• 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."


Wed Dec 24, 2014

 By Marc Frank

HAVANA, Dec 24 (Reuters) – Cuba released more information on its fragile external finances this week than it has in over a decade, as it seeks foreign investment and credit following its sudden improvement in relations with the United States.

The government revealed a healthy current account surplus of $1 billion for 2014, supported by remittances and the re-export of oil that it receives on favorable terms from Venezuela, its closest ally. An estimate of foreign currency reserves, normally a state secret, has also surfaced. Western diplomats told Reuters they had seen a figure of $10 billion on what appeared to be an official economic report.

The revelations followed U.S. President Barack Obama’s announcement last week that Washington would restore diplomatic ties with Cuba and lift some economic sanctions in a dramatic about-face after more than five decades of confrontation.

Hungry for fresh credit but in no position to enter the bond market, Cuba has over the past four years restructured billions of dollars worth of debt with China, Japanese commercial creditors, Mexico and Russia, obtaining substantial reductions in what it owed in exchange for payment plans it can meet.

It has also significantly increased tax incentives for foreign investment, although companies say tax cuts are not enough and complain about a lack of information needed to make investment decisions.

Debt negotiations with the Paris Club of creditor nations may begin next year after 18 months of informal contacts, according to European diplomats, but they say Cuba will have to first open its books. It appeared to be making a start this week.


Diplomats said the reserves figure of $10 billion seemed feasible as Cuba has increased its reserves for fear of economic and political turmoil in Venezuela. It also plans to unify the dual monetary system and devalue the one-to-one exchange rate with the dollar.

Cuba last reported its “active” foreign debt, accumulated after it declared a default in the late 1980s, as $13.9 billion in 2011. It no longer reports its “passive” debt from before the default, which economists estimate at $8 billion.

Pavel Vidal, a former Cuban central bank official who now lives in Colombia but follows Cuba’s finances closely, said he estimates the foreign debt is “somewhere between $25 billion and $30 billion” and that a $10 billion reserves figure is plausible.

The current account showed a surplus of $1 billion this year but will drop to $5 million in 2015 as Cuba increases imports by 13 percent to stimulate growth, according to Economy Minister Marino Murillo, a significant admission for a country that usually waits three years to report such information. He revealed the information in a closed-doors session of the National Assembly last week and it was broadcast by state media on Monday.

Since President Raul Castro took over for older brother Fidel in 2008, Cuba has achieved significant trade and current account surpluses after years of deficits. Exports have risen more than 50 percent while imports have grown less than 8 percent as the government tries to regain international credibility by improving its finances and meeting debt payments.

Remittances totaled $1.7 billion this year and the re-export of Venezuelan oil brought in $765 million, Murillo said in offering a fairly detailed line item review of the current account for the first time in more than a decade.

He also said the payment of dividends to foreign joint venture partners would increase from $120 million this year to $447 million in 2015. Most surprisingly, Murillo, Castro’s point man charged with dismantling the old Soviet-style economy and building one similar to Asian communism, said Cuba obtained $5.7 billion in credit to cover the same amount in debt payments in 2015.

“To open the international financial gates Cuba will have to be much more transparent in releasing economic data, especially on its balance of payments,” said Richard Feinberg, the author of several studies on Cuba’s need to join the international financial community. “This new data release is a step in the right direction.” (Reporting by Marc Frank; Additional reporting by Daniel Bases in New York; Editing by Daniel Trotta and Kieran Murray)

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Leer en español (Read in Spanish) »

New York Times, THE EDITORIAL BOARD, DEC. 27, 2014

The words were scrawled in graffiti on a street near the house of the Cuban dissident Oswaldo Payá a few years before his suspicious death in 2012. “In a plaza under siege, dissidence is treasonous.”

Over the decades, Cuba’s authoritarian government has relied on that convenient argument to exert pervasive control over the lives of its citizens and keep opposition movements from gaining enough traction to threaten the state. The message was unmistakable: As long as the United States was intent on toppling the island’s leaders and meddling in the country’s affairs, Cubans, as a matter of national sovereignty, had to close ranks. The era that began this month when President Obama and President Raúl Castro of Cuba announced an end to more than 50 years of enmity between their governments is a watershed moment for Cuba’s diverse and courageous opposition movement.

Under Communist Party rule, Cubans endure the austerity of living under a stagnant, centrally planned economy. Their access to the Internet is severely limited and censored. The island’s official press is wholly subservient to the state. Outside the rigid mechanisms of the party, Cubans have few substantive vehicles to challenge their leaders.

In 1998, at the end of a decade of hunger and deprivation triggered by the collapse of Havana’s longtime patron, the Soviet Union, Mr. Payá undertook an audacious mission. Relying on a Cuban law that ostensibly allowed groups of 10,000 or more eligible voters to propose new laws, Mr. Payá gathered, by some estimates, more than 25,000 signatures from Cubans who endorsed sweeping democratic reforms, including free elections, freedom of assembly, freedom of the press and a less-regulated economy.

Osvaldo Paya

Oswaldo Payá

In 2002, Cuba’s National Assembly responded to Mr. Paya’s initiative, known as the Varela Project, by amending the Constitution to make the island’s socialist, one-party system “irrevocable.” The following year, Cuban authorities jailed scores of dissidents and independent journalists during a period of intense repression known as the Black Spring. The crackdown, which took aim at many leaders of Mr. Payá’s movement, largely escaped global attention.

