• 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."

Book Review: ¿Quo vadis, Cuba? La incierta senda de las reformas

Posted on April 14, 2014 by Arch Ritter

 

By Archibald Ritter

¿Quo vadis, Cuba? La incierta senda de las reformas . Edited by Pavel Vidal and José Antonio Alonso.  Notre Dame, IN: University of Notre Dame Press, 2011. Pp. xvii + 453. $48.00 paper. ISBN: 9780268029830.

Quo Vadis, Cuba? edited by Pavel Vidal and Jose Antonio Alonso, is a co-production of the Center for the Study of the Cuban Economy of the Universidad de la Habana (CEEC), and the Institute for International Studies at the Complutense University of Madrid  (Instituto Complutense de Estudios Internacionales of the Universidad Complutense de Madrid).[1] The project was financed by the Spanish Agency for International Cooperation.  

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The volume does not attempt to make a comprehensive overview analysis of the functioning of the economy or a complete set of prescriptions for economic reform. Instead, the objective of the volume is “…to make a modest contribution to the search for useful paths for a “renovated” Cuba,” (Vidal and Antonio Alonso p.24.) and in this it succeeds. The Cuban-Spanish team has produced an outstanding set of analyses of a number of the central economic conundrums facing the Cuban economy.  

The analysts at CEEC have been focusing on Cuba’s economic situation now for some twenty years. They have steadily pushed the envelope, arguing forcefully and courageously from within Cuba regarding the need and possible shapes for reforms. They have also “stayed in the game” – in contrast to the dissident analysts such as Miriam Celaya, Dimas Castellanos and the late Oscar Chepe,  among others who work outside the system. While the CEEC analysts have perhaps had only a limited direct role in decision-making, they have been instrumental in moving the discussion forward and supporting the changing climate of opinion regarding economic institutions and policy.

The first chapter by Juan Triana Cordoví and José Antonio Alfonso, focusing on the foundations of economic growth, begins with some discussion of growth theorizing and possible insights from international experience for Cuba. It then analyzes Cuba’s growth performance, and discusses strategic options. The policy recommendations that it arrives at are fairly standard – namely promoting exports and solving the problem of the dual exchange rate and monetary system.  The third recommendation, which calls for the actualización of policy regarding the promotion of direct foreign investment (to complement domestic savings levels and stimulate technological transfer), is perhaps a bit surprising in view of Cuba’s three decades of policy hostility and then another two decades of policy reticence.[2]  

Ricardo Torres and Isabel Álvarez present a strong analysis of technical innovation, including a quick review of some theorizing, some comparative international experience and an analysis of structural changes in industry, trade and employment and the technological dimension thereof during the Special Period. They attribute the technological lag to low savings and investment levels, weak infrastructure, limited access to technology from abroad, and “the inertia and ‘immovilismo’ of Cuba’s managerial systems…” (Torres and Álvarez p.129.)  Among their policy suggestions are higher levels of savings and investment to permit accelerated incorporation of new technologies and structural change and a broadening of the self-employment sector to permit professional activities that would utilize Cuba’s well-educated labor force more effectively.

This volume also includes outstanding chapters analyzing tax reform and enterprise by Omar Everleny Perez, Saira Pons and Carlos Garcimartin; on Cuba’s social challenges and policy targeting by Anicia Garcia, Susanne Gratius and Luisa Íñiguez Rojas, and a chapter on the decentralization of state programs by Santiago Díaz de Sarralde and Julio César Guanche.             The concluding chapter by the editors entitled “Rules, Incentives and Institutions” outlines the “required institutional transformation” that Cuba needs to undergo, namely “the readjustment of the rules, norms, values and organizations inherited from the past:” The precise form of that readjustment is unstated, but “[t]he framework of economic and social incentives within which Cubans functioned in the past is called upon to transform itself and must be progressively replaced by another that will be coherent with the objectives of the reform” (p. 257).

This challenging chapter discusses the place of institutions in the development process, institutional quality and the process of institutional change in Cuban agriculture, the non-agricultural self-employment and micro-enterprise sector, the cooperative sector, and the direct foreign investment area. It emphasizes the pre-requisites for the functioning of markets (secure property rights, security of contracts, effective competition) and also market failure. It also includes brief analyses of the opposition to current institutional reform (inertia and opposition to change, potential loss of position by vested interests and the social hierarchy, and impacts on income distribution.)  The authors conclude that while reformist gradualism has certain advantages, an activist prioritization of reforms is desirable, such that the first reforms generate clear benefits for broad sectors of the population thereby building support for further reforms. All in all, this book makes valuable contributions to the understanding of the reformist challenges facing Cuba as it resolves some of its most pressing economic problems and moves towards a mixed but more market-oriented economy with major roles for the small enterprise and cooperative sectors.


