• 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."

“From Collision to Covenant: Challenges Faced by Cuba’s Future Leaders”

Posted on August 19, 2013 by Arch Ritter

Lenier Gonzalez of Espacio Laical has written an insightful and challenging analysis of Cuba’s political future. It has been reproduced as a special study “From the Island # 19) by the Cuban Studies Group. it is available here in English: Lenier Gonzalez, From Collision to Covenant: Challenges Faced by Cuba’s Future Leaders.

A Spanish language version is here: Lenier Gonzalez:  De la colision al pacto,desafios del relevo politico en Cuba.

Lenier Gonzalez Mederos

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Association for the Study of the Cuban Economy, Annual Conference 2013

Posted on July 19, 2013 by Arch Ritter

The Association for the Study of the Cuban Economy is holding its Annual Conference for  2013 in Miami on August 1 to 3. It looks like a most interesting conference coming at a time when the economic reform process is solidifying and evolving in new directions.

The program has been put together by Jorge Pérez-López, who has performed this task for the last 23 years! The program includes a large number of Cuban analysts from the Island who are now free to travel from their country when they decide. Among the Cuban invitees are Armando Nova of the Centro de Estudios sobre la Economia Cubana of the University of Havana, and Oscar Espinosa Chepe, an independent analyst.

Jorge Pérez-López

The complete program plus info on registration is available here:

ASCE Conference 2013 Preliminary Program: Reforming Cuba?   ASCE 2013 program.

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Cuba’s “1 Percent” Is Not Who You Think It Is

Posted on July 19, 2013 by Arch Ritter

Origiginal article here: “Cuba’s 1 Percent…..”ext Size

By: Michelle Caruso-Cabrera | CNBC Chief International Correspondent,  Friday, 19 Jul 2013 | 7:00 AM ET

Art and Handicraft Market on the Malecon, 2004

In most parts of the world, artists struggle to make a living. In Cuba, they’re part of the wealthiest 1 percent of the population.  Two quirks of fate have led to an explosion of well-paid artists on the island: an exception to the U.S. embargo on Cuban goods that allows Americans to spend money on Cuban art, and an accident of Cuban history that lets artists keep the money they earn.

Dionel Delgado, 29, is emblematic of financially successful Cuban artists. His new gallery is in an apartment he just bought in a prime ground-floor location in old Havana that gets lots of tourist foot traffic.  As he painted a large, lush landscape of the Cuban countryside, he told CNBC, “A big part about my work is about the landscape. The love of my country, my space, my dream space.”

CNBC’s Michelle Caruso-Cabrera is one of the few business journalists who has been asked to visit Cuba. Why would the socialist government extend the invitation? She has the latest from Havana.

Don’t try to buy the work however—it’s already sold to a Mexican gallery for $10,000. He said that, on average, he sells a painting every two months.

Thousands of Americans travel legally to Cuba every year under what the Treasury calls “people to people” licenses. Remember Jay-Z and Beyoncé’s trip? On such junkets, American tourists are prohibited from buying any kind of souvenir—except for books, music and art.

As a result, as one moves through old Havana, some of the most prevalent items for sale aren’t T-shirts, hats or magnets, but paintings. In fact, the government put up a new building a few years ago expressly for art vendors.

An accident of Cuban history

Vendors there don’t have to be as successful as Delgado to make a good living. Most of the paintings for sale to tourists are $100 or less. Selling just one a month, a painter makes more than double the average Cuban, who earns only $19 in a government job.

Artists have held a special place in the Cuban economy since the early 1990s—an extremely difficult period in which the Soviet Union cut off the billions of dollars in subsidies it had supplied to Fidel Castro’s government. Even food was hard to come by. During that time, the government carved out a special exemption for musicians and artists, allowing them to travel freely in and out of the country and, more importantly, to be self-employed as artists and to keep the money they made.

The exemptions made them rich compared with other members of Cuban society, as well as more cosmopolitan.

http://thumbnails.cnbc.com/VCPS/Y2013/M07D16/3000183240/3ED2-KR-EBlock0716.jpg

Play Video

 

Abel Barroso Arencibia, 46, who specializes in wood carvings, agrees that artists are lucky to hold a special place in the Cuban economy.

Barroso is in the middle of a major renovation on his apartment. Two museums in New York—the Whitney Museum of American Art and Museum of Modern Art—hold his pieces in their collections. He has traveled all over the world, from the U.S. to Japan, and was able to do so long before other Cubans, who received that right only at the beginning of this year.

Critical of the government? It’s up to the viewer

Also remarkable is that the Cuban government seems willing to tolerate art that could be interpreted as critical of it. Barroso, for example, is working on a woodcut of a tablet computer. It obviously doesn’t work, but the “apps” on the wooden machine are all related to emigrating from Cuba.

