• The objective of this Blog is to facilitate access to research resources and analyses from all relevant and useful sources, mainly on the economy of Cuba. It includes analyses and observations of the author, Arch Ritter, as well as hyper-links, abstracts, summaries, and commentaries relating to other research works from academic, governmental, media, non-governmental organizations and international institutions.
    Commentary, critique and discussion on any of the postings is most welcome.
    This Blog on The Cuban Economy is dedicated to Cuba's Generation "A". Although inspired by Yoani Sánchez' original blog "Generation Y" this is not dedicated to those with names starting with the letter "A". Instead, it draws from Douglas Coupland's novel Generation A which begins with a quotation from Kurt Vonnegut at a University Commencement:
    "... I hereby declare you Generation A, as much as the beginning of a series of astounding triumphs and failures as Adam and Eve were so long ago."

Cuba Standard.com, Cuba Trade and Investment News

By Arch Ritter

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

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

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

Table of Contents:

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

Government eases auto sales restrictions.

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

OFAC fines Texas oil supplier.

U.S. lawmakers warning Repsol.

Jorge Piñón: What Washington should be doing.

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

Government reform shifting into overdrive.

Cuba to access global pharmaceutical markets via Brazil.

Cuba seeking South African funding for medical projects.

Iran boosts line of credit.

Vietnam seeking debt arrangement.

Vietnam working with Cuba on biogas

BY THE NUMBERS, FIRST HALF 2011

C o m p a n i e s:

Pemex eyeing Repsol’s Cuba operations;

Sherritt appoints new director ;

China, Cuba to jointly develop vaccine

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

BY YOANI SÁNCHEZ

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

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

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

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

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

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

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

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

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

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

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

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

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

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New Publication: The Cuban Diaspora in the 21st Century

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

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

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

The complete study is available here:

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

From the Preface by Juan Antonio Blanco:

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

Table of Contents

Preface 5
Summary 7
Introduction 11

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

State-Diaspora Relations 16

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

The Cuban Diaspora: Possibilities and Challenges 38

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

The Diaspora: Resources and Possibilities 47

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

Conclusions and Recommendations .65

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

 

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

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

Miriam Celaya

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

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

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

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

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

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

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

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

 

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Crecimiento económico y sector externo en Cuba

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

Jorge Mario Sanchez, Crecimiento económico y sector externo en Cuba

Jorge Mario Sánchez

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New Publication from Cuba: Cooperativas y Socialismo: Una Mirada DesdeCuba

A collection of essays on Cooperatives has just been published in Cuba, compiled by Camila Piñeiro Harnecker of the Centro de Estudios sobre la Economia Cubana. Ms. Camila Piñeiro comes with an impeccable political pedigree, with parents Manuel Piñeiro Losada (a Revolutionary from 1952 onwards and a 32 year veteran of the Central Committee) and Marta Harnecker, (a Chilean sociologist,  leading ideologue and prolific author.) The volume was made available courtesy of ASCE and Joaquin Pujol

The complete document is available hyperlinked here: Cooperativas y Socialismo: Una Mirada DesdeCuba, La Habana: Editorial Caminos, 2011

Compiladora: Camila Piñeiro Harnecker; Coordinador editorial: José Ramón Vidal

Edición: Mayra Valdés Lara; Diseño: Olmer Buchholz Espinosa

The Table of Contents is reproduced below.

Índice

Prólogo Camila Piñeiro Harnecke, 7

Parte 1 ¿Qué es una cooperativa?

1.       Una introducción a las cooperativas, Jesús Cruz Reyes y Camila Piñeiro Harnecker, 31

2.       La construcción de alternativas más allá del capital,  Julio C. Gambina y Gabriela Roffinelli, 55

Parte 2 Las cooperativas y los pensadores socialistas

3.       Cooperativismo y autogestión en las visions de Marx, Engels y Lenin,  Humberto Miranda Lorenzo 71

4.       Cooperativismo socialista y emancipación humana. El legado de Lenin, Iñaki Gil de San Vicente, 103

5.       El Ché Guevara: las cooperativas y la economía política de la transición al socialism, Helen Yaffe 132

6.       Las bases del socialismo autogestionario: la contribución de István Mészáros, Henrique T. Nova, 167

Parte 3 Las cooperativas en otros países

7.       Mondragón: los dilemas de un cooperativismo maduro, Larraitz Altuna Gabilondo, Aitzol Loyola Idiakez y Eneritz Pagalday Tricio, 191

