forums defended Cuba’s political system, but what was unique was the expression of differing political opinions.

“The debate in these forums signals a willingness on the part of authorities to allow a range of expression and acknowledge a range of opinions that were heretofore not recognised as legitimate,” William LeoGrande, a Cuba analyst at American University in Washington and co-author of Back Channels to Cuba, said. “However, it would be very premature to say it portends any significant change in the political system.”

The small crack in the dam on political discussion comes as the EU’s foreign affairs chief visits Cuba and as Washington and Havana work to normalise diplomatic relations and begin to discuss a range of issues, including human rights and expanded travel and telecoms, such as direct phone calls.

However, discussions on opening embassies in Washington and Havana have dragged on for two months, in part because of Cuba’s continued status as a US-designated sponsor of terrorism and its inability to obtain banking services in the US. A clash with Washington over Venezuela, Cuba’s closest ally, which led Raúl Castro to deliver a fulminating tirade on March 17 against new US sanctions placed on several Venezuelan officials, has not helped.

The Obama administration’s hope that the embassies would open before April’s Americas Summit, which both countries’ presidents will attend for the first time in decades, now appears out of reach. Efforts to lift the trade embargo in Congress also face opposition from the Republican leadership.

Cuba’s new electoral law, the details of which have not been revealed, will be discussed in grassroots meetings along with other measures on the agenda of a Communist party congress set for April 2016, an opportunity to offer a critique the political system.

“We call for the opening of a multi-party system in Cuba: well regulated so that no foreign power or financial company can finance or corrupt electoral campaigns,” the Observatorio Critico de Cuba, a social network of Cuban intellectuals on and off the island, said in a post to the civil society forum.

The policy shift is also taking place as pressure builds on the Cuban government to authorise unlimited internet access. While only 5 per cent of Cubans are estimated to have access to the internet, 30 per cent have access to the government-controlled intranet, with its thousands of local pages and blogs and where the forums are occurring.

“Raúl Castro’s policies include not only economic reform but also a more tolerant relation between state and society . . . and digital non-state media have become tolerated to a considerable extent,” Mr Hoffmann said.
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 Complete Liberty in Discussing Baseball in Parque Central, Photo by Arch Ritter

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Recent US-Cuba Policy Changes: Potential Impact on Self-Employment

Posted on March 18, 2015 by Arch Ritter

Mario A. González-Corzo*   Cuba Transition Project, Institute for Cuban and Cuban-American Studies, University of Miami, Issue 239,  March 11, 2015

Washington’s “new course on Cuba” presents a new set of challenges, opportunities and new prospects for the Island’s emerging self-employed workers. There are several reasons for this:

1. Despite existing constraints and limitations, policy contradictions, and the predominance of bureaucratic economic coordination mechanisms and centralized planning, the expansion of self-employment is one of the principal elements of Cuba’s efforts to “update” its economic model.

2.The implementation of a series of reform policy changes in Cuba since 2007, and particularly after 2010, have contributed to the rapid expansion of self-employment and its growing share of total employment (Figure 1). 

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Source: Oficina Nacional de Estadísticas e Información [ONEI], 2014; author’s calculations.

  •  While limited openings to allow the expansion of self-employment are not a new phenomenon in the Cuban economy, the number of legally-registered self-employed workers has grown significantly since 2007.
  • Self-employment has grown at an even faster rate since 2010, when the Cuban government announced its plan to reduce its bloated State payrolls by 20% and after 2011 when the number of authorized self-employment categories was increased to 201.
  • The number of self-employed workers grew 206.6% from 138,400 in 2007 to 424,300 in 2013. By contrast, employment in the State sector fell 10.1% between 2007 and 2013, and employment in cooperatives declined 6.2% during the same period.
  • While the State sector accounted for 82.9% of total employment in 2007, this figure fell to 73.7% in 2013. Self-employed workers represented 2.8% of total employment in 2007, but their share of total employment grew to 8.6% in 2013.
  • Most self-employed workers in Cuba, however, are presently employed in relatively low-skilled (service-oriented) activities. They also face a wide range of legal prohibitions that limit their ability to grow and achieve economies of scale and their potential contributions to the country’s development and economic growth.

3. Despite facing strict State-imposed controls and limitations, self-employment has contributed to job creation, the provision of goods and services that were insufficiently produced by the State, and increases in the State’s tax revenues; it has also contributed to changes in attitudes, perceptions, and relationships between a growing segment of the Cuban population and the State, leaving a lasting “footprint” on the Cuban economy.

4. Since the limited liberalization of self-employment and the legalization of the U.S. dollar in 1993, self-employed workers have been among the principal recipients of remittances from abroad, particularly from the Cuban community in the United States, directly serving as one of the principal mechanisms to strengthen transnational ties between both countries.

