• 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."

NO MORE RUM OR TOBACCO, NOR HOTEL STAYS: TRUMP IMPOSES NEW SANCTIONS ON CUBA

Posted on September 24, 2020 by Arch Ritter

BY NORA GÁMEZ TORRES

Nuevo Herald  News Sanctions, SEPTEMBER 23, 2020 05:22 PM

Trump honors Cuban-American veterans who served in 1961 Bay of Pigs invasion - U.S. - Stripes

Trump with Bay of Pigs Veterans

Americans traveling to Cuba will not be able to buy rum or tobacco as souvenirs, nor will they be able to stay in government hotels, according to new restrictions announced by President Donald Trump on Wednesday.

“Today as part of our continuing fight against communist oppression, I am announcing that the Treasury Department will prohibit U.S. travelers from staying at properties owned by the Cuban government,” Trump said in a speech to honor Bay of Pigs veterans at the White House. “We are also further restricting the importation of Cuban alcohol and Cuban tobacco. These actions will ensure U.S. dollars do not fund the Cuban regime.”

The Treasury Department modified the embargo regulations on Cuba to prohibit imports of rum and tobacco, as well as lodging in hotels or properties controlled by the Cuban government, government officials and the Communist Party, or their close relatives.

The properties appear in a new list created by the Department of State. Travel and tourism companies subject to U.S. jurisdiction will not be able to make reservations at these properties.

The list names 433 hotels and properties, including some “casas particulares” (private rentals) that the State Department determined were not independent of the government, said Carrie Filipetti, deputy assistant secretary of state for Western Hemisphere affairs, in a call with reporters on Wednesday.

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Among the private rentals included is Casa Vida Luxury Holidays, a property advertised on Airbnb that, according to media reports, is linked to Vilma Rodríguez, granddaughter of Communist Party head and former president Raúl Castro.

The measures will deal a harsh blow to Cuba’s tourism industry because the government owns all the island’s hotels. Many travel companies have operations in the United States and will therefore be affected by the measure. Previously, the administration had banned accommodation in hotels run by military companies, but now the prohibition extends to all state-run properties.

Thousands of Cuban Americans who travel to the island every year usually take their families on vacation at these hotels.

“The prohibition on the use of hotels owned by the government of Cuba will also result in fewer airline flights from the United States to Cuba,” said John Kavulich, the president of the U.S.-Cuba Trade and Economic Council.

Filipetti said the restrictions aim at denying funds to the government, which dominates the hospitality industry as well as tobacco and rum production. She added that the policy intends to benefit owners of private bed and breakfasts.

“The Cuban government profits from properties in the hospitality industry owned or controlled by the Cuban government … all at the expense of the Cuban people, who continue to face repression at the hands of the regime,” said Secretary of State Mike Pompeo in a statement. “Authorized travelers should instead stay in private accommodations, or casas particulares, owned and operated by legitimately independent entrepreneurs.”

The Treasury Department also eliminated a general authorization policy for the participation or organization of conferences, seminars, exhibitions and sporting events. Citizens, residents and companies subject to U.S. law must apply for a specific authorization or license for these activities.

Organizations in favor of more engagement with Cuba quickly pointed out that further restricting travel to Cuba could also hurt the private sector the administration officials say the U.S. wants to lift up.

“To continue limiting American citizens to travel to Cuba is to continue to put pressure on Cuba’s growing private sector, which is already hurting from the domestic economic crisis, the impact of U.S. policies, and the effects of the COVID-19 pandemic,” said María José Espinosa, interim president of Engage Cuba.

The new rules will go into effect Thursday, when they will be officially published in the Federal Register.

MORE SANCTIONS TO CUBA

Cuban leader Miguel Díaz-Canel blasted on Twitter the U.S. “empire” and the new measures “that violate the rights of Cubans and Americans. Its cruel and criminal policy will be defeated by our people, who will never renounce their sovereignty.”

In the last two years, the administration has intensified its “maximum pressure” campaign against the Cuban government, citing human rights violations and its support of Nicolás Maduro in Venezuela.

