• 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 Amnesty International: “The authorities attack us because we talk about the issues people face”

Posted on May 4, 2012 by Arch Ritter

Luis Felipe Rojas

For Cuban journalist and blogger Luis Felipe Rojas, posting an entry on his blog Crossing the Wire Fences or even sending an email is a daunting task.

Every time he wants to access the internet, he has to leave his house in the early hours of the morning and travel 200 kilometres from his hometown of Holguín, in eastern Cuba, to the closest cybercafé. If he is lucky, and he is not stopped at a police checkpoint on the way, he will get to a computer in about three hours.

Once there, Luis Felipe has to show ID to buy an access card and pay six US dollars to use the internet for sixty minutes – that is almost a third of a monthly local salary.

Some days he finds websites containing information considered critical of the government are blocked or messages have disappeared from his inbox.

Internet access is so highly controlled in Cuba that critics of the government have come up with creative ways to ensure their stories get out.

Sometimes that involves converting articles into digital images and sending them via SMS to a contact outside of Cuba, to type and post on Luis Felipe’s blog. He also uses text messages for posting on Twitter but the lack of internet access means that he cannot see what others say to (or about) him.

Luis Felipe is part of a growing group of journalists and government critics who are finding new ways to by-pass state control in order to disseminate information about human rights abuses taking place in Cuba.

According to a recent report by Amnesty International, independent journalists and bloggers have faced increased threats and intimidation when publishing information critical to the authorities.

The ‘Hablemos Press’ Information Centre, an unofficial news agency monitoring human rights abuses across Cuba, recently reported that from March 2011 to March 2012 inclusively, more than 75 independent journalists have been detained, some, like Caridad Caballero Batista up to 20 times.

“After the mass release of prisoners of conscience in 2011, we have seen authorities sharpening their strategy to silence dissent by harassing government critics and independent journalists with short term detentions and public acts of repudiation,” said Gerardo Ducos, Cuba expert with Amnesty International.

On 25 March, Luis Felipe was detained in a local police station for five days in order to prevent him from travelling to attend an open-air mass celebrated by Pope Benedict XVI.

“The authorities attack us because we talk about the issues people face – that not everybody has enough food, that public services do not always work, that there are problems with the health service,” Luis Felipe said to Amesty International.

“I have been scared many times. Scared of going to the street, of being beaten up, of being locked up for a long time and not seeing my children. But fear does not stop me. I do not think a tweet from me is going to save anybody from prison but it does save them from impunity.”

 

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After 50 years, Cubans hope to travel freely

Posted on May 2, 2012 by Arch Ritter

May 2, 2012 Wednesday 6:56 AM GMT

After 50 years, Cubans hope to travel freely

BYLINE: By PAUL HAVEN, Associated Press

DATELINE: HAVANA

After controlling the comings and goings of its people for five decades, communist Cuba appears on the verge of a momentous decision to lift many travel restrictions. One senior official says a “radical and profound” change is weeks away.

The comment by Parliament Chief Ricardo Alarcon has residents, exiles and policymakers abuzz with speculation that the much-hated exit visa could be a thing of the past, even if Raul Castro’s government continues to limit the travel of doctors, scientists, military personnel and others in sensitive roles to prevent a brain drain.

Other top Cuban officials have cautioned against over-excitement, leaving islanders and Cuba experts to wonder how far Havana’s leaders are willing to go.

In the past 18 months, Castro has removed prohibitions on some private enterprise, legalized real estate and car sales, and allowed compatriots to hire employees, ideas that were long anathema to the government’s Marxist underpinnings.

Scrapping travel controls could be an even bigger step, at least symbolically, and carries enormous economic, social and political risk.

Even half measures such as ending limits on how long Cubans can live abroad or cutting the staggeringly high fees for the exit visa that Cubans must obtain just to leave the country would be significant.

“It would be a big step forward,” said Philip Peters, a Cuba expert at the Virginia-based Lexington Institute. “If Cuba ends the restrictions on its own citizens’ travel, that means the only travel restrictions that would remain in place would be those the United States imposes on its citizens.”

The move would open the door to increased emigration and make it easier for Cubans overseas to avoid forfeiting their residency rights, a fate that has befallen waves of exiles since the 1959 revolution.

It could also bolster the number of Cubans who travel abroad for work, increasing earnings sent home in the short term and, ultimately, investment by a new moneyed class.

Scrapping exit controls should win Cuba support in Europe, which improved ties after dozens of political prisoners were freed in 2010.

But Peters and several other analysts said they doubt the new rules would bring about any immediate shift in U.S. policy toward Cuba, which includes a ban on American tourism. Those restrictions are entrenched and enjoy the backing of powerful Cuban American exiles.

“I don’t think it would lead to a drastic change in U.S. policy, but an accumulation of human rights improvements could lead to an incremental change,”

Peters said.

Cuba-born Rep. Ileana Ros-Lehtinen, a Republican from Florida, said any discussion about immigration reform on the island is a peripheral issue.

“The kind of changes I’m interested in are not about immigration,” said Ros-Lehtinen, who heads the House Committee on Foreign Affairs. “I’m interested in changes that affect fundamental freedom, democracy and respect for human rights.”

U.S. officials said they have been watching for an announcement for months, noting there has been such talk as far back as August. But nothing has happened, and they are skeptical that the Castro regime is truly committed to such reform.

Asked about possible reciprocal measures, one U.S. official said the Obama administration can’t promise anything because it doesn’t know what exactly Cuba plans to announce. The official wasn’t authorized to speak publicly and demanded anonymity.

State Department spokesman Mark Toner said the U.S. “would certainly welcome greater freedom of movement for the Cuban public.”

Rumors of the exit visa’s imminent demise have circulated on and off for years.

The whispers became open chatter last spring after the Communist Party endorsed migration reform at a crucial gathering. But Castro dashed those hopes in December, saying the timing wasn’t right and the “fate of the revolution” was at stake.

Alarcon’s comments, made in an interview published in April, revived hopes that a bold move is coming.

“One of the questions that we are currently discussing at the highest level of the government is the question of emigration,” he told a French journalist. “We are working toward a radical and profound reform of emigration that in the months to come will eliminate this kind of restriction.”

But on Saturday, Vice Foreign Minister Dagoberto Rodriguez told exiles not to set their hopes too high, vowing the government would maintain some travel controls as long as it faced a threat from enemies in Washington.

Havana residents say they are anxiously waiting to see what the government does.

“The time has come to get rid of the exit visa,” said Vivian Delgado, a shop worker. “It’s absurd that as a Cuban I must get permission to leave my country, and even worse that I need permission to come back.”

Added Domingo Blanco, a 24-year-old state office worker: “It’s as if one needed to ask to leave one’s own house.”