While self-employment expanded significantly (206.6%), and its share of total employment increased notably during the 2007-2013 period, it has grown at a much slower rate, following the initial spurt experienced in 2011. This can be primarily attributed to existing restrictions on the types of self-employment activities that are currently authorized, excessive State regulation and intervention, the inexistence of input markets where self-employed workers and micro-entrepreneurs can obtain essential inputs at competitive prices in Cuban pesos (CUP), onerous taxation, and the remaining ambivalence of the State’s policies and attitudes towards the self-employed.

Cuba’s self-employed workers also have to contend with a dilapidated infrastructure, excessive bureaucratic constraints, insufficient sources of funding (excluding remittances), logistical difficulties do to the existence of primitive (quasi-formal) supply chains, government restrictions regarding the accumulation of capital (or concentration of wealth), and limited property rights. In addition, they lack access to mobile payment platforms, advanced (computerized) accounting and transactions (or sales) recording systems, and modern procurement and purchasing systems.

In terms of market segment concentration, it is worth noting that a notable share of self-employed workers is engaged in tourist-oriented activities such as food services (servicios de gastronomía), lodging or hospitality (alquileres), and transportation. Many of these depend on remittances from abroad as a primary source of working capital, and the majority of their client base consists of tourists and foreign visitors. Primarily catering to a limited (albeit affluent) market segment, rather than to a wider strata of the Cuban population, limits their market share and opportunities for growth and expansion.

Despite facing these challenges and limitations, the number self-employed workers in Cuba continues to expand (albeit at a slower pace in recent years), demonstrating the resilience of the entrepreneurial spirit that has historically characterized a significant portion of the Island’s population.

Given the growing importance of self-employment in the Cuban economy in recent years, the strong transnational linkages between a significant portion of self-employed workers and their friends and relatives in the United States, new U.S. policies towards Cuba are likely to impact this key sector of the Cuban economy in several ways:

  1. Continued expansion of self-employment activities, including new more value-added categories.
  2. Improved access to credit and equity capital to finance small-scale private business ventures.
  3. Opening to foreign investment, including partnerships with Cubans residing abroad.
  4. Future expansion of firm size, scope, and areas of operations.
  5. Greater share of total employment and contribution to Gross Domestic Product (GDP), tax payments, and social security system contributions.
  6. Adoption of modern point of sales (POS) systems, accounting systems, and inventory anagement systems to track sales and report business operations (and thereby improve the State’s ability to collect taxes from microenterprises and self-employed workers).

Despite all the potential (positive) effects of the new US policy approach with regards to self-employment, their real impact “on the front lines” depends on whether or not the Cuban government has the political will to implement deeper reform measures that will reduce the monopoly of the State, while permitting the expansion of the private sector by eliminating the “internal embargo.” On the economic front, this can be accomplished by lifting the internal restrictions, excessive regulations, onerous taxation, and bureaucratic limitations imposed by the State on the self-employed. On the political front, this process would require a radical shift in the State’s perceptions and attitudes towards the self-employed, recognizing Cuba’s emerging entrepreneurial class not only as a source of tax revenue for the State, but as primarily as a an engine of job creation, wealth formation, and the economic growth and development.

_________________________________________________

*Mario A. González-Corzo, Associate Professor, Department of Economics and Business, LEHMAN COLLEGE, City University of New York (CUNY), and is a Research Associate, Institute for Cuban and Cuban-American Studies (ICCAS), University of Miami

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CAPITULO TORMENTOSO EN LAS RELACIONES CUBA-ESTADOS UNIDOS-VENEZUELA

Posted on March 18, 2015 by Arch Ritter

El proceso de negociaciones distendido y promisorio entre Cuba y Estados Unidos peligra debido a la    gran confrontación motivada por la Orden Ejecutiva del Presidente Obama el 9 de marzo contra 7 altos cargos chavistas, al declarar estado de emergencia nacional porque Venezuela constituía una amenaza a la seguridad de Estados Unidos.  Se  ha argumentado que esa es la redacción establecida para la imposición de las sanciones, adoptadas por ambas cámaras del Congreso y  aprobada por el presidente el 18 de diciembre de 2014, un día después del anuncio de Raúl Castro y Barack Obama sobre el restablecimiento de las relaciones diplomáticas y la apertura de embajadas.

Sin embargo su implementación llegó en un momento  delicado,  y ha desviado la atención de la represión a la oposición y los demás problemas internos en Venezuela. Los cubanos en la isla han pasado del optimismo al temor de volver a vivir en gran  tensión y que las medidas anunciadas por el presidente Obama sean obstruccionadas por el gobierno de Cuba, nuevamente pretextando la confrontación.