In 2010, the Cuban government agreed to release many political prisoners in a deal brokered by the Catholic Church, on the condition that they move to Spain. Mr. Payá died in a car crash in 2012 in Cuba that many human rights activists suspect was staged by the authorities.

A few of the released prisoners, including José Daniel Ferrer, a fiery lieutenant in Mr. Payá’s movement, refused to leave the island. Mr. Ferrer now leads the Patriotic Union for Cuba, the most visible and outspoken opposition group on the island. In a recent interview in Havana, Mr. Ferrer said his eight years in prison gave him time to reflect on why Cuba’s democratic movements had failed in the past and how they might one day prevail. Historically, he said, Cuban activists have often been seen by their compatriots as hapless victims of an oppressive state. “These people inspire pity, not a desire to follow them,” said Mr. Ferrer, who is based in Santiago de Cuba, the island’s second-largest city. “We’re trying to avoid reaching people with speeches of losers.”

Mr. Ferrer says his goal is not the type of sudden, dramatic overthrow of the Castro government that many Cuban exiles have historically favored. Rather, he said, Cuba’s opposition movement must become sufficiently empowered to get a seat at the table.

“We need to become large enough to force the regime to negotiate,” Mr. Ferrer said, acknowledging that it will take time to get enough Cubans to believe that siding with the opposition is worth the risks. “No one wants to bet on the horse that’s losing the race.”


José Daniel Ferrer

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Caridad-del-Cobre-42 Caridad del Cobre, by Natasha Chaviano, Havana 1997

A great historic week in US-Cuban relations.

A fine Christmas gift to all. A win-win-win-win result for the Cuban people, the United States and its citizens, Obama, Raul Castro and almost everyone else.

Not the end of the beginning (as Churchill said after the Battle of Britain) but the beginning of the end of the embargo.

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Jacobin, December 22, 2014

 Original Article Here: The resumption of US – Cuban relations is a real victory. But Cuban workers face renewed economic liberalization with little political opening.



Independently of the considerations that led the governments of Cuba and the United States to reach this agreement, it is a major gain for the Cuban people.

First, because it acknowledges that the imperial power of the US was not able to coerce the imposition of its socio-economic and political system, handing a victory for the principle of national self-determination. It is up to Cubans and Cubans alone to decide the destiny of their country. Second, because in practical terms, it can improve the standard of living of Cubans and help to liberalize, although not necessarily democratize, the conditions of their political oppression and economic exploitation, making it easier to organize and act to defend their interests in an autonomous fashion against both the state and the new capitalists.

This has been the case of China, where thousands of protests occur every year to protect the standard of living and rights of the mass of the population in spite of the persistence of the one-party state.

Contrary to what many liberals thought right after the Cuban Revolution, the issue was never whether the end of the blockade would lead the Castro brothers to become more democratic. That possibility was never and is not in the cards, except for those who believe that the establishment of Cuban Communism was merely a reaction to American imperialism instead of what Che Guevara admitted was half the outcome of imperialist constraint and half the outcome of the Cuban leaders choice.

What is real is the likelihood that the end of the blockade will undermine the support for the Castro government thereby facilitating the resistance and political formulation of alternatives to its rule.

That Cuba will be free from the grasp of US imperialism even if the economic blockade comes to an end is not likely. The more “normal” imperialist power broadly experienced in the Global South will replace the more coercive and criminal one of the blockade era, especially if a successful alliance develops between American capital and the native state capitalists of the emerging Sino-Vietnamese model, as it happened in China and Vietnam. Even at the purely political level, there are many conflicts that are clearly foreseeable, like, for example, one that was left unmentioned in the Obama-Castro agreement involving the return of revolutionary exiles, such as Assata Shakur, to prison in the United States.

With the passing of the historic generation of revolutionary leaders within the next decade, a new political landscape will emerge where left-wing opposition political action may resurface and give strength to the nascent critical left in Cuba. Some may argue that since socialism of a democratic and revolutionary orientation is not likely to be on the immediate agenda, there is no point to put forward such a perspective. But it is this political vision advocating for the democratic self-management of Cuban society that can shape a compelling resistance to the economic liberalization that is likely to come to the island.

By invoking solidarity with the most vulnerable, and calling for class, racial and gender equality, a movement can build unity against both the old and the emerging oppression.



|Brookings, December 22, 2014 9:00am

Original Here: Diplomatic Shock and Awe: Obama Elates Cubans


Focusing on Next Steps

The U.S. bureaucracy is now under pressure to transform Obama’s promises into deeds. The upcoming April Summit of the Americas in Panama sets a deadline for issuing the new regulations liberalizing travel and commerce. In a speech before the National Assembly on December 20, Castro announced that he would personally attend the Summit, where he would “express our positions with respect for all of the other heads of state.” So the Panama conclave will bring Obama and Castro face-to-face. They will want to be able to report real progress in warming relations and in improving the economic prospects of ordinary Cubans.