Many Cubans are reluctant to talk about their own experience with the exit visa.

One woman named Miru, who has been trying to leave Cuba since 2006, shared her story on the condition her full name not be used for fear that speaking with a foreign journalist could land her in trouble.

“This has been a very long process,” she said of her odyssey, which began when her husband defected from a medical mission in Africa and sought asylum in the U.S.

First, she had to get a letter releasing her from her job at a government ministry a process that took five years. Only then could she apply for the exit visa. That was three months ago, and Miru still hasn’t received an answer.

Officials say her case is complicated but won’t give a specific reason for the delay.

“I am very anxious to see my husband again,” she said.

The exit controls are a Cold War legacy of Cuba’s alliance with the Soviet Union. They were instituted in December 1961 to fight brain drain as hundreds of thousands of doctors and other professionals fled, many for new lives in Florida. That was three months before the U.S. embargo barring most trade with the island went into full effect.

Over the years, it has become much easier for Cubans to obtain permission to travel, though many are still denied, and it is particularly hard to take children out of the country.

Also, the exit visa’s $150 price tag is a small fortune in a country where salaries average about $20 a month. In addition, the person the traveler wishes to visit must pay $200 at a Cuban consulate.

Those who leave get only a 30-day pass, and the cost of an extension varies by country. In the U.S., the fee is $130 a month. Those who stay abroad more than

11 months lose the right to reside in Cuba. Before 2011, any property would automatically go to the state.

“The Cuban government has monetized every part of the humiliating process of coming and going,” said Ann Louise Bardach, a longtime Cuba expert and author of “Without Fidel: A Death Foretold in Miami, Havana and Washington.” “Getting out means running a gantlet, and it is all based on how much humiliation you can endure, and by the time they end up in Miami, people are filled with hate and dreams of revenge.”

Cuban officials have long portrayed the measures as necessary to counter Washington’s meddling. They accuse the U.S. of trying to lure away doctors by letting them walk into any American consulate and request asylum.

Cuban officials say even ordinary islanders are encouraged to leave by U.S.

regulations that automatically grant asylum to any who reach American shores, a policy Cuba says has encouraged thousands to attempt the dangerous trip on leaky boats and makeshift rafts across the Florida Straits.

It’s not clear how emigration reform will affect dissidents, who are routinely denied permission to leave and could still find themselves on some form of no-exit list.

In a recent New York Times opinion piece, dissident blogger Yoani Sanchez called the exit controls “our own Berlin Wall without the concrete … a wall made of paperwork and stamps, overseen by the grim stares of soldiers.” She has been denied travel papers at least 19 times by her own count.

Some hardliners in Florida predict any change will be merely a sleight of hand designed to export malcontents, ease a severe housing shortage and fob off legions of superfluous state workers.

But for hundreds of thousands of Cubans like Miru, the exit visa is a personal matter, not political. After six years separated from her husband, she clings to hope that she will finally obtain permission or benefit from a change in the law.

“I have followed all the rules of my country,” she said. “I’ll be so happy to leave.”

Associated Press writers Andrea Rodriguez and Peter Orsi in Havana, Laura Wides-Munoz in Miami, and Bradley Klapper in Washington contributed to this report.

Follow Paul Haven on Twitter: www.twitter.com/paulhaven

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Cuba: En Route to Becoming a Normal Mixed-Market Economy?

Posted on April 25, 2012 by Arch Ritter

Esteban Lazo Hernandez

By Marc Frank

HAVANA (Reuters) – Cuba will move nearly 50 percent of the state’s economic activity to the “non-state” sector, a senior Communist party official said at the weekend, the latest signal the island is headed toward a mixed economy.

Cuban President Raul Castro has hammered away at the need for the state to become more efficient and get out of secondary economic activity such as farming and retail services since taking over for his ailing older brother, Fidel, in 2008.

China and Vietnam adopted similar measures in the last few decades of the 20th century as they began to shift to what is known as market socialism.

“Today, almost 95 percent of gross domestic product is produced by the state. Within four or five years between 40 percent and 45 percent will result from different forms of non-state production,” a long-time Communist party political bureau member, Esteban Lazo Hernandez, said in a speech to the Havana city government.

Lazo, who is considered by many to be the Communist party’s top ideologue, said the increased private business and the tax revenue the move would generate meant local government needed to improve its efficiency in order to cope with the shift, according to clips of his speech broadcast by state-run television on Sunday.

The Cuban Communist party approved a comprehensive plan to revamp its Soviet-style command economy in April of last year.

The 311-point document calls on authorities to support and encourage, “mixed-capital companies, cooperatives, farmers with the right to use idle land, landlords of rental properties, self-employed workers and other forms that contribute to raise the efficiency of social labor.”

The plans envision the reduction of the state workforce by at least 20 percent, or a million workers, the elimination of subsidies in favor of more narrowly targeted welfare programs and granting state-run companies more autonomy.

“The question will be to see how this ‘non-state’ production will be split between real private property and cooperatives, and how independent from the state the cooperatives really are,” a Western diplomat said.

Since Castro took office the number of self-employed, often a euphemism for small businesses, has doubled to more than 300,000, and some 200,000 people have taken advantage of a land grant program to encourage small farming.

Small state retail services – from barber shops and beauty parlors to taxis and tiny cafeterias – have already been leased to employees. But local economists said a major shift to the “non-state” sector, like the one outlined by Lazo over the weekend, meant larger chunks of the state’s economic activity would be peeled off.

“Such a shift means not just tiny mom-and-pop operations and small businesses such as restaurants and hostels, but mid-sized companies operating as cooperatives and individually owned,” said a local economist who asked his name not be used.

Skeptics question how quickly Cuba’s centrally planned economy can manage such a radical transformation. “I think a shift of this magnitude in such a short time period would be highly unlikely for Cuba,” said William Messina, agricultural economist with the Food and Resource Economics Department at the University of Florida.

“Even though Raul is trying to implement a number of changes that could move the country in this direction, the bureaucratic resistance that there appears to be (at least within agriculture) will certainly slow the process,” he added.

(Editing by David Adams and Leslie Adler)

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Cuba: Still Paying Homage to the Economic Absurdities of “Che” Guevara

Posted on April 20, 2012 by Arch Ritter

By Arch Ritter

At the main entrance to the Calixto Garcia Hospital in Havana there still stands a large billboard that reads:

“Vale, pero millones de veces mas, la vida de un solo ser humano que todas las propiedades del hombre mas rico de la tierra.”

“The life of one single human being is worth millions of times more than all the wealth of the richest man in the world.” (Author’s translation)

The statement is a quotation attributed to Ernesto Guevara. The billboard has gone through various versions and was there at least as far back as when I saw it in 1995.

