• 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."

Yoani Sanchez and Reinaldo Escobar launch Independent Online Newspaper

Posted on May 22, 2014 by Arch Ritter

BBC, 21 May 2014

Original Article here: Independent Online Newspaper

The Online Newspaper is here:  http://www.14ymedio.com/

An online newspaper by Cuba’s best-known dissident blogger, Yoani Sanchez, has gone live.

Sanchez said the website would provide daily news about the communist-run country, but insisted it would not be a platform against the government.

The paper is produced in Cuba, but is only available online; it does not have a print version. Cuban media, including the country’s three national newspapers, are under strict state control. But President Raul Castro has eased restrictions on dissidents in recent years, allowing opponents of the government – including Sanchez – to travel abroad.

The paper, which is called 14ymedio, launched at 08:05 Cuban time (12:05 GMT). The title makes reference to the year of its publication, 2014, and the word medio, which is Spanish for media.

In her blog published in the online paper’s first edition, Sanchez says 14ymedio has been an obsession for her for more than four years. She says she wants the paper to “contribute information so that Cubans can decide with more maturity their own destinies”.

Its first edition also features a report from a Havana hospital, describing the work of nurses and other staff on night duty and the victims of violence they attend to. It also showcases a lengthy interview with jailed opposition writer Angel Santiesteban.

 But not all its contents is of a political nature. There is also advice on how to deal with dry or damaged hair and a sports feature on why Cuban football is getting less coverage and state backing than baseball.

‘No loaded words’

The editor-in-chief is Sanchez’s husband, fellow activist Reinaldo Escobar. Escobar told the Associated Press news agency that the paper would try to avoid any trouble with the authorities by remaining as an online-only publication. But he said that it would apply for accreditation for official events.

“We want to produce a newspaper that doesn’t aim to be anti-Castro, a newspaper that’s committed to the truth, to Cubans’ everyday reality,” he told AP. Escobar said the paper would avoid using loaded words such as “dictatorship” and “regime” and would refer to Mr Castro simply as “the head of state” or “President Gen Raul Castro”.

About 10 staff worked for weeks in Havana on the launch of the first issue. Critics say the website will reach very few Cubans inside the country, where there is limited internet access.

Sanchez achieved international recognition with her prize-winning blog Generation Y, in which she criticised the restrictions on freedom of speech and movement imposed on the island since the 1959 revolution

yoani-marido-cuba--644x362Yoani Sanchez and Reinaldo Escobar

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Yoani Sanchez: “14ymedio Is Born: Now I Can Dream Even Higher”

Posted on May 22, 2014 by Arch Ritter

Yoani Sanchez

Original article here: 14ymedio

The 14ymedio online newspaper is here:  http://www.14ymedio.com/

New Picture (7)I don’t remember the title of the movie, nor the director, nor even if I saw it at a movie theater or on TV. I just remember the scene, a brief moment in which the protagonist takes off his coat and gives it to his friend. He confesses to him that the garment, modern, leather, was his dream. “Go, so that you can have higher dreams,” he snaps while handing over the object of his desires.

When a project that has been desired for too long is realized, we get the feeling that we must set ourselves new goals. 14ymedio.com has been my obsession for more than four years. First, I felt it needed to be born so that its information could contribute to Cubans deciding their own destiny with greater maturity. Later came the question of how to achieve it, and, from there, the drafting of a timeline as necessary as it was difficult to meet.

There was also a long period when my friends snickered as I talked about it. “The crazy newspaper woman,” more than one person called me. The most difficult part, however, was — and remains — giving this fantasy a real life. The stumbles have been innumerable. From the taxes for a power that sees in information a gesture of treason, to confronting the skepticism of some friends. But obsessions are like that, they tend not to let themselves be defeated too easily.

Today, I have achieved a dream. Unlike the character in that movie, it’s not a piece of clothing but a space for journalism in which many colleagues accompany me. Born with a desire to reach many readers within and outside of Cuba, offering a full spectrum of news, opinion columns and information about the reality of our Island. It will take a lot of work, there is no doubt. We will grow little by little, trying to ensure the quality of every published piece.

Now I can have higher dreams: In a year, perhaps we will be at the corner kiosk. Who knows?

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Fidel Castro Lived like a King in Cuba, Book Claims

Posted on May 21, 2014 by Arch Ritter

Cuban president Fidel Castro tries on a Kim Willsher, The Guardian, May 21, 2014

Original Article here:  http://www.theguardian.com/world/2014/may/21/fidel-castro-lived-like-king-cuba

Former bodyguard Juan Reinaldo Sánchez writes that leader ran country like a cross between medieval overlord and Louis XV

Fidel Castro lived like a king with his own private yacht, a luxury Caribbean island getaway complete with dolphins and a turtle farm, and travelled with two personal blood donors, a new book claims.

In La Vie Cachée de Fidel Castro (Fidel Castro’s Hidden Life), former bodyguard Juan Reinaldo Sánchez, a member of Castro’s elite inner circle, says the Cuban leader ran the country as his personal fiefdom like a cross between a medieval overlord and Louis XV.

Sánchez, who was part of Castro’s praetorian guard for 17 years, describes a charismatic and intelligent but manipulative, cold-blooded, egocentric Castro prone to foot-stamping temper tantrums. He claims the vast majority of Cubans were unaware their leader enjoyed a lifestyle beyond the dreams of many Cubans and at odds with the sacrifices he demanded of them.

“Contrary to what he has always said, Fidel has never renounced capitalist comforts or chosen to live in austerity. Au contraire, his mode de vie is that of a capitalist without any kind of limit,” he writes. “He has never considered that he is obliged by his speech to follow the austere lifestyle of a good revolutionary.”

Sánchez claims he suffered Castro’s ruthlessness first hand when he fell out of favour, was branded a traitor, “thrown in jail like a dog”, tortured and left in a cockroach infested cell, after asking to retire. Released from prison, Sánchez followed the well-worn route of Cuban exiles to America in 2008.

“Until the turn in the 1990s I’d never asked too many questions about the workings of the system … that’s the problem with military people … as a good soldier, I did my job and my best and that was enough to make me happy,” he writes.