Barroso makes many woodcuts of communication devices. He calls the work an “ironic” commentary on technology. When asked if it’s a criticism of the government—given that most Cubans don’t have a cellphone or access to the Internet—he responds, “How it’s interpreted is up to the viewer.”

Besides landscapes, Delgado has created a series of large-format paintings that depict fake magazine covers. He said he was inspired by Norman Rockwell, famous for painting real magazine covers that portray an idyllic American life.

One of Delgado’s magazine cover paintings shows people preparing to jump over the Malecon—the famous seawall in Havana—in inner tubes. It’s a scene repeated by thousands of Cubans who, desperate to leave, took to the open ocean.

When asked if the painting is intended as a criticism of the government, Delgado said no, adding that “it talks about the troubles of Cuba.”

“It’s normal for all the Cubans to have this constant on our minds,” he said. For a Cuban, the sea means “one way to take his dreams out there, the American dream,” he added. “It’s a reflection of … how many people take this option, you know? For finding a way, you know?”

My Venture into Cuban Art: “Caridad del Cobre,” by Natacha Chaviano

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Cuba pushes ahead on reforms but insists island not for sale

Posted on July 16, 2013 by Arch Ritter

By Marc Frank in Havana, Financial Times,  July 15, 2013 1:29 pm

Cuba’s efforts to build a more market-driven economy are moving from lifting prohibitions on personal property, travel and minor economic activity to reform of larger state companies. But one of the most powerful men in the land had bad news last week for those who might harbour hope of owning a piece of the Caribbean island.

 “Life has demonstrated that the state cannot occupy itself with the entire economy, that it must cede space to other forms of administration,” Marino Murillo, the man appointed to head President Raúl Castro’s reform efforts, told journalists visiting the country last week. But Mr Murillo, a member of the politburo and vice-president of the Council of Ministers, emphasised that it was a transfer of administration and not a “property of the people” reform.

Since Raúl Castro took over from his ailing brother Fidel Castro in 2008, and first began to institute austerity measures and reforms, the country’s current account has run a surplus, but economic growth has stagnated at just over 2 per cent annually. The Cuban Communist Party and government adopted a more than 300 point plan in 2011 to “update” the country’s economic and social model, “but the party made clear the changes were to take place within the limits of socialism”, Mr Murillo said.

Asked repeatedly about foreign investment opportunities, the officials offered nothing new at all, repeating stock lines about investment being complementary to their development schemes and that existing regulations were flexible and adequate.

Mr Murillo said the government was developing a list of offers that should be ready by 2014 and were planned to stimulate investment. The implication was that drawn-out negotiations over control of joint ventures, duration of the agreements, tax breaks and labour relations are unlikely to be resolved soon. The possible exception is a special economic zone in western Cuba expected to open next year and which is awaiting publication of its rules and regulations. None of the 190 companies managing and temporarily in joint ventures in Cuba own any property outright, nor do they have the right to sell shares except with the authorisation of their partner, the state.

The Havana Cross-Harbor Ferry Chasing a Container Ship

Mr Murillo said agriculture represented more or less what authorities envision for minor and secondary sectors of the economy.  The country has leased fallow state land to nearly 200,000 would-be farmers in recent years, loosened the regulation of co-operatives that were already leasing state land and freed up all agricultural actors to sell more of their produce (currently 47 per cent) on the open market, bypassing the state’s wholesale and retail outlets. “Eighty-one per cent of the land is social property owned by the people, and 70 per cent of the land is administered by co-operatives and small farmers,” he said. Twenty per cent is owned by small farmers and their private co-operatives.

Cuba has been busy fostering development of small businesses in retail services, transport, construction and minor production, and allowing market forces to govern their activities, along similar lines to the agricultural sector. The government is leasing taxis and thousands of state shops, with up to five workers, to its former employees or any takers, and this month began to transfer larger enterprises with 6 to around 50 workers to co-operative administrations, 124 to date, with another 71 approved.

Currently, 4m people out of the country’s 5.1m-member labour force work for the state, the remainder occupied in what is called the “non-state” sector, Mateu Pereira, an adviser to the minister of labour and social security, told the journalists. An estimated 1m Cubans of working age do not seek employment. The co-operatives are the first outside of agriculture since all businesses were nationalised in 1968. The government says many more establishments will follow, beginning in 2014.

The co-operatives function independently of the state on the basis of supply and demand, divide their profit among members and receive better tax treatment than individually owned businesses, according to Cuban officials. A decree law published in December allows for an unlimited number of members and use of contracted employees on a three-month basis.

