• 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."

Baranyi and Legler: “Canada’s long engagement with Cuba: paradoxes and possibilities”

Posted on February 10, 2012 by Arch Ritter

By Thomas LEGLER y Stephen BARANYI, Universidad Iberoamericana (México) y Universidad de Ottawa (Canadá)

América Latina Hoy, 52, 2009, pp. 131-146; Canada’s long engagement with Cuba, paradoxes and possibilities

Professors Legler and Baranyi have produced an interesting analysis of Canadian relations with Cuba and the possible implications for the European Union and the United States which somehow I missed a few years ago. A Spanish language version of  full document is hyper-linked above. Unfortunately it is not available in English.  Here is the Abstract in English however.

ABSTRACT: The European Union, Latin America and even the United States have each initiated distinct processes of dialogue with Cuba. What relevant lessons can be drawn from Canada’s long history of engagement with the Revolution? This article documents the evolution of Canada-Cuba relations since the 1940s, focusing on the ups and downs of these relations since a policy of «constructive engagement» was launched in the mid-1990s. It argues that this approach (in its many guises) has not had a major influence on the liberalization of Cuban politics. Moreover, what little influence Canada had during the «Special Period» has diminished with the economic recovery and the diversification of Cuba’s external relations over the past decade. As such, the authors conclude that the most appropriate strategy for Canada and other «engagers» is to take a coordinated, long-term approach of supporting a variety of endogenous change processes inside Cuba. A realistic strategy should include ongoing but low-profile dialogue with the current regime, cooperation with a wide range of possible reformers within and beyond the state, and support for broader social changes through trade, foreign investment, tourism, academic and cultural exchanges.


ThomasLegler

Stephen baranyi

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Reporters Without Borders: Again Cuba’s “Freedom of the Press” is the Worst in the Henmisphere

Posted on February 9, 2012 by Arch Ritter

No surprises here. Once again, Cuba unfortunately comes last in the Hemisphere in a ranking regarding human rights. In this case. Reporters without Borders annual Freedom of the Press Report for 2011 comes to the conclusion that observers of Cuba are familiar with, namely that freedom of expression in Cuba exists only in the minds of the members of the Politburo of the  Central Committee of the Communist Party of Cuba.

The full report can be found here: Reporters without Borders, Press Freedom Index, 2011-2012. The Website for the Report is here: http://en.rsf.org/. The Reporters without Borders coverage on Cuba is here: Cuba Page.

Below is a quick summary of the methodology used by RWB for the calculation of its index.

“The ranking reflects the situation during a specific period. This year’s index takes account of events between 1 December 2010 and 30 November 2011. It does not look at human rights violations in general, just press freedom violations.

To compile this index, Reporters Without Borders prepared a questionnaire with 44 main criteria indicative of the state of press freedom. It asks questions about every kind of violation directly affecting journalists and netizens (including murders, imprisonment, physical attacks and threats) and news media (censorship, confiscation of newspaper issues, searches and harassment). And it establishes the degree of impunity enjoyed by those responsible for these press freedom violations. It also measures the level of self-censorship in each country and the ability of the media to investigate and criticize. Financial pressure, which is increasingly common, is also assessed and incorporated into the final score.

The questionnaire takes account of the legal framework for the media (including penalties for press offences, the existence of a state monopoly for certain kinds of media and how the media are regulated) and the level of independence of the public media. It also reflects violations of the free flow of information on the Internet.

Reporters Without Borders has taken account not only of abuses attributable to the state, but also those by armed militias, clandestine organizations and pressure groups.”

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Jeff Franks: Key political risks to watch in Cuba

Posted on February 6, 2012 by Arch Ritter

By Jeff Franks, for Reuters; HAVANA | Fri Feb 3, 2012 10:57am EST

HAVANA Feb 3 (Reuters) – Cuba is opening the door to private management of some state-run cafes and food service outlets in an apparent test of further reforms aimed at keeping the island one of the world’s last communist countries.

The government said food prices rose nearly 20 percent in 2011 in a warning sign that economic change will not be painless.

Spain’s Repsol YPF brought the massive Scarabeo 9 drilling rig into Cuban waters and began drilling what Cuba hopes will be the first of many wells in its untapped offshore oilfields.

ECONOMIC REFORMS

In eastern Holguin province, officials said 211 state-owned cafeterias would be leased to employeesin a semi-privatization similar to what has been done nationally with barber shops and beauty salons the past year and recently expanded to other service businesses such as watch repair and carpentry shops. The Holguin program has not been mentioned in national media, but is likely a trial run before it becomes generalized, as was done with the other services.

