• This Blog on The Cuban Economy is dedicated to Cuba's Generation "A". Although inspired by Yoani Sánchez' 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 that was brought to my attention by Andrew Johnston of Ottawa: ".. ... 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."

    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.

Liberating Cuba’s Long-Suppressed Resource: Entrepreneurship

By Arch Ritter

In early 1996, I visited the home of a high Cuban official with whom I had become acquainted.  While there, a “colero or  “queuer” arrived after having waited in the queue to purchase the family’s rations of cigars and cigarettes among other things. (A source of income for many people in Cuba was to stand in line and purchase short-supply rationed products for other families.)  Although no members of the family smoked, they happily collected their rationed tobacco products for resale on the black market in order to acquire other necessities. My friend the official was as “revolutionary” as anyone that I have known in Cuba, going so far in the early years of the Revolution as to return the “per diems” that he saved from foreign travel to the government rather than buying such things as shoes for his children. However, by 1996, buying and selling on the black market was natural and comprehensible for him and most other people.

I. From “School for Socialism” to “Nation of Entrepreneurs”

During the thirty years or so in which the exercise of entrepreneurship in a market-oriented setting was largely prohibited, Cuba in fact created a nation of entrepreneurs.  Although the intention was to convert Cuba into a “school for socialism,” the reality is that Cuba has also been a school for market-oriented entrepreneurship.  This is one of the more significant paradoxes of the Cuban Revolution.

The nature of Cuba’s planned economy itself inadvertently promoted widespread entrepreneurial values, attitudes, behavior, and savoir-faire as citizens of necessity have had to buy and sell, hustle and “network” in order to improvise solutions to their personal economic problems.  The most important phenomenon in this process was the rationing system, implemented in 1961. This system was designed to provide everyone with a basic supply of foodstuffs, clothing, and household consumables, in order to achieve a minimum level of equality of consumption and real income.  It provided every individual (or household for some products) with fixed monthly quotas of foodstuffs, cigarettes, or household consumables and with annual quotas for clothing and footwear.  Everyone received the same allocations of products at controlled and generally low prices (in relation to average monthly incomes).  (Children and those with special health problems such as diabetics were treated differently and provided with special food rations.)  Because everyone received essentially the same rations, many people would receive some items that they did not want or which were of lower priority than other items.  In the context of generalized shortage and excess demand which existed with varying intensities since 1962, especially after 1989, everyone had an incentive to sell the rationed items they did not want or to trade them for other products they did want.  For example, non-smokers would purchase their cigarettes and cigars through the rationing system and would then give them to other family members or friends, resell them on unofficial markets, or trade them for other products. Thus, the rationing system converted many people into “mini-capitalists.”

The situation of excess demand and generalized shortage, especially after about 1989 when the subsidization from the Soviet Union ceased, also meant that anyone with privileged access to a product at an official price could resell it at a higher free-market price or in the dollar economy.  There was therefore a strong incentive making a profit from exchanging many types of product between the fixed-price official sources and the unofficial or “black market” determined price.  Related to the above phenomenon was “amiguismo” or “sociolismo” or “partner-ism”, that is, the reciprocal exchange of favors.  While such reciprocity probably occurs in all countries and in many different contexts, it took on some important additional forms in Cuba.  Basically, any person with control over resources could exchange access to those resources for some current or future personal material benefit.   Cultivating friends or associates in this way was vital for assuring oneself and one’s family access to the goods and services necessary for basic material well-being.  Complex networks of reciprocal obligations thus became an important part of the functioning of the economy.  Daily life involved continuing endeavors in maintaining the personal relationships necessary to ensure access to necessary goods and services through the unofficial channels or through the official channels unofficially.

In short, citizens in their everyday material lives had to behave in an entrepreneurial manner.  People had to explore and evaluate new economic opportunities, to acquire the consumer goods they and their families needed, to sell some consumer goods (or in some cases outputs of goods and services), to bear uncertainty, face risk and take ultimate responsibility, and to invest in the maintenance of their supply and market networks, all under hard and unforgiving budget constraints.

A second area where entrepreneurial action was necessary was the central planning system itself. In a perfectly functioning planning system, enterprise managers would have little to do besides obeying and implementing orders.  But because the planning system could not and cannot work perfectly especially in the face of continuing disruptions and uncertainty, enterprise managers had to take initiatives in resolving unforeseen problems. Frequently, solutions to such problems were to be found outside the normal channels of the planning system and required improvised responses by the enterprise managers. This often involved enterprise managers obtaining the required inputs through negotiations with other enterprises, with superior officials, or with superiors or inferiors in other sectors or Ministries.  In these negotiation processes, political argumentation, political or Party “amiguismo” or “sociolismo” (i.e. the exchange of favors within the Party for political and material benefit) as well as economic criteria were central, and economic management was therefore highly political. Managers throughout the Cuban economy had to invest large amounts of time and energy in resolving such input-supply problems. Indeed, their performance depended upon their entrepreneurial success in operating “outside the plan.”

While entrepreneurial talents have been developed broadly among the population, their exercise until 1993 was for the most part restricted to the important but low-level everyday tasks of sustenance and survival, often carried out in the underground economy or in “black markets.”  But when the space available for entrepreneurial activity was increased with the liberalization of microenterprise beginning in September 1993, the expansion and diversification of micro-entrepreneurial activity was impressive.