In June, the Trump administration included Fincimex, a company controlled by the military conglomerate GAESA, on a list of entities linked to the Cuban military. Persons subject to U.S. jurisdiction are prohibited from direct financial transactions with these entities.

The United States also suspended all charter and commercial flights to Cuba, except for flights to Havana. It also limited per person remittances to $1,000 per quarter. And it has sanctioned companies involved in the shipments of Venezuelan oil to Cuba.

U.S. sanctions, the coronavirus pandemic, and the decline in Venezuela’s oil aid have plunged Cuba’s inefficient socialist economy into a deep crisis. The population suffers from a severe shortage of food, medicine and hygiene products, and although the government has promised some economic reforms, none appear to be immediate.

On Tuesday, Díaz-Canel complained to the United Nations General Assembly about the increase in the “aggressiveness of the U.S. blockade. … Not a week goes by without that government issuing statements against Cuba or imposing new restrictions.”

U.S. officials have rejected the Cuban government’s narrative and have pushed back on criticism that the sanctions may aggravate the situation of ordinary Cubans.

What the Cuban people are “going through, it’s a serious humanitarian concern. The embargo has specific provisions to allow Cuba to import food from the United States; it has exceptions for food and medical supplies,” said Mara Tekach, coordinator for Cuban affairs at the State Department in an interview with the Miami Herald on Wednesday. Citing Cuba’s long-standing inability to feed its population, Tekach added that “the regime is the one that ultimately is failing its people.“

The sanctions and the unrelenting attacks on socialism have secured President Trump the support of a significant portion of Cuban-American voters.

“The Obama-Biden administration made a weak, pathetic, one-sided deal with the Castro dictatorship that betrayed the Cuban people and enriched the communist regime,” Trump said in the White House speech. “Today, we reaffirm our ironclad solidarity with the Cuban people, and our eternal conviction that freedom will prevail over the sinister forces of communism.”

Filipetti denied that the timing of the announcement was linked to the upcoming presidential election, as critics of the administration have suggested.

“This announcement, just weeks before the presidential election, shows what the Trump Administration’s Cuba policy is really about,” said Collin Laverty, president of Cuba Educational Travel. “It’s about South Florida and it places absolutely no importance on the well-being of the Cuban people, democracy, human rights or advancing U.S. national interests in the region.”

Follow Nora Gámez Torres on Twitter: @ngameztorres

 

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CUBA’S ECONOMY WAS HURTING. THE PANDEMIC BROUGHT A FOOD CRISIS.

Posted on September 21, 2020 by Arch Ritter

The island was able to control the coronavirus, but the dearth of tourists in the pandemic’s wake strangled an economy already damaged by mismanagement and U.S. sanctions.

By Ed Agustin and Frances Robles

New York Times, September 20, 2020

Original Article: Cuba’s Economy Was Hurting….

HAVANA — It was a lucky day for the unemployed tourism guide in Havana.  The line to get into the government-run supermarket, which can mean a wait of eight or 10 hours, was short, just two hours long. And better yet, the guide, Rainer Companioni Sánchez, scored toothpaste — a rare find — and splurged $3 on canned meat.

“It’s the first time we have seen toothpaste in a long time,” he said, sharing the victory with his girlfriend. “The meat in that can is very, very expensive, but we each bought one simply because sometimes in an emergency there is no meat anywhere.”

Cuba, a police state with a strong public health care system, was able to quickly control the coronavirus, even as the pandemic threw wealthier nations into crisis. But its economy, already hurting from crippling U.S. sanctions and mismanagement, was particularly vulnerable to the economic devastation that followed.

As nations closed airports and locked down borders to combat the spread of the virus, tourist travel to Cuba plummeted and the island lost an important source of hard currency, plunging it into one of the worst food shortages in nearly 25 years.

What food is available is often found only in government-run stores that are stocked with imports and charge in dollars. The strategy, also used in the 1990s, during the economic depression known as the “special period,” is used by the government to gather hard currency from Cubans who have savings or get money from friends or relatives abroad.

