• 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."


Marc Frank in Havana and John Paul Rathbone in London

Financial Times, December 18, 2014 6:14 pm

Original Article Here: EUPHORIA GRIPS CUBA

In 1980, Mariel was the site of a massive refugee exodus to the US. Today, however, it is better known for the $800m free trade zone and container port that opened there last year – just as Washington was midway through secret talks with Havana. These culminated with this week’s US announcement that it would ease trade sanctions against the island.

“It’s going to change things around here a lot,” said Pedro Cordero, a machine operator, as he mused about Mariel’s future and the prospect of better US trade relations. “Soon we are going to have everyone here: Brazilians, Chinese, Panamanian . . . and Americans.”

Like Mr Cordero, Cubans reacted with hope and occasional euphoria to Wednesday’s announcement by President Barack Obama that the US was in talks to re-establish diplomatic relations with Cuba and improve commercial ties after a five-decade freeze.

 “It’s great, great, great. Everyone is thrilled, happy, excited,” exclaimed Anaida Gonzales, a nurse, in the provincial capital of Camaguey, after learning the news.

Mr Obama’s move, which follows 18 months of back-channel talks, does not end the US embargo, which requires an act of Congress. Nonetheless, Havana’s decision to sink scant resources into Mariel’s modern container terminal – and to build new marinas and golf courses elsewhere – suggests Raul Castro, president, decided long ago to make an all-out effort to normalise commercial relations.

The need for the boost this would bring has grown as Mr Castro’s limited economic reforms – which include liberalising small businesses and allowing some co-operatives – have failed to kickstart Cuba’s stalled Soviet-style economy.

The economic crisis in Venezuela, Cuba’s largest benefactor, has compounded the problem. Caracas will potentially soon be unable to afford the millions of dollars worth of subsidised oil it sends to Havana each year.

The easing of US-Cuban commercial relations “sends a very strong signal to the international community about the future of the Cuban economy and also the profitability of investments, especially with the US market so near”, said Pavel Vidal, a former Cuban central bank official, who now teaches at Javeriana University in Cali, Colombia. “If investment does increase, growth could rise to five or six per cent a year.”

Mr Vidal said he expected the biggest short-term boost would come from Cuban-Americans. Under the new rules they can send $2,000 every three months to their relatives on the island – four times the current limit.

Cuba’s potential removal from the US list of national terrorist sponsors would also trigger the end of some of the financial sanctions that have deterred foreign investment and trade.

Diplomats believe Washington and Havana hope to see relations fully restored by the time Mr Obama leaves office in 2017, or by 2018, when Mr Castro has said he will step down. However, they are cautious about the prospect of the congressional approval needed to end the US embargo and about the speed of change in Cuba.

For one, the most complicated elements of Mr Castro’s reform programme are yet to be put in place — unifying Cuba’s myriad exchange rates and granting full autonomy to state enterprises. And, despite revamping its foreign investment law in July to lure business, Cuba has not announced a single new deal.

From past experience, Havana is likely to move slowly as it balances the need for economic reform against the political risks of liberalisation. “The agenda on the far side of the Florida Straits we now know in detail, but the internal one remains, as it so often does, hidden and secret,” wrote Cuban dissident blogger Yoani Sanchez from Havana.

Other Cubans voiced disquiet amid the euphoria, fearing that the rapprochement could prompt a wave of emigration by Cubans who want to take advantage of current rules that make gaining US citizenship relatively easy, amid concern that these might change.

“I’m worried about a new immigration crisis over the next few months as people rush to set foot in America,” Alexis Fernandez, a local tour guide, said.

Nonetheless, the general mood in Cuba is one of ebullience, with small-scale entrepreneurs rubbing their hands at the prospect of more US visitors and others hopeful that their daily hardships might end.

“Everyone is grinning, some people are crying,” said said Ileleny Santiesteban. “This is wonderful . . . that it will be easier for everyone in the future, here and over there. That, maybe, it is finally over.”

What happens next

Travel and commerce American internet and telecoms companies, as well as banks, will be able to start doing business with Cuba. US visitors will be able to bring back $100 worth of cigars, writes Geoff Dyer.

Official meetings Roberta Jacobson, US assistant secretary of state for the western hemisphere, will visit Havana in January. John Kerry, secretary of state, will likely follow soon after and the White House has not ruled out a presidential visit.

A new embassy The US already has a large Interests Section in Havana. It wants to upgrade this into a proper embassy.

US Congress Some leading Republicans in Congress, who are deeply critical of the opening to Cuba, have threatened to block funding for an embassy and to hold up nomination of an ambassador.

Sanctions President Obama went almost as far as he could within the law in reducing restrictions on dealing with Cuba, but ultimately a real relaxation of the embargo will require approval of a Congress that contains many sceptics.

mariel.jpg 2Old Mariel


The New Mariel Container Port

Posted in Blog | Tagged , | Leave a comment


Below are links to two articles by Julia Sagebien and Paulo Spadoni on the impacts of US-Cuba normalization on Canadian business relations with Cuba.



       Attachment Here: SagebienSpadoni TIBR

 New Picture (1)


Attachment here: SagebienSpadoni CanadaCuba Ivey

Posted in Blog | Tagged , , | Leave a comment


Original here: SPECIFIC MEASURES; http://www.whitehouse.gov/the-press-office/2014/12/17/fact-sheet-charting-new-course-cuba; 17 December 2014

cuba_page_header_02Obama on the Phone with Raul Castro, December 17, 2014

Key Components of the Updated Policy Approach:

Since taking office in 2009, President Obama has taken steps aimed at supporting the ability of the Cuban people to gain greater control over their own lives and determine their country’s future. Today, the President announced additional measures to end our outdated approach, and to promote more effectively change in Cuba that is consistent with U.S. support for the Cuban people and in line with U.S. national security interests. Major elements of the President’s new approach include:

Establishing diplomatic relations with Cuba-

  • The President has instructed the Secretary of State to immediately initiate discussions with Cuba on the re-establishment of diplomatic relations with Cuba, which were severed in January 1961.
  • In the coming months, we will re-establish an embassy in Havana and carry out high-level exchanges and visits between our two governments as part of the normalization process. As an initial step, the Assistant Secretary of State for Western Hemisphere Affairs will lead the U.S. Delegation to the next round of U.S.-Cuba Migration Talks in January 2015, in Havana.
  • U.S. engagement will be critical when appropriate and will include continued strong support for improved human rights conditions and democratic reforms in Cuba and other measures aimed at fostering improved conditions for the Cuban people.
  • The United States will work with Cuba on matters of mutual concern and that advance U.S. national interests, such as migration, counternarcotics, environmental protection, and trafficking in persons, among other issues.

Adjusting regulations to more effectively empower the Cuban people-

  • The changes announced today will soon be implemented via amendments to regulations of the Departments of the Treasury and Commerce. Our new policy changes will further enhance our goal of empowering the Cuban population.
  • Our travel and remittance policies are helping Cubans by providing alternative sources of information and opportunities for self-employment and private property ownership, and by strengthening independent civil society.
  • These measures will further increase people-to-people contact; further support civil society in Cuba; and further enhance the free flow of information to, from, and among the Cuban people. Persons must comply with all provisions of the revised regulations; violations of the terms and conditions are enforceable under U.S. law.

