• 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’s Economic Problems and Prospects in a Changing Geo-Economic Environment

By Arch Ritter

Below is a Power Point Presentation made at the “Seminar on Prospects for Cuba’s Economy” at the Bildner Center, City University of New York, on May 21, 2012.

The full presentation can be found here: CUNY Bildner Presention, Arch Ritter on Cuba’s Economic Problems and Prospects….”, May 21 2012

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Yoani Sanchez, “Should the U.S. raise a fist or offer a hand to Cuba?”

July 10, 2012

Yoani Sanchez, CNN

Havana, Cuba (CNN) — In the nineties a certain joke became very popular in the streets and homes of Cuba. It began with Pepito — the mischievous boy of our national humor — and told how his teacher, brandishing a photo of the U.S. president, launches into a harsh diatribe against him.

“The man you see here is the cause of all our problems, he has plunged this island into shortages and destroyed our productivity, he is responsible for the lack of food and the collapse of public transport,” the teacher says.

After these fierce accusations the teacher points to the face in the photo and asks her most wayward student, “Do you know who this is?” Smiling, Pepito replies, “Oh yes … I know him, it’s just that without his beard I didn’t recognize him.”

The joke reflects, to a large measure, the polarization of national opinion with regard to our economic difficulties and the restrictions on citizens’ rights that characterize the current Cuban system. While the official discourse points to the United States as the source of our greatest problems, many others see the Plaza of the Revolution itself as the root of all the failures of the last 53 years.

True or not, the reality is that each one of the eleven administrations that has passed through the White House since 1959 has influenced the course of this island, sometimes directly, other times as a pillar of support for the ideological propaganda of Fidel Castro’s government (and now that of his younger brother Raúl).

Hence the growing expectations that circulate through the largest of the Antilles every time elections come around to decide who will sit in the Oval Office. Cuban politics depends so greatly on what happens in the ballot boxes on the other side of the Florida Straits — and some share the view that we have never been so dependent on our neighbor to the north.

Cuban diplomacy seems more comfortable contradicting America than seeking to solve the problems between the nations, which is why many analysts agree it would be easier for Raúl Castro to cope with an aggressive policy from Uncle Sam than with the more pragmatic approach of Barack Obama.

Obama’s easing of the rules on family remittances, reestablishing academic travel, and increasing cultural exchanges add up to an unwieldy formula difficult for the Castro regime’s rhetoric to manage. But the regime has also tried to wring economic and political advantages from these gestures from Washington.

The real question in this dispute is which approach would more greatly affect democratization in Cuba — to display a fist? Or to offer a hand? To recognize the legitimacy of the government on the island? Or to continue to treat it as a kidnapper holding power over 11 million hostages?

When the Democratic party, led by Barack Obama, came to the White House in January 2009, our official press was faced with a dilemma. On the one hand the newly elected president’s youth and his African descent made him immediately popular with Cubans, and it was not uncommon to find people walking the streets wearing a shirt or hat displaying the face of the former senator from Illinois. It was the first time in decades that some compatriots dared to publicly wear a picture of the “enemy” (the U.S. president) himself.

For a population that saw the top leaders of our own government approaching or passing 80, the image of a cheerful, limber, smiling Obama was more consistent with the myth of the Revolutionary than were the old men in olive green standing behind the national microphones.

Obama’s magnetism also captivated many here as well, and disappointed, of course, those who hoped for a heavier hand toward the gerontocracy in Havana.

Farewell socialism … hello to pragmatism

Beyond the political issues, the measures undertaken by the Obama administration were felt quickly in many Cuban families, particularly in their economy and relations with their exiled relatives in America.

With the increased cash from remittances, the small businesses that emerged from Raul Castro’s reforms were able to use the money coming from the north for start-up capital and to position themselves. Meanwhile, thousands of Cuban-Americans arrived at José Martí airport every week loaded with packages, medicine and clothes to support their relatives on the island.

Those who see the Cuban situation as a pressure cooker that needs just a little more heat to explode feel defrauded by these “concessions” to Havana from the Democratic government. They are the same people who suggest that a hard line — belligerence on the diplomatic scene and economic suffocation — would deliver better results.

Sadly, however, the guinea pigs required to test the efficacy of such an experiment would be Cubans on the island, physically and socially wasting away until some point at which our civic consciousness would supposedly “wake up.” As if there are not enough historical examples to show that totalitarian regimes become stronger as their economic crises deepen and international opinion turns against them.