The government, which wants to slash a million jobs from its payroll and encourage more private initiative, has said it will turn many small businesses, nationalized since the 1960s, over to employee cooperatives. It is encouraging self-employment, with more than 362,000 people now working for themselves. Economy Minister Adel Yzquierdo Rodriguez told the National Assembly in late December that 170,000 state jobs would be cut in 2012 and as many as 240,000 new non-state jobs added. The government’s goal is to have up to 40 percent of the island workforce of 5.2 million in non-state jobs by 2015.

President Raul Castro has made reform of Cuba’s lagging agricultural sector a top priority and the Cuban state, which owns 70 percent of the country’s land, has leased 3.5 million acres (1.4 million hectares) to 150,000 private farmers since he succeeded older brother Fidel Castro as president in February 2008. In some areas, the state has increased the land farmers can lease to 165 acres (67 hectares), extended their leases to 25 years, allowed them to build homes on the land and will let them pass the leases on to family members. Yet food output was up just 2 percent in 2011 and still below 2005 levels.

That, reduced food imports by the cash-strapped government and reforms allowing farmers to sell more of their production for market prices combined to make food prices shoot up in 2011. The National Statistics Office reported that meat prices rose 8.7 percent while produce prices increased 24.1 percent, for an average of 19.8 percent on the year..

At the same time, the average monthly salary inched up only a few percentage points to the equivalent of $19 a month, the government said. The statistics stated what Cubans already knew — their buying power has shrunk under Castro’s reforms.

President Castro told the National Assembly that Cuba still expected to spend $1.7 billion on food imports in 2012.

He also emphasized at a Communist Party conference the importance of an ongoing crackdown on corruption, which already has shuttered three foreign firms and sent executives of some of Cuba’s biggest state-run firms to prison. He said the party would implement term limits for the country’s leaders, but he gave no details.

What to watch: The pace of reforms and their consequences; The development of small businesses; Agricultural production and food prices.

FINANCIAL HEALTH

Castro said the economy grew 2.7 percent in 2011 and was expected to rise 3.4 percent in 2012. Cuba said it drew a record 2.7 million tourists in 2011, bringing in revenues of about $2.3 billion.

Travel industry experts say tourism has boomed this winter as the Arab Spring scared Europeans away from northern Africa, relaxed U.S. regulations made it easier for Americans to visit the island and Castro’s reforms drew visitors curious to see the effects of changes. They said Cuba needs more hotels to accommodate its growing tourism industry, which is a top hard currency earner for the country.

Cuba is heavily indebted and still recovering from a liquidity crisis that led to a default on payments and freezing of foreign business bank accounts in 2009. Castro told the National Assembly that accounts for foreign suppliers to Cuba had been unfrozen and steps taken to prevent the problem from happening again.

Hopes that reforms would bring more foreign investment have been slow to materialize, but Brazilian company Odebrecht said it would sign a contract to help Cuba improve its troubled sugar industry. One executive said the deal would include ethanol production. Long-awaited golf course developments, aimed at attracting wealthier tourists, remain on hold.

What to watch: Resolution of outstanding short-term debt; Signs of increased interest in foreign investment; Growth of tourism and Cuba’s ability to handle it

OIL PLANS

The Chinese-built Scarabeo 9 arrived in Cuban waters and at January’s end began drilling the first of three exploration wells in Cuba’s part of the Gulf of Mexico. Spain’s Repsol YPF and its partners plan to drill two of the wells and Malaysia’s Petronas and its partner, Russia’s Gazprom Neft, will drill the other, all this year and with the same rig.

The project has drawn opposition in the U.S. Congress, but, to allay safety concerns, Repsol allowed U.S. experts to inspect the Scarabeo 9 in Trinidad and Tobago. They said it met all international engineering and safety standards.U.S. companies are forbidden from operating in Cuba by the U.S. trade embargo.

Cuba depends on imports from its oil-rich ally Venezuela, but says it may have 20 billion barrels of oil offshore. The U.S. Geological Survey has estimated 5 billion barrels.

What to watch:  Results of Repsol’s exploratory well;  U.S. pressure to stop the drilling.

FOREIGN RELATIONS

A planned Papal visit in Marchimproved ties with Brazil, whose President Dilma Rousseff paid an official visit in January,are bright spots even as Cuba faces a more hostile Spanish government elected in November.

A major concern for Cuba is the health of Venezuelan President Hugo Chavez, a loyal ally whose government provides 114,000 barrels of oil a day and investment to Cuba. He underwent chemotherapy in Cuba and has declared himself cancer free, but experts say it is too soon to tell. If he were unable to continue in office, it would be a big blow to Cuba.

U.S.-Cuba relations, which thawed briefly under President Barack Obama, have been frozen by the imprisonment of U.S. aid contractor Alan Gross.He is serving a 15-year sentence for providing Internet gear to Cuban Jews under a U.S. program promoting Cuban political change. A document reported to be the court’s sentence said Gross knew the political aims of his work and tried to hide it from Cuban authorities despite his claims to the contrary.