Cuba will also begin deregulating state-run companies in 2014 as reform of the Soviet-style command economy moves from retail services and farming into its biggest enterprises, the head of the Communist Party’s reform efforts said. Mr Murillo said the 2014 economic plan included dozens of changes in how the companies, accountable for most economic activity in the country, did business.  The reforms will affect big state enterprises such as telecommunications company Etecsa, tourism corporations, trading company Cimex and sugar monopoly Azcuba.

Mr Murillo said changes include granting managers more autonomy and permission to sell excess products after meeting state obligations on the market, and allowing companies to retain half of their profits after taxes for such things as minor investment and wage increases.

Artesan market, La Rampa November 2008; not state enterprise

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Cuba to Embark on Deregulation of State Companies

Posted on July 9, 2013 by Arch Ritter

By Marc Frank; HAVANA | Mon Jul 8, 2013

Original here:  Cuba to embark on deregulation of state companies

HAVANA (Reuters) – Cuba will begin deregulating state-run companies in 2014 as reform of the Soviet-style command economy moves from retail services and farming into its biggest enterprises, the head of the Communist Party’s reform efforts said.

Politburo member and reform czar Marino Murillo said the 2014 economic plan included dozens of changes in how the companies, accountable for most economic activity in the country, did business. He made the comments in a closed-door speech to parliament deputies on Saturday, and some of his remarks were published by official media on Monday.

“The plan for the coming year has to be different,” Murillo was quoted as saying by Communist Party daily newspaper Granma. He said that of 136 directives for next year “51 impact directly on the transformation of the companies.”

The reforms will affect big state enterprises like nickel producer Cubaniquel and oil company Cubapetroleo and entail changes like allowing the firms to retain half of their profits for investment and wage increases and giving managers more authority. The plan also threatens nonprofitable concerns with closure if they fail to turn themselves around.

“Murillo’s empowerment of state-run companies is a milestone on the road toward a new Cuban model of state capitalism, where senior managers of government-owned firms become market-driven entrepreneurs,” said Richard Feinberg of the Washington-based Brookings Institution and an expert on Cuba’s economy.

“But only time will tell whether the government is willing to truly submit the big firms to market discipline – to let the inefficient ones go bankrupt,” he said.

Murillo cited the Communist Party’s reform plan, adopted in 2011, which he said called for freeing productive forces to increase efficiency and reducing how companies’ performance was measured to a few indicators such as profit and productivity.

Already this month, 124 small to medium state businesses, from produce markets to minor transportation and construction concerns, were leased to private cooperatives which, with few exceptions, operate on the basis of supply and demand and share profits.

Hundreds more were expected to follow in the coming years as the state moves out of secondary economic activity such as retailing and farming in favor of individual initiative and open markets under reforms orchestrated by President Raul Castro, who took over for his ailing brother Fidel in 2008.

Cuba’s economy was more than 90 percent in state hands up until 2008 and almost all of the its labor force of 5 million workers were state employees.

Cuba began laying off hundreds of thousands of state workers and deregulated small retail services in 2010, simultaneously creating a “non-state” sector of more than 430,000 private businesses and their employees as of July and leasing land to 180,000 would-be farmers.

Now larger enterprises, from communications, energy and mining to metal works, shipping, foreign and domestic trade, are being tweaked as the country strives to avoid bankruptcy and boost growth, which has averaged around 2 percent annually since the reforms began.

John Kirk, one of Canada’s leading academic experts on Latin America and author of a number of books on Cuba, summed up the changes announced by Murillo: “Cuba maintains its path towards a mixed economy.”

“It appears as if government determination to modernize the economy is slowly overcoming the profoundly rooted inertia of the bureaucracy,” he said.

 

CUPET: Out of gas? 

ELIMINATING BARRIERS

Murillo said companies would keep 50 percent of profits for recapitalization, minor investments, wage raises and other activities, instead of handing over all profits to the state and then waiting for permission to spend the money.

“The plan is designed so that a businessman from whatever sector does not have to ask permission to make minor investments to ensure production does not stop,” Murillo was quoted as saying.

“It eliminates administrative barriers to salary payments, which directors of companies can decide on, always and when they have sufficient profits to cover them,” he said.

Companies, which in the past were assigned hard currency for imports, will now be able to use the money to purchase local products.

“If an institution has … $200 million to import, and a local producer can produce what it plans to import, this body can directly pay that local producer with the approved funds,” Murillo said.

At the same time state firms that have reported losses for two years or more will be expected to turn a profit or they will be downsized, merged with others or closed.

“We can’t make a plan that includes companies like these … because the phenomena of having to finance these losses will persist,” Murillo said.

Cuba has already implemented some measures to set the stage for state company reform.

Most companies have been moved out of government ministries in favor of operating as “independent” holding companies and in some cases, such as in tourism, allowed to keep a percentage of revenues.