At first glance – or even after many years’ worth of glances – this may seem like a noble sentiment, poetically expressed. One is drawn into some sort of warm worshipful respect for such deep thought and for its author. Perhaps he is merely saying that a human life is worth a whole lot, which is undeniable. Perhaps this is just a poetic (and pre-numerate?) exaggeration in the manner in which the Bible says that Methusalah lived for a thousand years or Solomon had 700 wives and 300 concubines.

However, if words are to have meaning and if one thinks about it for a minute, this assertion appears more like foolishness than wisdom. Indeed from the perspective of economic logic or “applied common sense” it is absurd.

The richest man in the world was John D. Rockefeller, whose peak wealth was $318.3 billion (based on 2007 US dollars). If the life of a single human being was one million times larger, it would be valued at $318.3 Trillion. In comparison, the GDP of the US in 2007 was $13.9 Trillion (World Bank, World Development indicators 2009,  p.209) while that of Cuba in 2010 was 64.3 Billion in Moneda Nacional (ONE Anuario Estadistica Cubana 2011, Table 5.17).  Obviously if one person’s life was worth the Che Guevara number and medical investment in that single individual merited that amount of resources, then the resources available for everyone else in both the United States and Cuba would be zero.

In fact nobody’s life is worth an infinity of real resources. My own Father’s life was not judged to be worth an investment of some $5,000.00 by the Ontario medical system at the Kingston General Hospital. When he arrived at the Emergency Ward in 1989, taken there by a Medical Doctor namely my brother, it was judged by the staff that he was too old at age 82 for the more expensive treatment of the time and that a lesser treatment only was appropriate. This undoubtedly cut short his life but by how much I do not know. In my view, $5,000.00 was not a reasonable valuation of his life. But neither would have been $318.3 Trillion.

In actual fact, Cuba has used the scarce resources available for its health services “economically” and wisely. It has managed to squeeze good health results from relatively modest budgets.

Cuba has dropped numerous other economic absurdities promoted by “Che”. This includes the “New Man” approach to the mobilization of human energies and the “budgetary system of finance” (which abolished accounting and financial independence at the level of the enterprise and attempted to run the economy if it was one huge bureaucracy in which there was no knowledge of the value of what was produced nor of the costs of production.)

Perhaps it is time to reconsider all Che’s pronouncements with a critical mind.

See also The Marketing of “Che” Guevara: A Review of “Che’s Afterlife: The Legacy of an Image”, by Michael Casey

(A subsequent Blog entry will outline “Che’s Top Ten Economic Absurdities”.)

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Peter McKenna: “Canada needs a new approach to Cuba”

Posted on April 20, 2012 by Arch Ritter

Original Here: : http://www.ottawacitizen.com/news/Canada+needs+approach+Cuba/6477890/story.html#ixzz1sbPP0BZN

Following last weekend’s Summit of the Americas in Cartagena, Colombia, Prime Minister Stephen Harper needs to seriously reassess his position on Cuba (which was not officially invited to the inter-American gathering) and re-set the Canadian-Latin American relationship.

Indeed, we can’t on the one hand criticize the U.S. government for a failed Cuba policy (after 50 years of ineffective economic sanctions) and then side with the Americans on excluding Havana from the Americas Summit process. Additionally, we should not forget that Cuba punches well above its weight within the wider region.

Notwithstanding recent comments by former Cuban President Fidel Castro, who castigated Harper for environmental damage caused by Alberta’s oilsands and Canadian mining companies for exploiting struggling communities in many Latin American countries, the Canadian government should seek to strengthen its relationship with Havana. Minister of State for Foreign Affairs (and Consular Services), Diane Ablonczy, has already done some important work in this area. She has properly recognized that there exist huge opportunities where both Canada and Cuba can work constructively together on a wide range of issue areas, including trade, tourism, energy and people-to-people contacts.

The next step is for Foreign Affairs Minister John Baird to undertake an official visit to Havana in the coming months. That, of course, would set the stage for a prime ministerial visit to Cuba — or a visit by a senior-ranking Cuban government official (Raul Castro?) to Ottawa in the near term.

But as former prime minister Jean Chrétien found out during his own April 1998 visit to Cuba, it makes no sense to press the Cubans hard on the human rights front or to attach certain conditions to a continued warming in bilateral relations. Yes, we should raise the issue of democratization and respect for political rights and freedoms, but if we hope to influence them here we should do so in a respectful and non-accusatory manner (and without preconditions).

Canada could also earn some diplomatic credit with its Cuban friends (and build stronger linkages with the Argentines, Brazilians and Mexicans) by pushing U.S. President Barack Obama on an anti-Cuba bill passed by the Florida state legislature in March. Harper should firmly ask Obama if there is any way that this counterproductive bill can be quashed. The offending legislation was sponsored by Miami Republican lawmakers determined to punish the Cubans by restricting state and local governments from signing procurement contracts with any companies that do business with Cuba and Syria. Both countries still remain on the U.S. State Department’s list of state sponsors of terrorism.

The point here is not only to prevent Florida taxpayers from supporting companies that have commercial relations with Havana, but to compel those same companies from operating and investing in Cuba. In a word: it’s about “internationalizing” the U.S. economic embargo against Cuba — which has always been seen in Washington as the key instrument for removing the Castros from power.

Clearly, if this bill is signed into law by Florida Governor Rick Scott, it could have negative repercussions for Canadian companies bidding on contracts in the sunshine state.

But the constitutionality of such a bill is seriously in doubt, since only the federal government (and Congress) in Washington has the legislative competence to conduct foreign policy (and impose sanctions). And it is well-established that state and local governments are constitutionally prohibited from setting policy that conflicts with federal law-making responsibilities. A similar law in Massachusetts — which sought to limit state businesses from dealing with companies inking commercial deals with rights-abusing Burma — was struck down by the U.S. Supreme Court in 2000.

Canada could enhance its position and prestige in the hemisphere by standing up to the Americans on Cuba. Accordingly, it should seek Cuba’s presence at the next Americas summit, should there be one.

While most of what Fidel Castro said in early April can be ignored, he was right about highlighting the constructive engagement approach of former Canadian prime ministers Pierre Trudeau and Jean Chrétien toward Cuba. Indeed, we need to jettison ideologically tinged rhetoric and focus on positive interaction, co-operative dialogue and commercial exchange.

To be sure, one of the keys to Canada opening up the door to wider and deeper relations with the Americas has to involve Cuba. Taking up the question of Cuba’s importance in the region is a good place for Stephen Harper to begin.

Peter McKenna is professor of political science at the University of Prince Edward Island and the editor of the forthcoming book, Canada Looks South: In Search of an America’s Strategy.

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Armando Nova Gonzalez, “Cuban agriculture and the current economic transformation process.”