Nicolás Maduro recién había visitado a Fidel Castro, y acusado al gobierno de Obama de  fomentar un golpe de estado para justificar la detención de dirigentes opositores, establecer visado para todos los norteamericanos, ordenar la reducción del personal de la embajada norteamericana en Caracas a igual cantidad que la venezolana en Washington, y que los funcionarios tendrían que reportar sus actividades  y solicitar permiso para efectuarlas. Respondió a la Orden Ejecutiva con la demanda a la Asamblea Nacional de una Ley Habilitantes Antiimperialista, enardecidas concentraciones y  demanda de Cumbres de la Unión de Naciones Suramericanas (UNASUR) y ALBA-TCP, aunque no logró una de CELAC.   Los cancilleres de Colombia, Ecuador y Brasil y el secretario general de UNASUR habían estado en Caracas el 6 de marzo en una infructuosa gestión de promoción de diálogo con la oposición y  la participación en las próximas elecciones parlamentarias. Todos los cancilleres se reunieron en Quito, su sede, el 14 de marzo para aprobar una declaración de apoyo al gobierno de Maduro.  Ese día, el canciller Bruno Rodríguez  visitó a Maduro para declarar que Estados Unidos no puede tener una política de zanahoria con Cuba y una política de garrote con Venezuela.

La Alianza Bolivariana para los Pueblos de Nuestra América-Tratado de Comercio de los Pueblos (ALBA-TCP)  realizó el 17 de marzo una Cumbre Extraordinaria de solidaridad con Venezuela y  para coordinar una posición común con vista a la VII Cumbre de las Américas (10-11 de abril). En la Declaración se rechazó

“la Orden Ejecutiva injusta e injustificada, que constituye una interferencia contra el principio de soberanía y el principio de no intervención en los asuntos internos de los Estados”. Se ratificó “el compromiso y apoyo irrestricto con la hermana República Bolivariana de Venezuela en la búsqueda de mecanismos de diálogo con el gobierno de Estados Unidos, para que cesen las agresiones de este gobierno contra Venezuela”, y se propuso crear un Grupo de Facilitadores de CELAC, UNASUR, ALBA-TCP y CARICOM “para facilitar una diplomacia de compromiso entre los gobiernos de Estados Unidos y Venezuela para aliviar las tensiones y garantizar la resolución amigable”.

Raúl Castro se expresó fuertemente contra Estados Unidos y llamó a que eliminara la Orden Ejecutiva y normalizar las relaciones con Venezuela.  Manifestó que

“Estados Unidos debería entender de una vez que es imposible seducir o comprar a Cuba ni intimidar a Venezuela. Nuestra unidad es indestructible. Tampoco cederemos ni un ápice en la defensa de la soberanía e independencia, ni toleraremos ningún tipo de injerencia ni condicionamiento en nuestros asuntos internos.  No cejaremos en la defensa de las causas justas en nuestra América y en el mundo, ni dejaremos nunca solos a nuestros hermanos de lucha”.

Reveló los objetivos para la VII Cumbre de las Américas:

“Rechazaremos con determinación toda tentativa de aislar y amenazar a Venezuela, y reclamaremos el fin definitivo del bloqueo a Cuba.  La sociedad civil cubana será la voz de los sin voz, y desenmascarará a los mercenarios que presentarán allí como sociedad civil de Cuba y a sus patrones”.

Llama la atención que antes y durante el año y medio que duraron las negociaciones que culminaron el 17 de diciembre, las relaciones de Estados Unidos y Venezuela se deterioraban intensamente, lo que no impidió que Raúl Castro llegará a los sorprendentes acuerdos con Barack Obama. En 2010 quedaron sin embajadores; en 2013 comenzaron y se suspendieron negociaciones, y Maduro ofreció asilo a Edward Snowden; Kelly Keiderling, encargada de negocios y dos diplomático fueron expulsados, supuestamente por alentar acciones de sabotaje; en 2014 Maduro acusó al gobierno  norteamericano de estar detrás de las protestas como parte de un plan en su contra.

La sorpresiva  tercera ronda de conversaciones para el restablecimiento de las relaciones diplomáticas entre Roberta Jacobson, subsecretaria de estado, y Josefina Vidal, directora general de Estados Unidos en la Cancillería cubana, y  el alejamiento de la prensa indicaron la urgencia para tratar  la confrontación Estados Unidos-Venezuela,  en La Habana, el 16 de marzo. Resultaba obvio que el proceso sería complejo y prolongado, pero no se esperaba la abrupta interferencia de este diferendo.  En poco menos de un mes se requieren muchas negociaciones y voluntad de resolver asuntos muy complejos. La Cumbre de las Américas junto a la novedosa participación del gobierno de Cuba y el encuentro de Raúl Castro y Barack Obama, debería ser un espacio de diálogo constructivo y relanzamiento de las relaciones  Estados Unidos-América Latina y el Caribe.

La Habana, 18 de marzo de 2015

Miriam Leiva

Miriam Leiva, Periodista Independiente

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SEEDING A SILICON VALLEY IN CUBA

Posted on March 16, 2015 by Arch Ritter

ramphis-castro By Ramphis Castro, Founder, Mindchem

Original Here: Silicon Cuba?