8.       Cuarenta años de autogestión en vivienda popular en Uruguay, El “Modelo FUCVAM”,  Benjamin Nahoum, 219

9.       Economía solidaria en Brasil: la actualidad de las cooperativas para la emancipación histórica de los trabajadores/ Luiz Inácio Gaiger y Eliene Dos Anjos, 245

10.   Autogestión obrera en Argentina: problemas y potencialidades del trabajo autogestionado en el contexto de la poscrisis neoliberal, Andrés Rugge, 272

11.   De las cooperativas a las empresas de propiedad social directa en el proceso venezolano Dario Azzellini, 301

Parte 4 Las cooperativas y la construcción socialista en Cuba

12.   Las cooperativas agropecuarias en Cuba: 1959-presente,  Armando Nova González, 321

13.   La UBPC: forma de rediseñar la propiedad estatal con gestión cooperative, Emilio Rodríguez Membrado y Alcides López Labrada, 337

14.   Notas características del marco legal del ambiente cooperativo cubano,  Avelino Fernández Peiso, 366

15.   Retos del cooperativismo como alternativa de desarrollo ante la crisis global. Su papel en el modelo económico cubano, Claudio Alberto Rivera Rodríguez, Odalys Labrador Machíny Juan Luis Alfonso Alemán, 397

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Cuba closes once powerful sugar ministry

Marc Frank, Reuters
External Link: http://www.reuters.com/article/2011/09/29/food-cuba-sugar-idUSS1E78S0AG20110929

An Aerial View of What is Left of the Australia Sugar Mill, 2011

HAVANA, Sept 29 (Reuters) – Cuba is closing its once powerful Sugar Ministry in favor of a state holding company charged with pulling the sector out of a long decline, official media announced on Thursday.

A government communique said the decision was made at a  meeting of the Council of Ministers on Saturday. “The Council of Ministers, after an analysis of the sector, decided to close the Sugar Ministry as today it carries out no state functions,” it said.

President Raul Castro was quoted as stating the ministry would be replaced by holding company. Castro said 13 provincial companies   would belong to the new holding company with 61 mills, of which  five would close.

Plans to create the new sugar corporation and revitalize the industry by, among other things, allowing foreign investment and closing inefficient sugar mills were first reported by Reuters more than a year ago. The ministry’s demise is the last chapter in the dramatic decline of the sugar industry in a Caribbean island country where sugar was once king but now accounts for around 5 percent of foreign exchange earnings.

Cuba’s fall from once being the world’s biggest sugar exporter, producing 8 million tonnes of raw sugar annually, began with the  collapse of former benefactor the Soviet Union in 1991. Since then, the sector has declined relentlessly to 1.2 million tonnes. The country plans to produce 1.45 million tonnes during the harvest that gets underway in December.

Former Economy Minister Marino Murillo, recently promoted to lead economic reform efforts, said last year plans called for the industry to gradually increase production to around 2.5 million tonnes by 2015. Cuba itself consumes a minimum 600,000 tonnes of sugar annually and has a 400,000 tonne toll agreement with China.

In a painful 2002 downsizing of what was once the island’s flagship
sector, Cuba shut down and dismantled 71 of 156 mills, all 71 built well before the revolution, and relegated 60 percent of sugar plantation land to other uses.

More than 200,000 of the industry’s 400,000 workers were moved to other employment and many rural sugar towns were left stagnating, their closed mills marking the skyline. More mills have closed since then. Only 1.7 million acres (700,000 hectares) of the more than 5 million acres (2 million hectares) once controlled by Cuba’s sugar ministry are currently dedicated to sugar cane.

Repairs Inside the Australia Sugar Mill, November 1994

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US-Cuba policy, and the race for oil drilling

By Sarah Stephens,Executive Director of the Center for Democracy in the Americas. Jake Colvin, Vice President for Global Trade Issues at the National Foreign Trade Council – 09/29/11 03:39 PM ET
.