[1] Six of the seven Cuban authors were from CEEC and five of the Spanish authors are from the Universidad Complutense. The editor on the Cuban side, Pavel Vidal, was at CEEC but is currently at the Pontifica Universidad Javeriana at Cali Colombia.

[2] The authors contrast the highly successful nickel sector, which has had a major role for foreign investment (in the form of Sherritt International) with the autarkic and disastrous sugar sector.

Pavel Vidal.pngAAAPavel Vidal Alejandro

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The Venezuelan Dialogue From a Cuban Point of View

Posted on April 14, 2014 by Arch Ritter

By Yoani Sanchez in the World Post

Posted: 04/14/2014 11:58 am EDT Updated: 04/14/2014 11:59 am EDT

 Original here: The Venezuelan Dialogue From a Cuban Point of View

The dialog between the Venezuelan opposition and Nicolas Maduro is in full swing. Its critics are many, its most visible loser: the Cuban government. For a system that for more than half a century has disqualified and reprimanded its dissidents, this discussion table must present a sad acknowledgement of its own inabilities.

Last Tuesday stunned Cuban viewers could watch a debate between the opposition forces in Venezuela and pro-government representatives. The controversial meeting was broadcast on TeleSur, which is characterized by its tendency to back the work of Chavism with its reporting. On this occasion, however, it was forced to also broadcast the concerns and arguments of the other side.

The requirement that cameras and microphones would be present at the discussion proved to be a magnificent political move by Maduro’s adversaries. In this way the audience is engaged in the dialog and it’s more difficult to publish distorted versions later. The participants on both sides were allowed ten minutes each, an exercise in synthesis that the Venezuelan president, clearly, couldn’t accomplish.

For disinformed Cubans, the first thing that jumped out at us was the high level of the arguments the opposition brought to the table. Figures, statistics and concrete examples expressed within a framework of respect. The next day the most commonly heard comment in the streets of Havana was the popular phrase, “They swept the floor with Maduro.” A clear reference to the crushing critiques of his rivals. The government supporters, however, were notably timid, fearful, and offered a discourse plagued with slogans.

There is no doubt, this discussion table has been a bitter pill to swallow for those who up until a few hours before were accusing their political opponents of being “fascists” and “enemies of the nation.” Venezuela will no longer be the same, although the negotiations end tomorrow and Nicolas Madura will once again take the microphone to hand out insults right and left. He acceded to a discussion and this marks a distance between the path followed by the Plaza of the Revolution and another that recently began for Miraflores.

0010886523Maduro and Caprilles

New Picture (2)President Maduro

biXxJ.St.84The Opposition, Caprilles in the middle

And in Cuba? Is this also possible?

While the broadcast of the Venezuelan dialogue was airing, many of us asked ourselves if something similar could occur in our political scenario. Although the official press presents these conversations as a sign of strength on the part of Chavism, it has also kept enough distance so that we won’t get illusions of possible Cuban versions.

It is less chimeric to imagine Raul Castro getting on a plane and escaping the country than to project him sitting at a table with those he dubs counterrevolutionaries. For more than five decades, both he and his brother have been dedicated to demonizing dissident voices, such that now they are prevented from accepting a conversation with their critics. The danger posed by the impossibility of negotiations is that it leaves only the path to an overthrow, with its consequent trail of chaos and violence.

However, not only do the Cuban regime’s principal figures show reluctance before any negotiating table. The better part of the Island’s opposition doesn’t want to hear it spoken of. Before this double rejection, the agenda of a chimeric meeting fails to take shape. The opposition parties haven’t yet come together on a project for the country that can be coherently defended in any negotiation and look like a viable alternative. We members of the emerging civil society have reasons to feel concerned. Are the politicians now operating illegally in the country prepared to sustain a debate and capable of convincing an audience? Could they represent us with dignity when the time comes?