No wonder Mitt Romney is a much talked about figure in the official Cuban press. His strong confrontational positions feed the anti-imperialism discourse like fuel to a fire. The Republican candidate has been the focus of numerous articles in the official organ of the Communist Party, the newspaper Granma. His photos and caricatures appear in this same daily that was stymied when trying to physically mock Obama. Given the high rate of mixed marriages among Cubans, it’s quite sensitive to enlarge the ears and fatten the lips of the U.S. president without it reading as racist ridicule.

If, in the eighties, the media’s political humor was honed in the wrinkled face of Ronald Reagan, and later the media had a field day with the physique of George W. Bush, for four years it has been cautious with the current resident of the White House. All this graphic moderation will go by the wayside if Mitt Romney is elected as the next president of the United States. There are those who are already laughing over the possible jokes to come.

But whoever scores the electoral victory will find Cuba in a state of change. The reforms carried out by Raúl Castro lack the speed and depth most people desire, but are heading in the irreversible direction of economic opening. Havana is full of private cafés and restaurants, we can now buy and sell homes, and Cubans are even managing to sell the cars given to them during the era of Soviet subsidies in exchange for political loyalty. The timid changes driven by the General President are threatening to damage the fundamental pillars of Fidel Castro’s command. Volunteerism at any cost, coarse egalitarianism, active adventures abroad, and a country kept in a state of constant tension by the latest economic or political campaign appear to be gradually fading into things of the past.

On the other hand, citizens themselves have begun to experience the most definitive of transformations, that which occurs within. Public criticism is on the rise, although it has not yet found ways to be heard in all its diversity, but every day the fear of police reprisals diminishes.

The official media have unquestionably lost a monopoly on the flow of information and thanks to illegal satellite dishes Florida television now comes to Cuba. Alternative news networks circulate documentaries, films, and articles from independent journalists and bloggers. It’s as if the enormous ocean liner of Revolutionary censorship was taking on water through every porthole.

Young people are finally pushing to have Internet access, while the retired complain about their miserable pensions and almost everyone disagrees with the travel restrictions that prevent our leaving and returning to our own country. In short, the illusion of unanimity has fallen to pieces in Raúl Castro’s hands.

To this internal scenario, the result of the American elections could be a catalyst or obstacle for changes, but it is no longer the most important factor to consider. Although the billboards lining the streets continue to paint the United States as Goliath wanting to crush little David who represents our island, for an increasing number of people the metaphor doesn’t play out that way. They know that in our case the abusive giant is a government that tries to control the smallest aspects of our national life, while his opponent is a people who, bit by bit, is becoming more conscious of its real stature.

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Rapid Expansion of Private Restaurants

From Trabajadores, June 27, 2012

Iliana Hautrive / 27-06-2012

Courtesy of Ted Henken, author of El Yuma.

Original here: Mantienen estabilidad los elaboradores-vendedores de alimentos y bebidas que prestan servicio gastronómico por cuenta propia en La Habana.

Paladar “Dona Eutimia” Callejon del Chorro Plaza de la Catedral, opened February 2010

Hal Klepac at another fine paladar, 23 y Calle G (Avenida de los Presidentes)

De excelentes restaurantes se califican los conocidos paladares que hoy funcionan en La Habana, la capital de Cuba, con una cifra de 376 al cierre de mayo último.

Isabel Hamze Ruíz, directora provincial de Trabajo y Seguridad Social en el territorio, confirmó que esta actividad de trabajo no estatal mantiene una línea ascendente, desde octubre de 2010, cuando en el país se amplió y flexibilizó el quehacer por cuenta propia, y en La Habana prestaban servicio entonces unos 74 de estos centros.

Dijo que esos lugares no son mayoritarios dentro de la rama de elaboradores-vendedores de alimentos, pues los que ejercen al detalle en sus domicilios o de forma ambulatoria sobrepasaron los 10 mil 900, y quienes tienen cafeterías (puntos fijos) llegaron a dos mil 567 cuando finalizó el quinto mes del presente año.

Sin embargo, comentó, es una fuerza laboral estable, que a no ser en casos puntuales de solicitud de bajas, como en otras actividades, se consolida tras haber realizado importantes inversiones e, incluso, estudios de mercado, por parte de sus titulares.