The book, published on Wednesday, has been written with French journalist Axel Gyldén, a senior reporter at L’Express magazine. Gyldén admits Sánchez has a large axe to grind with Castro, but insists he has checked the Cuban’s story. “This is the first time someone from Castro’s intimate circle, someone who was part of the system and a first-hand witness to these events, has spoken. It changes the image we have of Fidel Castro and not just how his lifestyle contradicts his words, but of Castro’s psychology and motivations,” Gyldén told the Guardian.

This is not the first time it has been claimed that Castro enjoys great wealth. In 2006 Forbes magazine listed the Cuban leader in its top 10 richest “Kings, Queens and Dictators”, citing unnamed officials who claimed Castro had amassed a fortune by skimming profits from a network of state-owned companies. The Cuban leader vehemently denied the report.

Castro’s long reign ended in 2006 when he was stricken with what was believed to be diverticulitis, an intestinal ailment, and handed power to his younger brother Raúl, who had served as defence minister. He officially ceded power to Raúl in 2008. Fidel continued penning columns for the Communist party newspaper Granma but gradually vanished from public view, fuelling rumours he had died, only to surface for occasional, fleeting appearances. Raul has made cautious economic reforms but kept tight control.

Visitors such as Ignacio Ramonet, the French journalist who has interviewed Castro at length, have depicted an austere lifestyle of reading, exercise, simple meals and modest home comforts.

But Sánchez, now 65 and living in America, claims Castro enjoyed a private island – Cayo Piedra, south of the Bay of Pigs, scene of the failed CIA-sponsored invasion of 1961 – describing it as a “garden of Eden” where he entertained selected guests including the writer Gabríel Garcia Márquez, and enjoyed spear-fishing. The former bodyguard says Castro sailed to the island on his luxury yacht, the Aquarama II, fitted out with rare Angolan wood and powered by four motors sent by the Soviet president Leonid Brezhnev.

“Castro would sit in his large black leather director’s armchair … a glass of Chivas Regal on the rocks (his favourite drink) in his hand,” writes Sánchez.

Other presidential properties, he writes, included an “immense” estate in Havana complete with rooftop bowling alley, basketball court and fully equipped medical centre, and a luxury bungalow with private marina on the coast.

“Fidel Castro also let it be known and suggested that the revolution gave him no rest, no time for pleasure and that he ignored, indeed despised, the bourgeois concept of holidays. He lies,” he adds.

Ann Louise Bardach, a veteran Cuba chronicler who has interviewed Castro, said that as a lifelong hypochondriac he enjoyed the best food and medical care but did not have a lavish lifestyle. He was born into money and went into politics for power, she said. “He didn’t do it for the money. He’s not swinging from the chandeliers.” His current home, just outside Havana, had four bedrooms and would in the west be considered middle or upper-middle class, she said.

Focusing on any material advantage he may enjoy missed a larger point, said Bardach, author of Without Fidel: a death foretold in Miami, Havana and Washington. “He owns the island of Cuba. It’s his personal fiefdom.”

Sánchez says Castro’s dolce vita was a “crazy privilege” while Cubans suffered serious hardship in the 1990s as the economy “collapsed like a house of cards” after the disintegration of the Soviet Union and eastern bloc with which Havana had done almost 80% of its foreign business.

His compatriots, he says, were also unaware of their leader’s complicated love life, his womanising and subsequent tribe of at least nine children, not least because Cuban media was forbidden to mention them.

The Cuban leader kept a gun at his feet when travelling in his Mercedes and never went anywhere without at least 10 bodyguards, including two “blood donors”. At home he would get up late, and start work around midday “after a frugal breakast”.  “His favourite film that he saw I don’t know how many times was the interminable and soporific Soviet version of Tolstoy’s War and Peace … which lasted at least five hours.”

He recalls how Castro bugged everyone, including Hugo Chávez, and insisted his bodyguard jot down everything he did in a notebook “for history”. Sánchez says for nearly two decades he saw more of Castro than his own family. “He was a god. I drank all his words, believed all he said, followed him everywhere and would have died for him,” he writes.

He claims he finally realised that Castro considered Cuba “belonged” to him. “He was its master in the manner of a 19th century landowner. For him wealth was above all an instrument of power, of political survival, of personal protection.”

Recalling how Castro kept Angolan diamonds in a Cohiba cigar box, he writes: “Sometimes, Fidel had a little of the mentality of a pirate of the Caribbean.”  

La Vie Cachée de Fidel Castro is published by Michel Lafon on Wednesday.

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Havana Bars: The Next Wave of Private Innovation

Posted on May 20, 2014 by Arch Ritter

By Richard Feinberg

Cuba Standard, May 7, 2014

Original Here: Cuba Standard

 Among investors focused on Cuban markets, private bars and clubs are the new big thing. Within the last 18 months, enterprising Cuban investors have spiced up an already vibrating Havana night life by opening a variety of chic watering holes.

By all accounts, many investors are achieving their primary goal: rapid returns on risk capital.

And middle-class Cubans — not just tourists and expats — are enjoying the widening diversity of options for evening destinations.

 

Stiff competition, narrow market

For the emerging private sector — promoted by Raúl Castro since he took over from his ailing brother Fidel in 2008 — the previous big story was the paladares, privately run restaurants generally located within family homes. But so many enterprising Cubans seized the opportunity to earn gastronomic profits that the restaurant market quickly turned terribly competitive.

Many fine-dining paladares cater primarily to well-heeled tourists, charging prices that are moderate by international standards but far out of the reach of nearly all Cubans. Most Cubans working for the state receive the miserable wage of $20 per month — roughly the cost of a single paladar meal.

Facing this dual challenge of stiff competition in the restaurant space and the narrow tourism market, innovative Cuban entrepreneurs seized upon nocturnal entertainment as an exciting solution. Havana is not without bars, often featuring Buena Vista Social Club–style bands in Havana Vieja that appeal to middle-age tourists — but not to hip young Cubans or international travelers looking for the latest music video or mixed cocktail creations.