Posted on April 5, 2012 by Arch Ritter

DR. ARMANDO NOVA GONZÁLEZ, Centro de Estudios de la Economía Cubana, Universidad de la Habana, APRIL 1, 2012

Complete Original Here: Armando Nova,  Cuban agriculture and the current economic transformation process 2012  in Cuba Study Group WWW.FROMTHEISLAND.ORG INTRODUCTION

The Cuban economy has begun an interesting and important process of economic transformation, which has been identified as: the “Updating of the economic model.” It covers all economic sectors, with important implications for economic, social and political sectors of the nation. These changes have been reflected in the Guidelines of the Economic and Social Policy of the Party and the Revolution, adopted during the Sixth Congress of the Communist Party Congress held in April 2011 and ratified at the recent Conference of the CPC held in February of this year.

We must keep in mind that the Guidelines are only a guide and that the implementation process itself will lead to updates, enhancements and introduction of new issues and measures, which will be recom­mend by practice itself.

One may note that the most profound and important transformations have been initiated in a sector that is economically vital and strategic for the Cuban economy, as is the agricultural sector (AS). At the same time, it implies recognition and restitution of the important role of this sector in the economic-social-political development.

The insufficient domestic food production (see Nova 2010), is an issue that has been prevalent during the last fifty years in the national economy, increasing the country’s dependence on foreign food, making it more vulnerable and resulting in high expenditure of foreign currency for food imports (see Table 1), when most of these could be produced domestically under competitive conditions.

The Current Issue of the agricultural sector could be summarized as follows: agricultural and livestock pro­duction is down, there are records of significant quantities of idle agricultural land, and food imports continue to grow, to cover the shortfall in domestic production. This leads to obvious signs that the productive forces are still frozen and the need to transform systemically production relationships, and to the need to analyze how to solve the issue of ownership of the land and the changes needed to achieve it2.

The current situation of dependency in the area of food products is paradoxical, given the fact that the agricultural sector (AS) shows a significant number of unused areas (more than 2.0 million of idle Has). Results obtained from various scientific and technical institu­tions, indicate that there is a material basis (although undercapitalized largely by years of economic crisis, but it exists and can be improved and used) and has a significant human

WHAT ARE THE FACTORS THAT HAVE A NEGATIVE INFLUENCE?

Sometimes the reduction in agricultural and livestock production is attributed to the effects caused by drought, and to some extent this is a contributing factor, but this is a variable that must always be kept in mind instead of waiting for this to happen. It is necessary to prepare early for this effect and reduce the current vulnerability

This requires creating the necessary food reserves during the spring or rain period. This retranslates in the production of grains (corn, soy­bean, sunflower), in dry periods and throughout the year, and in the rescue of sugar cane production, not only destined for the production of sugar, but to the production of a number of side products such as molasses, yeast, bagasse, etc. used as animal feed. There is a need to rescue the necessary integration of the agro-industry and sugar cane production for food destined for cattle and pigs feed. Should also include the production of sugar cane used for livestock feed and forage base.

However, the most important aspect is the delay in implementing reforms in the agricultural sector, formal­ized in the Economic and Social Guidelines adopted at the Sixth Congress of the Communist Party of Cuba (CPC) and the systematic failure to apply them.

1. Delay in delivery of land to farmers under the framework of Decree Law 259 and its regulations (primar­ily bureaucratic aspects).

2. An insufficient offer of supplies, insufficient means of labor and production, with high prices (recent mea­sures have been taken recently aimed at reducing prices) and not adjusted to the demands, requirements, quality and specifications of producers and regions, usually modular. Not taking into account the actual existence of the market objective and role.

3. Need to amend Decree Law 259, to eliminate the uncertainties that it contains and which do not favor the permanence of the producer.

4. The failure to implement comprehensive measures for the decentralization of the marketing and elimina­tion of the Government inventory system.

5. The issue of prices paid to producers that are not satisfactory (despite the price increases in some cat­egories), particularly those products that replace imports, while willing to pay high prices for imported products and not to the local producer.

6. Late delivery of loans and technical assistance.

In summary reaffirmed by the results achieved at the end of 2011, there are still three aspects that have not been settled:

• Limited rights of the owner of the property: the producers should be allowed to make their own decisions throughout the cycle production-distribution-consumption-change.

• Failure to recognize the real and objective existence of the market and its complementary role with planning.

• Lack of systemic approach in the design and implementation of measures.

Given this repeated situation it is evident that the productive forces of the agricultural sector are still detained and required to remove the obstacles that still hinder its development, which implies continuing fast as pos­sible the transformation of production relations, which is a strategic economic sector for the Cuban economy.

Armando Nova Gonzalez

 

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Pavel Vidal Alejandro on “Monetary and Exchange Rate Reform in Cuba: Lessons from Viet Nam”

Posted on April 2, 2012 by Arch Ritter

Pavel Vidal of the Centro de Estudios sobre la Economia Cubana has just published a study on Cuba’s exchange rate and monetary policy reform with lessonbs from Viet Noam. it was published in Februaryt 2012 by the Institute of Developing Economies in Japan.

The Abstract of the work is presented below. The complete study is located here:  Pavel Vidal, Monetary Reform Cuba and Vietnam VRF Series473 IDE JAPAN

Abstract

Since 2010, the Cuban economy has entered a new period of economic reform, officially labeled as an “update of the economic model.” Cuba undertook a previous reform in the 1990s, but this was halted in the first decade of this century. Now, the new president, Raúl Castro, has insisted that the measures are permanent and structural.

This paper evaluates the three objectives of the proposed reform regarding monetary and exchange rate policy: 1) currency unification, 2) improving the monetary policy strategy and 3) financial transformations. In order to weigh the extent of the visible contents of the Cuban monetary and exchange rate reform and obtain lessons from international experiences, some elements of the Vietnamese reform are taken as points of comparison. The starting point of the Cuban reform has many differences compared to Vietnam. The principal significance and benefit of looking at Vietnam lies in the similarities between the problems that Cuba is facing today in relation to those faced by Vietnam since 1986, when the country launched the Doi Moi reform, since both starting models share many characteristics of the Soviet-style system.

The state sector in Vietnam was smaller than in any other reforming socialist economy. Large-scale state enterprises formed only a small part of its economy. Dollar (1993), Perkings (1993) and Riedel and Comer (1995) conclude that the structure of the Vietnamese reform was convenient for responding to a “big bang” liberalization in the late 1980s. When small units are the majority, it is easier to make the market system work. Therefore, the Vietnamese economy was in a better position to respond to the incentives provided by market-oriented reform than is the current dominant big state sector in Cuba.