Even in these stores, goods are scarce and prices can be exorbitant: That day, Mr. Companioni couldn’t find chicken or cooking oil, but there was 17-pound ham going for $230 and a seven-pound block of manchego cheese with a $149 price tag.  And the reliance on dollar stores, a move intended to prop up the socialist revolution in a country that prides itself on egalitarianism, has exacerbated economic inequality, some Cubans say.

“This is a store that charges in a currency Cubans do not earn,” said Lazaro Manuel Domínguez Hernández, 31, a doctor who gets cash from a friend in the United States to spend at one of the 72 new dollar stores. “It kind of marks the difference in classes, because not everyone can buy here.”

He left the Puntilla supermarket with a cart full of fruit cocktail, cheese and chocolate biscuits that he loaded into a 1950s Dodge taxi.

Cuba’s economy was struggling before the coronavirus. The Trump administration has worked hard to strengthen the decades-old trade embargo, going after Cuba’s sources of currency. It also imposed sanctions on tanker companies that delivered petroleum to Cuba from Venezuela and cut back on the commercial flights from the United States to the island.

Last month, Secretary of State Mike Pompeo announced an end to charter flights, too. After the Cuban state energy company Corporación Panamericana faced sanctions, even cooking gas rations had to be reduced.  Then Covid-19 put a stop to tourism. Remittances sent by Cubans who live abroad began to dry up as the illness led to huge job losses in the United States.

That left the Cuban government with far fewer sources of revenue to buy the products it sells in state-run stores, leading to shortages of basic goods throughout the island. Earlier this year, the government warned that personal hygiene products would be hard to come by.

Cuba is facing “the triple threat of Trump, Venezuela and then Covid,” said Ted A. Henken, a professor at Baruch College and a co-author with A. Ritter of the book “Entrepreneurial Cuba.”   “Covid was the thing that pushed them over the edge.”

The pandemic, and the recession that followed, pushed the government to announce that, after years of promises, it would make good on a series of economic reforms intended to stimulate the private sector.

The Communist Party said in 2016 that it would legalize small and medium-size private businesses, but no mechanism was ever set up to do so, thus business owners are still unable to get financing, sign contracts as a legal entity or import goods. Now, that is expected to change, and more lines of work are expected to be legalized, although details have not been announced.

Cuba also has a history of offering reforms only to rescind them months or years later, entrepreneurs said.  “They go back, go forward, then back again,” said Marta Deus, the co-founder of a business magazine who owns a delivery company. “They need to trust the private sector for all its capacity to provide for the future of the economy. We have big ideas.”

The government puts the blame for the current situation squarely on Washington.  “Why can’t we export what we want? Because every time we export to someone, they try to cut off that export,” President Miguel Díaz-Canel said of the United States in a speech this summer. “Every time we are trying to manage a credit, they try to take away our credit. They try to prevent fuel from reaching Cuba. And then we have to buy in third markets, at higher prices. Why is it not talked about?”

Mr. Díaz-Canel stressed that despite the hardships, Cuba still managed a successful battle against the coronavirus: The health system did not collapse, and, he said, no children or medical professionals died of the disease.

With 11.2 million people, Cuba had just over 5,000 coronavirus cases and 115 deaths by Friday, one of the lowest mortality rates in the world. By comparison, Puerto Rico, with 3.2 million people, had five times as many deaths.

People who tested positive in Cuba were whisked away to the hospital for two weeks — even if they were asymptomatic — and their exposed contacts were sent to isolation for two weeks. Apartment buildings, and even entire city blocks, that saw clusters were closed to visitors.

Anyone flying in after March also had to isolate in quarantine centers, and medical students went door to door to screen millions of people daily. Masks are mandatory, and the fines for being caught without one are stiff.

With international flights at a virtual standstill, immigration officers are now assigned to stand guard outside quarantined apartment buildings, making sure no one goes in or out 24 hours a day.

At a quarantined building in Boyeros, a neighborhood near the Havana airport, an immigration officer sat in the shade while messengers and family members of those inside dropped off food. Daniela Llanes López, 21, left vegetables for her grandfather, who was stuck inside because five people in his building had tested positive.

“In Cuba, I don’t know anyone who knows anyone who got the coronavirus,” said Ms. Llanes, who studies German at the University of Havana, noting that she does know people in Germany who contracted the illness.

