• 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.

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

PREFACE

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


RECOMMENDATIONS (7 to 9)

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

Review

“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 ASCE 2011, AGRICULTURAL POLICY AND PERFORMANCE

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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NUEVA EDICIÓN DE LA REVISTA ESPACIO LAICAL

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.

RELIGIÓN
– 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

INTERNACIONALES

– 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

BÚSQUEDA:

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

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

CUBA
– 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

TEMA POLÉMICO

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

CULTURA

– 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

ESPIRITUALIDAD

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

DE LAS ENTRAÑAS DE LA ISLA

– Cuba en su diversidad cultural. Por Jesús Guanche

EN DIÁLOGO

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

LA POLÉMICA

– 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

Abstracts

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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Cheney Wells: “The Role of Remittances in Cuba’s Non-State Sector Expansion”

How recent changes in remittance policy by the US and Cuba may facilitate small-scale investment to support Cuba’s growing non-state sector

Attached is an interesting MA Thesis by Chaney Wells on remittances and their posible use for microenterprise in Cuba:
Abstract:
This study adds to the existing literature on the potential use of remittances for credit in a financially underdeveloped economy, focusing on Cuba, a country for which little is known about the relationship between remittances and investment. In the past, economic and legal conditions in Cuba, in addition to US and Cuban policies on financial transfers have resulted in a large majority of remittances to Cuba being used for basic consumption. The Cuban government’s changing stance on the non-state sector, as well as recent shifts in both US and Cuban policies on remittances have important  implications for remittance use in Cuba. This paper assesses the factors affecting remittance use, and makes the case that as a result of the concurrent shifts in US and Cuban remittance policy along with Cuba’s non-state sector expansion initiative, a more significant portion of remittances will be used for productive investment purposes, filling the void left by the underdeveloped financial sector.
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Iglesia formará expertos en pequeñas empresas y cooperativas en Cuba (AFP)

Espacio Laical has just announced a new Masters’ Program in Business Management for micro, small and mediaum enterprises and cooperatives. It will be run bythe Centro Cultural Padre Félix Varela, of the Archdiocise of Havana and the Universidad Católica San Antonio,  Murcia, Spain.

The Convocatoria is presented below, together with a commentary from Agence France Presse.

Presumably Espacio Laical, the Centro Felix Varela and the Archdiocise of Havana have all the necessary permissions to proceed. if this is indeed the case, it represents a break of the state monopoly of higher education and the emergence of independent University level graduate programs. This could be of major significance for Cuba, representing a further loosening of state controls in professional education.

Convocatoria

Suplemento Digital No.134 / Junio  2011
Convocatoria, Maestria sobre Dirección de EmpresasEspacio Laical

El Centro Cultural Padre Félix Varela, de la Arquidiócesis de La Habana, y la Universidad Católica San Antonio, de Murcia, convocan a un Máster sobre Dirección de Empresas (MDE). La maestría, de modalidad semipresencial, tiene entre sus objetivos conseguir que el egresado adquiera habilidades y conocimientos avanzados en dirección de empresas; con un enfoque especial en pymes, micro-pymes y cooperativas. Contará con un claustro de profesores españoles y cubanos.
El MDE sesionará desde septiembre de 2011 hasta junio de 2012 y estará estructurado en siete materias:

  1. ENTORNO ECONÓMICO
  2. MARKETING
  3. ORGANIZACIÓN DE LA PRODUCCIÓN
  4. COMPORTAMIENTO ORGANIZACIONAL
  5. ECONOMÍA FINANCIERA Y CONTABILIDAD
  6. ESTRATEGIA Y EMPRESA
  7. SISTEMA TRIBUTARIO DE LA EMPRESA

Requisitos para los candidatos:

  • Podrán participar personas con título universitario.
  • Deberán entregar un currículum detallado, así como una fundamentación del por qué quieren cursar el MDE.
  • En la primera página del documento se colocará una ficha con nombre y apellidos del aspirante, lugar de residencia, dirección y teléfono, especialidad de la que es graduado y labor que desempeña actualmente.
  • Deberán adjuntar fotocopia del título.
  • Los documentos podrán ser entregados en la sede del Centro Cultural Padre Félix Varela (antiguo Seminario San Carlos y San Ambrosio), en La Habana Vieja , de lunes a viernes, de 9:00 AM a 12:00 M.
  • El plazo de admisión para los interesados vence el 20 de julio de 2011.
  • Del total de aspirantes los coordinadores del MDE escogerán a 40 personas.
  • El 28 de julio se hará pública la relación de personas seleccionadas.