II. Liberating Cuban Entrepreneurship

The advantageous consequences of further policy liberalization towards micro-enterprise have been illustrated dramatically by the arts and crafts market and by the Barrio Chino. The production of arts and crafts, largely for the tourist market, expanded immensely and the quality and diversity of the products has improved greatly after 1993. It is now a major source of foreign exchange for Cuba, though statistics on this do not seem to exist. Similarly, the quasi-private restaurants in the Barrio Chino that enjoyed a cultural exemption from the 12 chair size-limitation emerged some time ago as dynamic, large, diverse and efficient restaurants – perhaps the best in Havana. They are a living example of what many sectors of the Cuban economy could become with further relaxation of restrictions and a reasonable  tax regime were implemented.

The liberalization of licensing and the other policy changes that were introduced in 2010 and 2011 have already born fruit. (The policy reforms are outlined here Raul Castro and Policy towards Self-Employment and here: State Sector Lay-offs then Private Sector Job Creation.) The numbers of micro-enterprises have increased significantly even if the initial objective of 500,000 new jobs in the sector by March 31 2011was not achieved. This is illustrated in the accompanying chart.

Source: Republica de Cuba, Oficina Nacional de Estadisticas (ONE), Anuario Estadistico de Cuba, various issues

While the task of modifying the policy framework for the micro-enterprise sector is incomplete, major improvements have been instituted so far and more are in the process of implementation. In the summary presented in Table 1, it can be seen that advances have been made in a number of areas, notably licensing and “de-stigmatizing”. Progress has been made or promised in other areas. In still other areas, some reforms have been introduced but further action is desirable. And in a few areas there has been no action yet.

It is worth noting again the benefits that a deeper liberalization of policy towards small enterprise would generate. These would include:

  • More productive employment would be created, a vital objective if redundant state workers are to be reabsorbed into the economy.
  • An increase in small enterprise would increase competition, lower prices, improve quality and broaden diversity of the goods and services produced.
  • Incomes would be generated.
  • The average levels of incomes in the small enterprise sector would tend to be driven to the average national level if it were opened up with free entry for anyone wanting to establish a micro-enterprise.
  • Citizens would gain when reduced effort and time was necessary to obtain the goods and services necessary for survival.
  • Improved productivity of small enterprises would permit higher material well-being throughout Cuban society.
  • The massive underground economy would shrink.
  • Tax revenues from the sector would increase as it expanded.
  • Foreign exchange earnings and savings would occur as domestic products replaced imported products and as markets for tourists and for export expanded.
  • Innovation and improvement would be promoted.
  • Urban and rural commercial revival would occur.
  • The general quality of life would be improved.
  • The culture of compliance and respect for public policy rather than regulation avoidance and illegality would in time take effect.

Most important, further liberalization of the small enterprise sector would harness the ingenuity, creativity, industriousness and enthusiasm of a substantial proportion of the Cuban people to more productive economic activities.

Would such an apertura worsen income distribution? In the early stages, as some small enterprises increased in size, this would perhaps occur. But Cuba already has an income tax and an effective administrative system for taxing small enterprise so that this effect could be managed. Opening self-employment and small enterprise to all possible entrants would also increase competition in the sector and push prices and thence incomes towards average levels.

Barrio Chino, November 2008, Photo by Arch Ritter

 

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Mark Frank: “Cuba to grant much larger plots to farmers”

By Marc Frank;  Wed Oct 19, 2011

HAVANA (Reuters) – Cuba will greatly expand the amount of land granted to private farmers, an agriculture official said on Wednesday, as the Communist-run country struggles to boost productivity in the sector.

Under new regulations expected to be approved this year, productive farmers will be eligible for temporary land grants covering as much as 165 acres (67 hectares), up from the current maximum of 33 acres (13 hectares) mandated in a 2008 decree, said William Hernandez Morales, the top agricultural official in the eastern province of Santiago de Cuba.

“Those persons or lease holders that have really shown they can produce will be able to increase their land to five caballerias,” he said on state-run radio. A caballeria is an old land measure still used in Cuba equivalent to 33 acres (13 hectares).

The state owns more than 70 percent of the arable land on the Caribbean island, of which some 50 percent lies fallow and the remainder produces less than the private sector.

A local agricultural expert said private farmers produce 57 percent of the food on only 24 percent of the land.

President Raul Castro has made increasing food production a top priority since taking over from his brother Fidel Castro in 2008, but with poor results.

In one of his key reforms, the government has turned over 4 million acres (1.6 million hectares) of land to 143,000 farmers and would-be farmers since October 2008, but farmers have complained that the small size of the plots and other restrictions hampered production.

They said bigger plots and a recent measure that makes it easier to employ laborers were positive steps.

“This is special. They should redistribute all the fallow land that’s been overrun with brush,” Roberto Hernandez, a farmer who leased 33 acres in 2009, said in a telephone interview.

“Now the land produces nothing, when it should be producing root vegetables, beans, rice or what have you,” he added.

Central Camaguey farmer Jorge Echemendia agreed.

“This is what they have to do without waiting any longer. I don’t know how they do it, but when the state gives the land to the people they manage to clean it up, even if with their fingernails, and put it into production.”