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Cuban Gov. Presents “Favorable” Stats

Posted on July 8, 2013 by Arch Ritter

July 7, 2013

HAVANA TIMES — The Cuban government said on Saturday it is satisfied by the “favorable performance” of the island’s economy in the first half of the year, despite a “slowdown” overall and increased unemployment.

An optimistic minister of the economy, Adel Yzquierdo, painted a “favorable” picture of developments in the island’s centrally planned economy, but pointed to a general decline and reduced growth estimates for this year, in an address to the Cuban parliament.

Yzquierdo presented the legislature with economic performance figures for the first half of 2013. President Raul Castro was also present.

According to the figures, employment in the emerging private sector in Cuba continued to grow in the first half of 2013 while the state sector fell.

Unemployment is expected to grow by 4.2 percent in the state sector in the first half of the year, compared with a growth figure of 8.8 percent in the private sector, according to Yzquierdo’s report.

The forecasts, however, point to a general increase in unemployment because the expected growth in the self employed sector was not reached “, noted Prensa Latina.

The island currently has 400,000 people working in the private sector, the so-called “self-employed”. Over recent years, the government of Raul Castro is implementing a program of economic reforms with market elements that have allowed for an opening of some less specialized trades to private work.The medium-term goal is the progressive reduction of half a million jobs in the bloated state sector, as announced by the government in 2010.

Many of the “self-employed” registered so far, however, are retired or keep their jobs in the state sector while trying to obtain a little other income.

The economy showed an overall a “favorable performance”, said Yzquierdo. Almost all sectors recorded growth, “including trade, transport, communications and manufacturing,” he noted.

Yzquierdo said the Cuban trade balance was positive at the end of the first quarter and pointed to a similar trend for year-end. At the same time, he spoke of a “slowdown” in the global economic situation.

Cuba recently reduced its forecasts for annual growth in 2013 from the 3.6 percent initially estimated to somewhere between 2.5 and 3.0 percent. He emphasized that the evolution of gross domestic product (GDP) has been influenced by the crisis in the international arena.

In the first semester, the island’s economy grew 2.3 percent, according Yzquierdo, despite “external stress”, the “internal weaknesses” and the effects of Hurricane “Sandy”, which swept across the east of Cuba in October 2012.

“Sandy” affected 11 provinces and caused losses of almost 7 billion dollars, according to the minister.

The inaugural session of the eighth legislature of the National Assembly of People’s Power closes on, Sunday. Raul Castro is expected to pronounce in a speech to the parliament.

In a Communist Party Central Committee meeting last week, Castro came down hard on what he called “indiscipline and illegalities” in the State apparatus. He will most likely refer to the fight against corruption, one of the banner efforts of his administration.

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Raul Castro rages against Cubans’ sloppy habits and decaying morals

Posted on July 8, 2013 by Arch Ritter

The 82-year-old Cuban president denounces petty ‘social indiscipline’ such as drinking and swearing in the street

Original Here: guardian.co.uk, Sunday 7 July 2013 23.45 EDT

Raul Castro at the National Assembly in Havana.

Raul Castro spent the lion’s share of a prominent speech on Sunday scolding his countrymen for all kinds of bad behaviour, from corruption and theft to public urination and the practice of raising pigs in cities.

Speaking before legislators at one of parliament’s twice-annual sessions, the Cuban president railed against decaying morals, a deteriorating sense of civic responsibility and vanishing values such as honour, decency and decorum.

Castro aired a laundry list of complaints about illegal activities that he said did the country harm: unauthorised home construction, illicit logging and slaughter of livestock and the acceptance of bribes, to name a few.

He also fulminated against baser examples of “social indiscipline”: shouting and swearing in the streets, public drinking and drunk-driving, dumping rubbish on the roadside and people relieving themselves in parks.

At times, the 82-year-old’s speech sounded like a generational broadside against disrespectful youth who do as they please, a diatribe that could have crossed the lips of many a grandfather.

“When I meditate on these regrettable displays, it makes me think that despite the undeniable educational achievements made by the Revolution … we have taken a step back in citizens’ culture and public spirit,” Castro said. “I have the bitter sensation that we are a society ever more educated, but not necessarily more enlightened.”

Other examples of bad behaviour cited by Castro included:

• People showing up late to work;

• Graffiti and vandalism of parks, monuments, trees and gardens;

• Loud music that disturbed neighbours’ sleep;

• Raising pigs in cities despite the public health risk;

• Scavenging metal from phone and electrical lines, sewers, signs and traffic lights;

• Fare evasion on public transport;

• Failure to comply with school dress codes, and teachers who accept bribes for higher grades;

• Lack of deference to the elderly, pregnant women, mothers with small children and the disabled;

• Children throwing rocks at cars and trains.