The answer to this question will only be known once the opportunity arises. Until now the Cuban political dissidence has concentrated more on tearing down than on elaborating foundational strategies; the greater part of their energy has been directed to opposing the governing Party rather than on persuading their potential followers within the population. Given the limitations on disseminating their programs and the numerous material restrictions they suffer, these groups have not been able to carry their message to a significant number of Cubans. It is not entirely their responsibility, but they should be aware that these deficiencies hinder them.

If tomorrow the table for a dialog was set, it would be unlikely that we would hear a speech from the Cuban opposition as well articulated as that achieved by their Venezuelan colleagues. However, although negotiation isn’t a current possibility, no one should be exempted from preparing for it. Cuba needs for the people before those possible microphones to be those who best represent the interests of the nation, its worries, its dreams. They may speak for us, the citizens, but please, do so coherently, without verbal violence and with arguments that convince us.

d8b426fb7787a00c41d72006c4bec2013c0a2b4f - CopyYoani Sanchez

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Reordenamiento Laboral: Quién se queda, quién se va?; Labor Force Down-Sizing in Cuba’s Medical System

Posted on April 9, 2014 by Arch Ritter

By Archibald Ritter

On April 7, an article in Trabajadores stated that 109,000 workers in the heath sector were to be declared redundant, generating an expected 2 billion pesos in savings in the national budget, ostensibly without damaging the quality of health care services.

The newspaper where the article was published: Trabajadores ;

The original article is  here: Trabajadores, 7 de abril de 2014, Quien se queda, quien se va

This is  an ambitions action. Indeed, it is draconian. It seems to be well beyond the legendary “shock therapies” or “structural adjustment” programs once promoted by the International Monetary Fund that have been criticized vigorously in Cuba and elsewhere in the past.  

Apparently such a down-sizing is necessary due to the over-staffing of the health care system that seems to have built up over the years. This may be the case, as Cuba continued to judge its medical performance partly on numbers of doctors and medical personnel per thousand population and number of hospital beds – quantitative success indicators that probably contributed to an excessive expansion of the system.

However, the personnel of the Ministry of Health already had been cut back significantly from their peak of 335,622  in 2008 falling to 265,617 in 2011.  This was a personnel reduction  of 23.5%, with a 37% reduction of pharmacists, a 10.5% reduction of nurses, and a 45.4% reduction in auxiliary and technical personnel.  Presumably there are many more employees in the medical system not included in the numbers of the Table, people such as custodians, secretaries, receptionists, administrators, drivers, information technologists and tradesmen, but how many of these were employed in the system is not indicated in the ONE Anuario Estadistico.

Were further cuts required after these reductions? Apparently so.

Personal facultativo, Ministerio de SaludIs the Cuban government expecting that the numerous Cuban medical personnel abroad, and mainly in Venezuela will be returning to Cuba so that cut-backs will be necessary in order to accommodate them in the medical system?  Indeed, with Venezuela teetering on the brink of serious conflagration and economic melt-down, it may well be the case that Cuban medical personnel may not be in Venezuela at current levels for much longer. Is this the expectation of the Cuban government?

It is of interest to note that as was the case with the announcement of the 500,000 target for layoffs in the state sector in 2010, , the announcement of the job cuts were published in the workers’ newspaper, Trabajadores, and the person explaining the cut-backs was a certain Rafael Guevara Chacón, an employee of the Central de Trabajadores de Cuba (CTC), the labour federation. Is this how Cuba’s labour movement defends workers’ interests?

It will not be easy determining who is and who is not redundant in the medical system. What will be the criteria for determining the redundancies? Will favoritism or a person’s political record be significant factors?  What will be the job prospects for the medical personnel that are being poured out of the educational system?

Then there is the question of where the displaced workers are to go. Some will retire, but others will have to be absorbed elsewhere in the system.

Is the cuenta-propista or self-employment sector capable of creating an additional 109,000 jobs without further liberalization of the policy environment within which it operates?

Can personnel cut-backs of this amount actually avoid damaging the medical care system?

All in all, implementing labour force cut-backs in the medical system of this magnitude will undoubtedly be a major challenge for the government.

Cuba Apr 2012 062.jpg AAAA

Maternity Hospital, Avenida G Vedado, in process of reconstruction, 2012-2014; Photo by Archibald Ritter

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As Cuba eases investment rules, many Cuban-Americans turn against the embargo

Posted on April 8, 2014 by Arch Ritter

Apr 5th 2014 | MIAMI |

From the Economist here: As Cuba eases investment rules

AT THE outset of Tom Wolfe’s latest novel, “Back to Blood”, the muscled hero, a 25-year-old Cuban-American cop called Nestor Camacho, seethes when his fat and disdainful Americano (Anglo) colleagues stereotype him as a Cuban. He has never set eyes on the island, he says. His Spanish is poor. At home, his parents’ hatred of Fidel Castro flies over his head. His world revolves around Miami, not Cuba.