Castro has also decentralized decision-making, increased prices paid for produce, opened stores where secondary farm supplies such as clothing and tools are sold and promised farmers more freedom to grow and sell their crops.

Agriculture output increased 6.1 percent through June, compared with the same period in 2010, a year that saw a 2.5 percent decline despite the reforms.

Food production remains below 2005 levels and food prices at farmers markets have increased 7.8 percent this year, according to the government. (Editing by Jeff Franks and Mohammad Zargham)

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The “Home Hardware” Cooperative Model and its Relevance for Cuba

By Arch Ritter

As Cuba moves towards a mix of economic institutions with a greater role for the market mechanism as a means of social control over economic activity as well as for private ownership, various forms of co-operative organization have some appeal. Among the many forms of cooperative enterprise that exist and could be considered by Cuba, the Home Hardware variety may have a useful role to play. Already some academic analysts in Cuba are exploring the varieties of cooperative and their relevance for Cuba. ( See New Publication from Cuba: Cooperativas y Socialismo: Una Mirada DesdeCuba).

The Home Hardware Cooperative Model

Home Hardware, is a dealer-owned cooperative, in which about 1000 individual hardware store-owners also own the larger enterprise.  Membership in the cooperative permits the store owners to obtain major economies of scale in terms of purchasing and shared buying power, advertising, comprehensive inventory management and product delivery, and store management techniques. The cooperative has permitted small owner-operated hardware stores to remain viable in small towns and urban neighborhoods. It has permitted them to survive and thrive in the face of the competition from the massive “Big Box” hardware stores such as Rona (in Canada), Home Depot,  Lowe’s Companies Inc., or even Wal-Mart.

Original Home Hardware Store, now “Home Furniture”, St. Jacobs Ontario

The establishment of the Home Hardware co-operative was spear-headed by Walter Hachborn starting at the Hollinger Hardware store in the small town of St. Jacobs Ontario in 1938, working as a stock boy for $8 per week. When Gordon Hollinger died in 1948, Walter took over many of his responsibilities, and purchased the store in partnership with Henry Sittler and Arthur Zilliax in 1950. Hachborn then undertook the difficult task of persuading his fellow retailers to join forces in the Home Hardware’s cooperative – a task requiring diplomacy and determination. (Hachborn, who – full disclosure –  is my Father’s cousin, was awarded “The Order of Canada” as well as the “Queen’s Golden Jubilee Medal” in tribute to his business achievements and community service.)

Relevance for Cuba – and Any Country

The Big Box chains exist because of their economic advantages, namely economies of scale in purchasing, marketing and advertising, and management systems plus bargaining power in their relationship with their workers. However there are also a variety of major disadvantages of the Wal-Mart type of Big Box model of retailing or of the “Starbucks” model of service provision.  Among these are:

1.      Major concentrations of income and wealth in the hands of the few owners of the chains. (The Walton family members have estimated assets of $US 92 billion making then the wealthiest family in the world. )

2.      Damage to local communities and neighborhoods as commercial live gets sucked out of them to the sites of the Big Box stores.

3.      Environmental costs as long distance driving to the big stores replaces closer access to community stores.

4.      Exclusion of smaller scale local sources of products in favor of massive low-cost purchases for all their stores from single sources – usually from China, thereby helping to kill off local producers.

5.      Unpleasant shopping experience, (e.g. wandering around large spaces looking for a particular item with no assistance or guidance to be found.)

Already Cuba has a number of state-owned chains of stores,restaurants and hotels such as Tiendas Universo (CUBANACAN S.A.), Tiendas Panamericanas (CIMEX S.A.), Tiendas Caracol (HORIZONTES  Hoteles S.A.), Tiendas y Supermercados de la Sociedad Meridiano S.A. (CUBALSE Corporation; closed in 2009), Tiendas TRD Caribe (GAVIOTA S.A. owned by the militayr), and Tiendas de Habaguanex. If these were to be privatized under concentrated ownership, some of the problems of the Wal-Mart or Starbucks types of conglomerate would be generated or continued.

Tienda Cimex

In the years ahead, it is likely that Cuba will continue to move towards greater private ownership in many areas. If a future government wishes to avoid some of the disadvantages of the Mammoth Enterprise Chain syndrome, it could consider providing encouragement to Cuban-owned cooperative networks or independent enterprises in various activities in retailing and service provision. Possible areas where such a form of organization could be useful might include hardware stores (of course), food stores, bars, coffee shops, variety stores, barber shops, estheticians services and clothing stores, among others.

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Toronto Globeand Mail, “Small acts of free enterprise attest to reform looming large in Cuba”

Small acts of free enterprise attest to reform looming large in Cuba

By SONIA VERMA
Globe and Mail, Toronto, October 18, 2011

Regime can no longer afford to finance socialist ideals upon which it was founded

Original Article Here: Small acts of free enterprise….

Just off the Malecon, Havana’s famous seaside corniche, Omar Gatierrez strikes a deal to sell his ’56 Oldsmobile for the rough equivalent of $14,500. It’s the most money he’s ever made.

At a burger joint not far from there, Alfredo Garcia, an economist, shells out twice as much as he normally would for a strawberry milkshake just because it tastes good. Around the corner, Lazaro Rafael, a mechanic, haggles over the price of repairing an infirm Peugeot on the street near the sea where he lives.