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Spain’s Repsol begins Cuba offshore drilling-sources

Posted on February 3, 2012 by Arch Ritter

By Jeff Franks | Reuters – 17 hrs ago; HAVANA (Reuters)

Spanish oil company Repsol YPF has begun drilling the first well in Cuba’s long-awaited exploration of offshore oilfields that the communist country says hold both billions of barrels of oil and the key to greater prosperity, industry sources told Reuters on Thursday.

The massive Scarabeo 9 drilling rig, which arrived in Cuban waters two weeks ago, began drilling into the sea floor about 30 miles northwest of Havana on Tuesday night, the sources said.

A Repsol spokesman said the company could not comment on “operational details.”

The newly built, high-tech rig is operating in 5,600 feet of water, or what the oil industry calls “ultra-deep water,” in the Straits of Florida, which separate Cuba from its longtime ideological foe, the United States.

Sources close to the project said such wells generally take about 60 days to complete.

Repsol, which is operating the rig in a consortium with Norway’s Statoil and ONGC Videsh, a unit of India’s Oil and Natural Gas Corp, has said it will take several months to determine the results of the exploration.

The well is the first of at least three that will be drilled in Cuban waters with the Scarabeo 9, which was built in China and is owned by Saipem, a unit of Italian oil company Eni.

Sources have said that Repsol will drill the first well and then the rig will go to Malaysia’s Petronas in partnership with Russia’s Gazprom Neft and then back to Repsol for the third well.

It is not clear what happens after that, although some sources have said Repsol, which is leasing the Scarabeo 9 from Saipem at a rate said to be more than $500,000 a day, will move the rig to Brazil for exploration there.

Cuba has said it may have 20 billion barrels of oil in its northern waters, which are its part of the Gulf of Mexico. The U.S. Geological Survey has estimated it may have 5 billion barrels of oil, but its study does not include the entire Cuban gulf zone.

EASE FINANCIAL WOES

Cuba, which is in the midst of reforming its Soviet-style economy, is hoping oil will ease it chronic financial woes and bring energy independence from its socialist ally Venezuela. It receives about 115,000 barrels daily from the oil-rich South American country.

But if oil is found, experts say it could take five years or so to begin production because more drilling will be needed and production infrastructure put in place.

Repsol drilled the only previous offshore well in Cuba in 2004 and said it found oil but that it was not “commercial.”

It has been difficult to find a rig for more drilling because of the 50-year-long U.S. trade embargo against Cuba, which limits the amount of U.S. technology that can be used.

The Scarabeo 9, which is of Norwegian design, has only one piece of American equipment – the blowout preventer, a key part that failed in the 2010 blowout of a BP well in the U.S. Gulf of Mexico.

The BP well, which was in more than 5,000 feet of water and spilled 5 million barrels of oil, stained hundreds of miles of U.S. coastline.

In Florida, 90 miles north of Cuba, the Cuba offshore project has raised fears that a similar accident could damage the state’s beaches and coral reefs.

Drillers in Cuban waters could get within 45 miles of Florida, while in the U.S. gulf no exploration is permitted within 125 miles of the state.

At Repsol’s invitation, a team of U.S. experts inspected the rig in December in Trinidad and Tobago and said it complied with all existing engineering and safety standards.

But the United States, which has no official diplomatic relations with Cuba, has only made safety preparations from afar and has not been otherwise involved in the project.

Countries such as Norway and Brazil have helped lead an international effort to get Cuba ready for oil exploration and the possibility of an oil spill.

The project has gone forward despite opposition in the United States from Cuban exile leaders, who have proposed legislation in the U.S. Congress to try to stop Repsol.

They fear that oil will enrich and assure the survival of the Communist government they have long opposed.

“We need to figure out what we can do to inflict maximum pain, maximum punishment to bleed Repsol of whatever resources they have if there’s a potential for a spill that would affect the U.S. coast,” U.S. Rep. David Rivera from Florida told a congressional subcommittee in Miami on Monday.

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Association for the Study of the Cuban Economy, 2011 Conference Proceedings

Posted on February 2, 2012 by Arch Ritter

ASCE, the Association for the Study of the Cuban Economy has just published the Proceedings of its 2011 Conference. The Proceeding include a wealth of information and analyses. All articles for 2011 and indeed all the Conference proceedings for the last 21 years are freely available on the ASCE Web Site

Below is the Table of Contents for the 2011 Proceedings with all articles hyper-linked to the original ASCE source.