Already there is speculation that the Panama Summit will witness a second round of initiatives, fed by Obama’s pledge to discuss with Congress a formal and full lifting of economic sanctions.

Both governments have raised hopes. But the Cuban government, accustomed to operating in deep secrecy, will have to learn how to manage popular expectations in a more relaxed international environment—where the United States can no longer be blamed for its own economic mistakes. And if promises are kept, Cuba will finally enter a post-Cold War era where informed citizens have ready access to the Internet and a world of information.



Brookings, December 22, 2014 9:51am

Original Article Here: On Cuba, Obama and Castro


It’s hard to overstate the sense of relief and joy that was felt in both Washington and Havana as Presidents Barack Obama and Raúl Castro simultaneously announced a breakthrough in their two countries’ long-running hostilities. There was, of course, much anger and hand-wringing as well and a host of questions about what happens next. But it’s worth taking a moment to understand how both sides got to this point and why it portends a major shift in U.S. foreign policy and potentially, in Cuban society.



The head-snapping confluence of events on December 17—the simultaneous presidential announcements and returning flights home of prized Americans and Cubans; the holiday season celebration of loss and redemption and hope in the Jewish, Catholic and Afro-Cuban traditions; and the powerful language employed by President Obama in particular—make this a watershed moment in U.S. foreign policy. It marks the beginning of the end of five decades of hostility between two proud neighbors with distinct systems of governance. It symbolizes the end of the Cold War just as tremors of a new cold war between Washington and Moscow are growing. It signifies a reset in U.S.-Latin American relations on the eve of an unprecedented summit meeting of all the region’s leaders. It recognizes the failure of comprehensive punitive sanctions against a general population in favor of targeted sanctions for specific transgressions, as recently adopted in the case of Venezuela. It underscores that democratic change cannot be imposed by external coercion but only by supporting indigenous citizen movements willing to take the difficult and brave steps to demand it themselves. It declares the end of the strangle-hold of a minority faction of Cuban-American hardliners on an important foreign policy issue that affects all Americans. And most importantly, it restores hope on both sides of the Florida straits that change will continue, as it must, to improve the livelihoods and rights of millions of citizens in both countries. It was the big enchilada.

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Washington Post: December 23 at 7:00 AM

By Scott Clement

Original Article here: Poll on Embargo

A large majority of Americans support establishing diplomatic ties with Cuba, and even larger — and growing — majorities support an end to trade and travel bans to the country, according to a new Washington Post-ABC News poll.

The national survey finds little erosion in public support after President Obama announced sweeping changes in U.S.-Cuba policy, despite his weak approval ratings nationally. Sixty-four percent support establishing ties with Cuba, similar to 66 percent in a 2009 Post-ABC poll asking whether the United States should do so.

Sixty-eight percent support ending the trade embargo with Cuba — up 11 points from 2009 — and 74 percent support ending travel restrictions to Cuba — a jump of 19 points from five years ago. The poll described each policy in general and did not mention Obama’s action, maintaining broad comparability to previous surveys.

Washington Post-ABC News poll Dec. 17-21, 2014 among 1,011 adults conducted on conventional and cellular phones.

Support for allowing trade and travel with Cuba has grown across the board, even among Republicans, who were most skeptical. In 2009, 36 percent of Republicans said the United States should end the trade embargo and 40 percent favored an end to travel restrictions. But support has grown more than 20 points among Republicans in the years since, with 57 percent now supporting trade with Cuba and 64 percent supporting travel between the countries.

But Republicans continue to split on establishing diplomatic relations with Cuba overall, with 49 percent supporting and 47 percent opposing the idea — a similar split to 2009. The intra-party disagreement was aired publicly this week by two potential GOP presidential candidates, as Sen. Marco Rubio (Fla.) forcefully rejected Obama’s move and Rand Paul (Ky.) voiced encouragement.

Leaders of the Republican-controlled Congress appear to be following Rubio’s lead and seeking ways to block Obama’s new policy, according to the Post’s Paul Kane and Ed O’Keefe. Key possibilities include cutting funding for new diplomatic operations and denying confirmation to an ambassador to Cuba. At minimum, Congress could ensure the ban on most imports and exports between countries remains in place.

The GOP aside, majorities in nearly every other major demographic group in the survey support establishing diplomatic ties with Cuba, along with scuttling travel and trade bans. Independents support renewed diplomatic ties by a 63-32 margin, with 67 percent supporting lifting the embargo and 72 percent backing travel between countries. More than three quarters of Democrats support all three proposals tested in the poll.

Hispanics are among the most supportive of re-starting diplomatic relations with Cuba; 75 percent support doing so, while 20 percent are opposed. The survey did not include a large enough sample of Hispanics or detailed questions to examine attitudes of Cuban Americans.

A separate survey of Americans with Cuban heritage conducted by Bendixen & Amandi International found the group closely divided on Obama’s decision. Forty-four percent agreed with “Obama’s announcement to begin normalizing relations with Cuba,” while 48 percent disagreed. The survey , sponsored by El Nuevo Herald, the Miami Herald and the Tampa Bay Times, found a clear generational split, with 64 percent of U.S.-born Cubans supporting Obama’s policy while 53 percent of Cuban immigrants opposed it.