Facilitating an expansion of travel under general licenses for the 12 existing categories of travel to Cuba authorized by law-

  • General licenses will be made available for all authorized travelers in the following existing categories: (1) family visits; (2) official business of the U.S. government, foreign governments, and certain intergovernmental organizations; (3) journalistic activity; (4) professional research and professional meetings; (5) educational activities; (6) religious activities; (7) public performances, clinics, workshops, athletic and other competitions, and exhibitions; (8) support for the Cuban people; (9) humanitarian projects; (10) activities of private foundations or research or educational institutes; (11) exportation, importation, or transmission of information or information materials; and (12) certain export transactions that may be considered for authorization under existing regulations and guidelines.
  • Travelers in the 12 categories of travel to Cuba authorized by law will be able to make arrangements through any service provider that complies with the U.S. Treasury’s Office of Foreign Assets Control (OFAC) regulations governing travel services to Cuba, and general licenses will authorize provision of such services.
  • The policy changes make it easier for Americans to provide business training for private Cuban businesses and small farmers and provide other support for the growth of Cuba’s nascent private sector. Additional options for promoting the growth of entrepreneurship and the private sector in Cuba will be explored.

Facilitating remittances to Cuba by U.S. persons-

  • Remittance levels will be raised from $500 to $2,000 per quarter for general donative remittances to Cuban nationals (except to certain officials of the government or the Communist party); and donative remittances for humanitarian projects, support for the Cuban people, and support for the development of private businesses in Cuba will no longer require a specific license.
  • Remittance forwarders will no longer require a specific license.

Authorizing expanded commercial sales/exports from the United States of certain goods and services-

  • The expansion will seek to empower the nascent Cuban private sector. Items that will be authorized for export include certain building materials for private residential construction, goods for use by private sector Cuban entrepreneurs, and agricultural equipment for small farmers. This change will make it easier for Cuban citizens to have access to certain lower-priced goods to improve their living standards and gain greater economic independence from the state.

Authorizing American citizens to import additional goods from Cuba-

  • Licensed U.S. travelers to Cuba will be authorized to import $400 worth of goods from Cuba, of which no more than $100 can consist of tobacco products and alcohol combined.

Facilitating authorized transactions between the United States and Cuba-

  • U.S. institutions will be permitted to open correspondent accounts at Cuban financial institutions to facilitate the processing of authorized transactions.
  • The regulatory definition of the statutory term “cash in advance” will be revised to specify that it means “cash before transfer of title”; this will provide more efficient financing of authorized trade with Cuba.
  • U.S. credit and debit cards will be permitted for use by travelers to Cuba.
  • These measures will improve the speed, efficiency, and oversight of authorized payments between the United States and Cuba.

Initiating new efforts to increase Cubans’ access to communications and their ability to communicate freely-

  • Cuba has an internet penetration of about five percent—one of the lowest rates in the world. The cost of telecommunications in Cuba is exorbitantly high, while the services offered are extremely limited.
  • The commercial export of certain items that will contribute to the ability of the Cuban people to communicate with people in the United States and the rest of the world will be authorized. This will include the commercial sale of certain consumer communications devices, related software, applications, hardware, and services, and items for the establishment and update of communications-related systems.
  • Telecommunications providers will be allowed to establish the necessary mechanisms, including infrastructure, in Cuba to provide commercial telecommunications and internet services, which will improve telecommunications between the United States and Cuba.

Updating the application of Cuba sanctions in third countries-

  • U.S.-owned or -controlled entities in third countries will be generally licensed to provide services to, and engage in financial transactions with, Cuban individuals in third countries. In addition, general licenses will unblock the accounts at U.S. banks of Cuban nationals who have relocated outside of Cuba; permit U.S. persons to participate in third-country professional meetings and conferences related to Cuba; and, allow foreign vessels to enter the United States after engaging in certain humanitarian trade with Cuba, among other measures.

Pursuing discussions with the Cuban and Mexican governments to discuss our unresolved maritime boundary in the Gulf of Mexico-

  • Previous agreements between the United States and Cuba delimit the maritime space between the two countries within 200 nautical miles from shore. The United States, Cuba, and Mexico have extended continental shelf in an area within the Gulf of Mexico where the three countries have not yet delimited any boundaries.
  • The United States is prepared to invite the governments of Cuba and Mexico to discuss shared maritime boundaries in the Gulf of Mexico.

Initiating a review of Cuba’s designation as a State Sponsor of Terrorism-

  • The President has instructed the Secretary of State to immediately launch such a review, and provide a report to the President within six months regarding Cuba’s support for international terrorism. Cuba was placed on the list in 1982.

Addressing Cuba’s participation in the 2015 Summit of the Americas in Panama-

  • President Obama will participate in the Summit of the Americas in Panama. Human rights and democracy will be key Summit themes. Cuban civil society must be allowed to participate along with civil society from other countries participating in the Summit, consistent with the region’s commitments under the Inter-American Democratic Charter. The United States welcomes a constructive dialogue among Summit governments on the Summit’s principles.

Unwavering Commitment to Democracy, Human Rights, and Civil Society

A critical focus of our increased engagement will include continued strong support by the United States for improved human rights conditions and democratic reforms in Cuba. The promotion of democracy supports universal human rights by empowering civil society and a person’s right to speak freely, peacefully assemble, and associate, and by supporting the ability of people to freely determine their future. Our efforts are aimed at promoting the independence of the Cuban people so they do not need to rely on the Cuban state.

The U.S. Congress funds democracy programming in Cuba to provide humanitarian assistance, promote human rights and fundamental freedoms, and support the free flow of information in places where it is restricted and censored. The Administration will continue to implement U.S. programs aimed at promoting positive change in Cuba, and we will encourage reforms in our high level engagement with Cuban officials.

The United States encourages all nations and organizations engaged in diplomatic dialogue with the Cuban government to take every opportunity both publicly and privately to support increased respect for human rights and fundamental freedoms in Cuba.

Ultimately, it will be the Cuban people who drive economic and political reforms. That is why President Obama took steps to increase the flow of resources and information to ordinary Cuban citizens in 2009, 2011, and today. The Cuban people deserve the support of the United States and of an entire region that has committed to promote and defend democracy through the Inter-American Democratic Charter.

Posted in Blog | Tagged , , | Leave a comment

TEXTO COMPLETO DEL DISCURSO DE RAÚL CASTRO SOBRE EL ACERCAMIENTO CON ESTADOS UNIDOS: Alocución del Presidente cubano: Los Cinco ya están en Cuba, 17 diciembre 2014

Granma, 18 diciembre de 2014


Desde mi elección como Presidente de los Consejos de Estado y de Ministros, he reiterado en múltiples ocasiones, nuestra disposición a sostener con el gobierno de los Estados Unidos un diálogo respetuoso, basado en la igualdad soberana, para tratar los más diversos temas de forma recíproca, sin menoscabo a la independencia nacional y la autodeterminación de nuestro pueblo.

Esta es una posición que fue expresada al Gobierno de Estados Unidos, de forma pública y privada, por el compañero Fidel en diferentes momentos de nuestra larga lucha, con el planteamiento de discutir y resolver las diferencias mediante negociaciones, sin renunciar a uno solo de nuestros principios.

El heroico pueblo cubano ha demostrado, frente a grandes peligros, agresiones, adversidades y sacrificios, que es y será fiel a nuestros ideales de independencia y justicia social. Estrechamente unidos en estos 56 años de Revolución, hemos guardado profunda lealtad a los que cayeron defendiendo esos principios desde el inicio de nuestras guerras de independencia en 1868.

Ahora, llevamos adelante, pese a las dificultades, la actualización de nuestro modelo económico para construir un socialismo próspero e sostenible.

Resultado de un diálogo al más alto nivel, que incluyó una conversación telefónica que sostuve ayer con el Presidente Barack Obama, se ha podido avanzar en la solución de algunos temas de interés para ambas naciones.

Como prometió Fidel, en junio del 2001, cuando dijo: ¡Volverán!, arribaron hoy a nuestra Patria, Gerardo, Ramón y Antonio.