Preface

Conference Program

Table of Contents

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Haroldo Dilla Alfonso, “Cuba’s Collapsing Capital”

Posted on February 1, 2012 by Arch Ritter

January 31, 2012 |  Haroldo Dilla Alfonso*

HAVANA TIMES, from Cubaencuentro, Jan 30 — The recent collapse of a building in the Centro neighborhood of Havana is sad news that speaks to us of dead, injured and homeless – tragic losers of the nation’s “updating” of its model.

But the news isn’t surprising.

The only surprise is that it doesn’t happen more often.

In fact, if this doesn’t happen every day in the Cuban capital, it’s because our architects and engineers left us with a solid housing stock, one proven by the test of time and generations of occupants.

The condition of housing has been complemented by of our fellow citizens, whose one-thousand-and-one ways of shoring up those crumbling buildings will someday have to be chronicled. They somehow manage to continue living in these structures until gravity finally catches up with them, these defiant challengers.

I’m not going to dwell on a balance of accomplishments and failures of the city over this long post-revolutionary era. I’m just saying that, even considering the usual benefits, the city lost much more than what it should have lost to achieve more balanced regional development across the nation as a whole.

It’s missing a lot because it lost the most dynamic segment of its middle and intellectual class; it lost its excellent infrastructure in the heat of neglect and carelessness; and finally it lost its particular metropolitan character due to the mediocre plebeian stoicism of its post-revolutionary political class.

To compensate themselves for their revolutionary efforts, a new leadership layer took special care to redistribute the best homes in the best places and to reserve exceptional sites for their own recreational pleasures.

Havana was sacrificed by a post-revolutionary elite who understood the change as anti-urban stubbornness and who saw the “new man” (to quote Emma Alvarez Tabio) as the noble savage laying constant siege to the city.

We still recall the Havana invaded by farmers, cattle fairs on the grounds of the Capitolio, Fidel’s failed coffee belt around Havana and his ridiculous idea of moving the capital to the small eastern town of Guaimaro.

However, the city ultimately suffered the conversion of architectural gems into rooming houses and government offices, to which were added makeshift garages, sheds in gardens and terraces, rooms where once existed gates and balconies, and the famous “barbacoas” (second floor additions), which have all pushed these buildings to the extreme limits of their physical tolerance.

Restored Old Havana Building. Photo: Caridad

If from the early revolutionary years we can point to a respectable architectural legacy along with achievements on behalf of the urban majority (as evidenced through accomplishments such as the Habana del Este planned community), the Pastorita city-garden, Cubanacan art school), what followed was pathetic: formalized overcrowding (whose most well-known expression is the Alamar “projects”) and one of the most ghastly buildings in the world: the Soviet Embassy.

Due to policing that prevented the growth of slums on the urban periphery, as occurs in almost all Third World cities, the city ended up swallowing its marginality. This is manifested in unprecedented overcrowding that gives life to about 10,000 tenements in which their occupants live in some of the most subhuman conditions.

My fear is that we are beginning to experience another phase of the history of this city. The  “socialist” city (mediocre and boring) is giving way to another city whose “brand” is precisely the metropolitan situation that was denied for five decades – with its glamor, mysteries and nights of sequins and sex.

This is precisely the Havana that City Historian Eusebio Leal restored to the extent of both his own Hispanophile and courtesan inclinations as well as to the present and potential tastes of consumers.

The Havana that’s being designed will lie along the coast with its extensive golf courses and exclusive marinas. It is a Havana that will have little to do with the poor people who lost homes and family members in the recent Infanta and Salud building collapse.

Havana is beginning its gentrification process in the heat of the legalized housing market, which while still lukewarm is nevertheless inexorable. Elegant Havana will again take shape where now live the old political elite and increasingly the new emerging elite, intimately tied together, in the metamorphic process given to us by the general/president with his “updating.”

This is the Havana of future Cuban capitalism.

“Havana A” will bypass those people who — like the victims living on Infanta and Salud — every night fear a disaster. For these people, like for the thousands of victims who exist in shelters, like the hundreds of thousands waiting for a new home or the repair of an already existing one in the capital, what will remain is “Habana B”: a city of the poor and impoverished, one with the worst services and the worst environmental conditions.

They no longer even have hopes for units in Alamar. The Cuban government, in the process of abdicating its social responsibilities, has left only one option to those who live on the island: cheap loans for housing repairs. What’s more, access to this assistance is only possible through this system of shared misery and monopolized power that the degraded Cuban elite insist on presenting as an option for the future.

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Brazil’s President Flexes Clout in Cuba Trip

Posted on February 1, 2012 by Arch Ritter

Rousseff Offers Closer Economic Ties, Reflecting Nation’s Bid for Greater Regional Leadership; Human Rights Remain Issue

By JOHN LYONS And JOSÉ DE CÓRDOBA

Wall St. Journal, 1 February 2012

SÃO PAULO, Brazil—President Dilma Rousseff offered closer economic cooperation to Cuba during a visit to the communist island on Tuesday, marking Brazil’s highest-profile bid to transform its growing economic might into diplomatic leadership in Latin America.