The newly launched bars/clubs feature flat-screen TVs with contemporary sounds. Dancing begins around 10 pm and whirls well into the early morning hours. Some of the bar-hopping crowd may be exiting the paladares, in search of the after-hours fun for which Havana is so famous — but with a contemporary beat.

Significantly, the new upscale bars are also attracting Cubans – by keeping their prices within the range of what could be labeled the Cuban middle or upper-middle classes.

Entrance or cover charges are minimal and local beers sell for the equivalent of $2, tapas for just $2 – $6, heavier fare for $6 -15. These prices still lock out most Cubans, but are within the range of perhaps five percent of the 2 million Habaneros. (Alas, the Cuban government does not publish statistics on income distribution.)

Even if a Cuban couple limits their consumption to two beers each and a few snacks, how can they afford an evening on the town? Where do they find the $20 — the equivalent of a full month’s state salary? The sources of this middle-class purchasing power: profits from their own thriving private businesses, wages and tips earned in the tourist trade, bonuses granted by joint ventures, or remittances sent by generous family and friends living abroad. Cubans who served overseas — as diplomats, military attachés, or medical personnel — can accumulate savings. And privileged offspring of senior government officials are known to enjoy free beverages and bites.

As recently noted by AP correspondent Peter Orsi, the elites of the remarkably large and talented Cuban creative class — painters, dancers, musicians, film makers — also earn a good living; the farándula — the inbreed creative classes — congregate at Café Madrigal, Privé, and Espacios.

In Havana these days, trendy bars are not the only visible indicators of Cuba’s prosperous upper-middle classes and their lucky, beautiful children. Expensive daycare centers and domestic housekeepers, 21st century cars with private license plates replacing the iconic but decrepit 1950s Chevrolets, and expensive cell phones with e-mail service — all signal the emergence of new money.

At the new nocturnal watering holes, successful Cubans mingle comfortably with foreigners: the resident expatriate community of diplomats and business executives as well as tourists — mostly Europeans and Canadians, but also increasingly Americans, permitted to travel legally to Cuba under people-to-people educational programs licensed by the Obama administration.

 

The places

Two of the hottest Havana bars, Sangri-La and Up-and-Down (their ownership overlaps), are so packed on weekends that their overcrowded dance floors challenge even the most fluid salsa dancers. Intimate but very lively, Up-and-Down exploits the increasing stratification of Cuban society by differentiating the entry fee for the upstairs VIP lounges: a minimum of $20 consumption per person, priced for foreigners and a thin slice of the best-heeled Cubans. The bartender at Up-and-Down is rightly famous for his designer tropical drinks laced with plentiful pours.

 A combination restaurant and terraza bar, El Cocinero is a dramatic conversion of an old cooking oil factory into a two-floor industrial entertainment space. The plush first floor dining décor is dominated by a large black-and-white minimalist painting, while the al fresco upstairs features comfortable butterfly lounge chairs and a neon-lite bar. Typically, the denim-clad waitresses are youthful and attractive, and frequently with university degrees in their back pockets.

 

Product placement

A theatrical production of a Cuban-authored drama currently running in Havana, Rascacielos (Skyscrapers), is co-sponsored by the embassies of Spain and The Netherlands — and by El Cocinero and StarBien, a plush paladar (co-owned and managed by the gracious son of the minister of the interior). The commercial sponsorships earned product placements — explicit mentions in the text of the play — one dramatic signal of the growing weight and self-confidence of the emerging private sector.

Other trendy Havana dispensaries of alcohol and nocturnal diversion include Fábrica de Arte (featuring avantgarde paintings), Capricho (tasty tapas, serene ambiance), Escencia Havana (pre-revolution nostalgia in an 1880 villa), O’Reilly 304 (in Old Havana, superb vegetarian soup with three varieties of chili peppers), Toke (a mostly gay clientele, next to the Cabaret Las Vegas), and two new dimly lit dance clubs catering to a younger crowd, Melén and Las Piedras.

 zEl Cocinero upstairs; Photos by Richard Feinberg

 In many of Havana’s new bars, the décor and the crowd are sophisticated and universal: Their Miami equivalents have similar vibes, albeit with more bling and, as one Cuban male observed, more silicon. Island-bound Cubans have less jewelry to flaunt, and may sense that the Communist government, while more permissive today than during the decades of Fidel Castro’s austere rule, would still look askance at ostentatious displays of new wealth.

 

Small investment, quick return

Chats with owners and managers of these after-hour establishments suggest initial capital investments of roughly $30,000 – $70,000 (small by international standards). No entrepreneur reported commercial bank backing, which is scarce in Cuba. Rather, funds come from savings of family and friends, and in some cases money transfers from abroad – as donations, loans, or informal equity arrangements. Working within an uncertain business climate, these newly minted Cuban entrepreneurs often seek to recoup their capital in 12-24 months, a potentially feasible goal due to low costs of labor, rent, and utilities, and often interest-free financing.

zzPaul Sosa at his bar

The award for the most economical opening goes to Mamainé (as in the popular Cuban song, Mamainé, Mamainé, todos los negros tomamos café), a comfortable coffee and cocktail bar constructed by environmentalist and artist Paul Sosa using recycled woods and iron work. Spending less than $5,000 to fashion the 36-seat establishment within his parents’ home, Paul attracts both tourists and locals with strong $1 espresso coffees and $2 made-to-order mojitos.

 State-owned beer garden

Not to be outdone by the dynamic private sector, Cuban state companies have recently opened two large bars. Sloppy Joe’s, a revival of a pre-revolutionary saloon with a legendary 59-foot mahogany bar, once again caters mostly to tourists. More original, the government gloriously transformed an old timber and tobacco warehouse on Havana Bay into a large beer garden. The affordable prices and spectacular brightly painted murals attract Cuban families as well as foreigners. On one Sunday afternoon, the author viewed more than one Cuban child watching his parents enjoy the Austrian-made tall tubes of chilled beer.

 zzzOld warehouse, new beer garden

Cuban capitalists not only must confront uneven competition from state-run firms, but also face regulatory uncertainty: bars are still not an officially sanctioned category of business, so their owners must register them as restaurants — making them vulnerable to government inspectors. Not surprisingly, in this high-risk business climate, investors seek a quick return on capital. But short of an abrupt shift in government policy, it is a safe bet that bold entrepreneurs will continue to provide Havana’s after-hours revelers with new and exciting entertainment options.