When venture capitalists talk about Cuba as the next Promised Land, they note foremost the very real political hurdles that remain, both on the island and in the United States. The biggest obstacle, however, may be smartphones — the dearth of them.

Even as Cuba is a bright spot in the developing world for its top-notch health care and education systems, it remains in a technological dark age. Its communication systems, in particular, are almost as ancient as the Packards and Hudsons that putter around Havana. Mobile phone penetration (about one in 10 Cubans have one) is the lowest in Latin America, the country’s Internet is slow and government-censored, and owning a computer was illegal until eight years ago.

All of which makes it especially exciting to be a venture capitalist pondering the possibilities for funding companies in Cuba today and tomorrow. If VCs, particularly angel investors, can become involved soon, they will be getting in not at the proverbial ground floor but while the blueprints are being drafted.

Cuba, to be sure, has much to gain from the opening of its economy. For instance, it is one of the few places in the world where organic or non-GMO products, beloved by Americans, exclusively are grown. An export opportunity likely lies there. And then, of course, there is the Cuban cigar.

And certainly, the challenges for the first wave of early-stage VCs who hit the ground in Cuba are myriad. But we have made inroads before into early-stage economies: Iran, Yemen and Myanmar, to name a few.

Our fundamental role as VCs will be to support the creation of a new Cuban economy — one wanted by Cubans, not necessarily one desired by the U.S. or the outside world. Then we will back the local entrepreneurs who will build it.

A probable priority for Cuba: Telecom. Much of the island’s telephone connection with the rest of the world moves through an old undersea coaxial cable system. Banking networks and other infrastructure needed for e-commerce are just as antiquated.

The easing of sanctions announced by President Obama in recent months should make it more practicable for U.S. companies to export technology and consulting services to Cuba. There is the potential for leapfrog telecom networks, skipping over the wired and maybe even cellular network stages, going right to satellite technology.

The timing is excellent for VCs seeking partnerships in Cuba, as a new investment law, introduced in Cuba in March 2014, opens opportunities in agriculture, infrastructure, sugar, nickel mining, building renovation and real estate development.

Rodrigo Malmierca, minister for foreign trade and investment, believes Cuba needs to attract $2 billion to $2.5 billion in foreign direct investment per year to reach its economic growth target of 7 percent. To that end, in November 2014, the Cuban government appealed to international companies to invest more than $8 billion in 246 specified development projects. The 168-page Portfolio of Opportunities for Foreign Investment is available online and in English. “We have to provide incentives,” Malmierca said.

All this follows an initial effort four years ago by Cuba to make it easier, somewhat, to start a company, an initiative that hundreds of thousands of budding businessmen seized upon, taking their first steps into state-sanctioned capitalism.

Still, much more needs to be done — and faster — by both Cuba and the U.S. Congress for VC roots to take hold soon.

A recent Heritage Foundation report ranked only North Korea lower in labor freedom, respect for the rule of law and lack of corruption. Moreover, Cuba has repudiated or delayed debt payments to other nations and corporations; it also wants the U.S. to leave the Guantanamo Naval Base, which has proven to be problematic.

Meanwhile, in the U.S., resistance to normalization — although it’s lessening — remains problematic, as many Republicans, and especially Sen. Marco Rubio of Florida, the son of Cuban exiles, are unalterably opposed. Many Cuban exiles want reparations or the return of seized property and businesses, an unlikely scenario.

But the energetic, animated, conversations of the older generation Cuban exiles, often over a colada in Versailles or La Carreta restaurant in Miami, contrast with those of a new generation of Cuban Americans who want a different way forward and to play an active role in the rebuilding of their parents’ home country. At the same time, American nationals continue to become more curious about Cuba, its people, its music and business opportunities.

The rest of the world also has much to gain from Cuba’s expertise in medical-related fields; the country’s infant mortality rate is one of the lowest in the Western Hemisphere, and there’s a high-functioning universal health-care system.

Startups can catch fire in Cuba. And why shouldn’t they? Necessity is the mother of invention, and Cubans certainly have had a tough time in recent decades. The literacy rate, however, is high — higher than in the U.S. Cuba also has a strong culture of collaboration and support, two of the basic tools entrepreneurs use to meet challenges large and small.

Starting a business is human nature, too. The desire to prosper from trade has existed since antiquity. Holding back this instinct forever is impossible — it’s like stopping rain; eventually, it falls and things begin to grow. Such will be the case in Cuba.

Ramphis Castro — no relation to the Cuban leaders — lives in Puerto Rico. He is a Kauffman Fellow and founder of Mindchemy, a startup specializing in bringing technology entrepreneurship into the developing world. Reach him @jramphis.

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CUBAN ENTREPRENEURS CAN SELL EVERYTHING FROM SHOES TO SOAP IN THE UNITED STATES

Posted on February 24, 2015 by Arch Ritter

Mimi Whitefield, Miami Herald, 02/23/2015

Original here: http://www.miamiherald.com/news/nation-world/world/americas/cuba/article11041325.html#storylink=cpy

When the U.S. State Department announced new rules for products that independent Cuban entrepreneurs could sell in the United States, it published a broad list detailing they couldn’t sell. That left many people scratching their heads over whether much of anything now produced by Cuba’s cuentapropistas would be allowed.