To protect the national interest — and for the sake of Florida’s beaches and the Gulf of Mexico’s ecosystem — it is time to stop sticking our heels in the sand when it comes to U.S.-Cuba policy.

Before the end of the year, a Chinese-made drilling platform known as Scarabeo 9 is expected to arrive in the Gulf.  Once it is there, Cuba and its foreign partners, including Spain’s Repsol, will begin using it to drill for oil in waters deeper than Deepwater Horizon’s infamous Macondo well.  The massive rig, manufactured to comply with U.S.-content restrictions at a cost of $750 million, will cost Repsol and other companies $407,000 per day to lease for exploration.

They are taking this financial risk because Cuba needs the oil and its partners — Spain, Norway, Russia, India, Vietnam, Malaysia, Canada, Angola, Venezuela, and possibly China — believe that drilling in waters said to contain undiscovered reserves of approximately 5 billion barrels of oil is good business.

In virtually every other country in the world, developments like these would prompt high-level discussions about how to exploit these resources safely or to anticipate a crisis were a disaster to strike. Experts who have studied the currents say a spill in Cuban waters would send 90 percent of the oil into the Keys and up the East Coast of Florida. But the embargo leaves Florida’s sensitive coastal resources defenseless.

Due to the fact that the drilling involves Cuba, American companies and workers cannot lend their expertise to what could be a risky operation.  U.S. economic sanctions prevent our private sector from helping Cuba drill safely and paralyze the U.S. government, which ought to be convening bilateral discussions on best practices and coordinating disaster response.  In fact, the U.S. has no emergency response agreement with Cuba for oil spills.  While some specific licenses have been granted to permit U.S. firms to conduct limited transactions with Cuba, current sanctions bar the United States from deploying the kind of clean-up equipment, engineers, spare parts for blow-out prevention, chemical dispersants, and rigs to drill relief wells that would be needed to address an oil crisis involving Cuba.

One welcomed development came earlier this month, when William Reilly, a former head of the U.S. Environmental Protection Agency and co-chair of the Commission that investigated the Deepwater Horizon disaster, led a group of experts to Cuba to take a look at their plans.  While the administration has done well giving permission to Mr. Reilly, as well as to other experts, to discuss the problem with Cuban counterparts, it should move more aggressively to work with the Cuban government to cooperate on plans for safe drilling and responding to a possible crisis.

Rather than moving forward, some in the U.S. Congress would make the problem worse.  Rep. Ileana Ros-Lehtinen (FL-R), who criticized Mr. Reilly’s visit to Cuba as “giving credibility to the regime’s dangerous oil-drilling scheme,” has offered legislation to try and stop Repsol from drilling.  Rep. Vern Buchanan (FL-R) would deny Repsol the right to drill in U.S. waters if it helped Cuba drill in its waters.   Thirty-four members of both parties have written Repsol directly, threatening the company if it drills with Cuba.
Yet this tactic can’t work.  Even if they could deter Repsol from drilling – which is unlikely – they cannot stop Cuba and partners from countries like China, Russia, and Venezuela, from using the rig and searching for oil.

At some point, it is likely that drilling will begin and the United States ought to do what it can to prepare for that eventuality.  The U.S. government should facilitate access by Cuba and its drilling partners to the resources they need to drill safely.  President Obama should instruct the Treasury Department to issue a blanket general license now that would allow private industry to provide what oil expert Jorge Piñon calls ”any conceivable response” in the event of a crisis.

As we have already done with Mexico and Canada, the U.S. should join Cuba in crafting a crisis response agreement covering on-scene coordinators, a joint response team, response coordination centers, rapid notification protocols, customs and immigration procedures, and communications.  The plan should be written, signed, tested, and implemented as quickly as possible.

Earlier this year, the Deep Water Horizon Commission, which Mr. Reilly co-chaired, said in its final report “that neither BP nor the federal government was prepared to deal with a spill” of its magnitude or complexity; that industry and policy makers were lulled by a “culture of complacency” that resulted in 5 million barrels of oil being dumped into the Gulf.

Having seen this movie once before, complacency is inexcusable.  Politics should not blind Washington to the reality of the situation unfolding off of our shores.

Sarah Stephens is Executive Director of the Center for Democracy in the Americas.  Jake Colvin is Vice President for Global Trade Issues at the National Foreign Trade Council.