Early indications show that Cuban monetary and exchange rate reform will focus on the unification of the Cuban peso and convertible peso, the development of an interbank market, on the opening of  personal credit and loans for non-state businesses, and the improvement of the strategy for the monetary policy through greater coordination and the establishment of rules.

Taking into account the Vietnamese path of reform, and the changes that would seem necessary to achieve the very goals of planned Cuban reform for 2011-2015, a group of lacunae could be identified, such as the issue of government bonds, the entrance of foreign banks, greater competition and more flexibility in interest rates, as well as issues regarding transparency in the monetary policy. Cuba’s exchange rate adjustment in the 1990s was incomplete, since it took place only in the household sector. To eliminate the exchange rate and monetary duality, Cuban authorities must now extend the devaluation of the Cuban peso to the SOEs, joint venture companies and government institutions. They have to decide whether to do it gradually or by using a “big bang” approach, as in Vietnam. The large gap between exchange rates in Cuba (2,300%) speaks against a sudden devaluation of that magnitude, but also against the other extreme alternative of a too-slow adjustment that would require another twenty years of bearing the costs of monetary duality.

Low inflation is an important advantage of the current Cuban reform compared to the reform of the early 1990s, and also compared to Vietnam in the 1980s. However, the ongoing liberalization process could put price stability under risk. Like Vietnam, Cuba will experience inflationary pressures; first, coming from the unavoidable exchange rate devaluation, and second, because of the shift from officially-set prices to market prices. If Cuba’s government is able to implement the planned labor adjustment and the fiscal restraints together with the opening to the non-state sector, then the risk of high inflation will be certainly lower. A matter that arises from the overall analysis of the Cuban reform is the inefficiency of focusing the liberalization only on microenterprises and agriculture without taking advantage of the enormous amount of resources invested in education during the last five decades. It seems far better for sustainable economic growth, based on productivity gains, to extend the opening to the non-state sector on a larger scale, including a renewed aperture to foreign direct investments (FDI). It is not intended that changes happen all at once, fracturing the  macroeconomic and institutional stability of the country. In fact, as can be seen, the Vietnamese reform took several years to complete significant transformations of the economic system. However, Cuba should try everything possible to speed up its process in order to  recover lost time.

The Author
Pavel Vidal Alejandro is Assistant Professor at the Center for the Study of the Cuban Economy (University of Havana). He worked in the Monetary Policy Division of the Central Bank of Cuba for seven years (1999-2006). His fields of specialization are monetary policy and time series econometric models. He completed his Ph.D. at the University of Havana in 2007. In 2010, he was Visiting Professor at Harvard University and Universidad Complutense of Madrid.

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The Economist, Special Report on Cuba, March 24, 2012

Posted on March 28, 2012 by Arch Ritter

 

The Castros, Cuba and America; On the road towards capitalism

Change is coming to Cuba at last. The United States could do far more to encourage it.

The Economist has produced one of its excellent surveys, this time focusing on Cuba.

Below are a set of hyperlinks to the various chapters of the Cuba Report. The chapter on the economy is presented following the Table of Contents.

Hyperlinked Table of Contents

  Revolution in retreat; Revolution in retreat

Under Raúl Castro, Cuba has begun the journey towards capitalism. But it will take a decade and a big political battle to complete, writes Michael Reid

  Inequality; The deal’s off

Inequalities are growing as the paternalistic state is becoming ever less affordable

Population; Hasta la vista, baby

The population is shrinking, ageing—and emigrating

The economy: Edging towards capitalism

Why reforms are slow and difficult

Politics; Grandmother’s footsteps

With no sign of a Cuban spring, change will have to come from within the party

Cuban-Americans; The Miami mirror

Cubans on the other side of the water are slowly changing too

After the Castros; The biological factor

Who and what will follow Raúl?

The Economy: Edging towards capitalism

Why reforms are slow and difficult

GISELA NICOLAS AND two of her friends wanted to set up an events-catering company, but that is not one of the 181 activities on the approved list for those who work por cuenta propia (“on their own account”), so in May 2011 they opened a restaurant called La Galeria. With 50 covers, it is a fairly ambitious business by Havana standards. They have rented a large house in Vedado and hired a top chef and 13 other staff who are paid two to three times the average wage, plus tips. The customers are mainly foreign businesspeople and diplomats, Cuban artists and musicians and visiting Cuban-Americans.

“This opportunity means a lot to us,” says Ms Nicolas, who used to work for a Mexican marketing company. “But they haven’t created the conditions for a profitable business.” There are no wholesalers in Cuba, so all supplies come from state-owned supermarkets or from trips abroad. Reservations are taken on Ms Nicolas’s mobile phone. Advertising is banned, though classified ads in the phone book will soon be allowed.

Across Cuba small businesses are proliferating. Most are on a more modest scale than La Galeria. Fernando and Orlandis Suri, who are smallholders at El Cacahual, a hamlet south of Havana, can now legally sell their fat pineapples and papaya from a roadside stall, along with other produce. Orlandis plans to rent space on Havana’s seafront to sell fruit cocktails and juice. In Santa Clara, Mr Pérez’s wife, Yolanda, sells ice-cream from their home. Having paid 200 pesos for a licence and 87 pesos in social-security contributions, she earns enough “to buy salad”. The streets around Havana’s Parque Central heave with vendors hawking snacks and tourist trinkets. Many of them are teachers, accountants and doctors who have left their jobs for a more lucrative, if precarious, life in the private sector.

No reason to work

This cuentapropismo is only the most visible part of Raúl Castro’s reform plan. “The fundamental issue in Cuba is production,” says Omar Everleny, a reformist economist. “Prices are high and wages are low because we don’t produce enough.”

Cuban statistics are incomplete, inconsistent and often questionable. But in a lifetime’s detective work, Carmelo Mesa Lago at the University of Pittsburgh has calculated that output per head of 15 out of 22 main agricultural and industrial products was dramatically lower in 2007 than it had been in 1958. The biggest growth has come in oil and gas and in nickel mining, largely thanks to investment since the 1990s by Sherritt, a Canadian firm. But output per head of sugar, an iconic Cuban product, has dropped to an eighth of its level in 1958 and 1989. Capital investment has collapsed. Raúl Castro has repeatedly lamented that Cuba imported around 80% of the food it consumed between 2007 and 2009, at a cost of over $1.7 billion a year.

The American embargo is an irritant, but the economy’s central failing is that Fidel’s paternalist state did away with any incentive to work, or any sanction for not doing so. So most Cubans do not work very hard at their official jobs. People stand around chatting or conduct long telephone conversations with their mothers. They also routinely pilfer supplies from their workplace: that is what keeps the informal economy going.