En esos restaurantes es apreciable una variedad de ofertas y elevada calidad del servicio, dentro de un espectro que va desde pequeñas fonditas para pocos comensales, hasta aquellos que cuentan con las 50 capacidades autorizadas en cada uno de esos centros gastronómicos.

Para la población y los visitantes extranjeros es una opción que complementa a la red de restaurantes estatales que se mantiene funcionando en La Habana, tal como sucede en el resto del país.

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Russians Commence Petroleum Exploration off the Cuban Coast

Nick Miroff,  June 28, 2012;  from Globalpost.com

The Songa Mercur Drilling Platform

HAVANA, Cuba — For 30 years, generous oil subsidies from Moscow kept the lights on for Fidel Castro’s Cuban Revolution. Until the Soviet Union went kaput. Now, Russian state oil companies may be coming to Cuba’s rescue again.

Oil industry journals reported this week that a Soviet-built, Norwegian-owned drilling platform is headed for Cuban waters this summer, under contract with Moscow-based state company Zarubezhneft. The company has hired the rig, called the Songa Mercur, at a cost of $88 million for nearly a year, with plans to begin drilling in November. That should be enough time to poke plenty of holes in search of Cuba’s elusive undersea oil fields, which are thought to hold billions of barrels of crude but have yet to yield a decent strike.

The rig’s arrival couldn’t come at a better time for the Castro government and its state oil company, CubaPetroleo. The state firm has signed multiple contracts in recent years with foreign producers looking to drill in Cuban waters.

Another drilling platform, the Scarabeo 9, has been working off the island’s north coast this year, but has come up dry, dealing a blow to Havana’s hopes for weaning the island off imported crude.

Cuba currently gets about two-thirds of its fuel from socialist ally Hugo Chavez. But the Venezuelan president has been battling cancer and must campaign for re-election in October.

The Scarabeo 9 has been Cuba’s best hope. The Chinese-built, Italian-owned rig arrived late last year, opening a gusher of anxieties in the US. Environmental groups and Florida tourism operators worried about damage from a potential spill. Anti-Castro lawmakers worried an oil strike would give the Cuban government a cash windfall. Repsol, the Spanish oil company that first hired the rig, was the subject of hearings on Capitol Hill, and the Obama administration made the unusual move of sending an inspection team to visit the platform when it stopped in Trinidad en route to Cuban waters. But the state-of-the-art Scarabeo 9 was made for the Cuba job — literally. It is the only rig in the world designed specifically to comply with US trade sanctions against Cuba, which limit the amount of US technology that can be used in Cuban territory to no more than 10 percent.

So far the rig has come up empty in Cubans waters. Having spent more than $100 million for a dry well and a political headache, Repsol executives have announced they’re pulling out of Cuba.

Scarabeo 9 is now in the hands of Russia’s Gazprom Neft, which is drilling in Cuban waters at another offshore location in partnership with Malaysia’s Petronas. Results may be announced as soon as next month.

The Songa Mercur will be working much closer to shore. Built in 1989 at the Soviet Union’s Vybord Shipyards, its maximum drilling depth is just 1,200 feet of water, according to the rig’s specifications.

Jorge Piñon, an expert on Cuban oil exploration at the University of Texas, said the Songa Mercur was retrofitted and modernized in 2006 in Galveston, Texas, after it was purchased from a Mexican firm by Norway’s Songa Offshore SE. It’s currently working in Malaysia.

Unlike the Scarabeo 9, the Songa Mercur is loaded with US technology, including five Caterpillar generators, General Electric mud pump motors, and cementing equipment made by Halliburton. That will likely leave Russian operator Zarubezhneft in violation of the US’ Cuba sanctions, Piñon said.

Not that there’s much the US government can do about it. “This is a Russian state oil company, and they do not have US assets or interests to safeguard,” said Piñon, a former British Petroleum executive. “Do you think that Zarubezhneft is going to invite the US Coast Guard and the Interior Department to board (the Songa Mercur)?” he said. “How then is [the US] going to validate whether the Songa Mercur meets the embargo regulations?” The area where the platform will be drilling is off the coast of Cuba’s Ciego de Avila and Villa Clara provinces, and adjacent to an area that the Bahamas Petroleum Corporation is also looking to develop, Piñon added.