Unsurprisingly, the book is not universally liked in Miami (it skewers everyone, from Anglos to Cubans to Haitians to Russians). But in at least one respect it is spot on. Younger Cuban-Americans are less obsessed with Cuba than their exiled elders. Like other Americans, pollsters say, they now think more pragmatically; Cuba is not the only voting issue that they care about.

In fact, they are more likely to be pouring money into Cuba than shunning it. Remittances, as well as travel, have risen since President Barack Obama eased restrictions in 2009 and 2011 (see chart). Much of the money has found its way into restaurants (known as paladares), hairdressers or other small businesses run by relatives in Cuba. That has given Cuban-Americans an increasing, albeit hidden, stake in the island’s economic future.

The laws of both the United States and Cuba have forbidden such money to be treated as investment. But on March 29th Cuba’s parliament approved a new foreign-investment law that for the first time allows Cubans living abroad to invest in some enterprises (provided, according to Rodrigo Malmierca, the foreign-trade minister, they are not part of the “Miami terrorist mafia”). The aim is to raise foreign investment in Cuba to about $2.5 billion a year; currently Cuban economists say the stock is $5 billion at most.

The law, which updates a faulty 1995 one, is still patchy, says Pavel Vidal, a Cuban economist living in Colombia. It offers generous tax breaks of eight years for new investments. However, it requires employers to hire workers via state employment agencies that charge (and keep) hard currency, vastly inflating the cost of labour. It enhances the right to establish fully owned foreign businesses, although existing private firms, such as paladares, are still forbidden from taking foreign capital. Much, including whether or not Cuban-Americans can invest, will depend on how the government implements the law. “It’s still very discretionary,” Mr Vidal says.

Despite their failings, Cuba’s new rules are a reminder of how inflexible United States law remains. Because of the 53-year-old embargo against Cuba, some Cuban-Americans fear they will be left behind as investors from Brazil, China, Russia and Europe move in. Already Tampa, on Florida’s west coast, is vying for a greater share of Cuban business when the embargo is lifted. “Every day we’re missing opportunity,” says Bob Rohrlack, head of the Greater Tampa Chamber of Commerce.

20140405_AMC657In Miami people talk of a tipping point. Alberto Ibargüen, a former publisher of the Miami Herald, says demographic trends that began decades ago have finally softened the mood towards Cuba (though “absolutely not” towards the Castro regime). If American restrictions on all tourism to the island were lifted, “you’d get a couple of letters to the editor.”

Some Miami Cubans have managed to squeeze through cracks in the embargo. Hugo Cancio, who left the island in the Mariel boatlift of 1980, owns a website and magazine, OnCuba, written mostly by Cubans, which plays down repressiveness and plays up commerce and culture. He has a newsroom in Havana but despite his entreaties, American law forbids him from paying its staff. Tony Zamora, a semi-retired Miami lawyer who was jailed in Cuba for taking part in the 1961 Bay of Pigs invasion, has also recast himself as a promoter of investment in the island. After 40 trips to Cuba, he calls the embargo “almost a total failure”.

Many Cuban-Americans put their faith in Mr Obama to soften the embargo, even if Congress will not lift it. They note that more than 60% of Miami-Dade County, where they predominate, voted for the president in 2012, many more than in the previous election, even after he eased policy towards Cuba. If Charlie Crist, a Republican-turned-Democrat who is running for a second turn as Florida governor and supports lifting the embargo, wins in November, it will help their cause.

Even so, the old guard cares more about keeping the embargo than younger Cuban-Americans do about getting rid of it. Most Cuban-American congressmen in Washington, DC, remain avid backers of it. Mauricio Claver-Carone, who heads a pro-embargo lobby group, argues that all foreign investment still goes to monopolies run by the Castro regime, which helps prop it up. The stakes have been raised by the jailing of Alan Gross, an American citizen convicted in Cuba of smuggling communications equipment to dissidents. Few believe the Obama administration would risk a bold move without his release.

The embargo’s days are nonetheless numbered, not least because Raúl Castro, the 82-year-old president, and his brother Fidel, 87, will not live for ever. In the meantime, it increasingly seems like a relic, as outdated as the Castros’ Cuba.

