• 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.

Oil Diplomacy to the Rescue? Cuban Drilling off Florida Keys to Begin by End of the Year

John Daly,Oil Price; Tuesday, 27 September 20, Courtesy of Jorge R. Piñón.

[Oil Price is a well respected oil price research and analysis publication]

For 51 years the U.S. has imposed an economic embargo against Cuba, severely crippling the island’s economy for its effrontery in choosing a socialist path for development, a policy confirmed and intensified in the wake of the 1962 Cuban Missile Crisis.

Now the unlikeliest of economic interests may be bringing the two countries closer together – oil.

Specifically, oil deposits in the Florida Straits between Key West and Cuba.

Spain’s largest oil company, Repsol-YPF, has contracted the massive Italian-made Scarabeo 9 semi-submersible oil rig, currently en route from Singapore, to arrive in the Florida Straits by the end of the year after the end of hurricane season to begin exploring Cuba’s offshore reserves. Repsol-YPF, which drilled Cuba’s first onshore well in 2004, intends initially to drill six wells with the Scarabeo 9 rig.

Cuba, which currently produces a paltry roughly 50,000 barrels of oil per day from onshore sources, is understandably keen to begin exploiting its offshore reserves, which estimates place between 5-20 billion barrels of crude in a 43,000 square-mile drilling area containing 59 maritime fields it has designated off its northern coast. While Fidel Castro’s close ally, Venezuelan Hugo Chávez currently dispatches 120,000 bpd to Cuba on very favorable financing terms, the arrangement is heavily dependent on the friendship between octogenarian Castro and cancer-stricken Chávez, hardly a recipe for permanency.

While Repsol-YPF is the first out of the gate, other concessionaires include Norway’s Statoil ASA, India’s state-owned Oil and Natural Gas Corporation Ltd (ONGC) and Brazilian state oil company Petroleo Brasileiro, or Petrobras.

Note the total absence of U.S. oil companies – that’ll punish those pesky Commies!

While the 1982 United Nations Convention of the Law of the Sea (UNCLOS) maritime treaty provides littoral nations with a 200-mile Exclusive Economic Zone (EEZ) extending 200 miles offshore for exploiting maritime reserves, in 1977 U.S. President Jimmy Carter signed a treaty with Cuba that essentially split interstate waters and created for Cuba an “exclusive economic zone” extending from the western tip of Cuba northward to roughly 50 miles from Key West, which Havana then divided into 59 parcels for leasing.

So, what is Washington’s view of the latest developments? Depends how close you get to Florida, where politicians rely on the anti-Castro Cuban émigré vote to stay in power.

Congressional leaders like Cuban-born Republican House of Represenatives member Ileana Ros-Lehtinen and U.S. Senator Florida Democrat Bill Nelson would like to see Cuba scrap its offshore drilling plans altogether, a most unlikely scenario.

A more realistic approach is embodied in last week’s visit to Cuba by International Association of Drilling Contractors chief executive Lee Hunt, who as part of a joint Environmental Defense Fund traveled to the island with William Reilly, a former Environmental Protection Agency administrator and co-chair of the White House task force investigating the 2010 BP oil spill in the Gulf of Mexico, Royal Dutch Shell former vice president of deepwater drilling Richard Sears and Environmental Defense senior attorney Fund Dan Whittle to discuss plans to deal with possible oil spills from the Cuban projects, and whether U.S. firms might participate in cleanup activities.

The 64,000 peso question is whether Washington will allow such participation. Despite the embargo the Obama administration has said it will let U.S. companies do business with Cuba’s foreign partners in that context on a case-by-case basis. The reality of a Cuban oil spill having effects on U.S. waters has even allowed a bit of reality to intrude on Ros-Lehtinen’s policies, as she recently observed that “should a disaster occur and Florida’s waters be threatened, U.S. regulations could allow U.S. oil spill mitigation companies to engage in clean-up activities.”

Another potential factor in influencing Washington’s decisions is that Repsol-YPF may not be going it alone, either. Mexican daily La Jornada reported earlier this month that Mexican state oil company Petroleos Mexicanos, more familiarly known as Pemex, is shifting from its former “Mexico first” policy and intends to begin foreign operations, including offshore drilling in Cuba. The development is hardly surprising in light of Pemex’s recent announcement that it spent $1.6 billion to raise its stake in Repsol YPF from 4.8 percent to 9.8 percent, with the idea of creating a strategic partnership. In raising its stake, Pemex said it will unite its votes on the Repsol board of directors with those of Spanish construction company Sacyr Vallehermoso, which owns 20 percent of Repsol’s shares. Pemex seems to be emulating the successful global strategy of Brazil’s Petrobras.

As Pemex, ONGC and Petrobras are all state-owned companies, while the Norwegian government owns a majority share in Statoil ASA, to interfere with these companies’ activities is to roil relations with their parent governments, and in the case of Pemex, such a stiff-necked policy could have ominous implications for U.S. energy security, as according to the U.S. Energy Administration, the United States total crude oil imports now average 9,033 thousand barrels per day (tbpd), with Mexico being the second largest source of U.S. imports, running at 1,319 tbpd.

It may be time for a rethink of U.S. policy towards Cuba. After all, Castro has outlasted the Eisenhower, Kennedy, Johnson, Nixon, Ford, Carter, Reagan, Bush I, Clinton and Bush II administrations, so it rather seems unlikely that the embargo has produced the desired effect of removing the Cuban government.

And oil spills know no nationality.

OilWells, just off the Via Blanca, the road from Havana to Matanzas, 1999

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Cuba: A Half-Century of Monetary Pathology and Citizen’s Freedom of Movement

By Arch Ritter


Article 13. (1) Everyone has the right to freedom of movement and residence within the borders of each state.  (2) Everyone has the right to leave any country, including his own, and to return to his country.
Article 30. Nothing in this Declaration may be interpreted as implying for any State, group or person any right to engage in any activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth herein.