Brazil’s state development bank is financing a $680 million rehabilitation of Cuba’s port at Mariel. Work on the port is being managed by the Brazilian construction firm Odebrecht SA, which may also provide support for Cuba’s sugar industry, Brazilian officials have said.

CUBA

Cuban President Raúl Castro, left, and his Brazilian counterpart, Dilma Rousseff, review the honor guard at Revolution Palace in Havana on Tuesday.

Ms. Rousseff’s closer engagement of Cuba—she is visiting the island before a trip to the White House— is the latest example of Brazil’s strategy to expand its regional influence by offering subsidized loans to poorer nations. In recent years, Brazil has disbursed tens of billions of dollars around Latin America, and as far away as Africa.

But none of these efforts have the same symbolic resonance as in Cuba, which has opposed the U.S. since shortly after Fidel Castro’s 1959 revolution and remains a lightning rod in U.S. domestic politics and a sticking point for U.S. relations with other Latin nations.

“This is about growing Brazil’s soft power on the international scale and raising Brazil’s role in the world,” said Matthew Taylor, a Brazil specialist at the American University’s School of International Service. “Brazil is taking on a bigger role in the hemisphere in terms of aid and finance, and by helping out Cuba they really draw attention to this new role they are playing.”

Although the U.S. has been the predominant power broker in Latin America since the introduction of the Monroe Doctrine in 1823, experts say the U.S. doesn’t oppose Brazil’s bid for regional influence. Many analysts say they believe Brazil could become a stabilizing force in a region known for political and economic volatility.

In Cuba, for example, Brazil may provide a more moderate alternative to the impoverished island’s main economic benefactor, Venezuelan President Hugo Chávez. Mr. Chávez, a self-described foe of the U.S., delivers some 100,000 barrels of oil and refined products to Cuba a day in exchange for the services of Cuban doctors for Venezuelans in poor neighborhoods, along with other barter arrangements.

Cuba, meanwhile, is desperate for economic lifelines. Raúl Castro, who has taken over the presidency from his ailing brother Fidel, has experimented with limited economic overhauls in order to bring life into a moribund economy, where citizens are still issued ration books that allow them access to some basic foods at subsidized prices.

“The more normal Cuba’s economic relations are, the easier normalization with the U.S. will be in the future,” said Archibald Ritter, an expert on the Cuban economy at Canada’s Carleton University.

“I would imagine that the U.S. would privately hope that Brazil will play a mediating role in issues that concern us, like human rights,” said Cynthia Arnson, the director of the Latin American program at Washington’s Woodrow Wilson International Center for Scholars.

Still, during Tuesday’s visit, Ms. Rousseff criticized the existence of the U.S. base at Guantanamo Bay, where terror suspects are held, and the U.S. trade embargo, which she said contributes to poverty on the island.

And it is unclear how far Ms. Rousseff might go to nudge Cuba toward a more democratic society. She declined requests for meetings by Cuban dissidents, and has said she won’t press the Castro brothers on the island’s human-rights record.

“Human rights aren’t a stone to be thrown from one side to another,” she said in Havana on Tuesday. This week, Brazilian Foreign Minister Antonio Patriota said human rights aren’t an “emergency” issue in Cuba. Last month, Cuban political prisoner Wilmar Villar died in jail after a 50-day hunger strike. Activists said he was protesting being jailed for taking part in a political demonstration. The Cuban government has said Mr. Villar was a common prisoner and wasn’t on a hunger strike when he died of complications from pneumonia.

As a young woman, Ms. Rousseff participated in a Marxist guerrilla group in Brazil that was inspired by the Cuban revolution. But the fact that she was jailed and tortured by Brazil’s military dictatorship had raised hopes that she might be more sympathetic to the plight of political prisoners than her predecessor, Luiz Inácio Lula da Silva, who over the years disparaged Cuban hunger strikers.

Observers said the case of Yoani Sánchez, a Cuban blogger who criticizes the Castro regime, may offer clues to changes in Brazilian human-rights policy. Brazil granted Ms. Sánchez a visa, and observers said if Cuba allows her to visit, then Ms. Rousseff may be using engagement to yield some human-rights advances.

In a blog post on Tuesday, Ms. Sánchez said she hoped Ms. Rousseff would meet with human-rights activists in Cuba and in so doing keep faith with “the many voices of democracy rather than opt for a complicit silence before a dictatorship.”

For generations, Brazilian leaders have yearned for prominence in foreign affairs commensurate with its population of 190 million and sprawling geography. The country has lobbied, unsuccessfully, for decades for a seat on the United Nations Security Council.