But after analyzing all the exceptions and drilling into the complicated U.S. Harmonized Tariff Schedule, Miami Customs attorney Lenny Feldman has come up with what he calls his “yes” list — imports from self-employed workers that are permitted even though the U.S. trade embargo against Cuba remains in place.

It turns out there are more potential products than originally thought and quite a few that at least some of the 483,396 Cubans registered as cuentapropistas — those who work for themselves — make.

“There’s actually a lot left,” said Feldman, an attorney in the Miami office of Sandler, Travis & Rosenberg.

The State Department says its new rules will encourage private Cuban entrepreneurs to develop products for export. While all live animals and animal products are prohibited, raw hides, skins, leather, furs, saddlery and harnesses, handbags, and travel goods are allowed. So are paper products, plastics and rubber articles, ceramics, glass and glassware, articles of stone, plaster and cement; footwear, hats, umbrellas, toys and games, artificial flowers and feathers.

Independent entrepreneurs who make soap, cosmetics, candles, waxes and polishes, perfume or photographic or cinematographic goods are also in the clear. Jewelry makers, including those who work with pearls and precious and semiprecious stones, also got a green light as did producers of cutlery and tools.

Importation into the United States of an array of home goods, including furniture, lamps, illuminated signs, bedding, mattresses and cushions, clocks, wicker products, baskets, and articles made from wood, cork and straw, is allowed. Watches and musical instruments are on the “yes” list, too.

Continue Reading: CUBAN ENTREPRENEURS CAN SELL EVERYTHING FROM SHOES TO SOAP IN THE UNITED STATES

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Cuenta-Propista Arts and Crafts ready for Export to the US!

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Party Supplies? Ready for Export — Soon.

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CUBA EMPRESARIAL: LA REALIDAD AHOGA A LOS BUENOS DESEOS

Posted on February 23, 2015 by Arch Ritter

Nora Gámez Torres;  El Nuevo Herald, 02/21/2015

Original here: http://www.elnuevoherald.com/noticias/mundo/america-latina/cuba-es/article10895450.html#storylink=cp

En los parques de pueblos en el interior de Cuba y en algunos barrios de la capital, los niños se entretienen montando carretones tirados por caballos y cabras. No es una actividad lucrativa que se asociaría inmediatamente con el término “pequeño empresario”, pero el “servicio de coche de uso infantil tirado por animales” es una de las 201 actividades que el gobierno cubano ha autorizado a ejercer “por cuenta propia”.

No es, por supuesto, lo que tienen en mente funcionarios del gobierno y congresistas estadounidenses que han visitado recientemente la isla cuando hablan de ayudar al florecimiento de los negocios en Cuba, pero quienes pasean a los niños en coches forman parte, junto a dueños de “paladares”, taxistas, fotógrafos, reparadores de todo tipo de objetos y “arrendadores de vivienda”, entre otros, de un emergente sector privado, al que la nueva política exterior de Estados Unidos ha colocado en el centro de atención.

El objetivo declarado es estimular a este sector para la mejoría económica del pueblo cubano y la promoción de una sociedad civil independiente que, eventualmente, podría promover un cambio político en la isla. Pero ¿qué dimensiones reales tiene ese sector y qué potencialidades tiene para expandirse bajo el control del gobierno de Raúl Castro?

Según las últimas cifras oficiales publicadas en el periódico estatal Trabajadores en enero, 483,396 personas laboraban “por cuenta propia” en Cuba. Una pequeña cifra todavía, en comparación con los más de cuatro millones empleados en la economía estatal.

Estos trabajadores necesitan una “licencia” u autorización gubernamental para operar en una de las 201 actividades permitidas y deben pagar mensualmente las cuotas fijadas por el Estado. En su mayoría son oficios o servicios que requieren poca capacitación e infraestructura tecnológica, como “forrador de botones”, “rellenador de fosforeras” y “cuidadores de baños públicos”. Entre los que arrojan más beneficio se encuentran la gestión de restaurantes o “paladares” y los servicios de taxi.

“Aunque Raúl ha hecho cambios significativos en cuanto a la economía y la microempresa en Cuba, no son cambios suficientes para lograr las metas del gobierno de crecimiento y de transferir a los trabajadores estatales al sector no estatal, privado o cooperativo”, explica el profesor de Baruch College, Ted Henken, autor junto al también profesor y economista Archibald Ritter, del libro Cuba empresarial: un contexto de políticas cambiantes, del cual este reporte tomó prestado el título.

“Hay un grupo de obstáculos burocráticos y de regulaciones. Por ejemplo, muchos profesionales no pueden trabajar en su profesión en el mercado laboral privado. La mayoría de los 201 oficios no son productivos, son de sobrevivencia”, apuntó.