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A Belated Brief Review: Samuel Farber’s “Cuba Since the Revolution of 1959: A Critical Assessment”

Posted on April 7, 2014 by Arch Ritter

Review by Arch Ritter

Cuba Since the Revolution of 1959: A Critical Assessment. By Samuel Farber. Chicago, IL: Haymarket Books, 2011. Pp.ix + 369. $24.00 paper. ISBN: 1608461394.

book-cover-reduced-best

Samuel Farber’s volume on Cuba, as its title indicates, “attempts to present a historical analysis and evaluation of the Cuban Revolution since 1959.”  He approaches his analysis from “the left” but a democratic socialist left espousing genuine participatory democracy, with popular “self-mobilization fully respecting human and minority rights” (p. 4.)

Farber considers his work as “a form of advocacy and normative in its orientation”: 

“a political reflection on history and a search for a usable past which hopefully will support the new voices emerging in Cuba advocating a progressive transition toward a revolutionary and democratic form of socialism” (p. 5.)

While Farber’s work of course is not totally comprehensive, he takes a broad view, and includes national sovereignty, nation building and democracy, economic growth and social welfare, foreign policy, race and gender issues, the place of dissidents and critics from left to right, within and outside Cuba and then a summary and conclusion. Although Farber analyses the various issues over the life of the Revolution and also draws on pre-Revolutionary experience regarding the various issue areas, he brings each area into the 2000s and the 2010s. He also up-dates his work with an “Epilogue” on the Sixth Party Congress of April 2011 and comments on the reform process of the 2010s.

            Farber’s volume is thoroughly researched and documented. Indeed it includes 53 pages of footnotes that frequently include important substantive insights as well! His work draws on his own research and deep knowledge acquired over many years study, a comprehensive range of Cuban primary sources and the work of others analysts inside and outside Cuba.  Many observers and analysts of various aspects of Cuba’s historical experience since 1959 will be to some extent familiar with much that he writes about. However, it is enlightening and enjoyable to review in detail Farber’s well-written and well-organized discussion of these central dimensions of Cuba’s experience.

In view of Farber’s somewhat iconoclastic approach to his work, which is unabashedly “in a classical Marxist tradition” but also social democratic – or as he would undoubtedly prefer, “socialist democratic” – one might expect that he may come under s criticism from both the right and the left. But Farber’s work in fact seems uncontroversial, “mainstream” and “social democratic” in character. His analyses and evaluations are well balanced, objective and convincingly supported with painstaking and comprehensive presentation of evidence. This is a volume well worth reading for the “old Cuba hand” as well as for anyone wanting an objective analysis of Cuba’s experience since 1959.

imagesSamuel Farber

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ETECSA: un monopolio creciente

Posted on April 7, 2014 by Arch Ritter

Original here: ETECSA

Por Emilio Morales, Miami (The Havana Consulting Group).

13-companhia-cubana-de-telefono-435x650.jpg aaaEdificio ETECSA, formerly the US-owned Compania Cubana de Telefono

El crecimiento de los servicios de telefonía celular en Cuba se ha convertido en uno de los más prósperos y rentables negocios que controla el gobierno de Raúl Castro.

El papel imprescindible del desarrollo de las telecomunicaciones para la economía cubana y las necesidades de capital del país han transformado este sector en un exitoso activo financiero durante los últimos seis años. Para ello, el gobierno cubano ha implementado un plan de inversiones que le ha permitido renovar las plantas telefónicas, extender la red de telefonía celular a casi todo el territorio nacional, y preparar y formar a personal técnico y de marketing en el exterior. Actualmente el monopolio estatal cubano ETECSA está valorado en alrededor de $3,000 millones de dólares.

Desde que fuera liberada la contratación de los servicios de telefonía celular en el 2008, el número de líneas arrendadas alcanza los dos millones, lo cual le ha permitido a ETECSA ingresos de alrededor de $2,000 millones de dólares solo en la modalidad de telefonía celular prepagada, que es la que utiliza la población cubana.

Continue Reading: ETECSA March 2014

Año

Líneas

Facturación

2008

431,861

$146,223,512

2009

785,324

$257,403,045

2010

1,127,985

$280,473,300

2011

1,431,589

$340,095,000

2012

1,792,345

$450,100,465

2013E

1,912,340

$561,278,780

emilio-morales-dopicoEmilio Morales

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Richard Feinberg: “Cuba’s New Investment Law: Open for Business?”