 

Richard E. Feinberg, professor of international economy at the University of California, San Diego, writes about and travels frequently to Cuba. Three of his recent publications on the Cuban economy, including Safe Landing for Cuba?, can be found at www.brookings.edu

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Not Free But Comfy: Cuban Art Between State and Market

Posted on May 14, 2014 by Arch Ritter

Yvon Grenier

 Original Article from Literal: Reflections, Art and Culture:  Pensamiento, Arte y Cultura here:  Not Free But Comfy: Cuban Art Between State and Market

aaMore Equal than Others

 Successful artists (painters, sculptors, and performers) are part of the wealthiest 1 percent of the population in Cuba. For two decades, they have been able to sell their works abroad, even to Americans (art is not covered by the US embargo). Cuban art is mostly for export and it is a lucrative business. Artists who play by the rules have been able to leave and return to their country, on their own, for two decades. Ordinary Cubans were only granted this basic universal right (see Art.13 of the Universal Declaration of Human Rights) last January, and “exiled” Cubans are still denied the right to return to the island.

 In art, as in other forms of expression, everything is permitted in revolutionary Cuba. Except when it is not. As Fidel Castro proclaimed in 1961, in a famous speech to intellectuals, “Within the revolution, everything; against the revolution, nothing.” The Constitution stipulates: “Artistic creation is free, as long as its content is not contrary to the Revolution. The forms of expression in the arts are free.” Form and content are hard to dissociate in the visual arts. So, who is to make the call on “form” and “content,” and who figures out what is acceptably “within” La Revolución and what is not? Answer: La Revolución herself, that is to say, en dernière instance, Fidel and his brother Raúl.

 Since 1959 the ambitious goal of the new regime in Cuba has been to create “a new man in a new society.” Official documents talk about La Revolución as “the most important cultural fact of our history.” By and large, in this “new society” the range of what can be expressed has been reduced, which has hurt creativity, but the array of cultural activities accessible to the population in general has expanded in many areas, namely in music, visual arts and performing arts. The Instituto Superior de Arte (ISA-1976), for instance, produced many very well trained artists, who went on to have successful national and international careers. It is the only graduate school solely for the arts in Latin America. Many, perhaps most of the ISA’s graduates now live in exile.

 The visual arts are mostly for the happy few and they are typically less ideationally explicit in their “content” than other artistic or cultural forms. Consequently, in Cuba as in many other non-democratic countries, the government can cut visual artists a little slack. Visual artists have more “space” for expression than, say, writers or popular singers, who in turn enjoy a bit more leeway than academics. Nobody is less free than a journalist in Cuba. In other words, Cubans are all equal, in being denied their “right to freedom of opinion and expression” (Art.19 of the Universal Declaration of Human Rights), but some are more equal than others.

 New Cuban Art

 Visual artists who have been working within institutional channels have tested the borders of the permissible more often than most other actors in the cultural field. The trend really started during the 1980s, when young painters such as Flavio Garciandia, Tomás Sánchez, José Manuel Fors, José Bedia, Gustavo Pérez, Ricardo Rodríguez, Leandro Soto, Israel León, Juan Francisco Elso, and Rubén Torres challenged the dominant revolutionary didacticism of the previous decade. They were not unlike the painters of the Generación de la ruptura in Mexico (Alberto Gironella, Vicente Rojo, José Luis Cuevas, Vlady, Pedro Coronel), who defied their own dominant ‘socialist realist’ tradition (Mexican muralism) during the 1950s.

 The exposition Volumen Uno in January of 1981 in Havana officially inaugurated the so-called “New Cuban Art.” For painter Flavio Garciandia: “When we did Volumen Uno we were very, very conscious of the fact that the ‘state of the arts’ in Cuba was just awful, precisely because of those ideas of programmatic contentism [contenidismo programático]. We knew that Volumen Uno was a political exhibition… very polemical, precisely because we were positioning the problems in another part, not in the ‘content’–we had a completely distinct focus and in that moment this was practically a political challenge. . . Given the circumstances of the context, it was an exhibition that was proposing… art as a totally autonomous activity, not as a weapon of the Revolution as the Constitution says.” This (relative) “autonomy” opened up new artistic possibilities. Arguably, it made it easier for artists to eschew controversial issues or events, such as the tragedy that took place only eight months earlier: the 1980 Mariel boatlift, in which 125,000 people left the country (among them many artists and intellectuals). No reference to this exodus (and the shameful actos de repudio that accompanied it) is made in Volumen Uno.

 The emergence of the New Cuban Art coincided with the twilight of the Cold War and the deepening of globalization in the field of art. The Soviet Union (and its annual four billion dollars-a-year subsidy to Cuba) came to an abrupt end and Cuba was forced to open up to market forces. Meanwhile, in the art world, the Post Cold War era saw the début of numerous new Biennials, far away from the traditional capitals of global art: i.e. Sharjah, UAE (1993), Shanghai (1996), Mercosur (Brazil, 1997), Dak’art (1998) and Busan (Korea 1998). The first Havana Biennial (1984) can be seen as an early manifestation of this trend, in addition to being the only one operated by a socialist country. In the new global market for art, the purported anti-imperialist and anti-consumerist mission of the Havana Biennial offered a refreshing choice for multicultural or postcolonial curators and critics, and a thrilling one for decadently rich consumers. For instance, in 1990 the German chocolate magnate and art collector Peter Ludwig acquired more than two thirds of the exhibition of contemporary Cuban art ‘Kuba OK,’ in addition to many other famous works of the artists of the 1990s generation.

aaaArt and the new Gatekeeper State

 The 1980s generation (especially during the second half of the decade) was arguably more audacious and politically driven than the subsequent ones. But most prominent members of this generation left the country at the end of the 1980s and early 1990s. The artists who stayed in the country found a comfort zone, negotiating the terms of their subordination with what political scientist Javier Corrales calls the new “gatekeeper” state: e.g. a state that “decide[s] who can benefit from market activities and by how much.” Thus, the cultural field offered a testing ground for the kind of “segmented marketization” and limited liberalization of subsequent years, when brother Raúl inherited the presidency.