Nerci, Cuenta Propista and Artisan, Habana Vieja, Photo by Arch Ritter, November 2008

These small acts of free enterprise would have been inconceivable in Fidel Castro’s Cuba. Under his younger brother, Raul, however, they add up to dramatic economic reform that is quietly reconfiguring the country into something altogether different. Cuban authorities are careful to depict this restructuring as upgrading the revolution rather than forsaking it, yet underpinning it all is an overriding sense of urgency to change.

Floated by fickle Chinese credit and Venezuelan oil, the regime can no longer afford to finance the socialist ideals upon which it was founded. With Cuba at a crossroads, the future remains unclear. One path appears to lead to nowhere, should the regime prove too brittle to allow private enterprise to truly flourish. The alternative route, others worry, would morph the island into something resembling a Floridian mega-mall.

Both outcomes would be disastrous. Most analysts believe the country’s true destiny lies in becoming a mixed economy where the state loosens its grip over some sectors but maintains leverage over others. The aim, Cuban sources said, is to have 35 per cent of the economy privatized by 2015. Achieving this elusive balance, however, will prove exceedingly difficult. The reforms that have been rolled out so far – such as allowing cars to be sold and licensing small businesses – have been relatively painless, eclipsing more agonizing ones that lie ahead.

For Cubans, many of whom have virtually no memory of life before the revolution, the reforms are confusing and their consequences unknown. The regime has vowed to implement a progressive tax structure to avoid a Russian-like result where vast amounts of wealth is concentrated in the hands of the few. But a schism of class – however minor – would symbolically violate Mr. Castro’s symbolic contract with his people.

Over the next five years, for instance, the regime intends to lay off up to a million public-sector workers, equalling 10 per cent of its work force. Food rations, for which many Cubans rely on for their daily sustenance, are also due to be phased out. Betting on an increase in productivity, the government has promised to boost wages, but economists doubt it will be enough to keep pace with a rising cost of living, as goods are removed from the ration card.

“These larger state-led reforms are going to be wrenching,” said Christopher Sabatini, editor-in-chief of Americas Quarterly. One of the biggest obstacles to real change in Cuba, he argues, is the awkward paradox the regime finds itself in: Downgrading its leverage in order to save itself from ruin.

“There’s an inherent tension in any economic reform that involves the Cuban state reducing its own authority over the economy, which is [Fidel] Castro’s real legacy,” Mr. Sabatini explained.

Another problem is that while Cuban authorities seem to have a clear idea of the main focus of the restructuring – reducing the state payroll, nourishing the private sector, boosting food production – the government is vague on its timeline for implementing the changes and even more so on how it plans to deal with any fallout. The haphazard transition means that whenever one of the 311 new decrees issued by the Communist Party at its April Congress becomes law, few people on the street in Havana seem to notice or understand why they should care.

Josefina Vidal, director of the North America Department for Cuba’s Ministry of Foreign Affairs, said the protracted rollout is deliberate: “It’s a slow process because we are very much interested in avoiding any kind of social impact. We don’t want anybody to be abandoned or left behind,” she said in a recent interview with The Globe And Mail. Some measures, she acknowledged, were easier to implement than others.

When it comes to defining Cuba’s end goal, officials are equally open-ended, maintaining the state is not trying to emulate other countries – such as China or Vietnam – but rather aiming to pursue an entirely unique set of reforms. Observers, however, disagree.

“They want this to be a made-in-Cuba type of economic system. But if it is made in Cuba it certainly resembles the Chinese approach, and it’s moving more and more in that direction,” said Arch Ritter, an economist at Carleton University who specializes in Cuba.

As he points out, Cuba’s economy is nowhere near China’s in terms of scale or scope. Also, China’s ruling Communist Party is less ossified than Cuba’s, which is still dominated by octogenarians. The recent death Cuba’s minister of defence, Julio Casas Regueiro, at the age of 75, highlighted the frailty of the state’s older generation of leaders who are still firmly in charge.

Without political renewal, analysts say Cuba’s economic reforms are doomed. “They are trying to let the economic genie out of the bottle while keeping the political genie in. That’s not going to work,” predicted Arturo Lopez-Levy, a former political analyst in the Cuban Interior Ministry and a lecturer at the University of Denver.

Meanwhile it remains unclear how Cuban society, much less the regime, will deal with social changes that will inevitably follow the economic ones. How will the state prevent Cuba’s new generation of entrepreneurs from accumulating the kind of wealth that could give rise to a new upper class? How will it ensure all Cubans have access to capital, not just the ones with relatives in Europe or Miami? How will it provide incentives for productivity and initiative if it plans to heavily tax the rewards of that?

“Don’t be fooled,” Mr. Sabatini says. “They want to preserve the system in many ways … at least the perks of the system.”

As sweeping as Cuba’s current economic reforms are, key enterprises such as mining, oil and sugar production will remain in the hands of the state. Cuba’s health system and its lucrative tourist industry will also remain unchanged, at least for now. The rebranding of the revolution, Mr. Sabatini argues, is still very much a work in progress.

“What was Castroism anyways? It was really about survival. Cuba’s future will boil down to whatever it needs for political and economic survival, rather than any principled commitment to the revolution,” he said.