“All this takes place right in front of our noses without inciting public condemnation and confrontation,” Castro said.

“It is not acceptable to equate vulgarity with modernity, sloppiness and negligence with progress,” he said. “Living in society entails, in the first place, accepting rules that preserve respect for decency and the rights of others.”

The Cuban leader also spoke of the corrosive effects of official corruption, quoting his elder brother Fidel as saying such activity posed a greater risk to the Cuban revolution’s success than any outside forces.

Castro’s biannual speech to parliament has sometimes been a moment to announce new initiatives, but Sunday’s was short on specifics. Perhaps his most notable comment was a reiteration of the importance of doing away with Cuba’s unique dual currency system.

Most citizens get paid in Cuban pesos, while a second currency, the dollar-pegged convertible peso, is used in tourism and to buy most imported goods.

Castro told legislators the Cuban economy was advancing “positively” even if those gains had yet to be felt by the average Cuban family.

Castro also voiced support for Latin American allies’ apparent willingness to grant the NSA whistleblower Edward Snowden asylum, though he did not say whether Cuba itself would offer him refuge or safe passage.

—–

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Cuba’s Public Transport System: Adjustments are not Enough

Posted on July 5, 2013 by Arch Ritter

 

Cuba’s Public Transport System: Adjustments are not Enough

July 4, 2013 | Fernando Ravsberg*

HAVANA TIMES — Fifty years of unsuccessful attempts at re-structuring its public transportation into a system that works should suffice to make Cuba consider changing the very foundations of the system. The “reorganization” being proposed today promises to be more of the same and is not likely to yield the quality services aimed for.

The last meeting held by Cuba’s Council of Ministers publicly recognized that the country’s transportation system “has been unstable, inadequate and low-quality for years.” The common Cuban who “hops on a bus” every day has something similar to say, albeit with far less refined words.

“Updates” can help steer those sectors that actually work, such as public health, education or sports, in the right direction. It can even improve the tourism industry, which has seen much progress in the course of the last 3 decades.

Cuba’s public transportation system, however, has always been bad and, in recent years, has gone from bad to worse. Truth is, it wasn’t even satisfactory in the days of Soviet aid, when there was plenty of money and State subsidies to invest in it.

One of the many problems faced by the sector are the odd administrative decisions of Cuba’s Ministry of Transportation, which purchases buses from China but demands that they be equipped with U.S. engines, as though oblivious to the economic embargo that has existed for over fifty years.

When the engine in one of those buses breaks down, Cuba has to buy it from the United States. The purchase is conducted through a foreign company and involves sending the product to a third country, where it is re-shipped to Cuba. Prices naturally skyrocket and spare parts take a long time to reach the island.

What’s more, a whole series of meetings between the commercial departments of the Cuban import companies and Ministry experts are held before the order is actually placed. There are committees that convene to evaluate one, specific aspect of the product, which refer the matter to other committees designed to review other product details, which in turn call on a third committee…and this process goes on and on for months.

All the while, the broken bus idles at a State workshop where, many a time, it is scavenged for pieces that can be sold in the black market. When the Ministry finally decides to make a purchase, more spare parts are needed and the whole, interminable process of committee meetings begins anew.

In this way, Cuba’s Ministry of Transportation has at times managed to keep half of Havana’s public buses out of circulation, a remarkable feat when we recall that the country has purchased a large fleet of vehicles from China.

Organizing a functioning public transportation system anywhere is, admittedly, a complex task which requires experts, large investments and continuous subsidies. Such efforts, however, are only successful when the system, at base, actually works, be it in a wealthy or poor country.

All transportation resources should be a part of a single, unified system. Photo: Raquel Perez

Granting a large number of vehicle owners licenses to operate as private cabs greatly improved Cuba’s public transportation situation, but the government undertook this liberalization without establishing a standard fare, the routes where these taxis must circulate and a maximum frequency of operations, regulations which are currently being applied in many countries around the world.

In the end, those who end up paying for the absence of official regulations are the passengers, for cab drivers charge whatever they feel like charging and circulate down the city’s busiest streets at the time of day they deem convenient, leaving other areas of the city bereft of viable transportation.

I also hear that the government will begin encouraging the use of bicycles as a means of transportation people can use to move around the city. Vice-President Murillo even said that authorities “will evaluate the possibility of selling spare parts needed to maintain the bicycles at subsidized prices.”

When I questioned the wisdom of removing bicycle lanes from Cuban streets in this blog, I was accused of being hypercritical. Now, it appears as though they will have to bring back these lanes, as selling cheap bicycles won’t be enough – you also need to give cyclists a safe space to move in.

Some people make fun of this proposal, as though the use of this means of transportation were a sign of backwardness. In fact, many developed nations promote the widespread use of bicycles and have an extensive network of bike lanes. Some major cities, like Barcelona, even have an efficient public bicycle rental system.