 Artists quickly learned to deal with the international market, giving it what it wants: Cubanía products, with muted and aestheticized political overtones that make both the artist and the viewer feel astute, all of which transacted with the global language of art of the time (mainly conceptual art and arte povera). For all the talk about postmodern art in Cuba, the country is literally stuck in modernity, with primary concerns about national identity, sovereignty, material well-being, basic freedom and security. These modern concerns are omnipresent in New Cuban art, where they are at once localized and transcended by postmodern aesthetics. This confers New Cuban Art a trendy “glocal” cachet that simultaneously insinuates and defuses “content.”

 Cuban artists are masters of double entendre and detachment (parody, irony, sarcasm, and pastiche). They know what the taboos are: play with the chain but not with the monkey; don’t challenge La Revolución and its metonymic association with the Castro brothers. (About Fidel: according to Andrés Oppenheimer, in the early 1990s the guidelines were revised: “it was forbidden to show him standing next to anybody taller or to show him eating, and it was forbidden to divulge any information on his personal life.”) Yet, the global market likes its Cuban art with a dash of political irreverence. The regime can afford to appear open-minded since it is largely inconsequential on the island.

Even though artists are pretty shrewd when guessing the “parameters,” it is still perilous to “play with the chain.” Expositions have been censored and cancelled; artists are reprimanded and sometimes jailed. The performance artist Angel Delgado got six months in jail for publicly defecating on a copy of the daily Granma, during the exhibition “El objeto esculturado” (1989). According to Luis Camnitzer, the exhibition at the Castillo de La Real Fuerza in February of 1989 was closed “when it was found to include a portrait of Fidel Castro in drag with large breasts and leading a political rally, and Marcia Leiseca, the vice minister of culture, was relocated to the Casa de las Américas.” Artists have been castigated for speaking their mind on the public issues (most recently, for instance, the painter and sculptor Pedro Pablo Oliva lost his studio and his seat in the provincial assembly). Admittedly, it is not simple for outsiders (such as this author) to fully appreciate the day-to-day courage of individuals who strive to work and live under very difficult circumstances in the country of their choice: their own.

Continue reading:  Not Free But Comfy

Yvon_Grenier_PhotoYvon Grenier

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Centro de Estudios de la Economía Cubana; Presentations from Seminar on the Cuban Economy, 2013

Posted on May 7, 2014 by Arch Ritter

New Picture (16).bm AAaThe CENTRO DE ESTUDIOS DE LA ECONOMIA CUBANA  has recently redone its web site. It has also published the Power Point presentations from its 2013 Seminar.  Here is a list of the presentaions, hyper-linked on the author’s name.

 

PONENCIAS SEMINARIO 2013

Saira Pons Pérez, HACIA UNA NUEVA FISCALIDAD EN CUBA

Ricardo Torres Pérez, El desarrollo industrial cubano en un nuevo contexto

Juan Triana Cordoví, Cuba:un balance de la transformación.

Betsy Anaya Cruz , Cadenas productivas con impacto económico y social: el caso de los cítricos en Cuba

Aleida Gonzalez-Cueto, La Innovación y la administración de riesgos en las empresas cubanas en la actualidad

Orlando Gutiérrez Castillo, Reflexiones sobre los ambientes de innovación en las empresas cubanas

Anicia García y Betsy Anaya, Gastos básicos de una familia cubana urbana en 2011. Situación de las familias “estado dependientes”

Omar Everleny, Luisa Íñigues y Janet Rojas, Las escalas subnacionales de la macroeconomia cubana (pp.1-45)

Yailenis Mulet Concepción y Alejandro Louro, Las reformas económicas en los territories cubanos. Reflexiones para el diseño de políticas.

Jorge Ricardo Ramírez, Empresa cubana: Innovación, mejora continua de la calidad e  integración

Dayma Echevarría León, Innovación social: experiencias desde un proyecto interasociativo en Camagüey

Humberto Blanco Rosales, GESTIÓN DE LA INNOVACIÓN (GI) : ESTUDIOS DE CASOS Y PROPUESTAS DE MEJORAMIENTO

Ileana Díaz Fernández, Desafios de la innovacion empresarial en Cuba

 

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Canadian Parliament Member Warns Cuba Investors

Posted on May 1, 2014 by Arch Ritter

A businessman from his district has been jailed in Havana for 3 1/3 years without trial, says Peter Kent.

By Juan O. Tamayo, El Nuevo Herald,

A senior Canadian parliament member has taken a punch at Cuba’s new foreign investment law, saying that one of his constituents has been jailed on the island since 2011 without trial and has been offered leniency if he pays questionable debts.

“The international financial community should ponder long and hard the investment blandishments of Cuban ministers, diplomats and trade officials,” said Peter Kent, chairman of the House of Commons Defense Committee.

“Reality is at stark odds with the platitudes” of those officials, Kent added, going on to detail the case of his constituent, Cy Tokmakjian, one of several foreign businessmen jailed in Cuba on what they say are fraudulent corruption charges.

Tokmakjian, 73, a Canadian citizen of Lebanese descent, is president of Tokmakjian Group, at one point the second largest Canadian firm operating in Cuba. He has been jailed since Sept. 10, 2011 for investigation by Interior Ministry officials.

Kent described the ministry as modeled on the Soviet KGB and East German STASI security services. He also noted that all of the other jailed businessmen come from Canada and Europe — not Cuban allies such as China, Venezuela or Russia.

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Cy Tokmakjian

Tokmakjian’s assets in Cuba, worth more than $90 million, have been frozen and “it seems no coincidence” that the total value of the government’s claims against him exceeds that amount, Kent wrote in a column published Tuesday in the Huffington Post.

“There have been suggestions to company representatives that additional millions sent from Canada could result in a more ‘lenient’ outcome,” he added. “He has been told, many times, that, if he drops International claims against Cuba or admits to minor ‘offenses,’ he would have a lenient trial and be released immediately.”

Tokmakjian has repeatedly denied all the allegations against him, which include bribery and tax evasion. Kent said the businessman is ready to defend his case vigorously in a Cuban court.