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From the Toronto Globe and Mail: CUBA: Fifty years later, an agricultural revolution

Sonia Verma

Toronto Globe and Mail, Thursday, Oct. 13, 2011 9:21PM EDT

Original Article Here: CUBA: Fifty years later, an agricultural revolution

For years the land lay fallow, swallowed by thorny weeds. Strangers called it a lost cause. Armando Aroche saw a golden opportunity.

It was 2008 and Raul Castro, in his first major speech as Cuban President, made a shocking admission: 50 years of state-controlled agriculture had failed, resulting in chronic food shortages. The island was importing 80 per cent of the food it subsequently rationed for public consumption.

Mr. Castro offered free, 10-year leases on idle land to anyone willing to try their hand at farming.

Mr. Aroche, a rotund, 53-year-old peasant, was among the first to queue in San Antonio, a small municipality a half-hour drive from Havana.

“I was not afraid of anything,” he recalled. He had a faint childhood memory of a well on the southwest corner of a particular stretch of land, which he requested. He was awarded 7.28 acres and named his farm “San Juan.” He borrowed his neighbour’s tractor and irrigation system and, against all odds, managed to coax 68 tonnes of sweet potatoes and tomatoes from the earth that year, which he sold back to the state at a profit.

Today, he gazes out on his fields from beneath his sunhat. Too much rain means his tomato plants are flowering. His 1952 Ferguson tractor is on its last legs. A team of oxen plow the land as if in slow motion.

But despite these hardships, farmers such as Mr. Aroche are being held out as shining examples of the new face of Cuban socialism. The cabbage, onions, carrots and lettuce he cultivates are described by government officials as the fruits of their “new and improved system” that has boosted food production by awarding more land to peasants who farm it for a profit.

Mr. Aroche mounts his tractor

Since Decree No. 259 was passed in 2008, 170,000 peasants across Cuba have been granted land. In San Antonio alone, 410 people have applied for land with 283 of those applications granted.

“Pretty soon we will run out of lands to grant,” confessed Georgina Gutierrez Jimenez, president of the local chapter of the National Association for Small Farmers.

Each farmer can apply for a land grant of 13.48 acres. If the farm proves successful, they can apply for another. Farmers can also use their profits to buy their own equipment, insecticides and fertilizer – something the state used to strictly control. Each farm owner pays a 5-per-cent income tax to the state, and 3 per cent to the local agricultural co-operative.

Mr. Aroche, a trained mechanic, used to work at the “state enterprise of assorted crops,” and earned the equivalent of $9 a month. He demurred when asked about his income today, but acknowledged it is exponentially higher. For the past few years, his family has been able to afford long holidays on the beach.

He employs six workers, who are each paid a monthly wage of $12, plus a yearly bonus. They help themselves to food grown on the farm and often receive a small cash “tip” at the end of each day.

The new agricultural policy has succeeded in boosting food production, officials say.

“There has been an enormous impact,” said Arturo Aleaga Cespedes, a lawyer with the National Farmer’s Association. He cites a 60-per-cent increase in the production of rice, milk, vegetables and root vegetables.

However, it’s still not enough to satisfy Cuba’s food needs.

“We produce a lot, but the demand and consumption are always increasing,” Ms. Jimenez said.

Another challenge is persuading a younger generation of Cubans to take up their leaders’ challenge and return to the land. Many, like Mr. Aroche’s own children, were educated for urban jobs in state offices that are under enormous pressure to trim their bloated payrolls.

The country’s public service is set to lose up to half a million jobs over the next five years.

Mr. Aroche’s 26-year-old daughter, Joseline, quit her job as an economist when her son was born three years ago. Now, as she contemplates returning to the work force, she faces “not a lot of options,” she said.

Her father believes the future of his family, and that of his country, lies in the land: “To work in the field is very hard. It’s something most people don’t like, but it’s work that needs to be done,” he said.

The agricultural reforms – considered radical at the time – have proved to merely foreshadow larger changes sweeping through Cuba as the government relaxes its communist grip on everything from private enterprise to real estate in an attempt to generate revenue.

“The only problem is that all of this should have been done sooner,” Mr. Aroche added.

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Cuba Standard.com, Cuba Trade and Investment News

By Arch Ritter

A fine newsletter on Cuban trade and investment issues, including broader economic, political and company news is produced by Johannes Werner, who is also the editor of the Website entitled the CubaStandard.com. While out of the price range of the  analyst or citizen interested in Cuba, it is of relevance for enterprises and some government offices. Some of the items in the Newsletter also appear on the Website as well.

The Table of Contents of the most recent issue is presented below in order to provide an idea of the type of analysis and coverage included  in the Newsletter. The particulars on the publication are also presented below.

The Website for the the Cuba Standard is located here: Cuba Standard.com, Cuba Trade and Investment News

Table of Contents:

U.S. inching closer to talks on offshore oil safety.

Government eases auto sales restrictions.

Analysis: The Cuban diaspora, A role for exile money and know-how?

OFAC fines Texas oil supplier.

U.S. lawmakers warning Repsol.

Jorge Piñón: What Washington should be doing.

PdVSA official: China ‘almost sure’ to fund Cuban refineries.

Government reform shifting into overdrive.

Cuba to access global pharmaceutical markets via Brazil.