The Post-ABC poll was conducted Dec. 17 to 21 among a random national sample of 1,011 adults reached on both conventional and cellular phones. Results from the full survey have a margin of sampling error of plus or minus 3.5 percentage points.

The Bendixen & Amadni poll of was conducted Dec. 17-18 among a random national sample of 400 Cuban-American adults reached on conventional and cellular phones. The sample was drawn by oversampling areas where the Census indicates Cubans make up a larger share of the population. Overall results have a margin of sampling error of 4.9 percentage points.


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Completer article is located here: From the Island #25, Investment in Cuba  

From the Island #25, Cuba Study Group  December 22, 2014

An analysis by Rafael Betancourt and Omar Everleny Perez (Centro de Estudios sobre la Economia Cubana, Universidad de ka Habana) of the portfolio of opportunities created by Cuba’s new Foreign Investment Law No. 118


The Portfolio of Foreign Investment Opportunities suggests that the Cuban government has adopted a proactive posture and is clear as to where it wants to direct and promote investments. It is much easier to stimulate the influx of foreign capital when there are precise ideas of what they are looking for. But the legal framework per se is not enough. It is necessary to organize / adjust (poner a punto) the entire environment for doing business in the country, which includes the banking system, customs and the tax system, as well as telecommunications, domestic trade and the real estate market. The potential for exporting TIC services, for providing consulting and other professional services, in association with various national investors including cooperatives, could attract a significant amount of FDI and provide well-paid jobs to an important number of professionals in the country.

The Portfolio underscores mainly large investments, to the detriment of small and medium ventures, when they—in fact—are not mutually exclusive. The international practice demonstrates that medium enterprises tend to be more active in FDI that large multinationals, which have other interests associated with global value chains. In subsequent editions there should be greater number of opportunities for infrastructure projects, especially design and construction of highways and bridges, currently very deteriorated, together with telecommunications, to employ global technologies of e-commerce and messaging, among others.

The Portfolio prioritizes production for export, which will have a large import component. The country will need to guarantee the necessary facilities and flexibility of related institutions and mechanisms related to both. The excessively centralized form of planning that prevails today will need to be adjusted to the new times. 

Nor does the Portfolio encompass all possible foreign investments with the State sector: negotiations continue for projects under consideration before the Portfolio was published, others that stem from bilateral and multilateral agreements signed between Cuba and other nations, and still others such as those associated with the rehabilitation of the Havana Harbor, which changes function and morphology with the transfer of many of its industrial and port activities to Mariel and other areas.

Finally, agility in the decision-making process is an essential component in order for foreign capital to arrive with the swiftness that the Cuban economy requires, even though it has been a very gradual process to date. But the undercapitalization and accumulated needs require a quicker pace than has been adhered to until now.

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Would the island nation’s sports regime retain autonomy or become a sports colony?

By:Morgan Campbell  Staff Reporter,

Toronto Star, Published on Thu Dec 18 2014

Original article here: Baseball

aThe Associated Press file photo;  In 1959, a rebel solider from Fidel Castro’s army holds the bat of Detroit catcher Charley Lau, who was playing ball in the Cuban winter league in Havana.

Thursday afternoon in Miami, Gilberto Suarez was convicted for his role a human trafficking operation that smuggled baseball sensation Yasiel Puig out of Cuba in 2012. Puig had agreed to pay Suarez 20 per cent of his future earnings, but the price went up when the Mexican drug cartel working with Suarez also demanded a cut.

Suarez now faces up to a decade in prison, while Puig is headed into the third season of a $42 million (U.S.) contract with the Los Angeles Dodgers.

And the underground economy that prompts drug gangs to spirit star athletes out of Cuba — where pro sports have been illegal since 1961 — will crumble if the ends a five-decade embargo of the island.

But beyond shutting human traffickers out of pro baseball, Wednesday’s announcement that the U.S. and Cuba would move to normalize relations signals a massive shift in Cuba’s role in the global sports-industrial complex.

Cuba’s sports system has spent the last half-century focused on Olympic success. But as a return to professional athletics becomes possible, it’s not clear if Cuba will profit from participating in free-market sports or become colonized by wealthy U.S. outfits seeking discount talent.

The issue is especially pressing for Major League Baseball, where 25 Cuban-born players made rosters in 2014. That Cuba trails only the Dominican Republic and Venezuela as a source of foreign players, highlighting the depth of talent there. Major League teams aren’t authorized to scout Cuba, and players have to leave the country before they’re eligible to sign contracts.

Baseball industry experts say Major League Baseball needs to reach a detailed agreement with Cuban baseball officials on how to scout and sign players. An unfettered free market would favour big-spending teams like the Yankees, while a draft for Cuban players would help small-market teams keep pace.

Neither system necessarily benefits Cuba’s sports infrastructure.

“It’s (similar to) colonialism, and this is precisely what the Cuban government will want to avoid,” says Adrian Burgos, professor of Latino Studies and sport history at the University of Illinois. “There’s a lot of state resources invested in developing those players . . . It’s easy to say ‘We’re Major League Baseball and this is how it’s going to happen,’ but Cuba has its own baseball tradition.”