Cuba, a poor country, would benefit considerably from a strategy that availed itself of its various resources, creating a transportation system that could harmonize State, private, cooperative and even individual initiative.

To get there, however, the many import companies and endless committees that have been stepping on the brakes of the State must be removed, the private sector must be organized more efficiently, the cooperative sector expanded and inexpensive, individual alternatives which the population can afford must be sought.

Everything depends on how priorities are established. With what the government spends on only one of the thousands of vehicles it imports for use by its companies and ministries, a dozen electrical motorcycles or hundreds of good-quality bicycles could be purchased.

To buy a new bus, there’s no need to make an additional investment – importing 10 less automobiles suffices. The government could begin by suspending the practice of assigning vehicles to transportation officials, so as to give them the opportunity to experience what their less privileged compatriots endure (and think) on a daily basis.

Cuba’s economic progress should not be measured on the basis of the number of automobiles in circulation around the country, the fact there are more luxury cars on the street or we catch sight of a Hummer in Havana from time to time.

True success in this area will be to guarantee that ordinary Cubans have the means of transportation they need to get to work every day and take their kids to the Zoo one weekend or other.

Cooperativa de Omnibus Aliados, in the 1950s, (driving up Montes, it looks like)

Estacion Central de Ferrocarriles, Havana

Bicytaxis, Havana, November 2008

Camello, on Paseo de Prado (Marti), 1990s

Old Engines awaitying a home in a museum, in the shadow of the Capitolio, November 2008

New Chinese Bus, (driving up La Rampa?)

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Economic Reform in Cuba: A Private Affair

Posted on June 28, 2013 by Arch Ritter

Hesitantly, wholesale markets are becoming more established

FROM the Bay of Pigs to Che Guevara’s mausoleum, there is plenty for revolutionary tourists to see in Cuba. For economic junkies there should soon be a new item on the itinerary: Cuba’s first privately run wholesale market in half a century.

At present it is a nondescript warehouse of green-painted concrete near Havana’s airport. It is unmarked, and so few locals know about it that your correspondent drove past several times before finding it. But state media say it will open on July 1st. It is a source of excitement for those who will occupy it, because it will replace the muddy scrubland where drivers of hundreds of old trucks have been gathering on the outskirts of Havana to sell fruit and vegetables in bulk, always concerned that at any moment their makeshift trading post could be shut down.

They see the new premises as a further step on Cuba’s hesitant path towards freeing up wholesale markets and loosening the state’s control of food distribution. A farmer, sitting under a banana tree next to his cargo, proudly displays a handful of permits that he has recently paid for, covering everything from selling crops to owning and driving a delivery truck. He says that in the past, when the police caught him trying to drive produce to Havana without a licence, they would seize it and give it to a nearby hospital. “They can’t stop me now,” he says.

However, his ability to sell a broader selection of crops remains stymied by a shortage of seeds and fertilisers, supplies of which will not be available in the new market. Such inputs are still controlled by the state, he says, stroking his chin in a gesture that is meant to resemble Fidel Castro’s beard. The only way for a farmer to acquire more than he is allotted is via the black market.

The benefits of burgeoning wholesale trade are evident in a stroll through the back streets of Old Havana. Handcarts owned by private traders overflow with ripe mangos, avocados and limes, whereas government outlets nearby contain a few tired-looking pineapples.

Although wholesale produce is becoming more widely available, the government is only gingerly broadening wholesale trade to other supplies. Restaurant owners, for example, want to be able to buy flour, cooking oil, beer and soft drinks in bulk. Only a few shops provide these. The same is true of construction materials. “We don’t have anything like a Costco, where you can buy 20 crates of beer,” says Omar Everleny, a Cuban economist.

Partly to put such concerns to rest, the government announced in early June that it would gradually permit a variety of wholesale goods to be sold to state-run and privately run businesses, apparently building on an experiment started three months earlier on Isla de la Juventud, an island in western Cuba where Fidel Castro was imprisoned before his revolutionary victory in 1959. A pilot project to sell equipment to private farmers is also said to be taking place on the island. More than helping businessmen, the government’s priority in promoting such changes appears to be to raise output. So far, however, the reforms have been too half-hearted to achieve that.

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Cuba: Wind Power vs. Oil

Posted on June 24, 2013 by Arch Ritter

Isbel Díaz Torres, HAVANA TIMES (Havana), June 21, 2013

Original Essay Here: Cuba: Wind Power vs. Oil

It would seem that local newspapers are intent on misinforming the public – both at home and abroad – about the Cuban government’s priorities with respect to the development of alternative energy sources.

A case in point was the news surrounding the recently-concluded congress of the World Wind Energy Association and the Renewable Energy Exhibition (WWEC 2013), held in Havana at the beginning of this month.