Posted on April 2, 2014 by Arch Ritter

Richard Feinberg, April 1, 2014 1:30pm

We are still awaiting the publication of Cuba’s new foreign investment law, passed by the National Assembly on Saturday March 29 2014. In the meantime, here is a brief outline and discussion from Richard Feinberg in a Brookings Blog.

Original here: Cuba’s New Investment Law

 Dateline Havana: The Cuban legislature has approved a new foreign direct investment law (FDI), and the detailed follow-on regulations will be issued within the next 90 days. From my informal conversations in Havana, Cubans on the street seem to accept with enthusiasm the government’s dual message: that the new guidelines will not compromise Cuban sovereignty – a key gain of the 1959 revolution – but will encourage badly needed inflows of foreign capital and technology.

In a shift from past practices, government messaging has emphasized the importance of foreign investment worldwide, with the Communist Party daily, Granma (March 31, 2014), quoting a government commission declaring that “no country today has successfully developed without foreign investment as a component of its political economy.” President Raúl Castro asserted that “we must take into account the absolute necessity to stimulate and attract foreign investment, to add dynamism to our economic and social development.”

Experienced commentators have noted, however, that many of the more positive paragraphs in the new law could also be found in the previous 1995 FDI regulations, which were outweighed by more restrictive clauses and by a recalcitrant bureaucracy that in recent years has approved very few major new foreign ventures.

Several of the more promising sections of the new law echo recommendations in the 2012 Brookings monograph, The New Cuban Economy: What Roles for Foreign Investment?:

·         A strong official recognition that FDI must be integral to Cuba’s development strategy, if the country is to depart from its sluggish economic path.

·         Majority foreign ownership is an option (although this was also the case, if ignored in practice, under the 1995 regime).

·         The project approval process should be streamlined and made more transparent.

·         Firms should have more flexibility with regard to wage scales, such that remuneration can be a stimulus to productivity. In addition, the much anticipated currency unification will likely reduce the extraordinarily heavy tax on wages paid by foreign investors.

Other noteworthy aspects of the new law include reductions in certain taxes, and the promise of just compensation in the event of expropriation. But some existing obstacles to investment appear not to have been adequately addressed. For example, the new law continues to press investors on local content requirements, even as it also notes the importance of firm integration into global value chains.

The proof will be in the pudding, and investors will be watching closing for the fine print in the new regulations and, most importantly, for the implementation of the approval process. The new law recognizes that Cuba badly needs foreign investment in many sectors of its economy, including but not limited to agriculture and sugar, energy, bio-technology, construction, and tourism. Will the government establish an investment climate that attracts foreign investments, and a truly transparent bureaucratic process that vets proposals in a prompt timeframe competitive with international standards?

U.S.-based businesses, of course, will not be able to take advantage of any new investment opportunities, as a result of long-standing and comprehensive commercial sanctions. Other foreign businesses, however, are likely to get a head start soon

 Cuba Canada

Former Sherritt International CEO, Ian Delaney and Raul Castro, Captivated!

melia-cohiba-aerial-view-98The Melia Cohiba Hotel, Havana

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Demandas De Propiedad Entre Cuba Y Los Estados Unidos. Una Revisión De La Literatura. (Property Claims Between Cuba and The United States. A Literature Review.) By Jesus V. Bu Sr. Attorney at Law, Independent, Havana, Cuba

Posted on March 6, 2014 by Arch Ritter

By Jesus V. Bu Sr. Attorney at Law, Independent, Havana,  Cuba

 February 8, 2014

Original Essay: Property Issues US and Cuba, A Review of the Literature
This excellent survey of the literature on the issue of property and compensation claims between the US and Cuba is of major importance in outlining the differing views on this contentious and complex issue. This article is comprehensive, well-organized and clear. Unfortunately it is still available only in Spanish.

Abstract:     

Spanish: Este artículo es una revisión de la literatura sobre las reclamaciones de la propiedad pendientes entre Cuba y los Estados Unidos, con el objeto de resumir el estado actual del conocimiento académico. Este artículo examina las reclamaciones entre las partes, los mecanismos legales diseñados para solucionar las demandas y los remedios para cada tipo específico de demandante.