Cuba seeking South African funding for medical projects.

Iran boosts line of credit.

Vietnam seeking debt arrangement.

Vietnam working with Cuba on biogas

BY THE NUMBERS, FIRST HALF 2011

C o m p a n i e s:

Pemex eyeing Repsol’s Cuba operations;

Sherritt appoints new director ;

China, Cuba to jointly develop vaccine

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Yoani Sanchez on Cuba’s Current Predicament: “ Country for Old Men”

BY YOANI SÁNCHEZ

This essay was originally published in Foreign Policy, October 12, 2011. It can be found here:  “ Country for Old Men” or here: http://www.foreignpolicy.com/articles/2011/10/11/country_for_old_men

At the end of his July 31, 2006, broadcast, the visibly nervous anchor on Cuban Television News announced that there would be a proclamation from Fidel Castro. This was hardly uncommon, and many Cubans no doubt turned off their TVs in anticipation of yet another diatribe from thecomandante en jefe accusing the United States of committing some fresh evil against the island. But those of us who stayed tuned that evening saw, instead, a red-faced Carlos Valenciaga, Fidel’s personal secretary, appear before the cameras and read, voice trembling, from a document as remarkable as it was brief. In a few short sentences, the invincible guerrilla of old confessed that he was very ill and doled out government responsibilities to his nearest associates. Most notably, his brother Raúl was charged with assuming Fidel’s duties as first secretary of the Communist Party’s Central Committee, commander in chief of the Revolutionary Armed Forces, and president of the Council of State. The dynastic succession had begun.

It was a miracle that the old telephone exchanges, with their 1930s-vintage equipment, didn’t collapse that night as callers rushed to share the news, in a code that was secret to no one: “He kicked the bucket.” “El Caballo” — the Horse — “is gone.” “The One is terminal.” I picked up the receiver and called my mother, who was born in 1957, on the eve of Castro’s revolution; neither of us had known any other president. “He’s not here anymore, Mom,” I said, almost whispering. “He’s not here anymore.” On the other end of the line she began to cry.

It was the little things that changed at first. Rum sales increased. The streets of central Havana were oddly empty. In the absence of the prolific orator who was fond of cutting into TV shows to address his public, homemakers were surprised to see their Brazilian soap operas air at their scheduled times. Public events began to dwindle, among them the so-called “anti-imperialism” rallies held regularly throughout the country to rail against the northern enemy. But the fundamental change happened within people, within the three generations of Cubans who had known only a single prime minister, a single first secretary of the Communist Party, a single commander in chief. With the sudden prospect of abandonment by the papá estado — “daddy state” — that Fidel had built, Cubans faced a kind of orphanhood, though one that brought more hope than pain.

Five years later, we have entered a new phase in our relationship with our government, one that is less personal but still deeply worshipful of a man some people now call the “patient in chief.” Fidel lives on, and Raúl — whose power, as everyone knows, comes from his genes rather than his political gifts — has ruled since his ultimate accession in February 2008 without even the formality of the ballot box, prompting a dark joke often told in the streets of Havana: This is not a bloody dictatorship, but a dictatorship by blood. Pepito, the mischievous boy who stars in our popular jokes, calls Raúl “Castro Version 1.5” because he is no longer No. 2, but still isn’t allowed to be the One. When the comandante — now barely a shadow of his former self — appeared at the final session of the Communist Party’s sixth congress this April, he grabbed his brother’s arm and raised it, to a standing ovation. The gesture was intended to consecrate the transfer of power, but to many of us the two old men seemed to be joining hands in search of mutual support, not in celebration of victory.

Raúl’s much-discussed reforms followed the supposed handover of power, but in reality, they have been less steps forward than attempts to redress the legal absurdities of the past. One of these was the lifting of the tourist apartheid that prevented Cubans from enjoying their own country’s hotel facilities. For years, to connect to the Internet, I had to disguise myself as a foreigner and mumble a few brief sentences in English or German to buy a web-access card in the lobby of some hotel. The sale of computers was finally authorized in March 2008, though by that time many younger Cubans had assembled their own computers with pieces bought on the black market. The prohibition on Cubans having cell-phone contracts was also repealed, ending the sad spectacle of people begging foreigners to help them establish accounts for prepaid phones. Restrictions on agriculture were loosened, allowing farmers to lease government land on 10-year terms. The liberalization brought to light the sad fact that the state had allowed much of the country’s land (70 percent of it was in state hands) to become overgrown with invasive weeds.

While officially still socialist, the government has also pushed for an expansion of so-called self-employment, masked with the euphemism of “nonstate forms of production.” It is, in reality, a private sector emerging in fits and starts. In less than a year, the number of self-employed grew from 148,000 to 330,000, and there is now a flowering of textile production, food kiosks, and the sale of CDs and DVDs. But heavy taxes, the lack of a wholesale market, and the inability to import raw materials independent of the state act as a brake on the inventiveness of these entrepreneurs, as does memory: The late 1990s, when the return to centralization and nationalization swept away the private endeavors that had surged in the Cuban economy after the fall of the Berlin Wall, were not so long ago.