In December 2009, I made a formal invitation to two Cuban citizens to visit Canada, following the official “Procedure for Inviting a Cuban National to Visit Canada” as laid out by the Cuba’s Ministry of Foreign Affairs (MINREX). I paid the required Consular Fee of $CDN 256.00 for each invitation. The two Cuban citizens invited were Yoani Sanchez and Miriam Celaya. I thought naively and foolishly that while Yoani Sanchez had been denied the right to leave Cuba a number of times before December 2009 when she had been invited by official institutions, perhaps a personal invitation would be successful. I of course was wrong. The Exit Permits of course were refused. The Consulate of Cuba in Ottawa of course refused to return the $512.00.

Yoani Sanchez

Miriam Celaya

The lack of freedom of movement of Cuban citizens is well known. The case of Yoani Sanchez is a cause célèbre and also a public relations disaster for the Government of Cuba. A number of analysts have written eloquently on the practice of the Cuban Government to dishonor its commitment to Article 13 of the United Nations Universal Declaration of Human Rights cited above. (See Ana Julia Faya: Nosotros tampoco viajamos libremente a Cuba, “Los permisos de entrada y salida del país son una violación de los derechos de los cubanos” and Haroldo Dilla Alfonso, “The (Non) Right of Cubans to Travel, Havana Times, February 01, 2011”

Sergio Diaz-Briquets has presented a comprehensive and comparative analysis of the Consular Fees charged by the Governmemt of Cuba for the acquisition of a passport, its renewal while abroad, and various other consular services (ASCE Conference 2010). He concluded that the Consular Fees are simply abusive. (See  S. Diaz-Briquets, Government-Controlled Travel Costs to Cuba and Costs of Related Consular Services: Analysis and International Comparisons )

However, the most egregious violation of the freedom of movement of Cuban citizens lies less in the exorbitant consular fees that are routinely charged to Cubans abroad for consular services and the Exit Permit controls over Cuban citizens and more in Cuba’s monetary and exchange rate system.  Cuba’s currency has been inconvertible for 50 years and the dual monetary and exchange rate system has prevailed for the last 20 years. Currency inconvertibility means that citizens can not routinely change their earnings for foreign currencies in order to travel freely. Instead, from 1961 to 1992 they have had to get permission from the Government to exchange their earnings in Moneda Nacional into a foreign currency. On the other hand, anyone on official government business or activities sanctioned by the Government could get access to foreign exchange. This meant that for the average citizen travel was highly restricted unless one could find a foreign sponsor to pay the bills.

With the dual monetary system coming into play in the early 1990s, the economic powerlessness of most Cuban citizens was further intensified. With the collapse of the value of the “old peso” (Moneda Nacional) vis-a-vis the US dollar (and then the convertible peso CUC) the purchasing power of earnings in the official economy also collapsed. At the exchange rate for Moneda Nacional to the US dollar at around 26 to 1, the average monthly income is somewhere around US$ 20.00. Cuba’s monetary system impoverishes Cuban citizens in terms of the international transferability of their earnings from work.

In order to travel abroad, Cuban citizens now have three options. First, they can work for some branch of the government, mixed or state enterprises or organizations such as Universities for which travel abroad on official business can occur. Second, they can marry a foreigner for convenience or in sincerity – Spaniards and Ecuadoreans have been predominant recently – who then provides hard currency funding for travel abroad. Or third, they can now convert their Moneda Nacional earnings into Convertible pesos at the ratio of 26 to 1 and then acquire foreign currency through various channels with the convertible pesos. For most citizens, travel abroad is essentially blocked by the monetary and exchange rate systems.

The central planning system and the generalized controls on the economy adopted in 1960-61 meant that inconvertibility would have happened in any case. However, inconvertibility occurred under the watch of Che Guevara, who at the time was President of the National Bank and Minister of Finance as well as Minister of Industries (which included Basic Industry, Light Industry, Mining, Petroleum, and the sugar mills. Guevera was the indisputable “czar” of the Cuban economy.

Monetary inconvertibility and the accompanying loss of freedom of movement is one of Che Guevara’s gifts to the Cuban people. This has been compounded by the monetary and exchange rate policies of the Fidel and Raul Castro Presidencies after about 1990, which generated the dual system and which have so far been unable to come to grips with it and establish a unified and convertible currency.

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At the 2010 Conference of the Association for the Study of the Cuban Economy, Larry Catá Backer  presented a challenging and insightful  analysis of the new forms of socialist multinational enterprise being used by Cuba and Venezuela from the perspective of how practices of state bartering of labor may run counter to emerging global frameworks for human rights and economic activity.

” That collision is examined against (1) recent litigation in which Cuba has been accused  (directly or indirectly) of violating international law by operating enterprises based on forced labor, (2) the possibility of conforming to the OECD’s Guidelines on Corporate Governance of State Owned Enterprises, and (3) the possibility that these enterprises will not be able to conform to the United Nation’s developing business and Human Rights project.”