La enorme alegría de sus familiares y de todo nuestro pueblo, que se movilizó infatigablemente con ese objetivo, se extiende entre los cientos de comités y grupos de solidaridad; los gobiernos, parlamentos, organizaciones, instituciones y personalidades que durante estos 16 años reclamaron e hicieron denodados esfuerzos por su liberación. A todos ellos expresamos la más profunda gratitud y compromiso.

Esta decisión del Presidente Obama, merece el respeto y reconocimiento de nuestro pueblo.

Quiero agradecer y reconocer el apoyo del Vaticano, y especialmente, del Papa Francisco, al mejoramiento de las relaciones entre Cuba y Estados Unidos. Igualmente, al Gobierno de Canadá por las facilidades creadas para la realización del diálogo de alto nivel entre los dos países.

A su vez, decidimos excarcelar y enviar a Estados Unidos a un espía de origen cubano que estuvo al servicio de esa nación.

Por otra parte, basados en razones humanitarias, hoy también fue devuelto a su país el ciudadano norteamericano Alan Gross.

De manera unilateral, como es nuestra práctica y en estricto apego a nuestro ordenamiento legal, han recibido beneficios penales los reclusos correspondientes, incluida la excarcelación de personas sobre las que el Gobierno de los Estados Unidos había mostrado interés.

Igualmente, hemos acordado el restablecimiento de las relaciones diplomáticas.

Esto no quiere decir que lo principal se haya resuelto. El bloqueo económico, comercial y financiero que provoca enormes daños humanos y económicos a nuestro país debe cesar.

Aunque las medidas del bloqueo han sido convertidas en Ley, el Presidente de los Estados Unidos puede modificar su aplicación en uso de sus facultades ejecutivas.

Proponemos al Gobierno de los Estados Unidos adoptar medidas mutuas para mejorar el clima bilateral y avanzar hacia la normalización de los vínculos entre nuestros países, basados en los principios del Derecho Internacional y la Carta de las Naciones Unidas.

Cuba reitera su disposición a sostener cooperación en los organismos multilaterales, como la Organización de Naciones Unidas.

Al reconocer que tenemos profundas diferencias, fundamentalmente en materia de soberanía nacional, democracia, derechos humanos y política exterior, reafirmo nuestra voluntad de dialogar sobre todos esos temas.

Exhorto al Gobierno de los Estados Unidos a remover los obstáculos que impiden o restringen los vínculos entre nuestros pueblos, las familias y los ciudadanos de ambos países, en particular los relativos a los viajes, el correo postal directo y las telecomunicaciones.

Los progresos alcanzados en los intercambios sostenidos demuestran que es posible encontrar solución a muchos problemas. Como hemos repetido, debemos aprender el arte de convivir, de forma civilizada, con nuestras diferencias.

Sobre estos importantes temas volveremos a hablar más adelante.

Muchas gracias.

Posted in Blog | Tagged , , | Leave a comment


Globe editorial; The Globe and Mail; Dec. 17 2014,

Original Here:  Obama Opens The Door

President Barack Obama’s announcement that the United States will normalize diplomatic relations with Cuba is the beginning of the end of a standoff that has outlived its usefulness. Mr. Obama deserves praise for doing what he can within the limits of his executive powers to break the ice. But the onus on making this work doesn’t lie with the U.S. – it is the Castro regime that will either prove itself willing to join the 21st century or blow an opportunity to improve the lives of its people.

Cuba is a dictatorship. The media are state-controlled. Internet access is illegal without a permit. The government jails political prisoners in brutal conditions. As well, its economy is centrally planned, with only limited recent forays into private-sector employment. The average monthly wage is about $20 (U.S.) per month. Its state-run monopolies are as inefficient and corrupt as you’d expect.

And, yet, it has plenty of willing trading partners, including Canada (which played silent host to the talks that led to Wednesday’s announcement), Russia, India and the EU. But Cuba’s dictatorship has maintained its hold on absolute power by portraying itself as the brave resister of the U.S. trade embargo begun in 1961 during the Cold War. If it has imprisoned its own people in a political and economic time warp, it has done so in the name of fighting an “imperial” power. As if.

It’s a useful overstatement to claim that the embargo has held back the country’s economic growth and prevented it from becoming more democratic. That was the choice of the Castro regime. The fact that the country has taken steps toward liberalization since 2006, when the ailing Fidel Castro transferred power to his brother Raul, is proof that Cuba controls its future, and always did.

The embargo is still in place, for now. Mr. Obama can’t lift it unilaterally; it will take an act of Congress to do that, and the Republican majority will oppose it unless there are convincing signs from Cuba that it is moving toward democracy.

But the opening of an American embassy in Havana is a positive step, as is the lifting of travel and financial restrictions that will allow for limited U.S. investment. The more access Cuba has to the world, the harder it will be for the government to keep its people trapped in the past.


Posted in Blog | Tagged , | Leave a comment


The Associated Press; Published: December 17, 2014;

1WASHINGTON — The text of President Barack Obama’s remarks Wednesday on the release of American Alan Gross from a Cuban prison and on future diplomatic relations between the two countries. The text was provided by the White House:

Good afternoon. Today, the United States of America is changing its relationship with the people of Cuba.

In the most significant changes in our policy in more than 50 years, we will end an outdated approach that, for decades, has failed to advance our interests, and instead we will begin to normalize relations between our two countries. Through these changes, we intend to create more opportunities for the American and Cuban people, and begin a new chapter among the nations of the Americas.

There’s a complicated history between the United States and Cuba. I was born in 1961 — just over two years after Fidel Castro took power in Cuba, and just a few months after the Bay of Pigs invasion, which tried to overthrow his regime. Over the next several decades, the relationship between our countries played out against the backdrop of the Cold War, and America’s steadfast opposition to communism. We are separated by just over 90 miles. But year after year, an ideological and economic barrier hardened between our two countries.

Meanwhile, the Cuban exile community in the United States made enormous contributions to our country — in politics and business, culture and sports. Like immigrants before, Cubans helped remake America, even as they felt a painful yearning for the land and families they left behind. All of this bound America and Cuba in a unique relationship, at once family and foe.

Proudly, the United States has supported democracy and human rights in Cuba through these five decades. We have done so primarily through policies that aimed to isolate the island, preventing the most basic travel and commerce that Americans can enjoy anyplace else. And though this policy has been rooted in the best of intentions, no other nation joins us in imposing these sanctions, and it has had little effect beyond providing the Cuban government with a rationale for restrictions on its people. Today, Cuba is still governed by the Castros and the Communist Party that came to power half a century ago.

Neither the American nor Cuban people are well served by a rigid policy that is rooted in events that took place before most of us were born. Consider that for more than 35 years, we’ve had relations with China — a far larger country also governed by a Communist Party. Nearly two decades ago, we re-established relations with Vietnam, where we fought a war that claimed more Americans than any Cold War confrontation.

That’s why — when I came into office — I promised to re-examine our Cuba policy. As a start, we lifted restrictions for Cuban-Americans to travel and send remittances to their families in Cuba. These changes, once controversial, now seem obvious. Cuban-Americans have been reunited with their families, and are the best possible ambassadors for our values. And through these exchanges, a younger generation of Cuban-Americans has increasingly questioned an approach that does more to keep Cuba closed off from an interconnected world.

While I have been prepared to take additional steps for some time, a major obstacle stood in our way — the wrongful imprisonment, in Cuba, of a U.S. citizen and USAID subcontractor Alan Gross for five years. Over many months, my administration has held discussions with the Cuban government about Alan’s case, and other aspects of our relationship. His Holiness Pope Francis issued a personal appeal to me, and to Cuba’s President Raul Castro, urging us to resolve Alan’s case, and to address Cuba’s interest in the release of three Cuban agents who have been jailed in the United States for over 15 years.