Si las remesas son la principal fuente de inversión en los negocios privados en Cuba, como argumenta Henken, la nueva disposición anunciada por el gobierno de EEUU de eliminar restricciones a envíos destinados a “actividades de personas particulares y organizaciones no gubernamentales que promueven la actividad independiente para reforzar la sociedad civil en Cuba y el desarrollo de empresas privadas”, puede estimular la expansión de los negocios ya existentes o el surgimiento de otros. Pero la casi total ausencia de créditos nacionales es un obstáculo importante para aquellos que no tienen familiares o contactos en el extranjero.

Existe, además, “un obstáculo mayor del que todos se quejan: que no hay un mercado mayorista”, observa Henken.

Los altos impuestos es otra de las críticas a las regulaciones actuales, que establecen un impuesto progresivo sobre las utilidades hasta del 50%, más otros tributos por ventas, servicios, utilización de fuerza de trabajo, contribuciones a la Seguridad Social así como tasas por anuncios y publicidad comercial.

Los impuestos por utilidades comienzan en un 15% y llegan al 50% por ganancias superiores a $2,000 al año, lo que unido a las tasas arbitrarias de gastos deducibles, pueden generar impuestos reales que superan el 100 por ciento de lo generado en un año. “Obviamente esto podría matar a la empresa o promover el fraude”, argumentan los autores de Cuba empresarial.

En plena temporada de declaración de impuestos, algunos cuentapropistas han hecho pública su insatisfacción en cartas a medios oficiales como Granma o comentarios dejados en las páginas en internet de estas publicaciones.

La lectora Elizabeth González Aznar se quejó en Cubahora del bajo índice de deducción de gastos (hasta un 40% en dependencia del tipo de actividad) en el régimen de contribución de los cuentapropistas en condiciones en que “no existe mercado mayorista”, “los productos se adquieren en mercados minoristas y a precios muy altos”; “las tarifas eléctricas suben cada vez más” y “se abrió el cuentapropismo sin crear mecanismos elementales que mantuvieran una oferta de productos acorde a la demanda”.

González Aznar dijo verse obligada a comprar productos más caros en las tiendas de recaudación de divisas solo para poder obtener comprobantes que luego puede presentar al hacer su declaración.

Pero este no es el peor escenario. Históricamente, cada vez que el gobierno cubano ha permitido pequeños espacios para la iniciativa individual, ha perseguido duramente a quienes considera acumulan capital o se convierten en una competencia para el estado, como sucedió con la prohibición de comercializar ropa importada en 2013 o el cierre de paladares como El Hurón Azul.

La clausura de las salas de cine privadas en noviembre del 2013 ilustra, además, que el gobierno no está dispuesto a ceder en el control de espacios que considera esenciales, como la distribución de información y productos culturales, zonas que, por ahora, están vedadas a los negocios privados, al menos legalmente.

Que los emprendedores hayan reaccionado con la creación de “los paquetes”, un compendio de programas extranjeros distribuido informalmente en dispositivos portátiles de almacenamiento, ilustra que las autoridades solo pueden desplazar—pero ya no controlar—estas actividades hacia el mercado informal, que sigue interesado en este tipo de oferta.

Una última limitación impide la expansión de capital nacional en inversiones de mediano y gran alcance. La Ley 188, de inversión extranjera aprobada por el parlamento en marzo del 2014, regula las inversiones en Cuba de “personas naturales” y “jurídicas extranjeras”, así como las llamadas empresas “mixtas” con capital del estado cubano, pero no menciona que los cubanos, residentes o no en la isla, tengan el derecho de invertir en Cuba.

Para estimular las inversiones, el gobierno otorgó una excepción de ocho años a las empresas extranjeras que abran negocios en Cuba, entre otras facilidades, a las que no tienen derechos los pequeños empresarios cubanos, lo que constituye “un tipo sorprendente de discriminación en contra de los ciudadanos cubanos”, según escriben Henken y Ritter.

Cuba Mar 2014 040 Cuba Mar 2014 056 Cuba Mar 2014 059 Cuba Mar 2014 096

 

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WHO OWNS CUBA? AS CUBA-U.S. RELATIONS THAW, THE THORNY MATTER OF PROPERTY DISPUTES HEATS UP

Posted on February 23, 2015 by Arch Ritter

CRAIG OFFMAN

HAVANA — The Globe and Mail, Published Friday, Feb. 13 2015, 3:28 PM EST

Original here: WHO OWNS CUBA?

Tonito Ring Ring was a Latin-looking boy with a dial for a belly and a target on his head. In the 1950s, he was the cartoon mascot of the Cuban Telephone Company, then owned by American firm International Telephone & Telegraph. When the Revolution came in 1959, workers at company headquarters in Havana came looking for him. They tore Tonito down from the wall, thrust him into a coffin, walked him down Calle Aguila to the Malecon, and tossed him into the sea. The Communists, meanwhile, seized the entire Yanqui phone company and, in the ensuring three years, confiscated $1.6-billion worth of U.S property across the island.