Such aspirations were the butt of jokes during generations of economic and political turmoil. That started to change a nearly a decade ago, when Brazil began an economic expansion that lifted millions out of poverty and transformed the resource-rich nation into what some economists estimate is the world’s sixth-largest economy—a notch ahead of the U.K.

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Castro Rights Record Intrudes on Rousseff Trade Mission to Communist Cuba (Bloomberg)

Posted on January 31, 2012 by Arch Ritter

Bloomberg; 30 January 2012

Brazilian President Dilma Rousseff, who was inspired by Cuba’s revolution to take up arms against Brazil’s military dictatorship in the 1960s, is making the two-day visit to Havana as Castro takes steps to ease state control of the economy.

Brazilian President Dilma Rousseff, who was inspired by Cuba’s revolution to take up arms against Brazil’s military dictatorship in the 1960s, is making the two-day visit to Havana as Castro takes steps to ease state control of the economy. Photographer: Adalberto Roque/AFP/Getty Images

Brazilian President Dilma Rousseff will meet today with her Cuban counterpart, Raul Castro, to promise more trade and investment as human rights issues intrude on her first state visit to the communist island.

Rousseff, who was inspired by Cuba’s revolution to take up arms against Brazil’s military dictatorship in the 1960s, is making the two-day visit to Havana as Castro takes steps to ease state control of the economy. Tomorrow she’ll travel to Haiti, where Brazil is leading a United Nations peacekeeping force.

Dilma Rousseff befor a military court, 1970

The death this month of jailed dissident Wilman Villar after a 50-day hunger strike has drawn attention in Brazil’s media to Castro’s rights record and the government’s refusal to criticize it. While Rousseff has so far ignored requests for a meeting from pro-democracy activists, her government last week granted a tourist visa to Yoani Sanchez after the Cuban blogger invoked the president’s experience surviving prison and torture in an appeal to be allowed to leave the island.

“Rousseff is going to be in a very awkward situation by choice,” former Brazilian Foreign Minister Luiz Felipe Lampreia said in a phone interview from Rio de Janeiro. “She didn’t have to go to Cuba.”

Rousseff vowed to make human rights a priority of her foreign policy, and in condemning abuses in Iran distanced herself from the policies of her predecessor and mentor, Luiz Inacio Lula da Silva.

Urged on by his Workers’ Party, some of whose leaders were exiled in Cuba, Lula refused to criticize Fidel Castro or his brother’s government while in power from 2003 to 2010. Following a visit in 2010, which coincided with the death of another hunger striker, the former union leader compared the country’s dissidents to “criminals” in Sao Paulo jails.

While Rousseff, 64, is unlikely to address Cuba’s human rights situation publicly, she’s able to talk productively to Castro about his government’s record behind the scenes, said Julia Sweig, a senior fellow at the Washington-based Council on Foreign Relations.

“There won’t be the kind of back-slapping that we saw when Lula was there,” said Sweig, who is the author of several publications on Brazil and Cuba. “Precisely because of Dilma’s history and her explicit sensitivity to human rights I think she is well positioned for political dialogue.”

Cuba’s government relies on beatings, short-term detentions, forced exile and travel restrictions to repress virtually all forms of political dissent, New York-based Human Rights Watch said in a report this month. Cuba denies it’s holding any political prisoners and considers dissident activity to be counterrevolutionary.

In the run-up to Rousseff’s arrival, Brazilian newspapers published almost-daily interviews with Sanchez and activists from groups including the Ladies in White, in which they called for a meeting with the president’s delegation.

Any such requests will be studied by Brazil’s Embassy in Havana, the foreign ministry said in a statement. Rousseff’s agenda doesn’t include any meetings with activists, and underscoring the commercial nature of the visit, her human rights minister is not among the cabinet officials and business leaders making up her delegation.

Cuba’s rights record won’t necessarily improve if Rousseff speaks out, Brazil’s Foreign Minister Antonio Patriota said.

“There doesn’t appear to be an emergency in Cuba,” Patriota said Jan. 27 at the World Economic Forum in Davos, Switzerland. “There are other situations that are very worrisome, including Guantanamo,” he said, referring to the U.S. detention camp for suspected terrorists on Cuba’s southeastern tip.

While Cuba isn’t among Brazil’s 30-biggest commercial partners, trade between the two countries has been expanding at a 30 percent annual pace since 2006, reaching $642 million last year, according to Brazil’s Foreign Ministry. Together with China and Venezuela, which provides the country with subsidized oil, Brazil has emerged as one of Cuba’s biggest foreign investors.

Rousseff will visit today the deepwater port at Mariel, which is undergoing a nearly $1 billion renovation led by Odebrecht SA with funding from the Brazil’s state development bank. The Salvador, Brazil-based construction and raw materials conglomerate said yesterday that it will also sign an agreement to expand a sugar-cane mill operated by state-controlled Azcuba.