Larry Catá Backer is the W. Richard and Mary Eshelman Faculty Scholar
and Professor of Law, Professor of International Affairs, Pennsylvania State University. He is the author of the  legal Blog Law at the End of the Day,
The complete Essay is available here:


Larry Catá Backer


This paper considers Cuba’s new efforts at global engagements through the device of the grannacional in its ALBA framework. The paper starts by examining the basic theory and objectives of the grannacional generally as articulated in ALBA publications as the
“concepto grannacional” that serves as the organizing framework of these multi-state socialist enterprises. It considers distinctions and implications for the division of grannacional efforts between proyectos grannacionales and empresas grannacionales. It then focuses on a specific grannacional-related project—the Misión Barrio Adentro (MBA), a socio-political barter project in which Cuba exchanges doctors and other health field related goods and services under its control for Venezuelan goods, principally petroleum.
(Convenio 2000). MBA is analyzed as an example of the application of Cuban-Venezuelan approach to economic and social organization through the state. The MBA is also useful as an illustration of the difficulties of translating that approach into forms that might conform with emerging global expectations of economic conduct by private and state actors. The recent litigation  in which Cuba has been accused (directly or indirectly) of violating international law by operating enterprises based on forced labor by both laborers and doctors, and soft law systems of governing  business conduct (Galliot 2010) serve as a backdrop against which this analysis is undertaken. For Cuba programs like MBA have served as a means
of engaging in economic globalization and of leveraging its political intervention in the service of its ideological programs in receptive states like Venezuela. (Bustamante & Sweig 2008; Kirk & Erisman 2009). It has also provided a basis for expanding Cuba’s commercial power by permitting large scale state-directed barter transactions. But when bartering involves labor as well as capital, the fundamental premises of the ALBA system—and Cuban ideological notions of the fungibility of labor and capital in the service of the state—may collide with emerging global frameworks for human rights and economic activity. That collision is examined against (1) recent litigation in which Cuba has been accused  (directly or indirectly) of violating international law by operating enterprises based on forced labor, (2) the possibility of conforming to the OECD’s Guidelines on Corporate Governance of State Owned Enterprises, and (3) the possibility that these enterprises will not be able to conform to the United Nation’s developing business and Human Rights project. MBA serves as a template both to  understand the character of the operationalization of social sector  grannacionales and also to illustrate the way in which these projects raise significant questions of international law compliance, especially the ability of these enterprises to comply with emerging standards of business conduct.

Cuba has begun the process of seriously integrating itself within an international economic architecture. It is seeking to engage in globalization on its own terms. It means to use global engagement to open another front in its great ideological campaigns against the emerging conventional system private markets driven economic globalization in favor of a more state directed and controlled system of commercial activity among states. An important venue for that
engagement has been through ALBA. ALBA has served as a vehicle for regional integration through which the ideology driving the  Cuban state is leveraged, applied and furthered by others, principally Venezuela. In the form of ALBA’s grannacional projects
and enterprises, ALBA states seek to mimic, and by mimicking to subvert, the conventional framework for economic globalization.
It is one thing to describe the ideological and functional framework for the grannacional project. It is quite another matter to consider the way these enterprises might operate on a day-to-day basis. And more importantly, it is necessary to consider the implications
of such operation of these supra-national corporations under standards of international soft and hard law. This paper has suggested the contours of the violation exposure of grannacional projects under these international norms. The very ideological foundation of the grannacional projects serves as the basis
for conflict with normative standards in effect elsewhere.
In a command economy in which there is no distinction between the political and economic sphere and where the line between obligations of citizens and of workers is blurred, the difference between a citizen’s duty to the state and involuntary servitude can be quite thin. It is unlikely that international standards will bend to accommodate substantial deviations where the functional effect of state action appears to substantially impede recognized human rights, as those are generally understood. It suggests that while Cuba and the ALBA states may avoid the consequences of breach within their own territories, their assets elsewhere may be exposed to actions based on those breaches. And, perhaps more importantly, private and public enterprises of other states will also be exposed to liability for complicity Cuba in Transition in the violations of grannacional enterprises with which they might partner. That can have significant effects on the ability of grannacional enterprises to
forge significant business relationships outside the ALBA area. Global human rights norms, then, might confine grannacional activity to the territory of the sponsoring states more effectively than any sort of politically motivated embargo. The possible exposure of Cuba for human rights violations in connection
with its labor barter transactions illustrates the nature of the problem. Cuba (and ALBA) may well have to pay a price for the choice of their collective form of economic global engagement as it collides with the emerging legal and normative framework for international human rights applies to economic activity that, ironically enough, Cuba has helped to construct.

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Cuba’s Anti-Corruption Drive: Second Canadian Trading Company Shut Down

By Marc Frank | Reuters –
HAVANA (Reuters) – Cuba has shut down one of the most important western trading companies in the country as an investigation into alleged corrupt import-export practices broadened to a second Canadian firm, foreign business sources said on Friday.

State security agents on Friday watched who entered the building in Havana’s Miramar Trade Center where Ontario-based Tokmakjian Group, one of the top Canadian companies doing business on the communist-run island has its offices. The company offices of the fourth floor were sealed with a notice that it had been closed by Cuban State Security. “We received notice on Monday from the foreign ministry and the Council of State, which is the procedure in such cases, to stop all dealings with the Tokmakjian Group,” said an employee of a Cuban company that does business with the firm. Like other people who spoke to Reuters about the clampdown on the company, she asked that her name not be used.

Miramar Trade Center

Tokmakjian Group is estimated to do around $80 million in business annually with the Caribbean island, mainly selling transportation, mining and onstruction equipment. The company is the exclusive Cuba distributor of Hyundai, among other brands, and a partner in two joint ventures replacing the motors of Soviet-era transportation equipment. Company officials were not immediately available for comment.

Cuban authorities shut down Canadian firm Tri-Star Caribbean on July 15 and arrested company president Sarkis Yacoubian. The company, considered a competitor of Tokmakjian Group, did around $30 million in business with Cuba. “Apparently Tri-Star Caribbean was just the beginning. They brought in more than 50 state purchasers for questioning, arrested some of them and broadened the investigation from there,” a western businessman said. “As far as I know up to now just Canadian firms are involved, but you can bet every state importer and foreign trading company in the country is on edge,” he said.

Cuban President Raul Castro has made fighting corruption a top priority since taking over for his ailing brother Fidel in 2008, and in the past year a number of Cuban officials and foreign businessmen have been charged in graft cases.