The global financial crisis in 2007-08 also took its toll. Tourists stayed away, the oil price plunged, and with it Venezuelan aid. Hurricane damage meant more food imports, just when world food prices were rising and those of nickel, now Cuba’s main export, were plunging. All this coincided with the political infighting in which Mr Lage was ousted, during which “all financial and budgetary discipline was blown away”, according to a foreign businessman. Having repeatedly defaulted on its foreign debt, Cuba has little access to credit. Instead of devaluing the CUC, which would have pushed up inflation, in January 2009 the government seized about $1 billion in hard-currency balances held by state-owned enterprises (SOEs) and foreign joint ventures. It did not finish paying them back until December 2011.

The guidelines approved by the party congress contain measures to raise production and exports, cut import demand and make the state financially sustainable. This involves, first, turning over idle state land to private farmers; second, making the state more productive by transferring surplus workers to the private sector or to co-ops; and third, lifting some of the many prohibitions that restrict Cuban lives, and granting much more autonomy to the 3,700 SOEs.

The grip of the state on Cuban farming has been disastrous. State farms of various kinds hold 75% of Cuba’s 6.7m hectares of agricultural land. In 2007 some 45% of this was lying idle, much of it overrun by marabú, a tenacious weed. Cuba is the only country in Latin America where killing a cow is a crime (and eating beef a rare luxury). That has not stopped the cattle herd declining from 7m in 1967 to 4m in 2011.

In 2008 Raúl allowed private farmers and co-ops to lease idle state land for ten years. By December last year 1.4m hectares had been handed out. The government has now agreed to extend the lease-period to up to 25 years, allow farm buildings to be put up and pay for any improvements if the leases are not renewed.

Credit and technical assistance also remain scarce, says Armando Nova of CEEC. Farmers suffer in the grip of Acopio, the state marketing organisation. It is the monopoly supplier of inputs such as seeds, fertiliser and equipment and was the sole purchaser of the farms’ output, but its monopoly is being dented. Farmers can now sell surplus production of all but 17 basic crops themselves. Under a pilot programme in Artemisa and Mayabeque provinces, near Havana, new co-ops will take over many of Acopio’s functions.

The reformers want to see Acopio go. More surprisingly, so does Joaquín Infante Ugarte at the National Association of Economists and Accountants (ANEC): “It’s always been a disaster. We should put a bomb under it.” But in around 100 of Cuba’s 168 municipalities the economy is based on farming, so Acopio is a big source of power and perks for party hacks, and its future is the subject of an intense political battle. That makes farmers nervous. A year ago the 30 or so farmers in the Antonio Maceo co-op in Mayabeque leased extra land, got a loan and planted bananas, citrus and beans. The administrator says output is up, but “it will take time to see a real difference.” And with that he clammed up.

Official data suggest that output of many crops fell last year; the price of food rose by 20%. That may be partly because farmers are bypassing the official channels. Granma, the official—and only—daily newspaper, reported in January that a spontaneous, self-organised and regulated wholesale market in farm products has sprung up in Havana. That looks like the future.

Letting go is hard to do

Reducing the state’s share of the economy has been even more contested. Raúl originally said the government would lay off 500,000 workers by March 2011 and a total of 1.1m by 2014. That timetable has slipped by several years because the government has been reluctant to allow sufficiently attractive alternatives for workers to give up the security (and the pilfering opportunities) of a state job. But including voluntary lay-offs and plans to turn many state service jobs into co-ops (as has already happened with small barber’s shops, beauty parlours and a few taxi drivers), some 35-40% of the workforce of 4.1m should end up in the private sector by 2015, reckons Mr Everleny.

Raúl sees corruption as politically incendiary at a time of rising inequality

By October 2011, he says, some 338,000 people had requested a business licence, 60% of whom were not leaving state jobs, suggesting that they were simply legalising a previous informal activity. As happens to small businesses the world over, many fail in the first year. Few of the cuentapropistas have Ms Nicolas’s business experience. Many clearly find it hard to distinguish revenue from profit. ANEC is organising training courses. But the government has stalled an attempt by the Catholic church to set up an embryonic business school.

If cuentapropismo is not to be a recipe for poverty, the government will have to ease the rules. Mr Everleny wants to see private professional-service firms being established: architects, engineers, even doctors. Already the taxes levied on the new businesses have been cut, but they are still designed to produce “bonsai companies”, in the words of Oscar Espinosa Chepe, a dissident economist.

Lack of credit is another obstacle. Start-up capital for new businesses comes mainly from remittances. In a pilot scheme the government approved $3.6m in credits in January, nearly all for house improvements. As for deregulation, Raúl has taken some simple and popular steps, lifting bans on Cubans using tourist hotels and owning mobile phones and computers, and last year allowing them to buy and sell houses and cars.

But reforming SOEs is far more complicated. They have been told to introduce performance-related pay. The boldest step was last year’s abolition of the sugar ministry. In principle, SOEs that lose money will be merged or turned over to their workers as co-ops. But a planned bankruptcy law is still pending. So is the elimination of subsidies and the introduction of market pricing. Mr Ugarte of ANEC thinks much of this will happen this year, along with a new law to introduce corporate income tax.

The pace of change has picked up since the party congress set up a commission with 90 staff under Marino Murillo, a Politburo member and former economy minister, to push through the reforms, says Jorge Mario Sánchez at CEEC. “By 2015 there won’t be the socialist economy of the 1990s, nor the same society.” But there are several gaps.

For one, the government seems undecided what to do about foreign investment, a key element in the rapid growth in Vietnam and China. It has cancelled some of the joint ventures it had signed (often in haste) during the Special Period, and such new agreements as it is entering are almost exclusively with companies from Venezuela, China and Brazil. Odebrecht, a Brazilian conglomerate, has reached an agreement under which it will run a large sugar mill in Cienfuegos for ten years. Many foreign companies are keen to invest in Cuba but are put off by the government’s insistence on keeping a majority stake and its history of arbitrary policy change.

Officials worry that foreign investment brings corruption. Raúl has launched an anti-corruption drive with the creation of a powerful new auditor-general’s office. Several hundred Cuban officials, some very senior, have been jailed, as have three foreigners. Raúl rightly sees corruption as politically incendiary at a time of rising inequality. But he is tackling the symptoms rather than the cause. “People who were making $20 a month were negotiating contracts worth $10m,” says a foreign diplomat.

The guidelines involve only microeconomic reforms. Raúl’s macroeconomic recipe has so far been limited to austerity: he has managed to trim the fiscal and current-account deficits. The trickiest reform of all will be unifying the two currencies, by devaluing the CUC and revaluing the peso. It would help if Cuba were a member of the IMF and the World Bank and had access to international credit, but so far the government has shown no interest in joining. Mr Vidal of CEEC points out that for devaluation to provide a stimulus, rather than just generating inflation, the economy would have to be far more flexible. That will require a political battle.