Brazil’s role in helping Cuba create jobs, contrasting with longstanding hostility from the U.S., reinforces positive, albeit slow-paced changes taking place on the island of 11.2 million under Castro, said Sweig.

Since the 85-year-old Castro began handing power to his brother in 2006, the former defense minister has taken steps to open up the economy, which placed 177 out of 179 countries, ahead of only Zimbabwe and North Korea, in a ranking this month of economic freedom by the Washington-based Heritage Foundation.

For the first time in a half-century, Cubans can now buy and sell property and cars. After the 80-year-old Raul Castro began slashing state payrolls with a goal of eliminating 500,000 jobs, they’re able to seek self-employment as janitors and taxi drivers.

The overhaul comes amid declines in tourism and the price of nickel, the country’s biggest export, caused by a global economy whose prospects for recovery have dimmed, according to International Monetary Fund projections. The government expects Cuba’s gross domestic product to expand 2.7 percent this year, below the IMF’s 3.6 percent forecast for Latin America and the Caribbean region.

Political change has been slower. Speaking at a Communist Party summit on Jan. 29, Castro vowed to maintain single-party rule, adding that multi-party democracy would buoy U.S. “imperialism” in Cuba.

Still, the government last year freed the remaining 12 political prisoners that made up the so-called Group of 75 journalists and rights activists who were jailed during a 2003 crackdown. The Roman Catholic Church helped negotiate the release, and Pope Benedict XVI is scheduled to visit the once anti-clerical island in March.

The 36-year-old Sanchez, a critic of Castro’s government on a blog called Generation Y, referred to Rousseff’s persecution by Brazil’s 1964-1985 dictatorship in her appeal for a visa to attend a screening in Salvador of a documentary she appears in. Sanchez has been blocked from traveling abroad for the past four years.

“I saw a photo of young Dilma, sitting on a bench blindfolded as men accused her,” Sanchez wrote Jan. 24 on Twitter. “I feel that way right now

 Yoani Sanchez

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Cuba accepts Brazilian investment in its most emblematic economic sector: sugar

Posted on January 31, 2012 by Arch Ritter

(Reuters).—The Brazilian giant Odebrecht plans to produce sugar in Cuba, the company reported Monday in the first injection of foreign capital in a sector so far closed in the communist-ruled island.

 

Steam Locomotives at the now defunct Australia sugar mill, November 1994, photo by Arch Ritter

Odebrecht Group signed with the state of Cuban Sugar Business Administration a “productive management contract” to wit “September 5” in the central province of Cienfuegos.

“The agreement for a period of 10 years is to increase sugar production and milling capacity and help the revitalization” of the industry, Odebrecht said in an email sent to Reuters through his press office.

The project would open to foreign capital, the underfunded Cuba’s sugar industry, whose production has plummeted from about 8.0 million tons in the 1970s to just 1.2 million tonnes in the last harvest. In addition, it will deepen Brazil’s role in modernizing the dilapidated productive infrastructure of the island.

Odebrecht did not elaborate.

But a Brazilian sugar industry executive told Reuters that the contract could be signed this week during a visit to Cuba, Brazilian President Dilma Rousseff. Cuba allowed more than a decade, the inflow of foreign capital to develop other strategic industries such as tourism and oil recently, where a consortium led by Repsol-YPF this year will begin to explore Cuban waters in the Gulf of Mexico.

Private companies from other countries have spent years negotiating its entry into the sugar industry in Cuba, nationalized shortly after Fidel Castro’s revolution in 1959. The opening comes after a major restructuring of the industry in late 2011 as part of the efforts of President Raul Castro to modernize the island’s socialist economy.

Do you also ethanol?

According to the director of the Brazilian sugar industry with knowledge of the project, Odebrecht also produce ethanol from biomass energy in Cuba. “Cuba is opening up the possibility of producing ethanol accompanied by power generation and Odebrecht will mount a distillery there,” said the businessman.

“It’s a similar project that Odebrechtis developing in Angola,” he added in reference to a joint venture of $ 258 million Angolan oil company Sonangol with to produce some 260,000 tons of sugar, 30 million liters of ethanol and 45 megawatts of power power.

Ethanol production on a large scale in Cuba has met with opposition from former President Fidel Castro, an ardent critic of the use of food crops like corn to make biofuels. Some experts believe that if Cuba could revive its sugar industry to become the third largest producer of biofuels in the world behind the United States and Brazil.

Ron Soligo, an economist at Rice University in Houston who has studied Cuba’s sugar industry, estimates that the island could produce about 7,500 million liters of ethanol annually. “But developing the ethanol industry in Cuba will take a while, since much of the land has been abandoned for years,” he said.