MLB faced a similar situation in the late 1940s and early 1950s, when the toppling of the colour barrier opened up a previously untapped talent source. Big league teams signed African-American stars like Jackie Robinson and Larry Doby, but weren’t obligated to compensate the Negro League teams that developed them.

Integration enabled MLB’s current cultural diversity, but a decade-long drain of star power crippled Negro League teams financially, leading to their eventual collapse.

If Cuba wants to guarantee its 16-team domestic league remains viable, Toronto-based sports lawyer Arturo Marcano says it should emulate the Japanese league, which requires MLB teams pay a posting fee before negotiating with a player.

“The Japanese model would allow them to have some control over players, which is something really important for them,” says Marcano, who also writes a baseball column at ESPNDeportes. “The Cuban government will welcome the income they get from signing players, regardless of the system they adopt.”

aaaaFidel: Baseball Star

Baseball wouldn’t be the only sports business facing changes.

In 1976, Cuban superheavyweight boxing legend Teofilo Stevenson won his second Olympic gold medal and entertained intense speculation that he would defect from Cuba for a big money showdown with Muhammad Ali. But Stevenson wouldn’t leave Cuba for capitalism. “What is $1 million compared to the love of eight million Cubans?” he’s often quoted as saying.

But for the past two decades, top Cuban boxers have trickled out of the country to fight professionally, and right now four Cuban fighters hold pro world titles.

When Cuban Guillermo Rigondeaux dismantled Nonito Donaire in April 2013, he figured that the win over an established star would propel him into boxing’s economic elite, where eight-figure paydays are the norm.

But no high-profile fights have materialized, and many observers blame the free market. As a Cuban exile, he doesn’t have a built-in U.S. fan base, while his cerebral fighting style isn’t exciting enough to attract casual viewers.

Rigondeaux’ manager, Gary Hyde, fumes over the idea that Cuban boxers are bad for business, and sees a huge opportunity if the U.S. and Cuba can normalize relations. Staging a title bout in Cuba, he says, will disprove the notion that Cuban fighters can’t attract customers.

“They reason they haven’t a fan base is because there are 11 million people in Cuba and they can’t get out to see” Cuban fighters compete), says Hyde. “Put those fighters in a baseball stadium in Cuba and I guarantee that stadium would be full . . . But I obviously wouldn’t be charging $2,000 for ringside seats.”

Wednesday’s announcement from the White House spurred similar speculation among baseball observers, who floated the idea that MLB could eventually expand to Havana.

Big league teams have set up shop in the Caribbean before.

From 1954 to 1960, the Havana Sugar Kings served as the Cincinnati Reds’ top farm team, and in 2003 the Montreal Expos played 22 home games in Puerto Rico. “Latin America is a market (where) MLB wants to have fans,” Burgos says. “It’s so much closer than Japan.”

Carleton University economist Archibald Ritter says Havana’s Pan American Stadium could host big-league baseball, but cautions that a franchise also needs deep-pocketed ownership, corporate support and a fan base with time and money. That’s where Havana would struggle.

Ritter, a research professor who studies the Cuban economy, says the best ownership option would involve the government collaborating with a foreign corporation, but that Cuba would also need to solve its currency dilemma. Last year, the country moved to phase out the “convertible peso,” a currency equal in value to the U.S. dollar — about 20 times the value of the standard Cuban peso aimed at tourists and tourism-industry workers. Most Cubans are paid in standard pesos and many work off-the-books jobs to hustle convertible ones.

Ensuring Cubans have the purchasing power to attend commercial sports events would mean settling on a single, strong currency.  In 2010, Cuba’s per capita GDP was $10,200, according to the CIA World Factbook. That figure is about a quarter of Canada’s per-capita GDP but still strong enough to enable a team to sell low-cost tickets.

“The players would have to be paid something close to what they would get in the U.S., so it would have to be a convertible currency,” Ritter says. “If enough Cubans could pay a reasonable cost — not an American cost — to pay a game, then I think it could become possible . . . If a ticket were $15 or $20, Cubans would go. They could afford it.”

aaaaaTraining Ground for Baseball Legends

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The Economist, Dec 17th 2014

Original article here: AT LAST, A THAW


IT HAS long been one of the great anomalies of American foreign policy. The United States normalised relations with Communist China and even with Vietnam, with which it fought a bitter war costing more than 50,000 American lives. But ties with Cuba, which long ago ceased to pose any threat to America, remained frozen in the Cold War. Maintaining the economic embargo against the communist island first imposed in 1961 was about revanchism and Congressional politics, not foreign policy.

On December 17th Barack Obama announced sweeping changes which go a long way to bring policy towards Cuba into the 21st century. The two countries will start immediate talks on restoring diplomatic relations and re-opening embassies. The president will use his executive authority to loosen the ban on travel to the island; raise the limit on remittances to ordinary Cubans and their small businesses from $500 per quarter to $2,000; and allow exports of building materials, farm equipment and telecommunications gear. Americans will be able to use their credit and debit cards on the island. The administration is also preparing to remove Cuba from its list of states that sponsor terrorism.

These announcements followed 18 months of secret talks in Canada between American officials and the government of Raúl Castro, who replaced his elder brother Fidel as Cuba’s president in 2008. The talks were encouraged by Pope Francis. They culminated with a 45-minute phone call between Mr Obama and Mr Castro on December 16th.