That location should present less of a threat to US beaches in the event of a spill, according to Lee Hunt, former president of the Houston-based International Association of Drilling Contractors. Shallow water does not eliminate the risk, Hunt said, but ocean currents in that area would likely keep floating crude away from US shores. “What has not changed is the need for blowout prevention,” said Hunt, who advocates closer cooperation between the US and Cuba on oil spill prevention. “The best and safest practices, and preparation for spill capping, capture, containment and cleanup remain risk factors for Cuba and the United States.”

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My Skepticism Runs High, but Maybe I am Wrong! Some Articles on the Moringa Oleifera.

By Arch Ritter

Fidel’s latest enthusiasm for the Moringa and the Mulberry arouses my disbelief, mainly because we have been through this movie too many times already. [See the previous blog entry: Still More “Good Advice” from Fidel!] The following articles from the Cuban press do not assuage my skepticism, the first four and the sixth having been written after Fidel’s great insights, making me think that Cuban journalistic sycophancy lives.

Could I be wrong? Sure. But the Moringa has been around for a while and has not turned out to be quite the miracle crop Fidel makes it out to be anywhere else. This makes me think that Fidel’s enthusiasms may have gotten out of hand one more time.

Here are some articles on the Moringa from the Cuban press for anyone that may be interested, courtesy of Ana Julia Faya:

1. Periodico Adelante, de Camaguey, junio 26, 2012, “Plantadas en Camaguey más de 200 hectáreas de Moringa”, http://www.adelante.cu/index.php/noticias/de-camagueey/1702-plantadas-en-camagueey-mas-de-200-hectareas-de-moringa-oleifera.html

And Cubadebate: http://www.cubadebate.cu/noticias/2012/06/26/sembradas-en-camaguey-mas-de-200-hectareas-de-moringa-oleifera/

2. Radio Maboas, de Amancio, junio 21 de 2012. “Agricultores amancieros apuestan por los beneficios de la Moringa Oleifera”, http://www.radiomaboas.cu/index.php/las-tunas/7-noticias/amancio/1387-los-agricultores-amancieros-apuestan-por-los-beneficios-de-la-moringa-oleifera

3. Periódico Escambray, Sancti Spiritus, 21 de junio de 2012, “La moringa: reseña de un árbol maravilloso,http://www.escambray.cu/2012/la-moringa-resena-de-un-arbol-maravilloso/

4. Periódico Victoria de Isla de Pinos, 20 de junio de 2012, “De la Moringa, todo“,  http://www.periodicovictoria.cu/index.php/isla-de-la-juventud/medio-ambiente/de-la-moringa-todo

5. Periódico Trabajadores, mayo 3 de 2012 (before Fidel Castro’s note on the moringa) “Sin temor a la sequía”http://www.trabajadores.cu/news/20120503/259364-sin-temor-la-sequia

6. Granma, 26 de junio de 2012: “La Moringa'”  http://www.granma.cubaweb.cu/2012/06/26/nacional/artic03.html

Here is Wikipedia’s discussion of the Moringa: Moringa oleifera, from Wikipedia, the free encyclopedia. The Wikipedia article emphasizes the possible role of the Moringa for purposes of Malnutrition relief. One hopes hat this is not the property of the Moringa that Fidel is expecting will be useful in the Cuban context. Here is a Wikipedia quotation:

Moringa trees have been used to combat malnutrition, especially among infants and nursing mothers. Four NGOs in particular have advocated moringa as “natural nutrition for the tropics.” One author stated that “the nutritional properties of Moringa are now so well known that there seems to be little doubt of the substantial health benefit to be realized by consumption of Moringa leaf powder in situations where starvation is imminent.”  Moringa is especially promising as a food source in the tropics because the tree is in full leaf at the end of the dry season when other foods are typically scarce

As for the other wonder-plant, the Mulberry, the most famous Mulberry was the portable  artificial harbor constructed on the Normandy beaches for the WWII D-Day liberation of Europe, as pictured below.

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Still More “Good Advice” from Fidel!

By Arch Ritter

Fidel visits a collective farm. The manager of the farm says: “Fidel, all our chickens are dying and we don’t know what to do.”

Fidel replies: “The chickens are suffering from a salt deficiency. Feed them more salt.”

The workers on the  farm then feed the chickens more salt. A year later, Fidel happens to visit the chicken collective again. The manager says “Fidel, almost all our chickens have died. What should we do?”