..

Iglesia formará expertos en pequeñas empresas y cooperativas en Cuba, Agence France Presse, 23 June 2011.

La Iglesia Católica convocó este jueves a universitarios cubanos a una maestría sobre dirección de pequeñas y medianas empresas (Pymes) y cooperativas, contempladas en las reformas que impulsa el presidente Raúl Castro.

La maestría “tiene entre sus objetivos conseguir que el egresado adquiera habilidades y conocimientos avanzados en dirección de empresas; con un enfoque especial en Pymes, Micropymes y cooperativas”, dijo la convocatoria publicada en la versión digital de la revista Espacio Laical.

El curso, para el cual se escogerán 40 personas entre los candidatos, está convocado por el Centro Cultural Padre Félix Varela, de la Arquidiócesis de La Habana, y la Universidad Católica San Antonio, de Murcia, España. Contará con profesores españoles y cubanos y se extenderá desde septiembre de 2011 hasta junio de 2012.

Las más de 300 reformas de Raúl Castro, aprobadas por el VI Congreso del Partido Comunista en abril (PCC, único), ampliaron el trabajo privado y abrieron las puertas para la formación de Pymes y cooperativas urbanas de producción y servicios.

Ahora el Gobierno se concentra en la elaboración y aprobación del sustento legal de esas empresas no estatales, pues en 1968, cuando la denominada “Ofensiva Revolucionaria”, fueron eliminadas.

La Iglesia Católica, que sostiene un inédito diálogo con el Gobierno desde mayo de 2010, cuyo resultado más importante fue la excarcelación de 126 políticos, ocupa cada vez más espacio en la sociedad cubana.

Ese proceso de acercamiento, iniciado tras la visita papal en 1998, ha ido superando cuatro décadas de relaciones ondulantes, con tiempos de fuertes tensiones y cohabitaciones, sobre todo desde la llegada de Raúl Castro al poder en 2006, tras una crisis de salud de su hermano, Fidel Castro.

 

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Similar Policies, Different Outcomes: Two Decades of Economic Reforms in North Korea and Cuba

An interesting comparison of Cuba and North Korea has just been published by Dr. José Luis León-Manríquez, a professor of international studies at the Department of Politics and Culture of the Metropolitan Autonomous University-Xochimilco, in Mexico City. It is available here:

Similar Policies, Different Outcomes, Two Decades of Economic Reforms in North Korea and Cuba

Introduction: “This article is aimed at analyzing, in a comparative perspective, the economic reforms undertaken by Democratic People’s Republic of Korea (DPRK, or North Korea) and Cuba since the demise of the Soviet bloc in the late 1980s and the early 1990s.1 The comparison seems pertinent inasmuch as both the DPRK and Cuba are relatively small countries that managed to survive the collapse of real socialism. Although the geographic areas of both countries are roughly the same, the North Korean population is more than double Cuba’s; by contrast, the Cuban GDP per capita is four times bigger than the DPRK’s individual income (Figure 1). Both countries have been ruled by single parties and have undertaken successful dynastic successions, and both countries have tried to maintain, with increasing tribulations, economic systems that advocate central planning and state property.”

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Espacio Laical, “The Sixth Party Congress and “Lineamientos”: A Turning Point for Cuba?”

Just Published on Espacio Laical, Suplemento Digital No.132 / 16 de Junio 2011
Tomado de la sección Búsqueda (revista 3-2011) Hyperlink here:

The Sixth Congress of the Cuba’s Communist Party will likely be of immense importance for Cuba’s future. The ratification of the revised Lineamientos de la Política Económica y Social del Partido y la Revolución “by the National Assembly means that it is now politically correct to support, advocate and implement an ambitious reform agenda.  By implication, it also is politically correct to draw the conclusion that a half century of economic experimentation with the lives of Cuban citizens was for the most part misguided, counterproductive, and unsustainable.  Despite attempts to create an impression of historical continuity by referring to the “updating” of the economic model, the old approaches to economic management have been deeply discredited. The shifting climate of opinion regarding how the Cuban economy can best function has been certified as reasonable by the National Assembly.  It now appears that a regression to old modes of economic operation is now highly improbable..