So for now, the effects of the highly publicized reforms are barely noticeable on our plates or in our pockets. The country continues to import 80 percent of what we consume, at a cost of more than $1.5 billion. In the hard-currency stores, the cans of corn say “Made in the USA”; the sugar provided through the ration book travels from Brazil; and in the Varadero tourist hotels, a good part of the fruit comes from the Dominican Republic, while the flowers and coffee travel from Colombia. In 2010, 38,165 Cubans left the island for good. My impatient friends declare they are not going to stay “to turn off the light in El Morro” — the lighthouse at the entrance to Havana Bay — “after everyone else leaves.”

The new president understands all too well that transformations that are too deep could cause him to lose control. Cubans jokingly compare their political system to one of the dilapidated houses in Old Havana: The hurricanes don’t bring it down and the rains don’t bring it down, but one day someone tries to change the lock on the front door and the whole edifice collapses. And so the government’s most practiced ploy is the purchase of time with proclamations of supposed reforms that, once implemented, fail to achieve the promised effects.

But this can only continue for so long. Before the end of December, Raúl Castro will have to fulfill his promise to legalize home sales, which have been illegal since 1959, a move that will inevitably result in the redistribution of people in cities according to their purchasing power. One of the most enduring bastions of revolutionary imagery — working-class Cubans living in the palatial homes of the bygone elite — could collapse with the establishment of such marked economic differences between neighborhoods.

And yet the old Cuba persists in subtle, sinister forms. Raúl works more quietly than Fidel, and from the shadows. He has increased the number of political police and equipped them with advanced technology to monitor the lives of his critics, myself among them. I learned long ago that the best way to fool the “security” is to make public everything I think, to hide nothing, and in so doing perhaps I can reduce the national resources spent on undercover agents, the pricey gas for the cars in which they move, and the long shifts searching the Internet for our divergent opinions. Still, we hear of brief detentions that include heavy doses of physical and verbal violence while leaving no legal trail. Cuba’s major cities are now filled with surveillance cameras that capture both those who smuggle cigars and those of us who carry only our rebellious thoughts.

But over the last five years the government has undeniably and irreversibly lost control of the dissemination of information. Hidden in water tanks and behind sheets hanging on clotheslines, illegal satellite dishes bring people the news that is banned or censored in the national media. The emergence of bloggers who are critical of the system, the maturation of independent journalism, and the rise of autonomous spaces for the arts have all eroded the state’s monopoly on power.

Fidel, meanwhile, has faded away. He appears rarely and only in photos, always dressed in the tracksuit of an aging mafioso, and we begin to forget the fatigues-clad fighting man who intruded on nearly every minute of our existence for half a century. Just a year ago, my 8-year-old niece was watching television and, seeing the desiccated face of the old commander in chief, shouted to her father, “Daddy, who is this gentleman?”

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New Publication: The Cuban Diaspora in the 21st Century

A new analysis of the potential role for the Cuban diaspora was made public today – October 7, 2011 – in Washington and will be presented in Miami on October 10. It was produced under the auspices of the Cuban Research Institute of Florida International University and more specifically, the Project entitled “The Cuban Diaspora and the Development of the Entrepreneurial Sector” of the Cuban Research Institute in cooperation with the Cuba Study Group.

As can be seen from the Table of Contents below, the Report, while concise, is wide ranging in scope and constructive in orientation. It may prove to be an important catalyst in generating changes in attitudes and eventually policy on both sides of the Florida Straits. At least, I hope that this is the case.

A distinguished group of scholars produced this Report, including Uva de Aragón (Florida International University), Jorge Domínguez (Harvard University), Jorge Duany (the University of Puerto Rico), and Carmelo Mesa-Lago (University of Pittsburgh).  Orlando Márquez, director of Palabra Nueva, a journal of the Havana Catholic Archdiocese, joined the committee in March. The coordinator for the project is Juan Antonio Blanco (Florida International University), who also coauthored the report.

The complete study is available here:

The Cuban Diaspora in the 21st Century, FIU, October 2011

From the Preface by Juan Antonio Blanco:

The authors have analyzed relations between several states and their diasporas and studied the problems and potentials associated with the Cuban diaspora’s potential role in Cuba’s national development. While this document does not attempt to evaluate the measures adopted by the Cuban government in August 2006, it suggests that Cuba’s so-called economic update would have a better chance of success were it accompanied by a parallel update of the island’s migratory policy.
The authors have reviewed the tensions, conflicts, and traumas in the history of Cuban state’s relationship with its diaspora, but their emphasis is always on the future. Without glossing over problems, they prefer to scan the horizon for possibilities that could bring about a genuine normalization of relations between the diaspora and its country of origin; in particular, changes in existing migratory policy to bring it in line with universally recognized standards. Their analysis also includes the obstacles posed by United States policy toward Cuba, especially for the Cuban diaspora, and the need for their removal.
The members of the committee—who volunteered their services to produce this report—have formulated a series of recommendations for respectful submission to the governments of Cuba and the United States, as well as to the Cuban diaspora and Cuban civil society.
As the authors note in the conclusion to this document, “Many of the observations, conclusions, and suggestions expressed in this report are aimed at tomorrow, with the hope that they will eventually be implemented in whole or in part. Tomorrow can begin today, however, if the actors with decision-making power in this area so choose, as Cuba so urgently needs.”