Fidel pulls on his beard, thinks hard, and says sagaciously: “Your chickens are suffering from a deficiency of pepper. Feed them some pepper.”

The chickens are then fed pepper. The following year, Fidel again passes through the farm. The manager says: “Fidel, all our chickens have died. We are lost.”

Fidel says: “What a pity. And I still have so many more good ideas.”

[This story came to me originally with a Rabbi in the place of Fidel.]

Cuba’s economic history is in part a history of his “Good Ideas”, imposed on Cuba, with the support and adulation of acolytes, devotees and yes-men and with the suppression of criticism. Think of Instant Industrialization (1961-1963), the “Revolutionary Offensive (1968), the 10 million tons sugar harvest goal, the “New Man”, the Havana Green Belt project and shutting down half the sugar mills (2002).

Fidel now has yet another “Good Idea” reproduced below in his new reader-friendly format, namely a haiku-length quasi-twitter statement. Perhaps he learned from Yoani Sanchez that “brevity is the soul of wit” and also beats three-hour verbosity.

Reflections of Fidel
Nutrition and healthful employment
(Taken from CubaDebate)

“THE conditions have been created for the country to begin massively producing Moringa Oleífera and mulberry, which are sustainable resources [for the production of] meat, eggs, milk and silk fiber which can be woven by artisans, providing well-remunerated employment as an added benefit, regardless of age or gender.”

Fidel Castro Ruz
June 17, 2012
2:55 p.m. •

(See Reflections  of Fidel)

This looks like déjà vu all over again with Fidel proposing a new massive scheme. Thankfully the former President is totally out of the economic picture. If he were still the Big Boss in charge of the central planning system, we could expect some billions would be invested in another untested hare-brained scheme. I still remember Fidel’s adulatory descriptions of “Black Velvet,” the Canadian breeding bull, which was supposed to revolutionize Cuba’s milk cow herds and lead to unlimited supplies of milk, butter etc. Now the new agricultural miracle is Moringa Oleífera and mulberry!

In contrast, President Raul, the pragmatist, might order a study for some four years before deciding whether or not to run a pilot project. Or, more likely now, perhaps an independent farmer might give it a try and if it works, others will adopt it and then in time still others– which is how innovation occurs in a decentralized market economy.

Moringa Oleífera

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Presentations from the Bildner Center, (CUNY) “COLLOQUIUM ON THE CUBAN ECONOMY” May 2012,

On May 12, The Bildner Center at City University of New York, under the leadership of Mauricio Font organized a one-day conference analyzing the recent experience of the Cuban economy in its process of transformation.  All of the Power Point presentations from the  “COLLOQUIUM ON THE CUBAN ECONOMY” have been posted on the  Center’s Web Site. The presentations of the Cuban participants, all from the Center for the Study of the Cuban Economy, namely Omar Everleny, Pavel Vidal, Camila Piñeiro, and Armando Nova, are especially valuable and informative as they provide up-to-date and inside analyses of major issue areas. Mauricio, Mario González-Corzo, and the team are certainly to be congratulated for organizing this event

All of the presentations can be be accessed at the Bildner Web Site via the hyperlinks listed below in the form of the program of the conference.

Session #1: Cuban Updates on Actualización

1. Cuentapropismo y ajuste estructural
Omar Everleny, University of Havana

2. Microfinanzas en Cuba
Pavel Vidal, University of Havana

3. Non-state Enterprises in Cuba: Current Situation and Prospects
Camila Piñeiro, University of Havana

4. Impacto de los Lineamientos de la Política Económico y Social en la producción nacional de alimento
Armando Nova, University of Havana

Moderator: Mauricio Font, Bildner Center for Western Hemisphere Studies

Session # 2: Strategic Initiatives: Agriculture

1. Measuring Cuba’s Agricultural Transformations: Preliminary Findings
Mario González-Corzo, Lehman College, CUNY

2. U.S. Food and Agricultural Exports to Cuba – Uncertain Times Ahead
Bill Messina, University of Florida

Moderator: Emily Morris, Economist Intelligence Unit in London

Session # 3: Revamping Socialism: Perspectives and Prospects

1. Actualización in Perspective
Mauricio Font, Bildner Center for Western Hemisphere Studies

2. Cuban Restructuring: Economic Risks
Emily Morris, Economist Intelligence Unit in London

3. Prospects in a Changing Geo-Economic Environment Archibald Ritter, Carleton University, Canada

ROUNDTABLE: Implications and Future Agenda


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Al Jazeera on “The Truths and Tales of Cuban Healthcare”

The full article is available here:The Truths and Tales of Cuban Healthcare  and here;  http://www.aljazeera.com/indepth/features/2012/06/201265115527622647.html. The Introduction and an excerpt are reproduced below.