Tri-Star Caribbean did business with around half of the 35 Cuban state companies authorized to import, from tourism, transportation and construction to the nickel and oil industries, communications and public health. The whereabouts of the man who founded the family business, Cy Tokmakjian, of Armenian heritage, born in Syria and educated in Canada, was not clear on Friday.He was last seen by Reuters a week ago, the day after his offices were sealed, but another western businessman said he had been detained by Cuban authorities. “They picked up Cy on Saturday and I heard his wife and at least one of his kids flew ion to see what they could do,” he said.

Cuba’s state-run media rarely reports on corruption related investigations until they are concluded and those charged are sentenced.
Tokmakjian, a former mechanic, is a self-made millionaire with interests in Canada and other countries besides Cuba, where he is a well known figure. He made his first deal with the Caribbean island in 1988.

President Castro, a general who headed Cuba’s Defense Ministry for 49 years, has cracked down on corruption as part of his efforts to revive the country’s sagging economy, but to date has done little to change the conditions that foster it, such as low salaries and lack of transparency. There is no open bidding in Cuba’s import-export sector and state purchasers who handle multimillion-dollar contracts earn anywhere from $50 to $100 per month.

Castro has moved military officers into key political positions, ministries and export-import businesses and in 2009 stablished the Comptroller General’s Office with a seat on the Council of State. A source close to the Tri-Star Caribbean case said the Comptroller General’s Office had been brought into the investigation, indicating it most likely was targeting high level officials.

Castro’s crackdown has resulted in the breaking up of high-level organized graft in the civil aviation, cigar and nickel industries, at least two ministries and one provincial government. An investigation into the communications sector and another into shipping are also under way.

Cy Tokmakjian

Cy Tokmakjian

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As Cuba plans to drill in the Gulf of Mexico, U.S. policy poses needless risks to our national interest

The Center for Democracy in the Americas’ Cuba Program has published a thorough exploration of Cuba’s petroleum exploration plans and prospects and the implications for United Sates” policy towards Cuba generally and in the oil sector more specifically.It is the most thorough and well-balanced assessment of this issue that I have seen. (Apologies for not getting some publicity out on this work earlier.)

Here is a hyperlink to the study. The Preface and the last coupleof Concluding comments are als presented beliw.

As Cuba plans to drill in the Gulf of Mexico, U.S. policy poses needless risks to our national interest

The Center for Democracy in the Americas’ Cuba Program; February 2011


This year Cuba and its foreign partners will begin drilling for oil in the
Gulf of Mexico. Drilling will take place as close as 50 miles from Florida
and in sites deeper than BP’s Macondo well, where an explosion in April 2010
killed 11 workers and created the largest oil spill ever in American waters.
Undiscovered reserves of approximately 5 billion barrels of oil and 9 trillion
cubic feet of natural gas lie beneath the Gulf of Mexico in land belonging
to Cuba, according to the U.S. Geological Survey, although Cuba’s estimates
contain higher figures. The amount actually recoverable remains to be seen.
Finding oil in commercially viable amounts would be transformative for
Cuba. Revenues from natural resource wealth have the potential to provide
long-sought stability for Cuba’s economy and are likely to significantly alter
its relations with Venezuela and the rest of Latin America, Asia and other
leading energy producing and consuming nations. Discoveries of commercially
viable resources would also have an enormous impact upon the Gulf
environment shared by Cuba and the United States.
The U.S. embargo against Cuba, a remnant of the Cold War, is an obstacle
to realizing and protecting our interests in the region. Not only does it prohibit
U.S. firms from joining Cuba in efforts to extract its offshore resources, thus
giving the competitive advantage to other foreign firms, but it also denies
Cuba access to U.S. equipment for drilling and environmental protection—an
especially troubling outcome in the wake of the disastrous BP spill. The embargo compels Cuba’s foreign partners to go through contortions—such
as ordering a state of the art drilling rig built in China and sailing it roughly
10,000 miles to Cuban waters—to avoid violating the content limitations
imposed by U.S. law.
Most important, due to the failed policy of isolating Cuba, the United
States cannot engage in meaningful environmental cooperation with Cuba
while it develops its own energy resources. Our government cannot even
address the threat of potential spills in advance from the frequent hurricane
activity in the Gulf or from technological failures, either of which could put
precious and environmentally sensitive U.S. coastal assets—our waters, our
fisheries, our beaches—at great peril.
The risks begin the moment the first drill bit pierces the seabed, and
increase from there. Yet, our policy leaves the Obama administration with
limited options:
• It could do nothing.
• It could try to stop Cuba from developing its oil and natural gas, an alternative
most likely to fail in an energy-hungry world, or
• It could agree to dialogue and cooperation with Cuba to ensure that drilling
in the Gulf protects our mutual interests.
Since the 1990s, Cuba has demonstrated a serious commitment to protecting
the environment, building an array of environmental policies, some based
on U.S. and Spanish law. But it has no experience responding to major
marine-based spills and, like our country, Cuba has to balance economic
and environmental interests. In this contest, the environmental side will
not always prevail.
Against this backdrop, cooperation and engagement between Cuba and
the United States is the right approach, and there is already precedent for it.
During the BP crisis, the U.S. shared information with Cuba about the
spill. The administration publicly declared its willingness to provide limited
licenses for U.S. firms to respond to a catastrophe that threatened Cuba. It also
provided visas for Cuban scientists and environmental officials to attend an
important environmental conference in Florida. For its part, Cuba permitted
a vessel from the National Oceanic and Atmospheric Administration to look for damage in Cuban waters. But these modest measures, however welcome,
are not sufficient, especially in light of Cuba’s imminent plans to drill.
Under the guise of environmental protection, Reps. Ileana Ros-Lehtinen
and Vern Buchanan, Members of the U.S. Congress from Florida, introduced
bills to impose sanctions on foreign oil companies and U.S. firms that help
Cuba drill for oil, and to punish those foreign firms by denying them the right
to drill in U.S. waters. This legislation would penalize U.S. firms and anger
our allies, but not stop Cuba from drilling, and will make the cooperation to
protect our mutual coastal environment more difficult should problems occur.
Energy policy and environmental protection are classic examples of
how the embargo is an abiding threat to U.S. interests. It should no longer
be acceptable to base U.S. foreign policy on the illusion that sanctions will
cause Cuba’s government to collapse, or to try to stop Cuba from developing
its oil resources. Nor should this policy or the political dynamic that sustains
it prevent the U.S. from addressing both the challenges and benefits of Cuba
finding meaningful amounts of oil in the Gulf of Mexico.
The path forward is clear. The Obama administration should use its
executive authority to guarantee that firms with the best equipment and
greatest expertise are licensed in advance to fight the effects of an oil spill.
The Treasury Department, which enforces Cuba sanctions, should make clear
to the private sector that efforts to protect drilling safety will not be met with
adverse regulatory actions. The U.S. government should commit to vigorous
information sharing with Cuba, and open direct negotiations with the Cuban
government for environmental agreements modeled on cooperation that
already exists with our Canadian and Mexican neighbors.
Most of all, the administration should replace a policy predicated on Cuba
failing with a diplomatic approach that recognizes Cuba’s sovereignty. Only
then will our nation be able to respond effectively to what could become a
new chapter in Cuba’s history and ours.
There is little time and much to do before the drilling begins.
Sarah Stephens; Executive Director