Almost six decades later, the United States is intent on making the Cubans pay. Literally.

Now the property of the state-run phone monopoly ETECSA, the telephone company is just one of roughly 6,000 confiscated assets, estimated to be worth a total of more than $7-billion, to which American firms and citizens hold claims. If the Cubans want the United States to lift its gruelling economic embargo – now a possibility, after U.S. President Barack Obama announced the re-establishment of diplomatic relations in December – they’re going to have to address the thorny issue of compensation. With Mr. Obama’s presidency winding down, and Cuba’s economy suffering even more than usual thanks to the woes of petro patron Venezuela, pressure is beginning to build to tackle the elephant in the room.

Although Cubans have long considered the embargo a form of slow genocide, America clearly feels differently. In its eyes, Mr. Castro and his comrades took part in nothing less than illegal seizures of property, and should now pay for what they stole if they want to normalize trade. In fact, a two-decade-old American law dictates that there will be no normalization in trade until the claims are settled.

Compensation is a freighted emotional issue for these antagonists, whose mutual antipathy long precedes the revolution. It’s not just about land or assets, communism versus capitalism. It’s about the right to claim victimhood. “Cuba’s crime is not that it’s communist,” political scientist Rafael Hernandez told me as we sat down to talk in his Havana living room last month, the day before Assistant Secretary of State Roberta S. Jacobson made her historic visit to Cuba. “The two countries have a long way to develop a relationship that surpasses a century of mistrust.”

Mr. Obama’s announcement may bring an economic revolution to Cuba. Although the short-term aims include lifting travel and financial restrictions, and even moving toward an exchange of embassies, the long-term goal is to normalize trade.

But Ms. Jacobson has said that the two sides won’t broach the topic of compensation until much further down the road. For the payment issue, even the process is complicated. As previous Cold War-era attempts at land claims have proved, establishing a rate for repayment will be no small feat. For one thing, no one knows whether the United States, which represents all the claims, will seek to settle in one lump sum or want to address each case individually.

q1 001Q4 001Q2 001Tables from Archibald Ritter, “The Compensation Issue in U.S. – Cuba Normalization”, Chapter 16 in A. Ritter and J. Kirk, Editors, Cuba in the International System: Normalization and Integration, Macmillan Press Ltd, 1995 United Kingdom 

Continue Reading: Who Owns Cuba

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CANADIAN CEO RETURNS HOME AFTER IMPRISONMENT IN CUBA

Posted on February 23, 2015 by Arch Ritter

DANIEL TROTTA

HAVANA — Reuters; , Feb. 21 2015, 2:00 PM EST

Original here: http://www.theglobeandmail.com/news/national/canadian-ceo-returns-home-after-imprisonment-in-cuba/article23139650/

 Cuba has freed Canadian businessman Cy Tokmakjian after more than three years in jail, his company said on Saturday, resolving a case that had strained Cuban-Canadian relations and alarmed foreign investors.

Tokmakjian, founder of the Ontario-based company, was convicted of bribery and other charges and sentenced to 15 years in September in what the transportation company had called a “show trial” and a “travesty of justice.”

Cuban prosecutors had outlined a pattern in which Tokmakjian wooed Cuban officials and their families with a series of gifts, helping the Tokmakjian Group do business estimated at $80 million annually with Cuba until the company was shuttered and its founder arrested in September 2011.

Tokmakjian “was welcomed home by his family, friends, and thousands of employees,” said the company statement, which also thanked the Canadian government. A spokesman said the 74-year-old was released early Saturday.

The statement made no mention of two Canadian aides from the Tokmakjian Group, Claudio Vetere and Marco Puche, who were also convicted and sentenced to 12 and 8 years. They had been under house arrest pending trial and while their convictions were being appealed.

Fourteen Cubans including the former deputy sugar minister and the former director of the state nickel company were also convicted and sentenced to terms ranging from 6 to 20 years.

Foreign companies and diplomats had raised concerns that Tokmakjian’s case could scare off investors while Cuba was actively seeking foreign capital. It also annoyed Canada, a major trading partner.

“His ordeal is a cautionary tale to any investor who thinks the Cuban playing field is level,” said Peter Kent, Tokmakjian’s member of parliament.

Cuba seized about $100 million worth of company assets including bank accounts, inventory and office supplies, a ruling the company was challenging in international arbitration.

No immediate reason was given for the sudden release of Tokmakjian, whom Cuba had previously hailed as a model business partner over 20 years for supplying crucial transportation equipment during a severe economic crisis after the collapse of the Soviet Union.

The company was later caught up in an investigation of Cuba’s international trading sector, part of a crackdown on corruption.

cy7Cy Tokmakjian

Throughout the time Tokmakjian was tried in June and sentenced in September, the Canadian government was helping the United States and Cuba by serving as host to secret talks on restoring diplomatic ties.