Today, Alan returned home — reunited with his family at long last. Alan was released by the Cuban government on humanitarian grounds. Separately, in exchange for the three Cuban agents, Cuba today released one of the most important intelligence agents that the United States has ever had in Cuba, and who has been imprisoned for nearly two decades. This man, whose sacrifice has been known to only a few, provided America with the information that allowed us to arrest the network of Cuban agents that included the men transferred to Cuba today, as well as other spies in the United States. This man is now safely on our shores.

Having recovered these two men who sacrificed for our country, I’m now taking steps to place the interests of the people of both countries at the heart of our policy.

First, I’ve instructed Secretary (of State John) Kerry to immediately begin discussions with Cuba to re-establish diplomatic relations that have been severed since January of 1961. Going forward, the United States will re-establish an embassy in Havana, and high-ranking officials will visit Cuba.

Where we can advance shared interests, we will — on issues like health, migration, counterterrorism, drug trafficking and disaster response. Indeed, we’ve seen the benefits of cooperation between our countries before. It was a Cuban, Carlos Finlay, who discovered that mosquitoes carry yellow fever; his work helped Walter Reed fight it. Cuba has sent hundreds of health care workers to Africa to fight Ebola, and I believe American and Cuban health care workers should work side by side to stop the spread of this deadly disease.

Now, where we disagree, we will raise those differences directly — as we will continue to do on issues related to democracy and human rights in Cuba. But I believe that we can do more to support the Cuban people and promote our values through engagement. After all, these 50 years have shown that isolation has not worked. It’s time for a new approach.

Second, I’ve instructed Secretary Kerry to review Cuba’s designation as a state sponsor of terrorism. This review will be guided by the facts and the law. Terrorism has changed in the last several decades. At a time when we are focused on threats from al-Qaida to ISIL, a nation that meets our conditions and renounces the use of terrorism should not face this sanction.

Third, we are taking steps to increase travel, commerce, and the flow of information to and from Cuba. This is fundamentally about freedom and openness, and also expresses my belief in the power of people-to-people engagement. With the changes I’m announcing today, it will be easier for Americans to travel to Cuba, and Americans will be able to use American credit and debit cards on the island. Nobody represents America’s values better than the American people, and I believe this contact will ultimately do more to empower the Cuban people.

I also believe that more resources should be able to reach the Cuban people. So we’re significantly increasing the amount of money that can be sent to Cuba, and removing limits on remittances that support humanitarian projects, the Cuban people, and the emerging Cuban private sector.

I believe that American businesses should not be put at a disadvantage, and that increased commerce is good for Americans and for Cubans. So we will facilitate authorized transactions between the United States and Cuba. U.S. financial institutions will be allowed to open accounts at Cuban financial institutions. And it will be easier for U.S. exporters to sell goods in Cuba.

I believe in the free flow of information. Unfortunately, our sanctions on Cuba have denied Cubans access to technology that has empowered individuals around the globe. So I’ve authorized increased telecommunications connections between the United States and Cuba. Businesses will be able to sell goods that enable Cubans to communicate with the United States and other countries.

These are the steps that I can take as president to change this policy. The embargo that’s been imposed for decades is now codified in legislation. As these changes unfold, I look forward to engaging Congress in an honest and serious debate about lifting the embargo.

Yesterday, I spoke with Raul Castro to finalize Alan Gross’s release and the exchange of prisoners, and to describe how we will move forward. I made clear my strong belief that Cuban society is constrained by restrictions on its citizens. In addition to the return of Alan Gross and the release of our intelligence agent, we welcome Cuba’s decision to release a substantial number of prisoners whose cases were directly raised with the Cuban government by my team. We welcome Cuba’s decision to provide more access to the Internet for its citizens, and to continue increasing engagement with international institutions like the United Nations and the International Committee of the Red Cross that promote universal values.

But I’m under no illusion about the continued barriers to freedom that remain for ordinary Cubans. The United States believes that no Cubans should face harassment or arrest or beatings simply because they’re exercising a universal right to have their voices heard, and we will continue to support civil society there. While Cuba has made reforms to gradually open up its economy, we continue to believe that Cuban workers should be free to form unions, just as their citizens should be free to participate in the political process.

Moreover, given Cuba’s history, I expect it will continue to pursue foreign policies that will at times be sharply at odds with American interests. I do not expect the changes I am announcing today to bring about a transformation of Cuban society overnight. But I am convinced that through a policy of engagement, we can more effectively stand up for our values and help the Cuban people help themselves as they move into the 21st century.

To those who oppose the steps I’m announcing today, let me say that I respect your passion and share your commitment to liberty and democracy. The question is how we uphold that commitment. I do not believe we can keep doing the same thing for over five decades and expect a different result. Moreover, it does not serve America’s interests, or the Cuban people, to try to push Cuba toward collapse. Even if that worked — and it hasn’t for 50 years — we know from hard-earned experience that countries are more likely to enjoy lasting transformation if their people are not subjected to chaos. We are calling on Cuba to unleash the potential of 11 million Cubans by ending unnecessary restrictions on their political, social, and economic activities. In that spirit, we should not allow U.S. sanctions to add to the burden of Cuban citizens that we seek to help.

To the Cuban people, America extends a hand of friendship. Some of you have looked to us as a source of hope, and we will continue to shine a light of freedom. Others have seen us as a former colonizer intent on controlling your future. Jos� Mart� once said, “Liberty is the right of every man to be honest.” Today, I am being honest with you. We can never erase the history between us, but we believe that you should be empowered to live with dignity and self-determination. Cubans have a saying about daily life: “No es facil” — it’s not easy. Today, the United States wants to be a partner in making the lives of ordinary Cubans a little bit easier, more free, more prosperous.

To those who have supported these measures, I thank you for being partners in our efforts. In particular, I want to thank His Holiness Pope Francis, whose moral example shows us the importance of pursuing the world as it should be, rather than simply settling for the world as it is; the government of Canada, which hosted our discussions with the Cuban government; and a bipartisan group of congressmen who have worked tirelessly for Alan Gross’s release, and for a new approach to advancing our interests and values in Cuba.

Finally, our shift in policy toward Cuba comes at a moment of renewed leadership in the Americas. This April, we are prepared to have Cuba join the other nations of the hemisphere at the Summit of the Americas. But we will insist that civil society join us so that citizens, not just leaders, are shaping our future. And I call on all of my fellow leaders to give meaning to the commitment to democracy and human rights at the heart of the Inter-American Charter. Let us leave behind the legacy of both colonization and communism, the tyranny of drug cartels, dictators and sham elections. A future of greater peace, security and democratic development is possible if we work together — not to maintain power, not to secure vested interest, but instead to advance the dreams of our citizens.

My fellow Americans, the city of Miami is only 200 miles or so from Havana. Countless thousands of Cubans have come to Miami — on planes and makeshift rafts; some with little but the shirt on their back and hope in their hearts. Today, Miami is often referred to as the capital of Latin America. But it is also a profoundly American city — a place that reminds us that ideals matter more than the color of our skin, or the circumstances of our birth; a demonstration of what the Cuban people can achieve, and the openness of the United States to our family to the South. Todos somos Americanos.

Change is hard — in our own lives, and in the lives of nations. And change is even harder when we carry the heavy weight of history on our shoulders. But today we are making these changes because it is the right thing to do. Today, America chooses to cut loose the shackles of the past so as to reach for a better future — for the Cuban people, for the American people, for our entire hemisphere, and for the world.

Thank you. God bless you and God bless the United States of America.

alan-gross-cuba121714045-756x540Alan Gross returns Home, December 17, 2014

2Billboard re the “Cuban Five”

Posted in Blog | Tagged | Leave a comment


By JULIE PACE and MATTHEW LEE; Dec. 17, 2014 1:36 PM EST

460x WASHINGTON (AP) — President Barack Obama announced the re-establishment of diplomatic relations with Cuba on Wednesday and declared an end to America’s “outdated approach” to the communist island in a historic shift aimed at ending a half-century of Cold War enmity.