Accept the Reality of Cuba’s Oil Program
7. The United States is served by an economically stable Cuba.
Cuba is currently undertaking significant economic reforms. It has announced
layoffs for 500,000 state workers and proposed economic reforms to enable
Cuba’s nascent private sector to absorb them. More Cubans working in the
private economy will provide more Cubans with greater personal autonomy.
If Cuba is able to develop its hydrocarbon reserves in a manner that places
the Cuban economy on a more sustainable footing, this could lessen the
possibility of another migration crisis or other forms of instability.
Cuba’s economic plans include its vision for oil. As Lisa Margonelli said at
the National Foreign Trade Council, “Cuba has an elaborate plan to be a port,
to be a source for refined products, to serve as a bonded warehouse for the
distribution of goods throughout the region. Despite being a small country,
they are thinking about energy and their economic future in a big way.”
Economies dependent on the extraction of natural resources are often
unsuccessful. Finding oil can be a double-edged sword. Cuba having foreign partners will help them guide the process of incorporating these resources
into its economy over time. Given the time required to monetize the oil,
Cuba should aim for having healthier economic and political institutions
operating before the oil money starts to flow.
8. Cuba’s potential contribution to the regional energy market could be valuable to the U.S.
Professor Soligo cites several benefits to the United States if Cuba is able to
realize the potential of its oil resources in the Gulf of Mexico. In his remarks
at the National Foreign Trade Council, Professor Soligo said, “Whoever
develops these resources it would be good for the United States.”
For example, Professor Soligo observed that Cuba has the potential to
develop an ethanol industry, and the U.S. cannot meet its ethanol targets
without imports. Policy changes would be required to allow Cuba access
to the U.S. market, and would provide substantial environment and energy
policy benefits were they to be made. While Cuba has opposed using corn
for ethanol, it has the resources to produce cellulosic material in its place.
Lisa Margonelli observes, “It is in U.S. interests to create fair price
competition for Cuban oil rather than forcing them into one-buyer fixed
price contracts with China. Securing the flow of more oil into the world
spot market has been one of the few effective American responses to OPEC’s
pricing power since 1979.”
9. U.S. policy should welcome the geo-political changes oil could
usher in.
Cuba is unlikely to disassociate itself from Venezuela or China regardless of
what the U.S. does. Still, Cuba’s post-revolutionary history is defined, in part,
by its dependence on the former Soviet Union and later on Venezuela, and
the development of its offshore resources could give the island’s economy
greater independence than it has enjoyed to date.
If Cuba were no longer dependent on Venezuela, and the U.S. engaged
in cooperative efforts on oil and the environment, we would be establishing
deeper and more positive ties with Cuba’s government and signal to its citizens
that we have a stake in their success.
as c uba p lans t o dr ill, u.s. p olicy p uts our nat ional interest at r isk
10. U.S. policy toward Cuba should no longer be predicated on Cuba failing.
For more than 50 years, U.S. policy toward Cuba has been predicated on
regime change; the Cuban government being overthrown, or being strangled
into submission by U.S. sanctions or the pressure of diplomatic isolation.
It should no longer be acceptable to base U.S. foreign policy on the illusion
that sanctions will cause Cuba’s government to collapse, or even stop
Cuba from developing its oil resources. Nor should the inertia exhibited by
this policy or the political dynamic that sustains it prevent the U.S. from
addressing both the challenges and benefits of Cuba finding meaningful
amounts of oil in the Gulf of Mexico.
The embargo imposes real constraints on the government’s ability to
protect our nation against the potentially grave consequences of an environmental
disaster linked to drilling for oil in the Gulf of Mexico by Cuba
and its foreign partners.
As one expert told us, “Cuba is a country with whom we have virtually
no diplomatic or commercial relations. If a well gets out of control, we have
no genuinely effective recourse if we’re waiting for a transition in Cuba’s
government to occur.”
If Cuba brings commercially viable amounts of oil out of the Gulf, the
embargo becomes even more irrelevant than it is today. How should the U.S.
respond, especially now that drilling in 2011 is a fait accompli and will take
place approximately 50 miles from our shores?
The U.S. should respond by changing the policy, in the ways we describe
here, so the national interest of the United States can be realized and protected.