It was unknown whether Canada’s role had any influence on Tokmakjian’s release.

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BAD HABITS CAN DERAIL US-CUBA NEGOTIATIONS

Posted on February 20, 2015 by Arch Ritter

Peter Hakim, President Emeritus, Inter-American Dialogue

Estado de S. Paulo, February 15, 2015.

In a belated response to the December 17 announcements of presidents Raul Castro and Barack Obama, Fidel Castro (or at least the message released in his name) tepidly endorsed their historic decision to normalize relations between the United States and Cuba—while rightly emphasizing that reconciliation would surely be a difficult and lengthy process in light of the accumulated distrust of the past fifty years.

But distrust, a predictable element in all negotiations between adversaries, is not the only challenge for US-Cuban diplomacy. What most threatens to derail the two nation’s ongoing talks is a clash of national character flaws: the terrible impatience of Washington in foreign affairs confronting the Havana government’s excessive caution and stubborn resistance to change.

Cuban-American relations since Fidel Castro took power in 1959 have been a narrative of US impatience squaring off against Cuba’s defiance. Although initially tolerant, in less than a year the Eisenhower Administration began efforts to topple the revolutionary regime, and shortly thereafter embargoed commerce with the island. Just months in office, President Kennedy launched the Bay of Pigs invasion.

Among US Presidents, Obama has been unusually cautious overseas, but he is well aware that he has an important stake in the pace of both political and economic reform in Cuba. Washington’s yardstick for judging his new Cuba policy will mostly be progress toward human rights, free expression, and more open politics—and these have appropriately been made a top priority of the US negotiating agenda. White House plans already include reinforcing ties with dissidents and other non-governmental actors, bolstering the incipient private economy, expanding Cuban access to information and opinion, and supporting other democracy-building initiatives. None of this should be a surprise to the Cuban government. Still, suspicious, distrustful Cuban authorities may view even modest new initiatives along these lines as “meddling” and “promoting regime change”. To paraphrase Fidel, if the US is allowed to take a finger, it will soon be after the hand, and then the arm.

Cuba is proud of its success in defying the US for half a century. Even as it seeks improved relations, it is not ready to yield much, if anything, to US pressures. There is little reason to doubt that the Cuban government genuinely wants a sustained thaw in relations with the US, principally to shore up a debilitated economy further jeopardized by a cut-off of support from crisis-ridden Venezuela. But Raul Castro and other Cuban officials have consistently declared their intention to keep Cuba’s political and economic systems intact. The excruciatingly slow process of vital economic reforms over the past eight years underscores the leadership’s resistance to change, to yielding any of its centralized control. At last month’s meeting of Latin American and Caribbean heads of state, Raul Castro demanded, as pre-conditions for normalized relationship, that the US lifts its embargo on Cuba and return Guantanamo Bay to Cuban sovereignty. This is a signal that Cuba’s leaders will not be rushed. They know that the US cannot meet these demands in any short period.

While secret negotiations over many months were needed to mark a path toward reconciliation, sustaining the process now requires transparency from both governments. There should be no surprises from either side. Official lines of communication should be opened at many levels. Both the American and Cuban people should be kept informed of key developments. Covert US operations, like the programs that funded Alan Gross’s internet-related activities and assisted dissident groups, should be replaced by fully public initiatives as the administration has wisely promised. Regime change is off limits.

For its part, the Cuban government should begin respecting international norms regarding human rights and rule of law. That means abandoning such common practices as mass arrests and jailing of opponents, harassment of dissidents whether by police or vigilante groups, cruel treatment of political prisoners, and other denials of basic rights. With Cuba now under an intensive media spotlight, such violations will gain immense attention worldwide. If they intensify, the political recoil in the US might well halt the emerging rapprochement.

It is also critical that the US appreciate the limits of its influence on Cuba’s political evolution. Enduring changes will come only from the actions of the government and people of Cuba. The US should not hesitate to urge Cubans to respect human rights and democratic principles, but it should keep its word to forego heavy handed demands, pressures, and deadlines. These could well backfire, increasing the Havana government’s resistance to change.

With most Latin American countries now committed to democratic politics at home, the region’s governments should be expected to help support political and economic reform in Cuba. Brazil, Mexico, and several other nations have particularly close ties to Cuba and could be instrumental in assisting the country’s transition. But it is only when the Cuban government makes clear that it values such assistance will the other Latin American nations be prepared to act. On this front they will surely not respond to US pressure.

The recipe for Cuban-American reconciliation is straightforward. More caution and patience from the US, along with a willingness to tolerate ambiguity, even inaction, for some time. More flexibility and risk-taking from a Cuba government that needs to accept less control and less certainty about its future. And Latin American nations prepared to show their solidarity by taking on responsibility for helping Cuba through a difficult period of potentially dramatic changes.

1829-309387-1

Peter Hakim

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