The state-run system has been praised, but many specialists now fear they are falling behind international standards.

Lucia Newman  Last Modified: 18 Jun 2012 08:30

If there is one thing for which Cuba has received praise over the years, it is the Communist government’s state-run healthcare system. Much of this praise is well-deserved. Despite its scarce resources, Cuba has one of the world’s lowest infant mortality rates – just slightly lower than that of the US. Life expectancy is 77.5 years, one of the world’s highest. And until not so long ago, there was one doctor for every 170 citizens – the highest patient-per-doctor ratio in the world.

Of course, the government can afford so many doctors because they are paid extremely low salaries by international standards. The average is between $30 and $50 per month.

And the benefits of this healthcare have not only been felt by Cubans.

Under Fidel Castro, the former Cuban president, hundreds of child victims of the Chernobyl nuclear disaster, left without proper medical attention after the collapse of the Soviet Union, were invited to Cuba. A hospital was constructed to treat them while they and their families set up temporary residence in Tarara, a beautiful seaside neighborhood near Havana. Many remain there today.

Decline

By the time I moved to Cuba in 1997, there were serious shortages of medicine – from simple aspirin to more badly needed drugs.

Ironically, many medicines that cannot be found at a pharmacy are easily bought on the black market. Some doctors, nurses and cleaning staff smuggle the medicine out of the hospitals in a bid to make extra cash.

Although medical attention remains free, many patients did and still do bring their doctors food, money or other gifts to get to the front of the queue or to guarantee an appointment for an X-ray, blood test or operation.  If you do not have a contact or money to pay under the table, the waiting time for all but emergency procedures can be ridiculously long.

Many Cubans complain that top-level government and Communist Party officials have access to VIP health treatment, while ordinary people must queue from dawn for a routine test, with no guarantee that the allotted numbers will not run out before it is their turn. And while the preventative healthcare system works well for children, women over the age of 40 are being shortchanged because yearly mammograms are not offered to the population at large.

I saw many hospitals where there was often no running water, the toilets did not flush, and the risk of infections – by the hospital’s own admission – was extremely high.

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Ernesto Hernández-Catá: “THE GROWTH OF THE CUBAN ECONOMY IN THE FIRST DECADE OF THE XXI CENTURY. IS IT SUSTAINABLE?”

Ernesto Hernández-Catá has agreed to have his recent essay “The Growth of the Cuban Economy in the First Decade of the XXI Century: Is it Sustainable?posted on this Web Site. It was written for presentation at the forthcoming 22nd annual meeting of the Association for the Study of the Cuban Economy in Miami in August 2012. The full study is available here: Ernesto Hernandez-Cata, “The Growth of the Cuban Economy in the First Decade of the XXI Century”.


Ernesto Hernández-Catá

Conclusion

Income and production increased rapidly in Cuba during the first decade of the XXI century. Growth was fueled by a surge in government spending and a boom in services exports and investment—all of them made possible by rapidly increasing in payments received from Venezuela. The expansion in both domestic and foreign demand during the decade did not visibly result in higher inflation or in a massive deterioration of the country’s external position, partly because potential output also increased rapidly reflecting the strong performance of investment. (In this connection, it is a good thing that part of the Venezuelan money was used to finance capital formation rather than consumption.) However, capacity utilization also increased markedly, and the gap between actual and potential GDP must have dwindled considerably, leaving little room for supply to respond to additional demand pressures.

While there was no explosion in the current account of the balance of payments for most of the decade, severe pressures did emerge in 2008 and the authorities had to restrict imports, ration foreign exchange, and take measures that damaged the nation’s reputation in world financial markets. The Central Bank also intervened on a large scale to keep the exchange value of the Cuban peso fixed—a policy that cannot continue forever.