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“The Economist” on Taxes in Cuba: Get used to it

The Castros’ subjects get acquainted with that other sure thing

Sep 17th 2011 | HAVANA | from the print edition

Half your monies are belong to us

WHEN Raúl Castro, Cuba’s president, announced last year that the government would cut its payroll by up to 20% and promote self-employment, state media hailed the birth of a “tax culture”. As most Cubans had never paid income tax, the Communist newspaper published a guide to the concept. Government economists predicted a 400% increase in tax revenue from individuals.

The experiment has been bumpy. Last October Cuba published a tax code for workers in its 181 newly authorised occupations, ranging from furniture repairer to professional clown. As in the early 1990s, the last time Cuba tried economic liberalisation and taxation, the rates were punitive: 10% on turnover, 25% for social security and up to 50% on income. Such levies discouraged some people from risking self-employment. By May applications for job licences were tailing off.

Moreover, Mr Castro failed to beef up the National Tax Administration Office (ONAT), which was soon overwhelmed by filings. That has delayed revenue collection, and allowed both intentional and inadvertent tax cheats to go unpunished. “They seem even more confused about this than we are,” says Ernesto, an engineer who obtained a licence to set up a plumbing business in March. He admits that he simply guesses how much he has earned each month and declares a tenth as much.

But Mr Castro seems more flexible than his brother and predecessor Fidel, who blamed the self-employed for sowing inequality and happily taxed private firms out of existence. Eager to find jobs for up to 1m public workers he plans to fire, he has carved out exemptions from the social-security tax and twice increased the scope for deductions. He has also ordered ONAT to retrain its staff and hire new inspectors. “There certainly is an element of making up the rules as they go along,” says one European diplomat based in Havana. “But Raúl seems totally determined to make this work.”

Further reforms are on the way. By the end of 2011, Cubans will be allowed to buy and sell homes and cars. It remains to be seen how long they will accept taxation without representation. “They happily take our taxes,” says Michel, a barber who recently founded a business. “But they still keep their secrets.”

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Debating U.S.-Cuban Relations: Shall We Play Ball?

Debating U.S.-Cuban Relations: Shall We Play Ball?

Jorge I. Dominguez (Editor), Rafael Hernandez (Editor), Lorena G. Barberia (Editor)

New York: Routledge, August 2011;

ISBN-10: 0415893232 | ISBN-13: 978-0415893237

Book Description

Two decades ago, affairs between the United States and Cuba had seen little improvement from the Cold War era. Today, U.S.-Cuban relations are in many respects still in poor shape, yet some cooperative elements have begun to take hold and offer promise for future developments. Illustrated by the ongoing migration agreement, professional military-to-military relations at the perimeter of the U.S. base near Guantánamo, and professional Coast Guard-Guardafrontera cooperation across the Straits of Florida, the two governments are actively exploring whether and how to change the pattern of interactions.

The differences that divide the two nations are real, not the result of misperception, and this volume does not aspire to solve all points of disagreement. Drawing on perspectives from within Cuba as well as those in the United States, Canada, and Europe, these authors set out to analyze contemporary policies, reflect on current circumstances, and consider possible alternatives for improved U.S.-Cuban relations. The resulting collection is permeated with both disagreements and agreements from leading thinkers on the spectrum of issues the two countries face—matters of security, the role of Europe and Latin America, economic issues, migration, and cultural and scientific exchanges in relations between Cuba and the United States. Each topic is represented by perspectives from both Cuban and non-Cuban scholars, leading to a resource rich in insight and a model of transnational dialogue.

Editorial Reviews


“This volume brings together twelve exceptional scholars on U.S.-Cuban relations to explore the key dimensions of that troubled relationship. By including the perspectives of both Cuban and U.S. scholars on topics ranging from national security to culture, the editors provide a fascinating look at the issues that still divide Washington and Havana half a century after the Cuban revolution.”
William M. LeoGrande, American University

Debating U.S.-Cuban Relations offers  an agenda that Washington and Havana should be embracing. It is a splendid primer which I hope will be useful when the United States and Cuba decide to bury an antagonism that has served neither well.”
Marifeli Pérez-Stable, Florida International University

“An excellent exploration of a topic which is important (and fascinating) not only in its own right, but also for its larger implications regarding U.S.-Latin American relations. The editors have assembled an A-List of Cuban specialists who bring to bear not only great expertise, but also a variety of perspectives which should interest people on all sides of this long-standing drama.”
Michael Erisman, Indiana State University

Book Launch:

Speakers: Jorge Dominguez and Rafael Hernandez; Discussant: John Coatsworth

When: 4:00pm; September 22, 2011

Location: IAB 802, Columbia University, 420 West 118th Street, 8th Floor IAB MC 3339, New York, NY 10027; Contact: Columbia University Institute of Latin American Studies, ilas-info@columbia.edu

List of Authors:

Jorge I. Domínguez, Profesor. Universidad de Harvard.

Rafael Hernández, Politólogo. Revista Temas.

Hal Klepak, Profesor. Royal Military College of Canada.

Carlos Alzugaray Tret, Profesor. Centro de Estudios Hemisféricos y sobre Estados Unidos, Universidad de La Habana.

Peter Kornbluh, Investigador. National Security Archive, Washington, DC

Susanne Gratius, Investigadora. Fundación para las Relaciones Internacionales y el Diálogo Exterior (FRIDE), Madrid.

Eduardo Perera Gómez, Investigador. Centro de Estudios Europeo. Universidad de la Habana

Archibald R. M. Ritter. Profesor. Universidad de Carleton, Ottawa.