Kent said that when he visited Cuba in 2010 as Minister of State for Foreign Affairs in charge of the Americas, Tokmakjian “was characterized as a valued partner by Cuban interlocutors.” The Canadian company largely sold imported vehicles to the island’s government.

The parliament member also noted that among the foreign investors who lost millions in Cuba when they came under suspicion of corruption were Briton Stephen Purvis, who was working to develop a golf course, and Frenchman Jean Louis Autret, who ran a string of bakeries and other businesses.

Another Canadian businessman, Sarkis Yacoubian, was expelled from Cuba in February after serving about one third of a nine-year sentence. He was arrested in July 2011 and was convicted in April 2013 of bribery, tax evasion and “activities damaging to the economy.”

Yacoubian, who ran a $30 million trading company in Cuba, Tri-Star Caribbean, told the Toronto Star newspaper that he had cooperated with investigators and hoped to receive a lenient sentence. Cuban officials never explained his expulsion.

He and Tokmakjian were imprisoned at La Condesa, a facility on the outskirts of Havana reserved for foreigners and important Cuban government officials.

Peter KentPeter Kent

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Book Review: CUBAN ECONOMIC AND SOCIAL DEVELOPMENT: POLICY REFORMS AND CHALLENGES IN THE 21ST CENTURY

Posted on April 22, 2014 by Arch Ritter

By Archibald Ritter

 Cuban Economic and Social Development: Policy Reforms and Challenges in the 21st Century. Edited by Jorge I. Domínguez, Omar Everleny Pérez Villanueva, Mayra Espina Prieto and Lorena Barberia. David Rockefeller Center for Latin American Studies, USA, 2012. Pp. iii + 333. $24.99 paper.  ISBN: 9780674062434.

This volume is a co-produced University of Havana / Harvard volume edited by Jorge Domínguez, Omar Everleny Pérez Villanueva, Mayra Espina Prieto and Lorena G. Barberia. Its objective is to describe and diagnose some of the central economic and social challenges that Cuba faces and to analyze some policy alternatives for meeting these challenges. The analyses are written by the University of Havana analysts who are among the strongest and most authoritative in their areas. These are accompanied by commentaries from professors at Harvard and the Federal University of Rio de Janeiro. The papers were prepared before the presentation of the government’s preliminary reform program, as outlined in its November 2010 Guide, though Domínguez’s introduction was written on the eve of the April 2011 Sixth Party Congress and draws on the authors’ analyses as well as the government’s proposals. Fortunately, the University of Havana authors present analyses of the key issue areas in an ambitious and long-term frame that goes beyond the discussion in the Guide and therefore does not read as dated.

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The opening chapter by Pérez Villanueva presents a summary overview of Cuba’s economic performance during the “Special Period” to 2010. His analysis leads to the conclusion that, “economic reform should be seen as the first of the structural changes that the country requires. Cuba’s economic problem is that the current economic system cannot serve as a starting point for the country’s development.” (Villanueva 16) He then proposes a variety of policy changes, some of which have in been incorporated into the Government’s policy reform program, for example ending rationing and state regulation rather than direct management of enterprises.

            Two essays on Cuba’s dual monetary and exchange rate system are included from Vidal Alejandro, formerly with the Banco Central de Cuba. The first focuses on the sources, character and cure of the monetary/exchange rate duality. Of special interest is the section proposing a set of policy reforms that provide a strategic approach for the establishment of a single currency.  Vidal Alejandro’s second essay is a more technical analysis of the international economic crisis of 2008-2009 and its repercussions for Cuban monetary policy. 

            Armando Nova González, who by now must be considered the “dean” of agricultural analysts in Cuba, has contributed two essays on Cuban agriculture. The first outlines the reforms of the early 1990s, analyzes and evaluates their impacts, and presents the range of policy changes required to resuscitate agricultural production, some of which have begun already. The second chapter then analyzes the impacts of the 2007-2010 reforms implemented after Raúl’s assumption of the Presidency. His central conclusion is that while the pricing, land redistribution and institutional reorganization reforms have been significant and positive, the reforms “lack a systemic focus” and require further deepening. (p.91)

In chapter six, Anicia García provides a fifty-five page analysis of agricultural production, food availability, and imports and exports of food and agricultural inputs. The sector has been severely damaged by its low policy priority over the last twenty five years, low prices in the state marketing system, minimal investment, a perverse exchange rate, and the strength of foreign competition – notably from the United States since the opening of agricultural exports to Cuba by that country. This is an impressively detailed and comprehensive analysis, clearly the best to appear so far. Following this is a fine chapter by Pérez Villanueva on direct foreign investment extracting insights from the experience of China and Vietnam for Cuba.

            Mayra Espina Prieto and Viviana Togores González contribute a valuable chapter analyzing Cuba’s changing socio-economic structures since the beginning of the “Special Period” in 1990, characterized by greater economic and social differentiation among sectors, regions, social groups and individuals and some exacerbation of inequalities, all of which have been generated by enhanced social mobility for those riding high in emerging economic activities and sectors of the economy, notably the higher end “self-employment” activities such as tourist oriented restaurants and “bed and breakfasts.”  New circumstances require new policy approaches and the authors emphasize the importance of targeting social programs, of focusing at the household level, of enhanced and sustained financial support for social policy and of social program decentralization.

The last chapter, by Lucy Martín Posada and Lilia Núñes Moreno, examines the regional and housing dimensions of inequality in Cuba. Drawing on regional statistical information from the Oficina Nacional de Estadísticas, the work of other analysts, their own analyzes and a survey, they construct a clear portrait of regional, housing and economic inequalities. They also present a range of specific policy recommendations for reducing these inequalities.

All in all, this is a valuable analytical survey of some of the central issue areas in Cuba’s current reform process. However, economic policies in a range of vital issue areas remain to be analyzed in greater depth as part of the process of the actualización of the Cuban economy. One hopes that the next round of major publications on the Cuban economy will investigate some of these specific policy areas more profoundly than was possible in a general volume such as this. Of particular relevance would be analyses of the policies toward industry, energy, infrastructure, the service sector, small enterprise and the private sector, cooperatives, state enterprise, foreign investment and joint ventures, exchange rate and monetary issues, trade policy, policy towards foreign investment, social policies, health and education, labor issues, pensions, demographic issues, cultural areas, etc. The work ahead is daunting.