The strategies worked, although when the authorities started lifting restrictions in July, opening beaches, bars and public transportation, the nation’s capital saw an uptick in cases and a curfew was imposed there.

“Cuba is good in crisis and good in preventive health care,” said Katrin Hansing, a professor at Baruch College who spent the peak of the pandemic in lockdown in Cuba. Support for the government was notable, she said; even if the store lines were long, people felt safe from the virus.

Many Cubans are now hoping the economic reforms will stimulate the private sector and allow independent business operators to kick-start the economy.

Camilo Condis, an electrical contractor who has been out of work for months, said the changes must come quickly, and must allow Cuba to function, whether the United States is under a second Trump presidency, or under Joe Biden.  “Like we private business owners say here: ‘All I want is for them to let me work,’” he said.

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CANADIAN RETIREE TURNING OUT HANDMADE BASEBALL BATS FOR CUBA

Posted on September 10, 2020 by Arch Ritter

Andrew Duffy

Ottawa Citizen, Sep 10, 2020  •  Last Updated 12 hours ago

From his basement woodworking shop in the Ottawa Valley, former car salesman Bill Ryan, 66, is turning out finely-crafted maple bats for Cuba’s beleaguered baseball leagues. Photo by Jean Levac /Postmedia

A retired Ottawa Valley car salesman is turning out hundreds of hand-made maple bats every year for Cuban baseball players as part of a decade-long effort to assist the impoverished island nation.

Bill Ryan, 66, spends 10 or 11 hours every day in his basement woodworking shop, making his now famous “Cubacan” bats.

This year, he wants to send 600 bats — they each cost about $50 — to Cuba, which is about to start its national baseball series. Professional quality bats are difficult to find and prohibitively expensive in Cuba, which remains the subject of a strict U.S. trade embargo.

“The only way I can do this is to do all of the steps myself,” says Ryan, who lives on a rural side road south of Carleton Place, near Franktown.

He uses his own sawmill to cut the rectangular “blanks” from which he crafts a baseball bat. The blanks — rectangular blocks 36 inches long and three inches wide — are kiln-dried for three months to reduce their moisture content and weight.

Each bat requires about two hours of labour. Ryan uses a lathe to shape the bat, then sands it three different ways before applying two coats of paint, decals and two coats of varnish.

A careful record keeper, Ryan has made 2,967 bats since he launched his “hobby” a decade ago. Almost all of his bats are now in Cuba.

“When I made the first bat, there was no intention of making the second or the third: It just sort of built,” he says.

Like most Canadians, Ryan’s first exposure to Cuba came as a sun-seeking tourist.  A deeper involvement in the country started innocently enough when he decided to fashion a few bats as gifts for Cuban friends. A lifelong woodworker, Ryan made trophy bats that were more a decoration than a piece of baseball equipment.

In baseball-mad Cuba, however, the bats attracted attention and he was asked to make more, including bats that could be used in games. The maple bats quickly grew in popularity among Cuban players.

He was also asked to make bats as gifts for each of the Cuban Five — five intelligence officers who were arrested by U.S. authorities in September 1988. “Los Cincos” spent more than a decade in U.S. prisons after being convicted of spying. Cuba maintained they were in South Florida to monitor extremist exiles involved in a wave of terrorist bombings in Havana.

All of the men were released by 2014 and welcomed home as heroes in Cuba. Ryan met and befriended one of them, Gerardo Hernandez, and together they launched a grassroots organization, Cubacan, dedicated to improving the lives of ordinary Cubans.

Cubacan has shipped equipment and materials to improve bat making in Cuba. Last year, the organization delivered more than two tonnes of sports equipment to the island.

This year, Ryan wants to send 600 hand-crafted bats to the 16 teams competing in Cuba’s national baseball series, a key stepping stone to the Olympic Games for the country’s best players. The series starts next week.

Cuba is struggling to equip its baseball teams because of economic sanctions and new restrictions imposed by U.S. President Donald Trump. During the past four years, Trump has reversed the thaw in U.S.-Cuba relations orchestrated by his predecessor, Barack Obama, and tightened the sanctions that have stifled the Cuban economy for 60 years.