The large size of Cuba’s dependence on Venezuelan aid makes the country hostage to fortune. A sudden interruption in such aid would trigger a deep recession and put the balance of payments in a critical position. Therefore the structural measures that were taken or announced in 2009 and 2010 should now be extended and pursued much more aggressively. This will not be easy. But as Russia’s former Finance Minister Boris Fedorov once said, dependence on foreign largesse is a luxury that a free country cannot afford.[i]

[i]  At the Conference on Russia’s Economic Reform held in Stockholm in June 1994. In response to an injunction by Jeffrey Sachs to suppress hyperinflation by fixing the value of the Ruble and borrowing massive amounts from abroad.

Ernesto Hernandez-Cata was born in Havana, Cuba in 1942. He holds a License from the Graduate Institute of International Studies in Geneva, Switzerland; and a Ph.D. in economics from Yale University. For about 30 years through, Mr. Hernandez-Cata worked for the International Monetary Fund where he held a number of senior positions, including: Deputy Director of Research and coordinator of the World Economic Outlook; chief negotiator with the Russian Federation; and Deputy Director of the Western Hemisphere Department, concentrating on relations with the United States and Canada. When he retired from the I.M.F. in July 2003 he was Associate Director of the African Department\, where he dealt with Ethiopia, Guinea, Sierra Leone and the Democratic Republic of Congo, among other countries. He was also  Chairman of the Investment Committee of the IMF’s Staff Retirement Plan. Previously he had served in the Division of International Finance of the Federal Reserve Board. From 2002 to2007 he taught economic development and growth at the Paul Nitze School of Advanced International Studies of the University of Johns Hopkins. Previously he had taught macroeconomics and monetary policy at The American University.

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Mark Frank on Cuban Access to Internet and Telephone Technology

By Mark Frank, (Reuters) – June 15, 2012

The original article is here: More Cubans have local intranet, mobile phones

The number of Cubans linked to the country’s state-controlled intranet jumped more than 40 percent in 2011 compared to the previous year and mobile phone use rose 30 percent, the government reported, even as Cuba’s population remained largely cut off from unfettered access to the Internet.

Communist-run Cuban monopolizes communications in the state-controlled economy. There is no broadband Internet in Cuba and the relatively few Internet users suffer through agonizingly long waits to open an email, let alone view a photo or video, which also hampers government and business operations.

The National Statistics Office said the number of ?Internet users reached 2.6 million last year, up from 1.8 million in 2010, although almost all were likely on the local intranet through government-run computer clubs, schools and offices.

Some of Cuba’s Intranet Users

Cuba reports intranet use as Internet use even though access to the Internet is banned without government permission.

The number of mobile phone users increased to 1.3 million in 2011, up from 1 million in 2010, the government said. Cubans do not have Internet connectivity on their phones. Cuba’s population is 11.2 million people.

Cell phone usage has grown by leaps and bounds since 2008, when the government first allowed all Cubans to buy the phones. That first year there were 330,000 users. Mobile phones are available only in a local dollar-pegged currency and sending even a Twitter message from a mobile phone can cost more than the average daily earnings of many Cubans.

There were 783,000 personal computers in the country, or 70 per 1,000 residents, though around 50 percent of those were in state hands, according to the report available at www.one.cu/ticencifras2011.htm

During a recent tour of Cuba by a Reuters reporter, no Internet users were found, though a few people said they occasionally accessed the Web using black market passwords or hotels.

WORST IN LATIN AMERICA

Cubans who want to leave the country often cite local telecommunications, rated as the worst in Latin America by the United Nations International Telecommunications Union, as one of the reasons.

Officials say that data detailing individual use of Internet and ownership of computers and telephones is misleading and argue the country’s technological priorities are on encouraging social use at government-operated computer clubs and through services that provide professionals access to literature in their fields.

Cuba blames the United States embargo for denying access to underwater cables, saying it must use a satellite system and is limited in the space it can buy. In February 2011, a fiber optic cable was laid fromVenezuelato Cuba to provide download speeds 3,000 times faster than Cuba’s current Internet and capable of handling millions of phone calls simultaneously. To date there is no evidence the cable is operational and the government and state-run media have remained mum on the matter.

Cuba has around a million fixed telephone lines. The country has a total telephone density of just 22.3 percent.

Access to satellite television is also severely restricted. Satellite TV access in Cuba is illegal without special permission from the government and authorities regularly raid neighborhoods and homes in search of satellite dishes.

 

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