The economic future for Cuba clearly lies in a newly-rebalanced albeit vaguely-envisaged mixed market economy that will be the outcome of the various reforms that are slated to be implemented.  This is a surprising reversal of fortunes. It also constitutes a vindication of the some of the views of the critics of past economic policies.

The “Lineamientos” represent an attempt by President Raul Castro to forge his own “legacy” and to emerge from the long shadow of his brother, as well as to set the Cuban economy on a new course. The ratification of the reform agenda represents a successful launch of the “legacy” project.  President Raul Castro would indeed make a unique and valuable contribution to Cuba and its citizens were he to move Cuba definitively through dialogue and agreement among all Cubans towards a model that guarantees both economic and social rights as well as civil liberties and authentic democracy.

Are moves in these directions likely to happen? Not under current political circumstances. However, there are bottom-up pressures building and some official suggestions that movement towards political liberalization is not impossible. In the meantime, Raul’s de-centralizing, de-bureaucratizing and “market-liberalizing” reforms been launched. This is a good start for the construction of a positive independent “legacy.”

I. Cuba’s Economic Situation

In various speeches since 2006, Raul Castro has indicated that he recognizes the problems that Cuba confronts in terms of the production of agricultural and industrial goods and improvement of Cuba’s infrastructure (despite the ostensibly solid GDP performance from 2005 to 2009 before Cuba was hit by the international recession.) He is well aware of the central causal forces underlying weak Cuba’s economic vulnerabilities and weaknesses such as the unbalanced structure of the economy, the overburden of deadening rules and regulations and a sclerotic bureaucracy and the monetary and exchange rate pathologies and dysfunctional incentive environment that deform the energies and lives of Cuban citizens.

Cuba’s economic plight can be summarized quickly with a couple of illustrations. First, Cuba’s underwent  serious de-industrialization after 1989 from which it has not recovered, reaching only about 51% of the 1989 level by 2009 (Chart 1)

Source: ONE AEC, 2004, Table 11.1 and 2IX.1

Note: Data for 1990-1997 are not available

There are a variety of reasons for the collapse of the industrial sctor:

(a)    The antiquated technological inheritance from the Soviet era as of 1989;

(b)   Insufficient maintenance over a number of decades before and after 1989;

(c)    The 1989-1993economic melt-down;

(d)   Insufficient levels of investment; (The overall level of investment in Cuba in 2008 was 10.5% of GDP compared to 20.6% for all of Latin America  according to UN ECLA, 2011, Table A-4.)

(e)    The dual monetary and exchange rate system that penalizes potential exporters that would receive one old (Moneda Nacional) peso for each US dollar earned from exports;

(f)    Competition in Cuba’s domestic market with China which has had a grossly undervalued exchange rate, coexisting with Cuba’s grossly overvalued exchange rate.

Second, the collapse of the sugar agro-industrial complex is well known and is illustrated in Chart 2. The sugar sector essentially was a “cash cow” milked to death for its foreign exchange earnings, by insufficient maintenance, by insufficient re-investment preventing productivity improvement, and by the exchange rate regime under which it labored.
Source: NU CEPAL, 2000 Cuadro A.86; ONE, 2010 Table 11.4

The consequences of the collapse of the sugar sector include the loss of about US$ 3.5 billion in foreign exchange earnings foregone (generated largely with domestic value added); reductions in co-produced electricity; a large increase in idled farm land; a destruction of the capacity to produce ethanol; damaging regional and local development impacts, and a destruction of much of the “cluster” of input-providing, output-processing and marketing activities related to sugar.

Third, the production of food for domestic consumption has been weak since 1989, despite some successes in urban agriculture.  Food imports have increased steadily and in recent years account for an estimated 75 to 80% of domestic food consumption despite large amounts of unused farm land. Meanwhile agricultural exports have languished,

 

Chart 3  Cuban Exports and Imports of Foodstuffs, 1989-2009
(excluding Tobacco and Alcoholic Beverages) (Millions CUP)

Source: NU CEPAL, 2000 Tables A.36 and A.37, and ONE, AEC, Various Years.