English: This paper contains a literature review designed to summarize the state of academic knowledge surrounding the outstanding property claims between Cuba and the United States. This paper examines the claims between the parties, the legal mechanisms designed to solve the claims and, the remedies tailored for each particular type of claimants.

Note: Downloadable document is in Spanish.

New Picture (4)New Picture (3)

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Cuban sugar harvest falters; foreign investment sought

Posted on March 5, 2014 by Arch Ritter

  By Marc Frank

Original here:  Cuban Sugar Harvest, 2014   

HAVANA, March 4 (Reuters) – For the third consecutive year Cuba’s reorganized sugar industry is failing to perform up to expectations, increasing pressure on the government to open up the once proud sector to foreign investment.

Already one mill, the first since the industry was nationalized soon after the 1959 revolution, is under foreign management, with at least seven others on the auction block.

AZCUBA, the state-run holding company that replaced the Sugar Ministry three years ago, announced plans to produce 1.8 million tonnes of raw sugar this season, 18 percent more than last season’s 1.6 million tonnes. But the harvest is 20 percent behind schedule, sugar reporter Juan Varela Perez wrote recently in Granma, the Communist Party daily.

“Continuous and heavy rainfall in almost all provinces of the country has affected the harvest since January,” state-run Radio Rebelde said late last week, reporting on a meeting of AZCUBA executives at the end of February. “To this has been added the habitual problems of inputs arriving late, disorganization and the poor quality and slowness of repairs,” the report said.

Sugar was once Cuba’s leading export, both before the revolution and afterward, when the former Soviet Union bought Cuban sugar at guaranteed prices. Today it is Cuba’s seventh largest earner of foreign currency, behind services, remittances, tourism, nickel, pharmaceuticals, and cigars.

“These days it is a true odyssey to go through a harvest. The mills need more profound repairs, but that costs millions upon millions of dollars,” Manuel Osorio, a mill worker in eastern Granma province, said in a telephone interview on Tuesday. “So they do some superficial repairs and start grinding and immediately the problems begin and this year to top it off it is hot and raining almost every day. The cane needs cool and dry weather to mature. If not, it is like milling weeds.”

The sugar harvest begins in December with the “winter” season and runs into May, with January through March the key months as dry and cool weather increases yields, but not this year.

“I can’t remember a wetter winter and it is almost impossible to harvest,” sugarcane cutter Arnaldo Hernandez said in a telephone interview from eastern Holguin province.

Cuban sugar plantations lack adequate drainage, making harvesting by machine difficult when it rains, and humid weather retards the production of sugar in cane.

“Going into the plantations is a heroic task, and when the cane reaches the mills it yields little sugar,” Hernandez said. “Look, even the Guaraperas (sugarcane juice) they sell in the city is like water. I know because I tried some myself yesterday.”

Rainfall was twice the average for the month in key eastern and central provinces through most of February, according to official media.

“So far this year 115.2 millimeters (4.5 inches) of rain has fallen in (the eastern province of) Las Tunas, twice the historic average,” the National Information Agency reported in late February. The agency said the harvest in Las Tunas was 35,000 tonnes of raw sugar behind schedule to date toward a plan of 194,000 tonnes through May.

A similar situation was reported in central Villa Clara, where the goal is 218,000 tonnes, and in central Camaguey, which reported production to date was 13 percent, or 11,000 tonnes, below plan.

INVESTMENT OPENING

Cuba produced just 1.2 million tonnes of raw sugar three seasons ago when AZCUBA was formed, compared with 8 million tonnes in the early 1990s, before the demise of the Soviet Union led to the industry’s near collapse. Industry plans call for an annual average increase in output of 15 percent through 2016, though over the last three harvests the increase has been 12 percent, according to AZCUBA. The poor performance so far this year may accelerate AZCUBA’s plans to open the sector to private investment.

President Raul Castro, who assumed power from his ailing brother Fidel Castro in 2008, is trying to revive the country’s economy through reforms passed by the Communist Party in 2011. The plans include more foreign investment.

This year, the Cuban Chamber of Commerce listed seven more sugar mills as candidates for foreign investment, all of which were built after the revolution and are therefore not subject to claims by previous owners. The remaining 48 mills in the country were all built more than 60 years ago.

This month the Cuban National Assembly is expected to pass a new foreign investment law that makes the island, and agriculture, more investor friendly.