Ryan says U.S. efforts to damage Cuba even reached into the Ottawa Valley. Earlier this year, he says, under pressure from the U.S. Treasury Department, GoFundMe closed his fundraising account which had been created to send sports equipment to Cuba from Canada.  The Canadian Network on Cuba (CNC) is now leading the fundraising effort to raise $30,000 to send the Cubacan bats to Cuba.

Ryan still travels to Cuba once a year with his wife, Nora. It’s “incredibly satisfying,” he says, to watch a baseball player hit a home run with one of his bats, but seeing one break still makes him shudder.

Two years ago, Ryan received the Cuban government’s Friendship Medal, which has gone to people such as singer Harry Belafonte and actor Danny Glover.

“More than one million Canadians go to Cuba every year,” he says, “so we’re trying to suggest to some of those people to send a bat, offer a donation, give something back.”

 

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IS THERE A WAY OUT OF CUBA’S ECONOMIC CRISIS?

Posted on September 9, 2020 by Arch Ritter

The economy is a failed subject that we must pass, said Omar Everleny Perez

By IPS-Cuba,  August 29, 2020

Original Article:   Cuba’s Economic Crisis

 

HAVANA TIMES – In a recent forum economist Omar Everleny Perez maintained that Cuba needs to make use of all its productive potential. Something he said hasn’t happened to date, especially the private sector, to stimulate growth and development.

“It’s time to advance in a new direction where private business isn’t seen as an evil. That appears to be overcome, but not completely. There is a long way to go, said the economist during the forum titled “How to Leave Behind the Crisis?”  The sponsor was the YouTube channel of the group Cuba es mi Patria.

The platform was created in March 2020, integrated by Cubans from inside the country and abroad. It hopes to contribute towards a democratic, economically prosperous and socially responsible country.

As a principle, the group rejects the United States embargo and its interventionist policies that affect life in Cuba.

Perez said the measures approved for the post pandemic period, “are better late than never, a very important step”. He recalled that many of them were approved in 2011 with the Communist Party “guidelines”. This reforms document, started by Raul Castro (2008-2018), was expanded in 2016.

Many economists had previously asked, why it takes so along to apply the reforms if they have all the political support? And they also criticized many of our positions, especially about small and medium size companies (PYMES), noted Perez.

“The main task now is to accelerate those decisions. It’s not enough just to say that the PYMES will be created. It takes speeding up the documents that make the task succeed. We shouldn’t work in the past, but for a future.”

Perez noted there has always been “a big distance between academia and decision makers, between researchers and the management system.” He believes that Cuba has better conditions today to promote the necessary changes. President Diaz-Canel’s frequent meetings with scientists and researchers is seen as a positive indicator.

Perez also considers it necessary to clear up some aspects in the reformed Constitution, in effect since April, 2019. One is the article prohibiting the concentration of wealth.

One area needing clarification, he said, is regarding imports and exports. Besides announcing the coming legal status to pymes, they already created the option to export and import to develop a business. “But, what’s the limit allowed for this activity?” We need more information, said Perez.

“The Chinese and Vietnamese weren’t concerned about those subjects (during their economic reforms process). On the contrary, they were concerned about people who lagged behind. It seems to me that Cuba has a divergent policy. It is more concerned about those who succeed than about those who have nothing.”

Perez says the country must change from general to targeted actions to protect vulnerable individuals and groups. “Let all those who can get ahead do so. And help those who lag behind, by using the national budget, social security, and food subsidies.”  Ideological contradictions have stopped the application of many of the topics approved in the Communist Party guidelines, said Perez.

He further noted that Cuban society has become unequal. They shouldn’t be providing the same rationed products to a restaurant owner and an 80-year old retiree.

Perez said the country has succeeded in important fields, such as health and education and others where it competes at international levels. But the economy is a failed subject that we must finally pass.

The US embargo

“The embargo is real, and it greatly affects the Cuban economy, but it is not the only problem. Cuba buys cheap chicken from the USA, but it has to be pay in cash. It goes further than the relationship among both countries. European entities and companies are fined, for example.