The biggest stumbling block to any change in the embargo was the incarceration of Alan Gross, a worker for the United States Agency for International development, who was jailed in 2009 for handing out satellite-communications gear on the island. Mr Gross, who is in very poor health, was freed on December 17th (he is pictured below with his wife, Judy, after his release). Freed too, and sent to the United States, was a Cuban whom Mr Obama said was “one of our most important intelligence agents”, as well as 53 Cuban political prisoners from a list provided by the United States. In return, the United States has released three Cuban spies serving long sentences after being arrested in 2001 for snooping on exiles and American military bases in Florida.

In seeking to normalise diplomatic relations, the administration recognised what has long been clear to the outside world: the embargo has manifestly failed to topple the Castros. Under Raúl Castro change has slowly started to come to Cuba from within. Private farmers, small businesses and co-operatives now make up around a fifth of the island’s labour force.

The United States’ Cuba policy also put it at odds with the whole of Latin America, which now favours normal ties. Mr Obama said he would attend the Summit of the Americas in Panama in April, to which Mr Castro has also been invited. He said he would continue to press for human rights and democracy in Cuba.

As for Mr Castro, it is not hard to see why he is interested in closer ties with the United States. For the past dozen years, Cuba’s moribund economy has been propped up by subsidies from Venezuela, mainly in the form of cheap oil. The fall in the oil price has pushed Venezuela’s economy into a deep recession. The approval rating of its president, Nicolás Maduro, has plunged to 25%, casting uncertainty over the durability of Venezuelan aid. Mr Castro said the agreement to restore diplomatic relations “doesn’t mean that the main thing [ie, the embargo] has been resolved”.

Only the United States Congress can repeal the embargo. What Mr Obama has done is remove some of its teeth. The president can count on public opinion in this issue, which in recent years has swung against the embargo. In an apparent attempt to mollify the pro-embargo camp, the administration recently dropped its previous opposition to a bill, approved earlier this month, imposing targeted sanctions against Venezuelan officials involved in repressing opposition demonstrations earlier this year. But none of this will assuage the president’s conservative critics in Congress. Mr Gross considered himself a “hostage” rather than a prisoner, and Mr Obama’s opponents pounced on the swap as endangering American lives, as well as coddling a dictator.

Just how far détente between the United States and Cuba will go is not yet clear. “I don’t expect a transformation of Cuban society overnight,” said Mr Obama. But he is surely right in saying that after half a century of failure in trying to isolate Cuba, it is worth trying to promote change there through engagement.


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The Globe and Mail, Friday, Dec. 19 2014, 8:03 PM EST

Original article: EUPHORIA

This week is not one Gregory Biniowsky will ever forget. The Canadian lawyer has lived in Havana for 23 years, a place where hope has regularly ebbed and flowed on expectations the United States would restore relations with the Caribbean island.

Change was always just around the corner. But it never materialized. Until Wednesday.

It was an “enormous” surprise when President Barack Obama announced the United States would normalize relations with Cuba, Mr. Biniowsky said.

Outside his home in Old Havana, church bells rang out and people cheered as Cuban President Raul Castro made his own simultaneous live broadcast confirming that three of the famed Cuban Five prisoners were released and that the two countries will renew diplomatic relations after 53 years of hostility.

Friends celebrated, some wept. Mr. Biniowsky described the mood in Cuba as euphoric.

The significance of the dramatic announcement go beyond relations between the U.S. and its much smaller next-door neighbour. Smoothing ties with Cuba will improve U.S. ties with Latin America as a whole, a region that long urged the U.S. to end its trade embargo. And it will have ripple effects on Canada’s long-standing relationship with the island, opening up both business opportunities and more competition, along with big changes in a favoured Canadian holiday destination.

“Across the political spectrum, from stalwart supporters of the Cuban revolution to intelligent opponents of the system, everybody is very happy,” Mr. Biniowsky said in a phone interview. “It’s not difficult to pick up on the extreme significance of it.”

The prospect of a lifting of the U.S. embargo on Cuba, he added, is a “game changer.”

Most poignant of all for him was hearing that Canada played a role in the fence-mending by hosting most of the secret talks over the past 18 months.

“Our government, regardless of who’s in power, has maintained a really honourable, constructive, intelligent policy towards Cuba. And the Cubans know that,” said Mr. Biniowsky, an international consultant who has advised the Canadian embassy and the United Nations in areas such as business, investment and social-impact projects.

The news made him “proud to be a Canadian,” he says, for “staying true to the tradition of being an honest broker.”


U.S. and Cuban flags hang from a balcony in Old Havana yesterday. ‘Everybody is very happy,’ said Canadian expat Gregory Biniowsky.

While it will take congressional approval to end the trade embargo, Mr. Obama is pulling all the levers at his disposal to free aspects of trade and travel, including – in a key confidence-building move for foreign investors – plans to take Cuba off the U.S. list of state sponsors of terrorism.

International visitors, many of them Canadian, certainly love cheap vacations and the charm of a place where time seems to have stood still, a country free of malls and McDonald’s, where 1950s cars still cruise and Internet access is sparse and roads are still potholed.