Jorge Mario Sánchez Egozcue, Investigador y profesor. Centro de Estudios Hemisfericos y sobre Estados Unidos, Universidad de La Habana.

Lorena G. Barberia, Investigadora. Universidad de Harvard.

Antonio Aja Díaz, Historiador y sociólogo. Centro de Estudios Demográficos, Universidad de La Habana.

Sheryl Lutjens, Investigadora. Universidad del Estado de California, en San Marcos.

Milagros Martínez Reinosa, Profesora. Universidad de La Habana.


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G. B. Hagelberg, Analyst and Friend of Cuba. His Last Work: ¨Cuban Agriculture: Limping Reforms, Lame Results”

By Arch Ritter

Cubans and friends of Cuba will lament the recent death of G.B. Hagelberg, a long time and highly respected analyst of Cuban agriculture, most notably the sugar sector. Hagelberg had a deep and long term knowledge of the sugar agro-industrial complex in the Caribbean generally including Cuba, having served as the resident sugar adviser of the government of Barbados from 1960 to 1968 and from 1980 to 1986. He was the author of numerous publications, including a book-length study entitled  The Caribbean Sugar Industries: Constraints and Opportunities (1974). More recently his work focused more on Cuban agriculture and he authored a variety of works in this area. His last analysis. referred to here, was originally entitled “Cuban Agriculture: Limping Reforms, Lame Results”. but was re-labelled “Agriculture: Policy and Performance”. It was presented at the  Association for the Study of the Cuban Economy (ASCE) Conference in August 2011.

Some central conclusions of this last work are presented below and the complete essay can be found here, courtesy of ASCE and especially Joaquin Pujol. It will be generally available on ASCE’s Website for the 2011 Conference soon.

The complete text can be found at this hyper-link:


Hagelberg’s Concluding Comments:

Analysts can thank Raúl Castro for a semblance of glasnost. Ironically, it reveals the limits of his perestroika. That enterprise is running the danger of unraveling under the weight of its internal contradictions. If this is not to happen, the realization has to gain ground that “concentration of ownership” (Article 3) is as undesirable in the public as in the private sector of the economy and that competition is the mother of efficiency. Non-functional state monopolies and monopsonies have to be dismantled. Also to be unpicked is the conflation of centralization and planning, a fantasy nowhere more counterproductive than in agriculture. To succeed, farm and agroindustrial policies must be informed by a thorough understanding of the conditions that make these sectors different from other economic activities. Regulation is obviously necessary in such areas as environmental protection, food safety and the prevention of market abuse. But to thrive, Cuba’s agriculture and agroindustry require the government to shift decisively from a controlling to an enabling mode, attending to rural infrastructure investment, research and extension, the reduction of risk from natural causes, financing, and the provision of timely and reliable information.


In a speech to the National Assembly in July 2008, Raúl Castro returned to his oft-quoted 1994 statement that “beans are more important than cannons.” Over 2007-10, the four calendar years in which he has led the government, bean production averaged 96,400 metric tons annually, against an average of 109,175 tons in the previous four years (ONE, 2011a, Table 1.6). Men who have spent a lifetime running the armed forces may believe that making farm policy is not rocket science. It is surely at least that. After all, a centrally managed economy was first to send a man into space; across the world, the track record of centrally managed economies in agriculture has been less glorious. The measures introduced to boost the home-grown food supply and reduce the need for imports have still to pass the beans test, and Cuba’s agricultural malaise rumbles on.

Agricultural Scene, Vinales, 1997

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The July-September 2011 edition of La Revista Espacio Laical has just been published.  Its primary focus is on an evaluation of the results of the VI Congress of the Communist party of Cuba.Included also is an interview with Phil Peters, author of the Blog The Cuban Triangle and Carlos Saladrigas.Unfortunately it is available only in Spanish.

Here is a full Table of Contents together with Abstracts of some of the Economics Essays with hyper-links.

Table of Contents:

Índice General
Secciones y artículos:

EDITORIAL : El reto de ser audaces  – Del Magisterio.

– Contemplarán al que traspasaron.  Por Sandro Magister

– La contemplación de la belleza.  Por Joseph Ratzinger

PÁGINAS RESCATADASA cargo de Jorge Domingo Cuadriello
– El patriotismo cubano. Por Eliseo Giberga

EL DOSSIER: Post VI Congreso PCC
– El VI Congreso del Partido y los Lineamientos: ¿un punto de vi raje para Cuba?  Por Archibald Ritter
– El VI Congreso: una evaluación preliminar.  Por Armando Chaguaceda.
– Cuba: ¿qué cambia tras el VI Congreso del Partido Comunista?  Por Carmelo Mesa-Lago.
– Cambios en marcha y consensos por lograr.  Por José Ramón Vidal
– Tratando de reinventar el socialismo. (Entrevista a Ricardo Alarcón). Por Manuel Alberto Ramy
– Reformas económic as y desarrollo en el Este de Asia: ¿una experiencia para Cuba? Por Arturo López-Levy


– La apuesta egipcia. Entrevista a Antonios Naguip. Por Gianni Valente
– Mi vida para la libertad de Chile. Entrevista a Sergio Bitar. Por Roberto Veiga González


– Cuba y su diáspora: el desafío de facilitar un reencuentro.  Por Carlos Saladrigas

– Poder  e ineptitud en el exilio de Miami. Por Alejandro Armengol

– Vivir como vecinos. Entrevista a Philip Peters. Por Roberto Veiga González

– Aportando para el diálogo y el consenso.  Entrevista a Roberto Veiga González.  Por Armando Chaguaceda


– Saladrigas, Arboleya y el debate sobre el futuro de Cuba.  Por Lenier González Mederos


– Re-señas de libros. Por Jorge Domingo Cuadriello

– Elogio y digresión.  Por David Mateo

– Aspera ad Astra o el itinerario espiritual de un líder político. Por Habey Hechavarría Prado