Fourthly, “inflation-adjusted “ or “real” wages in the official economy collapsed and have not recovered significantly according to estimates from the Centro de Estudios sobre la Economia Cubana (Chart 4.)  This is indeed a major calamity for the official state economy. But though the official 2008 wage rate remained around 25% of its level of 1989, most people had other sources of income, such as remittances, legal self-employment, home produced goods and services, economic activities in the underground economy, income supplements in joint ventures, goods in kind from the state and widespread pilferage.  Those without other sources of income are in poverty.

Chart 4   Cuba: Real Inflation-Adjusted Wages, 1989-2009
(
Pesos, Moneda Nacional)

Vidal  Alejandro, Pavel, “Politica Monetaria y Doble Moneda”, in Omar Everleny Perez et. al., Miradas a la Economia Cubana, La Habana: Editorial Caminos, 2009

Furthermore, despite the exceedingly low official rates of unemployment – around 1.6 to 1.7%, (far below the “natural rate” of unemployment which represents normal new entrants, job-changers and structural changes in any economy) – underemployment is obviously very high. Presumably the 1.8 million workers considered by the Government to be redundant and subject to probable lay-off and transfer to small enterprise, are “underemployed”, accounting for around 35 per cent of the labor force.

A further dimension of the fragility of Cuba’s economic situation is the dependence on the special relationship with Venezuela that relies upon high oil prices and the presence and munificence of President Chavez.

It is to the credit of President Raul Castro that he has faced these problems directly, diagnosed their sources, and produced the “Lineamientos” to deal with them. The central sources of the difficulties are the general structure of incentives that orients the economic activities of Cuban citizens, this including the dual monetary and exchange rate system, the tight containment of individual economic initiatives, the detailed rules and regulations of the omnipresent bureaucracy. Paradoxically, in attempting to control everything in the past, the government has ended up controlling very little. The effectiveness of stricter state controls actually leads to weaker genuine control due to their promotion of illegalities, corruption and the ubiquitous violation of unrealistic regulations.

II. The Lineamientos

The objective of the “Lineamientos” is “to guarantee the continuity and irreversibility of Socialism” as well as economic development (p.10). This is to be achieved through an “up-dating” of the economic model that should result in utilization of idle lands, reversal of decapitalization of infrastructure and industry, a restructuring of employment, increased labor productivity, increased and diversified exports, decentralized decision-making and elimination of monetary and exchange rate dualism (p. 8.)

But the term “Socialism” remains somewhat ambiguous in the document.  Reference is made to “socialist property” and “preserving the conquests of the Revolution.”  Especially interesting is the statement that

“…socialism signifies equality of rights and equality of opportunities for all the citizens, not egalitarianism” (p.9)

This assertion could be of game-changing significance, as it articulates a fundamental principle of “Social Democracy” more so that a traditional principle of  “Socialism.”  This leaves questions unanswered and doors unclosed.

The “Lineamientos” are in effect an ambitions and comprehensive “wish-list” or statement of aspirations. Many of the 313 recommendations are fairly obvious, trite and general statements of reasonable economic management. Some statements have been made repeatedly over a number of decades, including those relating to the expansion and diversification of exports, science and technology policy, the sugar agro-industrial complex, or the development of by-products and derivatives from the sugar industry (an objective at least since 1950.) Restating many of these as guidelines can’t do much harm, but certainly does not guarantee their implementation.

There are also opaque elements among the guidelines and seeming contradictions as some of them stress continuity of state planning and control while others emphasize greater autonomy for enterprises.  For example, Guideline 7 emphasizes how “planning” will include non-state forms of enterprise and “new methods…. of state control of the economy” while No. 62 states “The centralized character …of the degree of planning of the prices of products and services, which the state has an interest in regulating will be maintained.” But numerous other guidelines spell out the greater powers that state and non-state enterprises will have over a wide range of their activities including pricing (Guidelines 8 to 22 and 63.)