 

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Cuba’s New Foreign Investment Law: Amplified Discrimination against Cuban Small Enterprise Operators and in Favor of Foreign Enterprises.

Posted on April 17, 2014 by Arch Ritter

By Archibald Ritter

Cuba’s new Foreign Investment Law was published in the Gaceta Oficialon April 16, 2014.  It is available here:  Ley de la Inversión Extranjera

foreign-investment-law

The objective of the law is to provide an improved legal, fiscal and regulatory framework for foreign enterprises that decide to operate in Cuba.

Cuba has passed this law because of the perceived benefits that such direct foreign investment can generate for the country, namely technological and managerial transfers, access to foreign markets, higher-productivity employment, higher income levels, financial inflows and increased levels of investment. This last factor is of especial importance in view of the very low levels of investment that Cuba has achieved for the last 20 years. Indeed Cuba’s levels of investment have been the lowest in all of Latin America for the last two decades. In 2011 this rate was 10.2% of GDP vis-a-vis 22.4% for all of Latin America. (UN CEPAL, Balance Preliminary, 2013).  

The law certainly seems to have created a more hospitable environment for foreign firms, providing greater security of tenure, greater control over the hiring and compensation of labor, and most of all, through generous tax breaks. Indeed, the tax advantages for foreign investors now seem to me to be overly generous. One might estimate that the new foreign investment regime will be highly successful in promoting foreign investment from a range of sources and perhaps especially from China and Brazil.

However, there is a major element of injustice in the new law, particularly as it relates to taxation. The new tax regime intensifies the discrimination favoring foreign investors operating in “Mixed Enterprises” (Joint Ventures) or “international economic associations” when compared to the tax regime for small enterprises owned by Cuban citizens. This is both unfair and counterproductive. It may also be unsustainable.

The contrast between the tax treatment of foreign enterprises which will usually big private or (in the case of China) state corporations in comparison the tax treatment for small Cuban-owned firms, is summarized in Table 1.

 

Table 1: Comparison of the Tax Regimes for Cuban Small Enterprise and Foreign Enterprise Operating in Mixed Enterprises  after the 2014 Foreign Investment Law

Small Enterprise Sector

Foreign Investors in Mixed Enterprises or “Economic Associations”

Nominal Tax Rates

Personal Income Tax Rate: 15% rising to 50% of income above CuP 50,000 or $2,000 per year

Profits Tax: 15% of Net Corporate Income [perhaps 50% for resources]; Personal Taxes Exempt for those earning profits.

Effective Tax Base

60 to 90% of Gross Revenues; [Maximum of 10% to 40 % allowable d for input costs, depending on activity]

Net Income after deduction of  all production and investment costs from Gross Revenues

Effective Tax Rates

May approach or even exceed 100% of Net Income

15% of Net Income; [perhaps 50% for mining and petroleum]

Tax Holiday

 None

Eight Years Profit Tax Exemption,

Deductibility ofInvestment Costs from Gross Revenues

Deductible only within the 10% to 40% allowable deduction  limits

Fully deductible from Gross Revenues in determining Taxable Income

Deductibility of Input Costs from Gross Revenues

Deductible only within the 10% to 40% allowable deduction  limits

Fully deductible from Gross Revenues in determining Taxable Income

Employee Hiring Tax

Tax exemption for first five employees; Tax required on six or more

Complete Tax Exemption

Social Security Payments

Yes

Yes

Lump-Sum Taxation

Up-front Cuota Fija Tax Payments Necessary

None

Input Importation Rights

Direct Import Purchases Prohibited

Freedom to Import Directly

Profit Expatriation

No

Yes

 The most obvious difference in tax treatment is that Cuban small enterprise operators pay a marginal tax rate of 50% of Gross Revenues (less deductions) on any income exceeding 50,000 pesos per year this being equivalent to about US$2,000.00 per year or about US 166.67 per month. In contrast, the foreign corporations in mixed enterprises pay 15% of Profits in taxes – but only after an eight year tax holiday.

Perhaps more serious, for Cuban small enterprise owners, taxable income is calculated as an arbitrary percentage of Gross Revenues – from 60% to 90%  – depending on the nature of the economic activity. The costs of inputs of materials, labor, rent, utilities, etc. and all costs of investment are not deductible from Gross Revenues in determining Taxable Income – only the arbitrary amounts of 40 to 10% or Gross Revenues. To my knowledge, no other country taxes its own enterprise sector in this way.

On the other hand, foreign corporations can deduct all costs of investment and inputs of all sorts from Gross Income in calculating Taxable Income. This indeed is standard international practice.  

Or in other words, the effective tax base for foreign firms is Gross Revenues minus all costs of production and investment. In contrast, for micro-enterprise the tax base is gross revenue minus arbitrary and limited maximum allowable levels of input costs ranging from 10 to 40 percent depending on the activity, regardless of true production costs.

The result of this is that the effective tax rates for foreign enterprises are reasonable though generous. But for Cuban small enterprises the effective tax rate can be unreasonable and could reach and exceed 100%. Moreover, investment costs are deductible from future income streams for foreign firms this being the normal international convention.

To add insult to injury, foreign investors receive an eight year tax holiday in which corporate profit taxes are exempt from taxation. Cuban citizens operating small enterprises receive no such tax holiday.

Moreover, under the new legislation, the profits of the foreign enterprises can all be repatriated. In contrast, the infinitely more modest after-tax incomes of Cuban citizens would virtually all be spent within the domestic economy. If their after-tax earnings were to be taken out of the country, they would have to exchange their CUP or Moneda Nacional savings for foreign currency at the rate of about  CUP 26= $US1.00 or about CUP 34.5 = Euro 1.00

Small enterprise owners must make payment of a proportion of their taxes at the beginning of each month. Foreign firms certainly do not have to do this.