“These 50 years have shown that isolation has not worked,” Obama said in remarks from the White House. “It’s time for a new approach.”

As Obama spoke to Americans, Cuban President Raul Castro addressed his own nation from Havana, saying that while the two countries still have profound differences in areas such as human rights and foreign policy, they must learn to live together “in a civilized manner.”

Wednesday’s announcements followed more than a year of secret talks between the U.S. and Cuba, including clandestine meetings in Canada and the Vatican and personal involvement from Pope Francis. The re-establishment of diplomatic ties was accompanied by Cuba’s release of American Alan Gross, who had been imprisoned for five years, and the swap of a Cuban who had spied for the U.S. for three Cubans jailed in Florida. Gross spoke with Obama from the plane carrying him back to the U.S.

Obama’s plans are sweeping: He aims to expand economic ties with Cuba, open an embassy in Havana, send high-ranking U.S. officials to visit and review Cuba’s designation as a state sponsor of terrorism. The U.S. also is easing restrictions on travel to Cuba, including for family visits, official U.S. government business and educational activities. But tourist travel remains banned.

Obama’s action marked an abrupt use of U.S. executive authority. However, he cannot unilaterally end the longstanding U.S. economic embargo on Cuba, which was passed by Congress and would require action from lawmakers to overturn.

In a statement, the Vatican said Pope Francis “wishes to express his warm congratulations” for the efforts taken by Cuba and the U.S. “with the aim of overcoming, in the interest of the citizens of both countries, the difficulties which have marked their recent history.”

U.N. Secretary-General Ban Ki-moon called the news “very positive” and thanked the U.S. and Cuban presidents “for taking this very important step.”

Obama said Gross’ imprisonment had been a major obstacle in normalizing relations. Gross arrived at an American military base just outside Washington Wednesday morning, accompanied by his wife and a handful of U.S. lawmakers. He went immediately into a meeting with Secretary of State John Kerry, who said he looked forward to becoming the first U.S. secretary of state in 60 years to visit Cuba.

Licensed American travelers to Cuba will now be able to return to the U.S. with $400 in Cuban goods, including tobacco and alcohol products worth less than $100 combined. This means the long-standing ban on importing Cuban cigars is over, although there are still limits.

The U.S. is also increasing the amount of money Americans can send to Cubans from $500 to $2,000 every three months. Early in his presidency, Obama allowed unlimited family visits by Cuban-Americans and removed a $1,200 annual cap on remittances. Kerry is also launching a review of Cuba’s designation as a state sponsor of terror.

Obama said he continued to have serious concerns about Cuba’s human rights record but did not believe the current American policy toward the island was advancing efforts to change the government’s behavior.

“I do not believe we can keep doing the same thing for over five decades and expect a different result,” he said.

Some on Capitol Hill disagreed with his move. Sen. Marco Rubio, R-Fla., said the new U.S. policy would do nothing to address the issues of Cuba’s political system and human rights record. “But it potentially goes a long way in providing the economic lift that the Castro regime needs to become permanent fixtures in Cuba for generations to come,” Rubio said.

Senate Majority Leader Harry Reid, D-Nev., said that while he remains concerned about human rights and political freedom inside Cuba, “I support moving forward toward a new path with Cuba.”

U.S. officials said Cuba was taking some steps as part of the agreement to address its human rights issues, including freeing 53 political prisoners.

Cuba also released a non-American U.S. intelligence ‘asset’ along with Gross. Officials said the spy had been held for nearly 20 years and was responsible for some of the most important counterintelligence prosecutions that the United States has pursed in recent decades. That includes convicted Cuban spies Ana Belen Montes, Walter Kendall Myers and Gwendolyn Myers and a group known as the Cuban Five.

The three Cubans released in exchange for the spy are part of the Cuban Five — a group of men who were part of the “Wasp Network” sent by Cuba’s then-President Fidel Castro to spy in South Florida. The men, who are hailed as heroes in Cuba, were convicted in 2001 in Miami on charges including conspiracy and failure to register as foreign agents in the U.S.

Two of the five were previously released after finishing their sentences. Gross was detained in December 2009 while working to set up Internet access as a subcontractor for the U.S. Agency for International Development, which does work promoting democracy in the communist country. It was his fifth trip to Cuba to work with Jewish communities on setting up Internet access that bypassed local censorship.

Bonnie Rubinstein, Gross’ sister, heard the news from a cousin, who saw it on television. “We’re like screaming and jumping up and down,” she said in a brief telephone interview from her home in Texas.

Cuba considers USAID’s programs illegal attempts by the U.S. to undermine its government, and Gross was tried and sentenced to 15 years in prison.

Gross’ family has said he was in ailing health. His wife, Judy, said in a statement earlier this month that he had lost more than 100 pounds, could barely walk due to chronic pain and had lost much of the sight in his right eye. He walked without assistance after he arrived back in the United States.

Posted in Blog | Tagged | Leave a comment


By Mimi Whitefield, Miami Herald


Read more here: New Economy

Just a couple years ago, tourists who wanted to sample one of Cuba’s paladares were on their own. A bus from state tour operator Havantur wouldn’t think of stopping to allow visitors to dine on roast pork or grilled red snapper at one of these small private restaurants.

No more. Now, government tourism companies are doing business with them, booking reservations for tour groups at both paladares and casa particulares — private bed-and-breakfasts. “A few of our casas have been block-booked by Havanatur and Transtur,” said Matthew Sellar, who runs Scotland-based CubaCasa, an online booking site for private accommodations.

Call such co-existence the inevitable advance of market forces as the hemisphere’s only communist nation reforms its creaking state-owned, centrally planned economy. But entering the fifth year of a process that ultimately led to the economic reforms, the changes are still very much a work in progress with daunting challenges ahead.



The reforms are not nearly as fast or as profound as many — inside and outside the country — would hope. Cuban leader Raúl Castro has often said the process will continue “sin prisa pero sin pausa” (without haste but without pause).

Since the economic guidelines — or lineamientos — were approved, Cuba has allowed limited self-employment and worker-owned cooperatives, revamped its foreign investment law and agriculture system, allowed the private sale of homes and cars, changed rules so Cubans can more freely travel abroad and begun to phase out the ration book.

“The biggest change is that the government and the party have now accepted the idea of a larger private sector,” said Phil Peters, president of the Cuban Research Center and a regular traveler to Cuba. “You see it in every town in Cuba — and it’s being discussed around every family table in Cuba. It’s a huge ideological shift, and it’s not something you would have seen under Fidel Castro.”

But when Spanish Foreign Minister Jose Manuel Garcia-Margallo visited Cuba in November, he urged the government to pick up the pace. “Spain would like to see a more rapid pace to the economic reforms that give more space for private initiative and foreign investment,” he said.

The changes extend beyond the purely economic.

In 2013, Cuba removed the bureaucratic barriers that made it so hard for Cubans to take foreign trips and also allowed its people to stay abroad for up to two years without losing citizenship rights. That meant Cubans seeking an economic solution no longer had to leave their homeland definitively to take part in the global economy or seek new opportunities.

The reforms also have laid bare Cuba’s racial divide. But unlike in the past, the government has now sanctioned discussion about the economic inequities between blacks and whites.

“The population generally speaking wants change. There is a thirst for change,” said Arch Ritter, an economist and Cuba scholar at Carleton University in Ottawa. “The economic changes are real.” But the government “could prevent the reforms from going much further if they threaten the political control of the [Communist] Party,” he added.