But the reality is that Cuba’s economy is stuck. It’s hard to aspire to a better life in a country with little access to credit, convertible currencies and foreign investment. Foreign investors have shied away from the communist-run nation, not just because of its red tape, one-side legal dispute system and state-heavy approach but also for fear of U.S. reprisals. This has made it difficult to, for example, expand ports and roads or improve obsolete industrial plants or telecommunications services.

“It creates a condition of a country that can’t grow, because everything grows on credit and investment,” said Julia Sagebien, associate professor at Dalhousie University who was born in Cuba and has studied the island’s economy since 1994. She said she is “extraordinarily happy” over the changes. On her last trip in May, after four years of advising Cuba on economic reform and areas such as social enterprises and Canadian co-operative models, she was set to throw in the towel. The economy was “starting to freeze again,” she said, and only the lifting of the embargo could really get it going. Now “the patient in the coma has finally woken up,” she said. “The real rehabilitation comes now.”

Cuba is an attractive market. It’s the biggest island in the Caribbean with the largest population, at 11.2 million people. It has fertile land, a growing bio-pharma industry, thousands of new micro-enterprises and miles of beaches. And Cubans are justifiably proud of the country’s achievements with a well-educated population, long life expectancy and low crime rates. The huge income disparities visible through much of Latin America are absent in Cuba, though that has started to change with shifts in the economy, meagre public-sector wages and the growth of private businesses such as hair salons and cellphone repair shops.

Prof. Sagebien sees opportunities for Canadians – particularly in the next year before U.S. investors move in – in sectors such as infrastructure, agricultural inputs like fertilizer, equipment and parts, paper pulp, energy, mining, commercial banking and tourism. (Most U.S. citizens will still be prohibited from visiting Cuba, unless they have Cuban relatives or fit other categories including education and humanitarian workers.)

Canada and Cuba have long and colourful history. Relations date to the 1700s, when Atlantic schooners traded salt cod and potatoes for rum and sugar. Cuba was the first country in the Caribbean where Canada established a diplomatic mission and official relations began in 1945, according to the federal government’s website. Canada and Mexico were the only two countries in the hemisphere that never broke trade relations with the island. Former prime minister Pierre Trudeau struck a friendship with Fidel Castro and visited the nation in 1976. Cuba’s annual Terry Fox Run has become the world’s largest outside of Canada. The two countries retain close academic ties. And Cuba is among the top three destinations for Canadian tourists. Canada is, by far, Cuba’s largest source of tourists with more than a million visitors a year.

Mr. Biniowsky figures the U.S. will lift the travel ban ahead of the trade embargo, which could in turn double the number of tourists to the island to about six million people. That will juice the economy. And, he added, “who is going to be doing all the airport expansions, marinas, hotels and infrastructure? Well, Canadians, Europeans, Latin Americans, everyone else except for the United States. So we’ll have an interesting situation where the Cuban economy will begin to really heat up before the embargo is lifted because the travel ban will have been lifted.”

The Canadian tourism industry already sees a pick up in business in year ahead. Cuba Cruise, a new Canadian company that runs cruises that circle the island, and aim to give visitors a sense of the “Real Cuba,” said it expects increased bookings in the short term from international travellers. “eager to explore a country that is virtually free of American commercialization and chock full with charm before it might change.”

Once big U.S. cruise companies and tour operators jockey their way into the island, the picture is less clear, according to Dugald Wells, president and chief executive of Cuba Cruise. “What the competitive landscape is going to look like a year from now, that’s up to the politicians,” he said, adding that it’s with a bit of trepidation that we go forward.”

“There’s change in the air,” said Mr. Biniowsky. He cautioned that Cuba is not the easiest place to do business, but that it holds much promise. Canadians “need to get in now, position ourselves, create relations with the Cubans now, because the clock is really beginning to tick.”

He is optimistic about the future – even though it may mean growing throngs outside his house. “It will be a bit too touristy for me, and Cuba will lose a bit of its charm, because part of its charm is the lack of massive amounts of tourists. I don’t think Cubans are ready because of their infrastructure … so it’s going to be maybe a bit of a rough transition. But it’s good for the country, it’s hard currency for them.

“Let’s see how the Cubans manage – hopeful there won’t be a McDonald’s in old Havana, but we’ll see.”


Gregory Biniowsky

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 Source: Abajo con el bloqueo en contra de los emprendedores cubanos, tanto en La Habana como en Washington, 14 y medio, Diciembre 13, 2014

 Original article here: Abajo con el bloqueo

En docenas de entrevistas que hicimos a empresarios cubanos durante los últimos 15 años solíamos oír dos refranes: “El ojo del amo engorda el caballo” y “el que tenga tienda que la atienda, o si no, que la venda”. El primero indica que la calidad de un bien o un servicio mejora (o “engorda”) cuando la persona que lo presta goza de autonomía y obtiene una ganancia económica. El segundo exige que el Gobierno entregue al sector privado las actividades económicas (o “tiendas”) que no ha logrado operar con efectividad, muchas de las cuales ya se practican en la economía sumergida cubana.