 

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Yoani Sánchez, “With Clitoris and With Rights”

Posted on March 20, 2012 by Arch Ritter

Article printed from Generation Y: http://www.desdecuba.com/generationy

At times with good intentions – other times with not so good – someone tries to silence my complaints about the machismo in my country, telling me, “Cuban women don’t have it so badly… those in some African nations, where they are subjected to ablation, are worse off.” As an argument it’s a low blow, it hurts me in the groin, connects me to the cry of a defenseless teenager, mutilated, subjected to that ordeal by her own family.  But the rights of women should not be reduced only to the power to maintain their physical integrity and to defend their biological capacity to experience pleasure. The clitoris is not the only thing we can lose, there is a long list of social, economic and political possibilities, which are also snatched from us.

As I live in a country where the paths of civic protest have been severed and demonized, I dare to offer in this blog a list of the violations that still persist against women.

  • They do not allow us to establish our own women’s organizations, where we can unite and represent ourselves. Groups that are not channels of transmission from the government to the citizens, as sadly happens with the Federation of Cuban Women.
  • When they speak of women in the political class, it’s clear that they don’t have any real power but are there to fulfill quotas or assignments by gender.
  • The icon of the Federation of Cuban Women (FMC) – the only organization of this kind permitted by law – shows a figure with a rifle on her shoulder in clear allusion to the mother as soldier, to the female as a piece of the warring conflict cooked up from above.
  • The absence in the national press of reporting about domestic violence does not eliminate its real presence. Silence does not stop the aggressor from hitting. In the pages of our newspapers there should also be these stories of abuse, because otherwise we are not going to understand that we have a serious problem of assaults, silenced within the walls of so many homes.
  • Where can a wife go when she is beaten by her husband? Why are there no shelters or why doesn’t the media publicize the locations of these refuges for battered women?
  • Buying disposable diapers is almost a luxury in this society. Most new mothers still have to spend a good part of their time washing baby clothes by hand. Every emancipation needs a material infrastructure of freedom, otherwise it will remain so only in slogans and mottoes.
  • The high prices of all the products needed for motherhood and pregnancy are also a factor that influences the low birth rate. A crib with mattress costs the equivalent of $90 U.S. in a country where the average monthly salary doesn’t exceed $20.
  • The child support that a father must provide for his children after a divorce – as stipulated by law – doesn’t exceed, in many cases, the equivalent of $3 monthly, which leaves a woman economically powerless to raise her children.
  • The extremely high prices of food relative to wages keep Cuban women chained to the stove while performing economic pirouettes to put a plate of food on the table. It is the women and not the political-economic system that performs a daily miracle so that Cuban families eat, more or less well or more or less badly.
  • After so many slogans about emancipation and equality, we Cuban women are left with a double workday and dozens of cumbersome bureaucratic tasks. It’s enough to go outside to see the effects of this excess load: most women over forty have bitter faces, make no plans for the future, do not go out with their women friends to a bar, and have no escape from their family and the tedium.
  • When a woman decides to criticize the government, she is immediately reminded who wears the skirt; they accuse her of immorality, infidelity to her husband, being manipulated by some male mind, and call her “prostitute,” “cocky,” “hooker,” as many discriminating cutting insults as they can imagine.
  • You can’t try to liberate a specific social group in a society gripped by the lack of rights. To be a woman in the Cuba of today is to suffer these lacks twice.

In short, we want to have a clitoris and rights, to feel pleasure and to speak our opinions, to be known for our skirts, but especially for our ideas.

Family, Photo by Arch Ritter

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CUBA: One step forward

Posted on March 20, 2012 by Arch Ritter

By Andrea Armeni,

Published originally here “CUBA: One step forward” in Emerging Markets, 19/03/2012

After several tough years, the Cuban economy in 2011 started to show signs of recovery. Following a wave of reforms seeking a mild opening of the economy, and renewed, if limited, attention from international partners, some took this as cause for hope that things might be looking up for the island nation. Yet the challenges for the small and isolated enclave of socialism in the Americas remain daunting.

Faced with crippling foreign debt following the liquidity crisis of 2008 and 2009, Cuba found itself in need of a drastic overhaul. Already bare-bone, imports were slashed a further 38%, and government spending was cut back.

But this last crisis finally prompted the state to enact its first series of serious economic reforms in six decades. As Cuba’s outdated economic model is generally considered to be the real reason of its economic ills, any kind of progress in the model is an improvement.

Observers had anticipated that Raúl Castro, after taking over the reins from his brother Fidel in 2006, would herald a period of transition. But early attempts at reform were stymied, and Raúl did not prove to be a stalwart of change. His early criticisms of the Cuban economy did not materialize into effective policy. Moves towards openness and away from the almost absolute control by the state of economic activity didn’t happen.

Real change started to take place in 2011, when Raúl pushed for the long-delayed Sixth Congress to adopt a series of economic action points ranging from a slashing of the bloated state payroll and a sliver of openness to private enterprise, to private ownership of real estate and greater freedoms in agricultural production. The reforms are moving Cuba in the right direction – and, as compared to previous measures, they are concrete measures. According to Armando Linde, former president of the Association for the Study of the Cuban Economy (ASCE), unlike in the past: “the current reforms are not merely to appease possible Castro-fatigue in Cuba. They are doing it because they feel that their model has been exhausted.”

Mercado Artesanal, on the Malecon, Photos by Arrch Ritter, around 2004

Richard Feinberg, a non-resident senior fellow of the Brookings Institution and author of a recent major report on Cuba, notes that “the reform process, which is still cautious, is accelerating.”

This positive impression of the state’s intentions is accompanied by a widespread sentiment that the reforms still do not go far – or fast – enough. Others, such as Arch Ritter, a Canadian academic at Carleton University and an expert on the Cuban economy, voice concerns over the feasibility and the implementation of the 300-odd “main lines” of reform.

Cuban economist Oscar Espinosa Chepe, a frequent critic of the state, welcomes the reforms but also notes that the government has already fallen short on its proposed implementation timetable. Omar Everleny, a professor as well as director of the prominent Center for the Study of the Cuban Economy in Havana, sounds a more positive note: “The option given by the government is a good one: a gradual approach, that is to say, every few months a new measure is implemented.” A case in point is the reduction of the state employee rolls: the plan called for the dismissal of half a million workers in the state’s employ by the end of 2011. According to Carmelo Mesa-Lago, a respected scholar of the Cuban economy, only some 100,000 have been dismissed so far. Without the sudden creation of jobs in the private sector, the firing of so many state employees would have resulted in an unemployment rate of 22%, says Mesa-Lago.

With significant limitations on alternative employment for a population used to monopolistic state employment, change has to be gradual.