While there are a few gaps and shortcomings in the “Lineamientos” as well as the references to planning and state control, they include some deep-cutting proposals on various aspects of economic organization and policy that represent the inauguration of a movement towards a “market-friendly” economic policy environment. Among these are:

  • Greater autonomy of the enterprise in numerous dimensions, hiring and firing, wage structures, financing, price setting, investing, and also in facing bankruptcy;
  • A phase-out of rationing and the ration book and the more careful targeting of social assistance to those who need it, thereby also strengthening incentives to work (No. 162);
  • The establishment of wholesale markets for inputs for all types of enterprise. (No. 9);
  • Continuing distribution of unused state lands to small farmers (No. 187);
  • Reduction of state controls regarding small farmers and cooperatives regarding producer decision-making, marketing of crops, provision of inputs, and (No. 178-184)

A central policy thrust is the expansion of the self-employment and cooperative sector in order to absorb ultimately some 1,800.000 state workers considered redundant. The legislation already implemented in October 2010 liberalized policy somewhat so as to encourage the establishment of additional microenterprises – especially by the liberalization of licensing, the establishment of wholesale markets for inputs and the recent relaxation of hiring restrictions. However, the limitations of the policy changes are highlighted by the modest increase in the number of “Paladar” chairs – from 12 to 20.

Unfortunately current restrictions will prevent the expected expansion of the sector. These include the heavy taxation that can exceed 100% of net earnings (after costs are deducted from revenues)  for enterprises with high costs of production; the prohibition of the use of intermediaries and advertising, and continued petty restrictions. Perhaps most serious restriction is that all types of enterprises that are not specifically permitted are prohibited including virtually all professional activities.  The 176 permitted activities, some defined very narrowly, contrast with the  “Yellow Pages” of the telephone directory for Ottawa (half the size of Havana) that includes 883 varieties of activities, with 192 varieties for “Business Services”, 176 for “Home and Garden, 64 for “Automotive”  and 29 for “Computer and Internet Services.” Presumably policies towards micro-and small enterprise will be further liberalized in the months ahead if laid-off workers are to be absorbed productively.

One short-coming of the “Lineamientos” is the lack a time dimension and a depiction of how the various changes will be implemented. There are no clear priorities among the innumerable guidelines, no sequences of actions, and no apparent coordination of the guidelines from the standpoint of their implementation. It remains a “check-list” of good intentions, though none-the-less valuable.

The absence of a vision of how change was to occur and the slow pace of the adoption of the reforms so far is also worrisome. However, the Administration of Raul Castro has been deliberative and systematic though also cautious. It is probable that somewhere in the government of Raul Castro there is a continually evolving time-line and master-plan for the implementation of the reform measures.

A careful and well-researched approach to economic reform is obviously desirable. The difficulties encountered in laying off 500,000 state sector workers and re-absorbing them in the small-enterprise sector by March 31, 2011 has probably encouraged an even more cautious  “go-slow” approach.  Perhaps “slow and steady wins the race!”

A process of economic —but not political— reform seems to have already begun following the Congress. Where it will lead is hard to predict. Presumably Raúl Castro’s regime would like the process to end with the political status quo plus a healthy economy. The latter would require a new balance between public and private sectors, with a controlled movement toward the market mechanism in price determination and the shaping of economic structures, and with the construction of a rational configuration of incentives shaping citizens’ daily economic actions so that their private endeavors become compatible with Cuba’s broader economic well-being.

In such a reform process many things would be changing simultaneously with symbiotic impacts and consequences that will likely be painful and are difficult to foresee. Will President Raul Castro have the courage to take the risks inherent in an ambitious process of economic change? This remains to be seen. But the economic and political consequences of inaction are so bleak and the attractiveness of a positive historical “legacy” are so enticing that President Raul Castro will continue.

The economic reform process has been launched. It is in its early stages. It will likely continue under the leadership of Raul Castro. It will proceed far beyond the “Lineamientos” under new generations of Cuban citizens in economic as well as political spheres.

Bibliography

Naciones Unidas, CEPAL, La Economia Cubana: Reformas estructurales y desempeňo en los noventa, Santiago, Chile, 2000, Second Edition.

Oficina Nacional de Estadisticas (ONE), Anuario Estadistico de Cuba (AEC), various years. Website: http://www.one.cu/

Partido Comunista de Cuba,  Lineamientos de la Política Económica y Social del Partido y la Revolución, Aprobado el 18 de abril de 2011, VI Congreso del PCC

United nations, Economic Commission for Latin America and the Caribbean, Preliminary Overview of the Economies of Latin America and the Caribbean, 2010, Santiago, Chile January, 2011

Vidal Alejandro, Pavel, “Politica Monetaria y Doble Moneda”, in Omar Everleny Perez et. al., Miradas a la Economia Cubana, La Habana: Editorial Caminos, 2009

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