Already some targets have slipped. The government initially said it wanted to move 500,000 Cubans off state payrolls into self-employment by 2011. Then the target was revised to 1.8million workers by 2015. Early this year, state payrolls had been reduced by 596,500 workers through layoffs and by converting workplaces to co-ops. Some 476,000 self-employed workers were registered at the end of September.

But analysts say significantly speeding up dismissals from state enterprises is risky for the Cuban government because it could cause social problems.

So far, the government has made reforms only around the edges. Castro talks of perfecting or updating the current socialist system instead of doing away with it. But it’s also clear Havana wants a smaller government, a more vibrant economy and citizens who don’t look at emigration as the only solution to economic problems.

Though the government has blown hot and cold on foreign investment, officials now say foreign investors are essential to spurring the type of growth Cuba needs to develop. This fall, it released a wish list of 246 projects for which foreign money is welcome.

And the 800-pound gorilla — unifying Cuba’s dual monetary system and fixing its haphazard pricing system — has yet to be dealt with, although the government says it is preparing conditions for elimination of the two-tiered system.

What all the reforms will add up to is something of a mystery. “The Cuban government hasn’t set out clearly what the desired end state should be. They haven’t laid out a clear development model,” said Richard Feinberg, a professor of international political economy at University of California, San Diego and a senior fellow at the Brookings Institution.

Castro — who officially became Cuba’s leader in 2008, two years after he took the reins from his ailing brother — has made it clear he won’t be rushed. He “likes to experiment before moving forward and measure the results and the repercussions,” said Domingo Amuchastegui, a former Cuban intelligence analyst who now lives in South Florida.

“That’s reasonable, but Raúl just doesn’t have the time,” said Carmelo Mesa-Lago, a Cuba expert and economics professor emeritus at the University of Pittsburgh.


The reforms were fueled not so much because Cuban leaders truly embraced them but because they had little choice as the world shifted, support from traditional allies came into question, and the economic status quo became unsustainable.

Cuba has previously flirted with economic reforms and pulled back when its economy has improved. But Amuchastegui said “reversing the process is now out of the question, and everyone knows that.”

So far, the results have been mixed and economic growth has remained sluggish.

The Cuban economy is expected to grow by only 1.3 percent this year, according to government estimates. The 2014 target was 2.2 percent. The merchandise trade deficit in 2013 topped $9billion — the second-highest ever.

At a recent Cabinet meeting, Economy Minister Marino Murillo Jorge said 2015 growth was expected to come in at just over 4 percent. The U.N. Economic Commission for Latin America and the Caribbean estimates 2015 growth at 3 percent. Mesa-Lago finds both estimates optimistic.

The problem in gauging the reforms’ success or failure, said Peters, is that the process isn’t complete. “There has been substantial progress in many areas, but they’re not done,” he said.

Although self-employment is proceeding more slowly than the government envisioned, it now seems to have moved beyond simply legalizing the shadowy realm of Cuba’s informal economy and black marketeers.

Among the most popular fledgling businesses are those linked to the tourist trade. Both casas and paladares have been legal since the 1990s, when the collapse of the Soviet Union plunged Cuba into an economic crisis. Then the regime seemed to view them grudgingly as competition rather than business partners.

“Now, they’ve begun to integrate them into the broader economy,” said William LeoGrande, an American University professor who specializes in Latin America.

Also spurring the establishment of new paladares is a change in rules that allows them to hire staff rather than just family members. Up to 50 seats are also permitted, compared to 12 previously. Mood lighting, contemporary art, terrace or poolside dining, nouveau cuisine and Cuban fusion dishes are among the features of the most upscale ones.

Sellar recently visited Havana to add more casas particulares to his online booking site. The 20 new ones he liked will bring the total on the site to 120. During the high season in December and January, most have no vacancies, he said. Casa owners also have been busy upgrading with new Chinese bathroom fixtures, air conditioning — even rooftop hot tubs — and adding services. The Artedel Luxury Penthouse in Havana, for example, offers a private driver, a translator and assistant, massage and laundry and will organize salsa and Spanish classes for guests.

In September, the government announced plans to gradually shift Cuba’s 8,984 state-owned restaurants into private hands — although it will still own the land they sit on. And more than three years ago, the government began turning over state-owned beauty salons and barber shops to employees who run them as cooperatives. Murillo said the creation of 498 cooperatives has been approved, and 329 of them are in operation. Another 300 proposals are under evaluation, he said.

“The key now is these non-agriculture cooperatives. If the Cubans do this right, it will create a means to move a large number of small and medium-sized state businesses to the private sector,” Peters said.

But many of the self-employed are hustling to merely get by. During a recent trip to Cuba, LeoGrande found one street-corner cuentapropista whose business was refilling disposable plastic lighters. He’d drill a hole, fill it up with lighter fluid and then cover the hole. Almost all the private ventures he saw — from bicycle repair shops to pizza stalls were tiny. “I got the sense they are open to taking advantage of any opportunity they see,” he said.

When Amuchastegui traveled to Artemisa, a small city west of Havana, in November, he found lots of home building and renovation taking place as well as many small private businesses from cellphone and computer repair shops to carpenters’ workshops. “It’s become business and making money, business and making money,” he said. At the Banco de Crédito y Comercio, said Amuchastegui, lines snaked down the block as people waited to apply for credits, mostly for home improvements.


But if self-employment is the most visible of the reforms and among the most popular, agricultural reform may be the least successful.

“For me, agriculture is the key to a successful economic reform, and so far they don’t have the results,” said Mesa-Lago.

In an effort to boost its agricultural output, Cuba announced a new plan for land tenure in 2009 and then further reformed the process in 2012 to allow larger plots and permit small farmers to build homes and barns on the land. Although the state retains ownership of the land, farmers are allowed to cultivate it under 10-year contracts with the state.

“It is not doing the trick,” Mesa-Lago said. Among the problems, he said, is the farmer must be tied to inefficient state farms or cooperatives to get seeds and farm equipment and must market through them. Investments in the land also are restricted by the state.

Other reforms established wholesale markets for farm supplies and eliminated the requirement that 70 percent of the harvest be sold to the state at set prices. But the latter reform applies to only three provinces — Havana, Mayabeque and Artemisa.

“Essentially, they need to provide more incentives for farmers,” Feinberg said.

It’s possible agricultural production will edge up slightly this year, but it will be below 2005 levels and well below the peak year of 1989, said Mesa-Lago. “Cuba is still importing 70 to 90 percent of the food it needs at a cost of around $2 billion annually,” he added. Next year, the government estimates food imports will increase to $2.194 billion.

Since Cuba began allowing its people and permanent residents to freely buy and sell real estate in November 2011, se vende signs have begun to pop up on homes and apartments. Last year, real estate agents, who had long operated illegally, were added to the list of approved self-employment jobs.

Internet sites like Revolico.com and cubisima.com also have sprung up. The cubisima site recently listed a four-bedroom, three-bath colonial home on Miramar’s Fifth Avenue that had been partially renovated for $280,000.

“This is a game changer,” said Antonio R. Zamora, a Miami lawyer who specializes in foreign investment. For the first time since the early days of the revolution, Cubans have been able to unlock the value of their homes and begin building capital, he said. “It’s a big change in the net worth of the Cuban people — and it doesn’t really involve the government” other than making payment through a state bank, recording a sale and paying tax on it, Zamora said.

Despite all the activity, Mesa-Lago said, there are still only pockets of a market economy in Cuba. The changes to date, he said, add up to only a “fraction of the total economy.” He’d like to see the reforms accelerate and deepen — and he believes Castro, who is 83 years old and plans to retire in February 2018, may have the best chance of pushing them through.