Table of Contents

Preface 5
Summary 7
Introduction 11

A Better, Shared Future 11
Points of Departure  12
Advantages of a Shared Future 13

State-Diaspora Relations 16

Haiti: A strategically selective state 18
The Dominican Republic: A Transnational Nation-State 20
Cuba: Between Disinterest and Denunciation 23
Policies for Improving State-Diaspora Relations 28
The Role of Government Institutions 33
Relations with Non-Governmental actors 34
Dual Citizenship Laws 34
External Voting 35
Investment Incentives  35
“Brain Circulation” 35
Ethnic Tourism 36
Nostalgic trade 36
Relations with Charitable and Voluntary Organizations 37

The Cuban Diaspora: Possibilities and Challenges 38

The Cuban Diaspora in the United States 38
New Policies and the Diaspora  45

The Diaspora: Resources and Possibilities 47

Economic Capital  48
Social Capita 50
Human Capital 50
Symbolic Capital 51
Possible Diaspora Support for the Non-State Sector  52
Venture Capital or Joint Investment in Small Enterprises  53
Using Symbolic and Social Capital to Attract Financial Capital  55
Access to Foreign Markets, Marketing, and Outsourcing 56
Tools, Inputs, and Technology 57
Training and Consulting 58
Obstacles and Challenges 59
Policy Framework: Updating Cuba’s Migration Laws 61
The Subjective Context  63

Conclusions and Recommendations .65

Conclusions 65
Recommendations 68
To the Government of Cuba  69
To the Government of the United States70
To the Cuban Diaspora 72
To Cuban Society. 72
Epilogue 73

 

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Miriam Celaya on Corruption: “About Controls, Comptrollers and the Uncontrollable”

An interesting and cutting critique on corruption from the Blog Sin Evasión by Miriam Celaya. October 3 2011

Miriam Celaya

One of the first rulings of General R. when he assumed the enthronement to power (please allow me to flatter the younger Castro’s vanity) was to create a system to detect and to put a stop to the rampant corruption that has been entrenched in the country through all spheres and at all levels. It is suspected that corruption is generalized, but the controls and audits reach only to a point … past this point, it might cause dangerous vertigo.

The first (detecting corruption) should be extremely easy. It is obvious and jumps up at you without much effort. The second (putting an end to it), is another matter. Because the General, of course, initiated from the start a process on the surface – not exactly from above — and downward, just where the pockets of the regime resent it the most, and many illustrious heads have rolled since then, including some gray-haired celebrity ones or some that don’t even have enough hair for a comb-over and only until recently were part of the trusted court of their olive green Majesties.

The first of the renowned Band of Seven to have been sacked were Otto Rivero, Felipe Pérez Roque, Francisco Soberón, José Luis Rodríguez, Carlos Lage, Carlos Valenciaga Estenoz and Fernando Rodríguez, who apparently were some sort of threat to the higher epaulets in the palace. “Revolutionaries” of the old guard, who until recently were known for their proven commitment to the regime have joined them.

Apparently, the effects of the Finance Ministry are proving more outrageous than what is prudent, so the official press has been given explicit orders to keep silent. That is, even more silent. So the media, mainly the written press, is engaged, with zeal worthy of better causes, to bring to the light of day the misuse of resources by the manager of some bakery or some agrarian co-op, but sweeps under the rug the dirt of ministries and of other senior bureaucrats with titles that are longer than their own names.

It seems that no one escapes the scrutiny of the severe comptroller of impulses of the purifying will of the General. Personally, I think it’s like a cash count, in which the incoming treasurer makes an effort to purify the accounts so that their own gains are not resented. Because in the state we find ourselves, it could be said that comptrollers have defecated against the ceiling fans, and more courtiers have been hit with feces than their majesties had thought. From ministers, managers of firms (foreign and Cuban), aviation directors, corporate officers of various magnitudes, including the brand-new and militant ETECSA, and countless numbers of minor number of minor entourages that have indeed been publicly beheaded.

But what more curious individuals won’t stop wondering, those who won’t stop misbehaving, who wonder about everything and are always full of ill-intentions, is who will be the leaders charged with renovating a model that seems to generate epidemics of corrupt leaders? What guarantees will there be that of those who will assume the responsibilities of the deposed won’t end up corrupted? What are the chances that a government that has not been able to create morally able replacements to carry out the “high mission of the revolution” will ever succeed in putting together, in the short run, a group of responsible and honest leaders? Will they create leadership schools? Will the General be able to trust anyone under the age of 75? Can we trust (and this is the clincher) the selection capability of the General?

But, in the midst of this sea of corruption of those who used to manage just a small slice of the power and the money, maybe the hardest questions to answer are precisely those that seem more urgent and logical: Are our president and his closest cronies the only “pure” ones we have left to take the helm in the midst of so many storms? Is the General “auditable”? Who is the comptroller who scrutinizes the financial dealings of the administration of the country?

Let’s sit and wait for the answer from the brand-new Comptroller General of the Republic.

 

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Crecimiento económico y sector externo en Cuba

A descriptive analysis of Cuba’s external sector and economic growth has been published by Jorge Mario Sanchez, of the Centro de Estudios sobre la Economia Cubana. Here is the hyperlink:

Jorge Mario Sanchez, Crecimiento económico y sector externo en Cuba

Jorge Mario Sánchez

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