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POLITICAL ECONOMY OF CHANGE IN CUBA

A three-day international symposium held under the auspices of the Bildner Center at City University of New York. and spearheaded by its Director Mauricio Font, was held in March 2011. It was entitled Cuba Futures: Past and Present, and focused on the dynamics of change in contemporary Cuba—the politics, culture, economy.

A selection of the papers on the Cuban economy have been published on the web by the Bildner Centre.  The are all hyperlinked here: Political Economy of Change in Cuba, Bildner Center, CUNY New York. A Table of Contents is presented below. Of special interest are the essays by the analysts from the Centro de Estudios sobre la Economia Cubana, Armando Nova, Camila Piñeiro, Pavel Vidal Alejandro and Omar Everleny Pérez .

Table of Contents

Preface                                                                                                                                   xi

1 La actualización del modelo económico cubano, Omar Everleny Pérez Villanueva

2 Forecasting Cuba’s Economy: 2, 5, and 20 Years, Emily Morris*    10

3 Las restricciones de divisas en la economía cubana, 2010, Pavel Vidal Alejandro 19

4 New Forms of Enterprise in Cuba’s Changing Economy, Camila Piñeiro Harnecker    43

5 Valoración del impacto de las medidas más recientes en los resultados de la agricultura en Cuba, Armando Nova González     63

6 Las nuevas transformaciones en la agricultura cubana: éxitos y desafíos, Reynaldo Jiménez Guethón           81

7 Cuba y el turismo norteamericano. Analisis de potencialidades y de impactos en la región caribeña, Gerardo González Núñez and Roberto Orro Fernández         9

78 Tourism in Cuba: Barriers to Economic Growth and Development Hilary Becker     117

9 Cuba: A Services-Centered Survival and Development Pattern, Alberto Gabriele        133

10 Theoretical Foundations of a Future Privatization in Cuba: The Property and Ownership Paradigm, Frank-Christian Hansel   155

11 Globalization and the Socialist Multinational: Cuba and ALBA’s Grannacional Projects at the Intersection of Business and Human Rights, Larry Catá Backer         183

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Cuba’s Offshore Petroelum Exploration and U.S. Policy

POLITICO: Cuba drilling next hurdle for U.S.
By: Darren Goode (Courtesy of Jorge R. Piñón)
September 27, 2011 10:38 PM EDT
The White House must crisscross complex political and policy waters as it faces the impending reality of oil drilling off Cuba a mere 60 miles from the Florida Keys.

“It’s just like firing a shotgun in a crystal store,” said Jorge Piñón, a visiting fellow with the Florida International University Latin American and Caribbean Center’s Cuban Research Institute. “You’re going to break something eventually.”

That presents multiple challenges for the Obama administration, which is tasked with protecting the U.S. coastline and waters if a catastrophe begins off Cuba.

“I think there is a lot of a tendency to hold the breath and hope it doesn’t happen,” said Lee Hunt, president of the International Association of Drilling Contractors. “I can assure you that inaction and lack of leadership against a potential disaster would be this administration’s Katrina.”

Administration officials have already upgraded drilling standards for operations off the U.S. coast and have established a partnership with Mexico to set higher bilateral standards in the Gulf of Mexico since last year’s historic spill. And Bureau of Ocean Energy Management, Regulation and Enforcement Director Michael Bromwich said last week that “the issue of drilling offshore Cuba has been on our screen for many months.”

“I can say that this issue has been focused on and discussed in very high levels of the government,” Bromwich said.

The Spanish company Repsol is expected by January to begin drilling a deepwater exploratory oil well off Cuba in waters about 60 miles south of Key West and slightly deeper than BP’s doomed Macondo exploration well. Other exploratory wells from the same Chinese-built semi-submersible rig owned by the Italian company Saipem would follow in subsequent months — involving companies such as Russia’s Gazprom.

“Politicians don’t like to take the risk with Cuba unless they see a clear positive payback of some sort,” said Bill Reilly, a former EPA administrator under President George H.W. Bush. “Now that we see the rig approaching Cuban waters, the political calculus will change.”