“Due to the centralized nature of the Cuban economy, a large Brazilian company can be the right partner,” he added.

Brazil, the second largest ethanol producer in the world, has provided technical assistance the Cuban authorities for the production of biofuels from sugar cane. “The issue is on the table. There is planned investment in sugar and there is a possibility that at some point this can be extended to the ethanol industry,” said a Brazilian Foreign Ministry source.

Odebrecht’s entry in the modernization of the depressed sugar industry expand its role in the infrastructure of the island. The company is currently one of the leading ethanol producers in Brazil through its subsidiary ETH.

Brazilian construction works executed for 800 million dollars to upgrade the container port of Mariel west of Havana. The project largely funded by the government’s National Development Bank of Brazil is seen as a key business platform if the U.S. lifts its embargo on the island.

Repairs, at the now defunct Australia sugar mill, november 1994, Photo by Arch Ritter

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John P. Rathbone “Lessons for Cuban business”: A Note on Problems of Micro-Ensterprises

Posted on January 30, 2012 by Arch Ritter

“Lessons for Cuban Business” from “Beyondbrics” (Financial Times); January 30, 2012 8:19 am

John Paul Rathbone
President Raúl Castro wants the recent liberalisation of small businesses to bolster Cuba’s sagging economy and absorb the 1m state workers he says will eventually be laid off.

But Cuba’s budding micro-entrepreneurs – over 350,000 had registered as of November 2011 – lack almost everything that start-ups need, from premises and relevant skills to capital. Will they ever really get off the ground?

A bustling restaurant in Havana’s colonial centre – which opened in January 2011, is appropriately called “La Moneda Cubana”, the Cuban coin, and is run by Miguel Ángel, a 37-year old entrepreneur – suggests some answers.

First, the premises. The three-storey restaurant, which once belonged to Ángel’s grandfather, was nationalised in the 1960s. But the family has lived continuously at the premises since then – indeed, ever since 1924. As a result, Ángel was able to set up operations immediately.

And what a location it enjoys: La Moneda Cubana lies just a few steps from the cathedral, has a sweeping view of the Havana bay from its roof terrace, and enjoys a regular stream of tourists. Few are so fortunate. Indeed, the process of leasing state properties remains incipient.

Second, necessary skills. Ángel worked for several years in the state tourist sector, first at the Floridita, where Ernest Hemmingway once drank daiquiris; then in the kitchens of the nearby Hotel Sevilla. “I learnt there everything I needed to run my kitchen,” Ángel told beyondbrics.

However, similar backward linkages are rarer elsewhere. “A good restaurant also needs a manager and an accountant,” he adds. Such skills are hard to come by in Cuba’s Soviet-style economy – hence the business skills training program the Catholic church set up last year.

Third, funds. The usual supposition is that Cubans turn to their émigré relatives for start-up capital. This is entirely legal under Castro’s new rules – indeed, it is tacitly encouraged.

Be that as it may, the cagey habits of under-the-table informality that Cubans developed over decades socialism remain deeply engrained.

Ángel, for example, insists he restored the three-story building “all with my own resources”.

Be that as it may, Ángel says his operation is now self-financing. La Moneda Cubana’s intense footfall suggests this may indeed be so. That is just as well, as the notion of Cuba’s creaking banking system offering credit is entirely novel – although there is government talk it will do so.

Fourth, inputs. Cubans can now buy construction materials directly from the state. As for food, Ángel still buys from the state rather than private farmers. “They can’t ensure a steady and reliable supply,” he says.

That is changing fast, however. According to state media, 71 contracts have been executed between private farmers and state-run hotels – a huge change that will strip out the inefficient state-distribution system.

Cuba’s small business sector is still fragile and Ángel’s success will not be replicated everywhere. Business generally remains very small scale. Most entrepreneurs sell out of their homes, or from makeshift street stalls. Havana is far from becoming a neon-wrapped landscape.

But the popularity of the reforms and Castro’s mantra that they will be implemented “slowly, but without pause” also means they are irreversible. Ahead of the Communist Party’s conference over the weekend, even state newspaper Granma talked of the need “to leave behind prejudices against the non-state sector” and to overcome the “psychological barrier” of “obsolete dogmas”.

One of these is work habits. Ángel, for one, has already turned on its head the old socialist rubric of “everyone pretends to work and the state pretends to pay.” Compared to state wages worth around $20 a month but paid in Cuban pesos, his staff get a percentage of profits in hard currency. “They like that, very much,” he says.

As for his own workday: “I get here early in the morning and usually leave around 3am.” Does he mind? “One has to do what one has to or wants to do – and I do. This is as much an emotional adventure as a financial one,” he says, with a smile.

John Paul Rzthbone

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