During a press conference, the director of Cuba’s Center for the Study of Renewable Energy Technologies (CETER), Conrado Moreno, declared that Cuba plans on developing the infrastructure needed to generate at least 10 percent of its electricity with renewable sources by the year 2030.

In this connection, the official lauded “the great strides in the development of wind power technologies” that Cuba has made in recent years, adding that the country has “a program the world can learn from.”

However, thanks to this impressive wind power “program”, whose installed capacity was less than 0.5 Megawatts (MW) in 2005, the country barely produced 12 MW of electricity in 2010.

That Cuba should present the congress with such an out-of-date figure (a figure which, in addition, is anything but impressive, representing a mere 0.08 % of the country’s entire energy output) should raise some eyebrows.

This figure may help explain why it will take thirteen years for the country to be able to generate 10 % of its energy with wind power and the other renewable sources of energy used on the island.

The fact of the matter is that Cuba currently has 9,343 wind turbines, 15 turbines and 4 wind farms in operation, for an installed capacity of 11.7 MW, a figure which places it beneath 68 other countries around the world.

As a way of comparison, in 2010 Nicaragua had a generating capacity of 40 MW (the equivalent of 5 % of the country’s total installed capacity), garnered from wind power technologies alone, while Cuba currently generates a mere 4 % of its electricity via renewable energy sources in general.

Local optimism, however, isn’t dampened by any of this, and experts continue to extol the virtues of Cuba’s largest wind farm (with a capacity of 51 MW), whose construction on the northern coast of the island’s eastern province of Las Tunas, a place of allegedly “ideal” wind conditions, is expected to be completed next year.

It is estimated that the wind farm could generate some 153 GW/h a year, allowing the country to cut down its fossil fuel consumption by some 40 thousand tons a year.

Not without a number of altercations at different levels, the Cuban government has managed to secure the environmental licenses required for the project from the pertinent agencies rather quickly, giving technicians a mere week to collect the required data.

Wind power is an abundant, renewable and clean energy resource which can aid in the reduction of greenhouse gas emissions. Cubans, however, have never received any in-depth information regarding its benefits and limitations, nor have we ultimately been consulted in connection with its implementation.

Boasting of a relatively high Energy Return Rate* (18.1:1), wind power is cursed by one, significant limitation: its intermittence, that is, the fact that wind currents are not constant.

According to experts, wind currents on Cuba’s northern coastline are not uniform and are heavily influenced by local conditions, resulting from the interaction of trade and local winds and seasonal meteorological events.

The contribution of biomass to Cuba’s energy production in the period 2000 to 2011. Figures in the equivalent of thousands of tons of oil.

Because of this, wind power can only ever supplement, never wholly replace, fossil fuel sources on the island, as the contribution of conventional energy sources is indispensible. In addition, as these conventional technologies operate in “backup mode” in this scheme, they consume a lot more fuel per KW produced every hour.

Fossil fuels are also consumed during the process of constructing the wind farm (during the mining of the materials, transportation and industrial processing) and all subsequent, indispensable maintenance operations.

Another inconvenient aspect of this technology is that winds must reach a certain, minimum velocity to be able to move the blades of the turbines. There is also a maximum wind velocity that, if exceeded, causes the entire network circuit to shut down.

In addition to the noise they produce and the disruption of the natural environment they represent, these wind farms reportedly affect the routes of migratory birds or the areas where these birds avail themselves of lateral winds, and the creation of access roads – and regular human presence, in general – damages local fauna.

The limitations of this technology, and the impact it has on the environment, ought not make us reject wind farms outright, but should, rather, make us re-think the way in which we have been implementing the technology and how congruous it is with the country’s global development strategy, as well as prompt us to demand accurate information in this regard.

Cuba has been working in the renewable energy field for decades without any type of legal regulations and without incurring any legal action from anyone. Recently, the director of CETER claimed that “a team of experts is working to implement it [the legal regulations] in a manner that suits Cuba’s economic development model.”

One of the more disquieting aspects of the wind power issue is how the Cuban media portray its state of development on the island, selling an image of a sustainable and ecological program, when, in fact, the country is heading down the more profitable road, caring little about its environmental impact.

Some statements we find in the press include: “In recent years, Cuba has made great progress in the development of wind power technologies.” / “Cuba has developed a wind power infrastructure (…) which only highly developed countries can boast of.” / “Cuba’s renewable energy program includes photovoltaic energy sources, which have experienced considerable development since the 1990s.” / “The ‘solarization’ of Cuba’s energy generating system.” / “The generation of electricity with renewable sources of energy will grow by 949 MW.”