That’s because it’s unclear whether Miguel Díaz-Canel, first vice president of Cuba’s Council of State and Castro’s heir apparent, or whoever succeeds Raúl Castro will have the same political clout as he does to carry out reforms that may be unpopular with Communist Party conservatives, Mesa-Lago said. “They are afraid of delegating economic power, and they fear what happened in Eastern Europe,” he said. “They want to avoid the classic example of the snowball that gets bigger and bigger and can’t be stopped.”


New Cooperative BusCooperative Bus, coming up Aguilar St. at Reina

Cuba Mar 2014 060Food Vender in the Street

Cuba Mar 2014 080Private Barber Shop on Agramonte

Cuba Mar 2014 105“Casas Particulares” on Neptuno

Cuba Mar 2014 114Advertising Private Enterprises

Cuba Mar 2014 118Tourists at the Plaza Vieja

Cuba Mar 2014 084Not the New Economy: Old Sugar Mill Locomotive on Display near the Capitolio

Posted in Blog | Tagged , , , | Leave a comment


December 14, 2014 – Miami Herald – MIMI WHITEFIELD

Original here: UNFINISHED WORK

Unifying Cuba’s cumbersome dual-currency system tops the list of reforms the government says it will carry out, but analysts say other changes — from measures to speed up foreign investment to a new tax structure — are critical to deepen and expand the reforms.

Cubans use one type of money, the Cuban peso, for everyday purchases and most salaries. But tourists generally use another currency, the convertible peso, which is also needed to purchase coveted consumer items.

To add to the confusion, there’s also one exchange rate for state enterprises and another for Cuba’s fledgling private businesses. The official exchange rate is 25 Cuban pesos (CUPs) for one Cuban convertible peso (CUC), but for state enterprises the CUP is on par with the CUC. One CUC equals $1 U.S.

The government first said it planned to eliminate the unwieldy two-tiered system in 2013 and work toward a single currency, the Cuban peso, but currency unification remains the most important piece of unfinished business as Cuba seeks to overhaul its ailing economy.

“This is probably the most difficult reform of all. It’s extremely complex but it’s also a key reform, especially at a time when Cuba is trying to attract foreign investment,” said Carmelo Mesa-Lago, an economist who has written extensively on Cuba.

Not only is the CUC over-valued but it creates distortions across the Cuban economy. The 1-1 exchange rate, for example, makes it difficult to determine the true productivity of state enterprises. Most wholesale and retail prices in Cuba are out of whack and the over-valued CUC tends to make Cuban exports less competitive.

“It holds them back and deforms everyone’s economic behavior,” said Arch Ritter, an economist and professor at Carleton University in Ottawa.

The dual-currency system also has created severe wage disparities in Cuba. Those who work for foreign companies and receive tips paid in CUCs are far better off than those who work for the state and receive their salaries in CUPs.

Cuban Economy Minister Marino Murillo said last month that eliminating the dual-currency system is the most important task now before the government and that certain transitional steps are underway.

There had been speculation that currency unification would come as a big bang, but now it appears the government is taking the gradual approach.

Stores that once only accepted CUCs have begun to accept both currencies, and prices are now being posted in both currencies at selected stores. The practice is gradually being rolled out across the island.

The government also has been running small-scale experiments with different exchange rates — 10 CUPs for 1 CUC, for example — in some state industries, said Mesa-Lago.

Analysts said a realistic and unified exchange rate will make the Cuban economy more competitive, but the process isn’t without risks, and there may be winners and losers during the transition.

“They need to be very careful; there could be unrest,” said Richard Feinberg, a professor of international political economy at the University of California, San Diego and a senior fellow at the Brookings Institution.

But government officials have tried to calm the population by saying the currency unification will be done in way that won’t be detrimental to those who have maintained their savings in Cuban banks in either CUCs or pesos.

“I don’t know how they will do this,” Mesa-Lago said. “There is also the possibility that it will generate inflation. But if they do it right, in the long-run it will be beneficial.”

Feinberg and a group of scholars and economists from the United States, Cuba and other Latin American countries met over the course of a year to examine how to shape Cuban economic policy in a way that encourages sustainable growth.

“We wanted to look at a country transitioning from a central economy to a somewhat more market-oriented economy” and study it from the point of view of economies that have already gone through the process, Feinberg said.

“We’re not saying you can take lessons learned and copy them like a stencil but there is no point in repeating mistakes,” he said.

The collaboration resulted in a Brookings report, Cuba’s Economic Change in Comparative Perspective, that concludes now is the time for Cuba to accelerate its reforms and prioritize price reforms, expansion of the private sector, foreign investment and gradual engagement with international financial institutions.

Phil Peters, president of the Cuba Research Center in Alexandria, Va., agrees that the government needs to come up with a way to allow lawyers, engineers, architects, consultants and other professionals to engage in self-employment.

Some are getting around the prohibition. An architect, for example, may take out a license as a self-employed construction worker, Peters said.

“But if they don’t find a way to allow skilled professionals to work, they are leaving a lot of money on the table,” he said.

There are other missing pieces — both big and small — in Cuba’s economic reform process. If they’re implemented, Cuba analysts say they would make the island’s fledgling entrepreneurs more successful and could help revive economic growth.

When Cuba’s National Assembly convenes Friday, it’s expected to review the reforms to date, and discuss the 2015 budget and the island’s new foreign investment law.

Not so much a missing piece as a question mark is Cuba’s ability to attract foreign investment, which officials have said is essential to the island’s development plans.

This fall, Foreign Trade Minister Rodrigo Malmierca Diaz announced 246 projects adding up to an investment of $8.7 billion that are open to foreign investment. The government hopes to attract $2 billion to $2.5 billion annually from foreign investors.

Among the projects on the wish list are 86 in the oil industry, 56 tourism projects — including golf-condo projects and 21 new hotels, a plant to produce bottles and another to produce aluminum cans, shrimp and peanut farming projects and wind farm projects where 100 percent foreign ownership will be allowed.

Health, education, the media and the military remain closed to foreign investment.

The Cubans hope that their foreign investment list in combination with the new foreign investment law plus a special economic zone tied to expansion at the Port of Mariel will entice the investors who are needed to jump-start development.

Malmierca has said the Cuban economy must grow at the lofty level of 7 percent annually for the type of development the country needs and that foreign investment will play an important roll in that equation.

The foreign investment law exempts investors from paying a tax on profits for eight years and cuts the tax from 30 to 15 percent.

But foreign firms will not be free to hire and pay workers directly.

“A lot of potential foreign investors question whether there will be sufficient freedom, profitability and security for their investments,” Feinberg said.

Malmierca himself also pinpointed another issue that makes foreigners wary. “Many people complain about the time in which we do things, but everyone’s got their own pace. We’re going to do this our way and we want to do it well,” he said.

In the past, approvals for joint ventures have often come at a glacial pace and the process has been excessively bureaucratic.

The 180-square-mile Mariel Special Development Zone, about 30 miles west of Havana, is supposed to be a focal point for foreign investment and offers the possibility of 100 percent ownership for foreign ventures that set up there.

Cuban leader Raúl Castro and Brazilian President Dilma Rousseff jointly opened the first phase of the nearly $1 billion Port of Mariel renovation in January. It is largely financed by Brazil and Cuba purchased more than $800 million in goods and services from Brazilian suppliers during construction.

The container port, which is eventually supposed to take Havana’s place as Cuba’s main commercial port, is operating and a ship from South Florida, a Crowley vessel loaded with frozen chicken, was the first to call. A rail link to the port also has been completed.

But those who have toured the special development zone recently say it is far from finished and companies are yet to move in. Build-out for specific projects is expected to take place some time next year.

Tim Cole, the British ambassador to Cuba, was among the recent visitors. “What’s immediately striking as you drive in is the ambitious nature of the project. The area set aside for the zone is huge… with plans that include logistics facilities for offshore oil exploration and general cargo and bulk foods facilities,” he wrote in his blog.