INITIAL CHANGES

But the resurgence of economic activity is evident, particularly in the capital, and there is little doubt that Cuba’s internal economy has received a positive push by allowing private micro-enterprise. Real GDP growth is expected to reach 2.5% in 2012. But limitations remain in terms of the scarcity of productive inputs, from flour to fertilizer, an uncertain new taxation scheme, and the strangulation of any enterprise that goes beyond a handful of employees.

Agriculture, another sector that has suffered tremendously in the last years, is showing signs of recovery in the official figures. This should be spurred further by easing restrictions on independent agricultural production and sale of farm produce. There is talk of making agricultural credits available as well as providing raw materials, such as seeds and fertilizers, that were previously accessible only to state producers.

But national production across the board remains dismal. Cuba manages its trade deficit in goods only by exporting services, principally in the form of doctors and nurses, to Venezuela and other friendly countries.

Cuba’s dependency on Venezuela creates problems of its own. Venezuela now counts for 40% of Cuba’s hard currency from trade, and its share in Cuba’s total trade deficit has risen to 42%, according to Mesa-Lago. Cuba is still reeling from the impact of the end of Soviet subsidies and many believe that if Venezuela’s policies vis-à-vis Cuba were to change, the island would likely suffer another tremendous crisis. Venezuela’s elections, scheduled for October, have raised the possibility, however slim, that Chávez could be unseated, not least following his diagnosis with cancer. “Cuba is going to be in trouble if there is a change of regime in Venezuela,” says Ritter. “With a regime change in Venezuela, which looks like a possibility, Cuba may lose its massive indirect quasi-subsidization through the purchase of these medical services.”

Nor is there any imminent rescue from other parties in sight. China’s credits are reportedly limited to commercial purchases of Chinese goods (Cuba does not officially publish such figures). Foreign direct investment is still low after the scare from the 2008–09 liquidity crisis, which caused investors to flee as the government froze foreign companies’ bank accounts and limitations emerged on the repatriation of proceeds. At the institutional level, Brazil is a potential partner for Cuba in the coming years. Lula’s seminal visit in 2010 was followed by a three-day visit from president Dilma Rousseff early this year. The economy featured at the core of the discussions, reinforcing Brazil’s presence on the island, with interests that range from a successful tobacco joint venture, Brascuba, to Brazil’s $640 million contribution to the renovation of one of Cuba’s main harbours.

Brazil’s interests in Cuba are far less ideological than those of Venezuela. Brazil’s knowledge and investments in sugar cane and its derivative ethanol could revive Cuba’s sugar industry, for example. But the interest is also geopolitical, as Brazil aims to assert its diplomatic influence over the continent.

The prospect of oil revenues is another reason for hope that Cuba can earn much-needed hard currency. Exploration began earlier this year for offshore oil extraction in Cuba’s waters. While the discovery of drillable reserves would be a godsend to the Cuban economy, any financial rewards would not come for another four or five years. Cuba can’t afford to wait that long on the economic sidelines – the reforms will have to prove effective in spurring internal growth quickly if Cuba is to avert another major crisis.

NOT SO SPLENDID ISOLATION

Beyond all this lies the fact that Cuba is still cut off from all international financial institutions (IFIs). “Cuba can’t be the only country out of some 200 that doesn’t belong to any of these institutions,” says Everleny. “To the extent that Cuba is changing its economy and is establishing better relations with other countries in Latin America, why should Venezuela be a part of these international institutions but not Cuba? Why Ecuador, Bolivia, Nicaragua?” The notion that Cuba should become a member in IFIs is gaining traction. Feinberg’s recent seminal paper, published by the Brookings Institution, analyses the feasibility of Cuba joining the IFIs, and was read with interest in Cuba. Feinberg outlines the complicated interplay between the morass of US legislation surrounding Cuba’s isolation from the rest of the world and the island’s real chances for establishing relations with the IFIs and, perhaps more plausibly, with Andean Development Bank Comunidad Andina de Fomento (CAF), which has already invested beyond its member countries.

“One would imagine that influential CAF shareholders (including Venezuela, Brazil and Argentina) would be supportive, and would agree that the goals of a Cuba fund could be made consistent with overall CAF policies,” says Feinberg’s paper.

For a long time the socialist state scoffed at the idea of dealing with such imperialist institutions as the World Bank and the IMF, but Cuba under Raúl has toned down its rhetoric against the IFIs. A recent visit to Cuba by several World Bank economists – though in their personal capacities – was mentioned positively by several observers.

Everleny, who met officials from the Washington multilaterals visiting Havana, says: “The spirit is to try to initiate an exchange from a technical standpoint – information, publication, access for them to see what is happening in Cuba.”

Officially, the World Bank, the IMF and the IDB will not comment on anything concerning Cuba, but these informal gestures have been welcome – even on the part of the Cuban government. “There has to be a dialogue already, even though officially there has not been a proposal to join any of the IFIs,” says Everleny. “But at the same time – the state has not blocked it either.”

Peter Hakim, president emeritus of the Inter-American Dialogue, echoes the voices that would welcome more involvement by the IFIs in Cuba, even if just at the consultative level. “The World Bank and the IMF have very talented people who know a lot about developing economies; they could be very helpful,” he says, “and even more helpful if they could put some money behind the reform process.”

Linde, the ASCE economist who retired as deputy secretary of the IMF, agrees, but he sees little chance of any significant steps happening quickly. While it is doubtful that any steps towards openness will come from the Obama administration before the 2012 elections, he says: “The Cuban community in the US is becoming more open to a rapprochement with the Castro regime. This younger generation is more amenable to looking ahead rather than looking back to the past.”

But the fact remains that until the US – for whatever reason – demonstrates a willingness to engage with Cuba, there is little prospect for any international action that could do much to improve the lot of the Cuban people. Hakim calls this a “terrible mistake” that has effectively stopped the IFIs from meaningfully approaching Cuba.

One good chance for openness to a dialogue in recognition of Cuba’s reforms should be the Summit of the Americas in April. Despite its lack of participation in the OAS (Organization of American States), Cuba has signalled its willingness to participate in the summit if invited, a position backed by the ALBA (Bolivarian Alliance for the Americas) countries. This is seen by some as a good opportunity for the US and Cuba to greet a new era where the two can sit at the same table.

Uninspiringly, US hardliners such as chairman of the House Foreign Affairs Committee Ileana Ros-Lehtinen are vehemently opposed to Cuba’s presence at the Colombia Summit: “Allowing the Cuban tyranny to participate would fly in the face of everything the Charter and the OAS is supposed to stand for,” she says.

The isolationist stance has fewer and fewer supporters outside a narrowing cluster of Miami Cubans. The overwhelming majority of non-political observers say the US should recognize the steps taken by Cuba and help push them along. It is 2012, not 1962, after all.

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