Odebrecht SA, a Brazilian corporation, began administering a mill in central Cienfuegos province this year, the first foreign company allowed into the industry since 1959. Odebrecht subsidiary, Compañía de Obras en Infraestructura, plans to upgrade the mill as well as the supporting farm and transport sectors, and has expressed an interest in other mills, as have a number of other foreign companies. Its 13-year contract calls for an investment of around $140 million to increase output to more than 120,000 tonnes of raw sugar from 40,000 tonnes.

Cuba consumes between 600,000 and 700,000 tonnes of sugar a year and has an agreement to sell China 400,000 tonnes annually, with what remains sold to other countries.

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Mechanized Zafra

cimg3076Cane Transport

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An Aerial View of what was Left of the Australia Sugar Mill, 2011

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The Institutional Structure of Production in the Cuban Economy

Posted on March 4, 2014 by Arch Ritter

Ernesto Hernández-Catá;  January, 2014

The complete essay is here: STRUCTURE OF GDP, 2014. Hernandez-Cata

 This paper presents estimates of Cuba’s gross domestic product (GDP) for the three principal sector of the economy: the government, the state enterprises, and the non-state sector. It estimates government GDP on the basis of fiscal data and derives non-state GDP from a combination of employment and productivity data. The article finds that the pronounced tendency for government output to increase faster than GDP was interrupted in 2010 and as the share of non-state production increased sharply. Nevertheless, the private share in the economy remains very low by international standards, and particularly in comparison to most countries in transition. The paper also derives estimates for gross national income. It finds that income is lower than GDP in the general government sector because of interest payments on Cuba’s external debt, while it exceeds production in the non-state sector owing to remittances from Cubans residing abroad.

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 The various estimates presented in this paper make it possible to reach a number of tentative conclusions.

 ü  The government share of GDP fell during the post-Soviet recession but then increased steadily all the way to 2009. The increase reflected the growth of current government expenditure; government investment—which accounts for the bulk of economy-wide capital formation—fell in percent of GDP. Total investment by all sectors also fell, to a very low level compared with the averages for other country groups and particularly for the emerging market and transition countries. The share of government spending declined from 2010 to 2011 following the financial crisis of 2008.

 ü  The share of the non-state sector GDP rose in the period 1993-1999 from a very low level in the Soviet-dominated period of the 1980’s. It changed little in the first decade of the XXIst century, but surged in 2011-2012 reflecting a transfer of employees form the state sector. Nevertheless, the non-state and private sector shares of the economy remains very small by international standards and notably by the standards of the countries in transition.

 ü  The relative importance of the state enterprises appears to have declined all the way from 1995 to 2009, but it has recovered somewhat since then.

 ü  National income in the government sector is lower than GDP because of interest payments on the external debt and, apparently, because of official transfers to foreigners.

 ü   By contrast, income in the non-state sector exceeds GDP by a growing margin, essentially because of dollar remittances from Cuban-Americans abroad. Thus, in that sector income from domestic production is being increasingly supplemented by income from abroad.

 ü  There is a statistically significant tendency for government current spending to crowd out the output of the state enterprises. Non-state output, on the other hand, appears to evolve mainly in response to official decisions to liberalize or to repress the non-state sector

 Finally, there is a major problem whose resolution is beyond the scope of this article but which must at least be noted. The Cuban authorities assume that data for transactions denominated in foreign currency should be translated into local currency at the fixed exchange rate of one peso (CUP) per U.S. dollar. Under this convention (which is retained in this paper) dollar values are identical to peso values. Historically, however, the exchange value of the peso applicable to households and tourists has been much lower and it is currently CUP 24 per dollar.  Clearly, the 1:1 exchange rate assumption introduces major distortions in the national accounts and in the balance of payments. For example, the peso value of exports of at least some goods and services (nickel, sugar and tourism among others) is grossly under estimated, while the dollar value of consumption is grossly over-estimated. In the income accounts, the dollar value of wages (mostly denominated in CUPs) is overestimated while the peso value of private remittances is under-estimated—although this is partly offset by an under-estimation of the peso value of interest payments abroad.

 The task of disentangling all the elements of bias introduced by the use of a 1:1 conversion factor would be daunting. For the time being the corresponding distortions would have to be accepted, although they should be recognized. The good news is that the Cuban authorities are in the process of unifying the existing multiple exchange rate system, too slowly hélàs, but fairly surely. One important result of this change will be to the adoption of a single exchange rate for all transactions and all sectors, as well as for the purpose of statistical conversion.

Ernesto-Hernandez-CataErnesto Hernández-Catá

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