“There are, apparently, more than 100 companies who have expressed an interest with the first projects likely to be approved by the end of the year,” Cole wrote. “Deadlines are tight as those companies coming to Mariel will need efficient services — for example, water, sewerage, electricity and high-speed Internet — to be able to operate.’’

As the work proceeds in Mariel, enforcement of the slew of new regulations and tax evasion by budding entrepreneurs remain problems for the government.

Granma, the Communist Party daily, recently reported that the government plans to tackle a number of enforcement issues in 2015. Among them: the under-reporting of income by self-employed workers and misrepresentation of how many workers they employ in their businesses.

Changes allowing Cubans to take full advantage of the new real estate market are also needed. Before Cubans could legally buy and sell homes, a permuta or swap was the way people moved from house to house — often with an under-the-table cash payment to sweeten the deal. Some of that sleight-of-hand has translated to the new market with off-the-books foreign owners putting up money for purchases, buyers and sellers declaring a lower-than-actual purchase price to lessen taxes and sales masquerading as donations.

To curb such practices and help calculate taxes, Granma reported that Cuba will begin using a market-based assessment tool that considers a number of factors, including the number of rooms, location and amenities, such as a garden or patio.

Granma also said the government planned to crack down on illegal economic activity in the coming year and concentrate on increasing the productivity and efficiency of state enterprises to stem losses. A new 2 percent tax on wholesale transactions also will be levied in 2015.

Other issues Cuba needs to address as it shapes economic policy are boosting agricultural production by giving small farmers more incentives, making more credits available so small entrepreneurs can expand their business, and improving wholesale markets, according to Cuba watchers.

Ritter said that even though he’d like to see a complete overhaul of Cuba’s labor laws and wage system, “I don’t think they’re going to do this.”

“The lineamientos were most ambitious,” he said. “If the Cubans could manage to do everything outlined in the lineamientos, it would be a huge reform.”

Posted in Blog | Tagged , , , | Leave a comment


Original Here: NY Times, Editorial: Cuban Economy

Leer en español


In July 2007, while serving as acting president as his brother underwent medical treatment, Raúl Castro delivered a startling indictment of the Cuban economy when he railed about the inefficiencies of the dairy industry. His description of the onerous and expensive mechanism to get milk from cows to dinner tables was old news to Cubans, who have been subjected for decades to a centrally planned economy that is among the world’s most dysfunctional and anomalous. It soon became clear that Mr. Castro’s unexpected candor that day signaled the start of a transformational era for the island’s economy.

After Fidel Castro ceded power to his brother in 2008, the government initiated reforms that have allowed Cubans to start building livelihoods that are not wholly subject to state control. The pace has been halting, with plenty of backtracking from the government’s old guard, which views further liberalization of the economy as an abdication of the socialist system Fidel Castro made sacrosanct.

The looming end of the Castro era — Raúl Castro, 83, has said he will step down in 2018 — is unfolding amid a vigorous debate on the future of the country’s economy.

To date, the Obama administration has watched the reforms with skepticism. The White House has eased restrictions on remittances and travel to the island, but it has done relatively little else to pare down the web of sanctions the United States has imposed on Cuba for decades.

President Obama could help expand the role of Cuba’s small but growing entrepreneurial class by relaxing sanctions through executive authority and working with the growing number of lawmakers who want to expand business with Cuba. The White House could start that process by removing Cuba from the State Department list of countries that sponsor terrorist organizations and making it easier for Americans to provide start up-capital for independent small businesses. Doing that would empower Cuban-Americans to play a more robust role in the island’s economic transformation. More significantly, it would gradually erode the Cuban government’s ability to blame Washington for the shortcomings of an economy that is failing its citizens largely as a result of its own policies.

Before Fidel Castro came to power in 1959, Cuba’s economy was heavily reliant on the United States, which bought the bulk of its main export, sugar. American tourists flocked to the island, lured by its proximity, tropical weather and raucous night life.

After the overthrow of Fulgencio Batista, an authoritarian leader who had protected American commercial interests on the island, Fidel Castro’s government asserted control over virtually every segment of the economy. It seized land and assets from American companies and vowed to guarantee all citizens housing, health care and education. Communism brought an ever more anemic and backward economy, one propped up largely by Moscow. But after the Soviet Union collapsed in 1991, so did Cuba’s economy.

Cubans euphemistically call the stark deprivation of the 1990s the “special period,” a time when the Cuban government was forced to allow in some foreign investment and authorize limited private-sector employment. In 1999, Havana found a new benefactor in the newly elected president of Venezuela, Hugo Chávez — which gave Cuban officials the ability to retighten state control of the economy. But in the last two years Venezuela, which provides heavily subsidized oil to Cuba in exchange for medical services, has struggled with a worsening economic and political crisis, which could force it to cut off subsidies to Havana.

The precariousness of that relationship has added urgency to the debate over how fast the Cuban government needs to implement the reforms Raúl Castro endorsed. Old-guard leaders warn that a liberalized market economy could turn Cuba into a less egalitarian society and provide an opening for the United States to destabilize the government through a flood of private investment. Reformists, including some of the country’s leading economists, say the current state of the economy is untenable.

The reality is that the island’s social welfare achievements cannot be sustained if current economic and demographic trends hold. Cuba is currently ranked in the top tier of the United Nations Human Development Index, a measure of a country’s education level, life expectancy and other variables. That’s an achievement matched by only two other countries in Latin America and the Caribbean, Argentina and Chile.

Wages in Cuba are worth roughly 28 percent of what they were before the collapse of the Soviet Union, according to the Center for the Study of the Cuban Economy at the state-run University of Havana. The devaluation has turned workplace theft into a major problem. It has also led tens of thousands of Cuban professionals to emigrate to the United States and elsewhere in Latin America in recent years in search of a better life. The country’s birthrate is declining, while its elderly are living longer.

The agricultural sector remains stymied by outdated technology and byzantine policies. A foreign investment law Cuba’s National Assembly approved in March has yet to deliver a single deal. Adding to the challenges, the Cuban government has pledged to do away soon with its dual-currency system (which includes a dollar-pegged peso established in the 1990s when tourism opened up), a process that could drive up inflation. Yet against the picture of stagnation is the growth of a new class of private-sector employees, now nearly 500,000 strong. That’s not a huge number in a nation of 11 million, but they are a marvel of ingenuity in a place where running a private restaurant requires buying virtually all ingredients on the black market. Basic staples, like potatoes, must be purchased as contraband in Cuba.

Many of those building small businesses, such as bed-and-breakfasts, are Cubans who returned with savings earned abroad and those with relatives outside the country who provided start-up capital. All struggle with the bureaucracy, since they are unable to import legally items as basic as mattresses and pillows. Bringing items from the United States is onerous and complicated by American sanctions. Cuban authorities appear conflicted about the growing private sector. While they welcome the employment and tax revenue it generates, bureaucrats are throttling businesses that are doing particularly well and forcing some to become joint ventures with the state. The underlying message seems to be: We want prosperity but not overly prosperous individuals.

Washington could empower the reformist camp by making it easier for Cuban entrepreneurs to get external financing and business training. That type of engagement is unlikely to succeed unless the United States abandons its policy of regime change. Cuba’s economic transformation may be proceeding slowly, but it could well lead to a more open society. For now, continued antagonism from Washington is only helping the old guard.


The Moa Bay Nickel Smelter

HAV_MeliaCohiba_Aerial_001Melia Cohiba Hotel and Hotel Riviera on the Right

g-lectores-de-tabaqueria-512Cigar Manufacture

Posted in Blog | Tagged , , | Leave a comment