En otras palabras, el embargo norteamericano, que ha sido criticado mucho últimamente, no es el “bloqueo” principal que está obstaculizando la revitalización de la economía cubana. Aunque el embargo ha sido condenado constantemente (y creemos correctamente) tanto por el Gobierno cubano como por los editores de The New York Times, en la Isla es mucho más común oír críticas al “auto-bloqueo” (embargo interno) impuesto por el mismo Gobierno cubano en contra del ingenio empresarial de su propio

Entre 1996 y 2006, Fidel Castro dio una gradual marcha atrás a las aperturas económicas que él mismo había implementado durante el llamado Período Especial a principios de los años noventa, demostrando que estaba más preocupado por los riesgos políticos que la iniciativa empresarial popular tendría para su control centralizado que en los beneficios económicos que estos traerían a Cuba. Por eso no estuvo dispuesto a transferir más que una porción simbólica de la “tienda” estatal a los emprendedores privados.

En cambio, durante la presidencia de Raúl Castro, aunque se declara que el objetivo de los cambios económicos sigue siendo “preservar y perfeccionar el socialismo,” él ha empezado a hacerle caso a la sabiduría popular de los refranes citados arriba reduciendo el tamaño de la “tienda” estatal al transferir la producción de últiples bienes y servicios a las cooperativas y pequeñas empresas privadas. De hecho, el número de los trabajadores por cuenta propia ha aumentado de menos de 150.000 en 2010 a casi medio millón hoy.

No obstante, hace falta hacer mucho más para que los empresarios cubanos puedan contribuir plenamente al crecimiento económico. Por ejemplo, el 70% de los nuevos trabajadores por cuenta propia vienen de las filas de los “desempleados”, una cifra que indica que simplemente legalizaron sus empresas informales ya existentes, por lo que no están creando empleos que absorban a los 1,8 millones trabajadores del sector estatal despedidos por el Gobierno.

Solamente un 7% de los trabajadores por cuenta propia son universitarios y la mayoría trabajan en actividades de bajo nivel porque casi todos los empleos por cuenta propia profesionales están prohibidos. Esta prohibición resulta ser un “bloqueo” bastante eficaz que obstaculiza el uso productivo de la fuerza de trabajo cubano altamente calificada.

Para “acabar con el bloqueo” contra los empresarios cubanos y así facilitar el surgimiento de un sector privado de empresas cooperativas y de pequeña y mediana escala hay que emprender reformas más profundas y audaces. Entre estas, una apertura de las profesiones a la empresa privada; la implementación de mercados mayoristas y crédito asequibles; acabar con el fuertemente custodiado monopolio de estado sobre las importaciones, las exportaciones y la inversión; permitiendo el establecimiento de empresas de venta al detalle; y relajar la presión fiscal sobre la pequeña empresa, que actualmente discrimina a las empresas nacionales a favor de las extranjeras.

¿Tiene Raúl Castro la voluntad política para profundizar sus reformas?

La prohibición de las actividades que el Gobierno prefiere monopolizar le permite ejercer un control sobre las ciudadanos cubanos e imponer un orden aparente sobre la sociedad. Sin embargo, esto se alcanza al precio de empujar toda la actividad económica prohibida (y toda ganancia impositiva) nuevamente al mercado negro donde se desarrollaba antes del 2010.

Por el otro lado, la legalización y regulación de las muchas actividades creadas y puestas a prueba en el mercado por el creativo sector empresarial cubano crearía más puestos de trabajo, una mayor calidad y variedad de bienes y servicios a precios más bajos, al tiempo que aumenta los ingresos fiscales. Pero estos beneficios vendrían a costa de permitir una mayor autonomía económica, la concentración de riqueza y propiedad en manos privadas y abrir la competencia contra los monopolios de estado por mucho tiempo protegidos.

La viabilidad de estas reformas depende también de cambios en la política norteamericana hacia Cuba y de la política cubana hacia su diáspora, la cual ya juega un papel importante en la economía cubana como proveedores de capital inicial a través de los miles de millones de dólares que mandan cada año en remesas. Otro fenómeno cada vez más importante es el amplio coro de voces en Estados Unidos, incluyendo a muchos prominentes miembros de la comunidad cubana-americana, que reclaman una nueva política norteamericana hacia Cuba.

Al reclamar reformas económicas más profundas dentro de Cuba, también creemos que unos cambios calibrados en la política norteamericana podrían estimular la apertura del mercado al permitir más apoyo material y técnico a los nuevos empresarios cubanos. Este acercamiento responsable al cada vez más robusto sector de las pequeñas empresas independientes de Cuba, puede y de hecho debe ser permitido, para estimular la expansión de las reformas económicas de Cuba y por tanto potenciar la autonomía económica del pueblo cubano.

Si el Gobierno cubano insiste en mantener un embargo a su propio pueblo, no debemos nosotros ayudarlo con nuestro propio embargo externo. Por el contrario, deberíamos hacer lo opuesto trabajando directamente con los florecientes empresarios de Cuba.

*Ted A. Henken es Jefe del Departamento de Sociología y Antropología de Baruch College, City University of New York. Archibald R.M. Ritter es Profesor de Investigación Distinguido Emérito de Economía y Asuntos Internacionales de Carleton University, Ottawa, Canadá. Su nuevo libro, Entrepreneurial Cuba: The Changing Policy Landscape, se publica en enero de 2015. 

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