Small enterprise owners also must pay a tax on the hiring of more than five employees (not a good mechanism for creating jobs.). Foreign firms are exempt from such a tax.

Foreign firms can import their inputs, equipment and machinery as well as personnel directly from abroad. Cuban citizens with small enterprises must make their purchases from the state Tiendas por la Recaudacion de Divisas (formerly ‘Dollar Stores’)

This differential tax treatment for Cuban citizens operating small enterprises and foreign enterprises represents a surprising type of discrimination against Cuban citizens. One might predict that this type of discrimination will generate major dissatisfaction on the part of Cuban nationalists as well as Cuban small enterprise operators. Before long, political pressures and the climate of public opinion should require greater fairness in the character of taxation.

However, given the seemingly insurmountable difficulties that some countries such as the United States face in constructing fairer tax regimes, perhaps I am naively optimistic. (Who can forget the 15% average tax rate paid by Warren Buffett and the 14.3% paid by Mitt Romney in comparison with the 35% paid by Buffet’s secretary as well as the average US citizen?)

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Cuban Doctors in Eye of Venezuelan Hurricane

Posted on April 16, 2014 by Arch Ritter

Washington Post, April 16, 2014

Original Here: Cuban Doctors in Eye of Venezuelan Hurricane

CARACAS, Venezuela — When Judith Faraiz’s son was near death after a severe motorcycle accident, she put his life in the hands of God and Cuban doctors.

Like many in Petare, a sprawling hillside slum of crumbling brick buildings on the eastern outskirts of Caracas, Faraiz has come to rely on Cuban physicians for free health services in a country where private care is too expensive for the poor and public hospitals have a dismal reputation.

The link is vital for both governments: In exchange for the services of its doctors and other professionals, Havana gets an estimated $3.2 billion in cut-rate Venezuelan oil that is a lifeline for Cuba’s ailing economy. Venezuelan President Nicolas Maduro, for his part, relies on social programs such as these to shore up support among his poor power base even as his approval ratings fall hand-in-hand with a faltering economy.

The Cuban doctors are the most visible symbol of the controversial collaboration between the two countries during 15 years of socialist rule in Venezuela, and increasingly they are a flashpoint for the violent unrest that has rocked the country since February and is blamed for at more than 40 deaths.

The mostly middle- and upper-class protesters who have taken to the streets say their country is following the path of Fidel Castro’s one-party Communist system. They see the doctors-for-oil deal as an intolerable giveaway of Venezuela’s vast petroleum wealth, even as the country suffers from 50 percent inflation and chronic shortages of basic goods like flour, cooking oil and toilet paper, not to mention a homicide rate among the world’s highest.

Unsubstantiated rumors have circulated that Cuban military advisers are helping to crush the anti-government demonstrations. Some allege that Havana is essentially running the Venezuelan military and that the Cuban doctors lack proper training.

 AAANicolas Maduro with Cuban Doctors in Venezuela

For supporters of Maduro’s government, however, the doctors are an example of concrete improvements in their lives delivered under the late President Hugo Chavez and now his hand-picked successor.

Faraiz, a 54-year-old former domestic worker, said doctors at a public hospital wanted to amputate one of her son’s legs, which had been horribly mutilated. He was prescribed a daily dose of antibiotics that the family couldn’t afford and contracted a serious infection.

So she took him to the Cuban doctors, who saved the leg by surgically implanting eight nails and also healed his fractured cranium. The care, and some of his medicine, didn’t cost a cent.

Faraiz fears that if the opposition ever takes power it would follow through on a promise to alter terms of the Cuba-Venezuela relationship, and the doctors would be forced to leave.

“It will ruin the poor,” she said, sitting in her low-ceiling living room in Petare.

While official figures are not public, Cuba is believed to have sent around 100,000 professionals, mostly health care workers but also athletes, engineers and even circus artists, to Venezuela since Chavez came to power in 1999. An estimated 31,000 Cuban health workers, about 11,000 of them doctors, are believed to be working in the country today.

Venezuela pays the Cubans a stipend for living expenses and they sleep in dormitories at the clinics where they work. Havana also pays them $425 a month — about 20 times the average government salary back home.

Cuba has similar programs in developing nations around the globe that help burnish its international image, but none as important as the one in Venezuela. Chavez was long the Caribbean island’s staunchest political and economic ally, and he spent months in Havana in 2013 for cancer treatments before he died.

The South American country sends about 100,000 barrels of oil every day to Cuba that accounts for half the island’s domestic energy consumption, University of Texas energy analyst Jorge Pinon says. Venezuela also ships oil on preferential terms to other poor nations such as Haiti and the Dominican Republic.

When the Cuban doctors arrived in Petare five years ago, residents initially eyed them with suspicion and sometimes slammed the door in their faces, said Yurisleidy Varela, a 29-year-old Cuban physician who directs the local clinic that treated Faraiz’s son.

Today the Cubans who staff “La Urbina” clinic are welcomed as they walk the mazelike streets making house calls and vaccinating children. The clinic offers free emergency, ophthalmology and pediatric care, as well as minimally invasive surgical procedures. Its several dozen staffers also minister to gunshot victims and drug and alcohol addicts.

But outside the slums and poor rural communities of Venezuela, the Cubans have become a focus of anti-government rage.

In February, dozens of people carrying signs saying “Cuba go home” physically harassed a Cuban baseball team playing in a tournament on Margarita Island. More recently, assailants burned down a medical clinic staffed by Cubans in the western city of Barquisimeto.

Some of the Cubans say the violence has them spooked.

“One never knows what can happen,” Varela said. “If they’re attacking their own institutions, imagine how it is with us Cubans.”

There’s no sign that the doctors will decamp anytime soon, and Maduro has vowed the anti-Cuba sentiment will only “bolster our conviction that we must strengthen our brotherhood.”

Miguel Tinker Salas, a professor of Latin American history at Pomona College in California, said that besides domestic political concerns, continuing the Cuba-Venezuela alliance is a way for Maduro to send a message to Washington that has been echoed in recent years by like-minded presidents around the region. “Cuba was a model for this generation” of leftist leaders, Tinker Salas said, “and I think it is, in a way, a way to declare one’s autonomy and independence.”

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