As these grandiloquent reports on “green” energy sources are published, oil prospecting projects across Cuba’s platform continue in almost utter silence. This means that the government continues to invest heavily in this polluting energy source.

Cuban oil experts and government officials had anticipated that the country would be producing 90 % of its electricity with domestic oil reserves by 2010, but were unable to achieve this.

According to recent declarations made by Jorge Piñon, Associate Director of the Latin American and Caribbean Energy Program, Cuba could be producing as many as 250 thousand barrels of crude a day within five to seven years.

Enthusiastic Cuban government experts estimate that the Gulf of Mexico platform could contain as many as 20 billion barrels of oil. The U.S. Geological Service estimate is considerably more modest, calculating reserve volumes there at 5 billion oil barrels.

To date, results have not been exactly promising. The “Scarabeo 9” platform had to pull out of the so-called Exclusive Economic Zone last year, following three unsuccessful attempts to find oil in the area.

To top things off, a few weeks ago, the Russian oil company Zarubezhneft decided to push back prospecting efforts to 2014, reporting “complications of a geological nature.”

These fiascos do little to burst the oil bubble of the Cuban government, which continues to spend millions in prospecting infrastructure.

Following the intensive modernization of the country’s thermoelectric plants ten years ago, Cuba is now working to expand its refinery in Cienfuegos, construct an oil duct connecting Cienfuegos and Matanzas, build a storage facility that can house 600 thousand oil barrels in Matanzas and complete the vast commercial port in Mariel (a billion dollar investment), and in many other related projects.

In the meantime, Venezuela continues to ship an average of 100 thousand barrels of oil to the island every day, 30 thousand of which are financed by PetroCaribe, as per a 25-year agreement with an interest rate of only 1 % signed with the island.

What will Cuba do in 2030, then, when it has the infrastructure to generate 10 % of its electricity using renewable energy sources? Will it have found the oil it seeks by then? Will it abandon the idea of using this oil for energy production? Will it sell it to the United States?

According to the most recent report issued by the National Intelligence Council, the CIA bureau responsible for analyzing and anticipating geopolitical and economic developments around the world, by 2030 the United States (the world’s largest importer of hydrocarbons today) will be entirely self-sufficient in terms of oil resources, and the world’s oil market could well collapse as a result of this.

We must acknowledge that hydrocarbons continue to be the world’s chief energy resource and that, like the rest of the world, Cuba does not have the infrastructure or programs needed to make the transition to a post-oil economy.

Many experts agree that the diversification and expansion of energy sources must become one of the pillars of Cuba’s future energy production scheme.

A broad range of alternative energy sources, from natural gas (the least polluting of all hydrocarbons) to renewable sources such as ethanol extracted from sugar cane, wind power, solar energy and bio-gas could be developed in Cuba.

That said, according to Cuba’s National Statistics Bureau, the amount of energy Cuba produced using renewable sources in 2011 was nearly 2 million tons less of oil equivalent than in 2001. This report reveals a marked decline in the use of these alternative energy sources in the course of the decade, a trend which coincides with the “oil enthusiasm” of recent years and the shutting down of numerous sugar refineries across the country.

The greatest drop was experienced in the use of biomass (chiefly sugar cane bagasse). Hydroelectric plants are the most widely used forms of primary energy production, while wind power generators occupy the fifth place among renewable energy technologies used on the island.

In recent years, experts in the field have voiced complaints that Cuba’s Electricity Law does not particularly encourage the use and commercial promotion of renewable energy sources.

The truth of the matter is that none of these sources of energy afford us one, magical solution to the problem of the energy deficit, and many of these technologies pose serious bioethical questions. If anything, they underscore the fact that the demands of contemporary society, engineered by global capitalism, are insatiable.

The policy of development at all costs, planned obsolescence, the alienation of individuals and collectives in productive processes, the outsourcing of production, the deification of consumption, policies which protect banks and international financial institutions, these and many other problems are at the root of the crisis faced by the energy sector and, I dare say, our civilization as a whole.

In the words of social anthropologist Emilio Santiago Muiño, “a sustainable system which is not grounded in marketing implies a profound change in lifestyle.”

Cuban economists and politicians do not appear to be equipped with the mentality needed to understand this. They are prey to the same ills mentioned above, and they are irresponsibly supported, in their policies, by a good part of Cuba’s scientific community, which does little to re-think the idea of “development” that prevails today.

At the recently-concluded world conference on wind power, Cuba sought to put together a business portfolio with a view to signing international agreements and broadening productive capacities in the sector.

This, which appears commendable, is congruous with the pragmatism of calculating analysts within and outside Cuba, who seek a painless reinsertion of the island’s economy in the international market.

*Energy Return Rate (ERR): Amount of primary energy that must be invested in order to produce energy with a given source.

Alternative energy source production in Cuba.

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