Reilly — who co-chaired a bipartisan commission that investigated last year’s Gulf spill — and Hunt were among a group granted permission by the administration to trek to Havana in early September to talk to senior Cuban officials in the absence of direct talks between the two governments.

“The message was drilling in deepwater is a highly challenging, risky, technologically complex job, and the lessons of Macondo show that even very experienced companies and very practiced regulators can get it wrong,” Reilly said.

Hunt, who was following up on a trip he made to Cuba last year, said the biggest difference between the two trips is the Cuban government “had taken a great deal more investigation” into safety and other protocols adopted by the U.S. and Mexico.

“In a way, I would say in 2010 they had a very solid regulatory plan. In 2011, they had a fairly sophisticated regulatory plan,” Hunt said. “I don’t have too many concerns about their ability to drill safely.”

Reilly and former Royal Dutch Shell Vice President Richard Sears, the chief technical adviser to the president’s spill commission, were in Cuba to explain the commission’s recommendations and findings.

“Turned out they knew the oil spill commission’s recommendations cold,” said Reilly, who later briefed Bromwich and White House officials about the trip. “That was kind of surprising and reassuring. They are aware they have very serious challenges, as any country that’s never done this before should have.”

But for many, the main concern is that U.S. equipment and personnel would not be ready to act quickly enough to respond to a spill.

“What’s in place from the U.S. side to respond and basically prepare for a worst case or really a spill of any kind?” asked Dan Whittle, director of the Environmental Defense Fund’s Cuba program, who was also on this month’s five-day trip to Havana.

Because of the decades-old U.S. embargo against Cuba, Hunt said, many resources would have to be shipped from as far away as the North Sea, the United Kingdom, North Africa or Asia.

Reilly, Hunt and Whittle are among those asking the Obama administration to grant general licenses or narrow emergency exemptions to the embargo to ensure that U.S. companies of all stripes can assist in preventing and responding to a subsea well leak.

The Commerce Department and the Treasury Department’s Office of Foreign Assets Control have granted licenses to some U.S. companies that operate in Cuban waters, including those that could help with oil spill preparation and response. Both agencies promised to act quickly on any additional approvals that are required.

But some say granting a wider exemption is needed so that various companies — including parts manufacturers and vessel and plane operators — can respond quickly.

“It’s very complex, so the easiest way is to issue a general license and to make sure that the general license is only to be used during an emergency,” Piñón said. “There are hundreds of companies. We don’t know who is going to have that valve that is going to be needed.”

For example, well containment systems developed by the Marine Well Containment Co., a coalition of major Gulf oil producers that formed after last year’s spill, and the Helix Energy Solutions Group were instrumental in the Interior Department’s decision to start granting deepwater drilling permits again this year. Repsol has contracts with MWCC and Helix for their operations in U.S. waters, but not in Cuba.

Bromwich said he is not pressuring the Treasury to issue or not issue a general license to companies.

“It would be in the national interest to make sure that everything that can be done certainly in U.S. waters is done,” he said. “Whether it goes beyond that, I think, is among the issues that are being discussed in high levels of the government.”

Regular talks also continue with Repsol, Bromwich said.

But while Cuba appears willing to adopt offshore drilling standards modeled after those in the U.S. and Mexico, Piñón said there needs to be direct talks between the two governments.

While the embargo tightened during the George W. Bush administration, the Obama administration has loosened some sanctions, including easing specific travel restrictions in January.

One challenge will be the politics in Florida, which will again be a swing state in the 2012 election. The state includes critics of any oil or gas drilling near the state’s coastline, along with hard-line Cuban refugees who wince at any melting of relations with the Castro regime. Florida congressional members from both parties have offered bills punishing companies that operate in Cuba.

Republicans on Capitol Hill, and potentially on the presidential trail, could also accuse the Obama administration of focusing more on shoring up Cuba’s domestic energy production rather than at home.

But Florida political observers say any concern about fiddling with the embargo runs a distant second to the state’s economic doldrums and the devastating impact that a spill could have on the Sunshine State.

“It’s much more of an issue for the Republican candidates than it is for the administration,” said Florida Republican strategist Ana Navarro. “I frankly don’t think the administration cares about the hard-lined Cuban-American vote, and I don’t think the hard-lined Cuban-American vote cares for the administration. And I don’t think that’s changing anytime soon.”

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