– José María Chacón y Calvo. Por Malena Balboa Pereira

– Cambiar o no cambiar: ¿es ese el dilema? Por Francisco Almagro Domínguez

– Harold Bloom y yo. Por Roberto González Echeverría


– En busca de una transformación relevante. Por Raúl Fornet-Betancourt


– Cuba en su diversidad cultural. Por Jesús Guanche


– El lugar de la ciudadanía. Participación política  y República en Cuba.  Por Julio César Guanche


– Las propuestas de Carlos Saladrigas para Cuba. Por Jesús Arboleya Cervera

– Comentarios sobre la entrevista a Saladrigas y las opiniones de Arboleya. Por Ramón de la Cruz Ochoa

– Saladrigas y el debate con Ramón de la Cruz. Por Jesús Arboleya Cervera

– Soberanía nacional, emigrados e inversionistas Por Arturo López-Levy


El VI Congreso del Partido y los Lineamientos: ¿un punto de viraje para Cuba? Por Archibald Ritter

El VI Congreso del Partido Comunista de Cuba (PCC) probablemente será de gran importancia para el futuro de Cuba. La revisión que el Congreso hizo de los Lineamientos de la Política Económica y Social del Partido y la Revolución significa que ahora es políticamente correcto apoyar, promover e implementar esta ambiciosa agenda de reformas. Por deducción, es también políticamente correcto llegar a la conclusión de que medio siglo de experimentación económica estuvo en su mayor parte equivocada, y fue contraproducente e insostenible. A pesar de los intentos de crear una impresión de continuidad histórica con la referencia a una “actualización” del modelo económico, los viejos enfoques de gestión económica han quedado profundamente desacreditados. El Congreso ha certificado el clima creado por los cambios de opinión acerca de cómo puede funcionar mejor la economía cubana. Ahora parece que es altamente improbable un regreso a los viejos modos de operar.
(leer más…)

El VI Congreso: una evaluación preliminar. Por Armando Chaguaceda
Pocos eventos han generado tantas esperanzas, frustraciones y debates como el pasado VI Congreso del Partido Comunista de Cuba. La postergación del mismo por 14 años y el trasfondo político del país (continuación de la crisis estructural del modelo socialista de Estado, inicio de reformas económicas e institucionales, relevo de liderazgo) fueron caldo de cultivo para las más variadas especulaciones. Por ello, al cierre inmediato de sus cortinas, diferentes analistas compartieron sus plurales evaluaciones del foro, tributando al necesario balance de sus resultados en cuyo seno se inserta el presente texto. (leer más…)

Cuba: ¿qué cambia tras el VI Congreso del Partido Comunista? Por Carmelo Mesa-Lago
En abril de 2011 se realizó el VI Congreso del Partido Comunista de Cuba (pcc), después de 14 años sin celebrar ese tipo de reuniones. El Congreso estuvo marcado por las ambiciosas reformas que Raúl Castro se propuso como meta tras reemplazar a su hermano Fidel Castro en 2006. No obstante, las contradicciones, las indecisiones, las inercias y las resistencias del aparato burocrático siembran dudas acerca de la eficacia de los cambios aprobados por el Congreso para sacar al país de la profunda crisis económica que enfrenta y recuperar unas fuerzas agotadas. (leer más…)

Cambios en marcha y consensos por lograr. Por José Ramón Vidal
Las sesiones del VI Congreso del Partido Comunista de Cuba, celebradas en abril último, cerraron una etapa de formulación y consulta de propuestas dirigidas a producir transformaciones en el modelo económico y social, que como es lógico suponer tienen y tendrán en lo adelante inevitables repercusiones en la esfera política. (leer más…)

Tratando de reinventar el socialismo. (Entrevista a Ricardo Alarcón). Por Manuel Alberto Ramy
Hace apenas 48 horas concluyó el VI Congreso del Partido Comunista de Cuba, un congreso que, según lo que he leído y escuchado, prefigura un país cualitativamente distinto y una sociedad diferente. El presidente de la Asamblea Nacional y miembro del Buró Político del Partido Comunista, Ricardo Alarcón, me ha concedido esta entrevista. Sé que dispone de poco tiempo así que me gustaría hacerle tres preguntas muy concretas. La primera está referida al ámbito del Poder Popular.(leer más…)

– Reformas económicas y desarrollo en el Este de Asia: ¿una experiencia para Cuba? Por Arturo López-Levy
Al discutir los cambios planteados en los Lineamientos económicos y sociales del VI Congreso del Partido Comunista de Cuba, muchos observadores han evocado las reformas en el Este de Asia, particularmente los procesos ocurridos en China y Vietnam. El contexto cultural, económico y social cubano es diferente al de estas naciones; sin embargo, conviene plantearse si hay lecciones de aquellas experiencias que Cuba pueden adaptar. (leer más…)


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Centro de Estudios sobre la Economía Cubana, “Seminario Anual sobre la Economía Cubana” 21-24 de junio de 2011

 The Centro de Estudios sobre la Economia Cubana has just completed and publicized its 2011 Annual Report on the Cuban economy. Here are hyperlinks to the main economics articles. A number of essays focussing on enterprise management have not been included here.

Juan Triana Cordoví, “Cuba 2010-2011, del crecimiento posible al desarrollo necessario

Jorge Mario Sánchez Egozcue, “La Relación Crecimiento Económico y Sector Externo, una evaluación de la dinámica

Pavel Vidal Alejandro y Omar Everleny Pérez Villanueva, “Relanzamiento del cuentapropismo en medio del ajuste estructural1
Ileana Díaz Fernández y Ricardo Torres Pérez, “Los encadenamientos productivos, un análisis para Cuba


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