“Every month there is a new measure from the Trump administration. Their repeal won’t solve all the problems, but it would clear the way. It would finish the arguments that we can’t do anything because of the blockade. Access to credit from international financial entities depends on a better relationship with US. It happened during Obama administration (2009-2017).”

Currency

“The creation of the convertible Cuban peso was a good measure in the old days. But they began to print more CUCs than the USD existing in the Cuban banks. Now the CUC is not convertible, it is a useless currency. What will remain is the regular Cuban peso (CUP), in which 85 percent of Cuban population receive the salary. I don’t think the dollar will be eliminated again from our economy in the medium-term. We have to increase salaries and do a wage reform. The exchange rates used by state companies need a new approach, closer to reality. Thus, creating a fair competition with private companies.”

Hard Currency Shops

“In social and political terms, it is not an appropriate action, because not everyone has USD. The government realized there is a large sum of USD in the country, noticing they didn’t have any participation. The stores selling in hard currency are full of buyers, but since March 2020 there aren’t flights directed to Cuba. Where is all that USD coming from? Cubans use to go to Panama and Mexico to buy products and resell them in Cuba at a profit. The government decided to import some of those items to sell at half the price of the informal trade. The benefits were for Cuban citizens and the government alike.”

Foreign Debt

“The Paris Club cancelled 85 percent (8.5 billion dollars) of the Cuban debt and Russia, 90 percent (more than 30 billion dollars). Cuba asked to defer payments for two years because of the damage caused by the pandemic period and fall of the exports. But the Paris Club gave a them a term for one year. I heard that Cuba will resume payment in 2021.

The Cuban economy is in its worst moment. At the end of 2020, the foreign debt should be around 28.671 billion dollars. That represents around 27 percent of the 106.343 billion dollars calculated as Cuba’s GDP, estimates the Economist Intelligence Unit. The official yearbook for 2019 is not ready yet.”

Communist Party Guidelines

“Ideological contradictions have stopped the application of many of the approved changes. There has always been rejection to a private sector. The perception that an advance in this sector could cause the loss of social achievements. It’s not about copying the Chinese and Vietnamese models, but we must improve agriculture, and solve the food problem. Our economy has no way to go forward without production and tourism. This is a paralyzed country. Infrastructure is deteriorated, and with a different population, many of whom were born after 1990. All ideological obstacles should be left behind.”

Impact of emigration and the loss of young professionals.

“A Cuban engineer arrives to any market in the world and one year later is as competitive as any other professional formed in another school. We have highly qualified human resources. It’s a pity that they are educated here, resources are spent, and then because of the economic situation they go to other countries looking for opportunities. They could do this in Cuba if it would be allowed.

“Many of them go away because they can’t see a solution to their personal economic situation working in a state-run company with a monthly salary of 600 CUP (24 USD). We have to give them a motivation to reduce the exodus of this labor force. This is not only a problem in our country.”

Investment from the Cuban side

“Cuba must give the same treatment for national and foreign investment. There are concepts to change. Some areas will be limited, as security and defense. Many Cubans will be ready to invest if the government changes the rules of the game. It’s seed capital that is there.”

Imports through government companies

“The possibility to import is already recognized and that’s a good measure. However, there are state companies known for their inefficiency and we’ll see if private businesses can work with them. Let’s see in six months how the first operations go. There are still a lot of unnecessary controls.”

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20 RECOMENDACIONES PARA DESTRABAR AL SECTOR PRIVADO EN CUBA

Posted on September 3, 2020 by Arch Ritter

Una lista elaborada con el concurso de muchos emprendedores cubanos para sugerir al gobierno cubano pasos concretos que fortalezcan el trabajo por cuenta propia y la pequeña empresa.

Por Oniel Díaz,

en Cuba, enero 22, 2020

Respondiendo a los pronunciamientos del Presidente de la República aquí van 20 recomendaciones para destrabar todo lo que entorpece el desempeño del sector privado en Cuba.

  1. Crear de una comisión integrada por el gobierno, académicos y trabajadores por cuenta propia para revisar las regulaciones vigentes publicadas en la Gaceta Oficial Nº 85 Ordinaria del 6 de noviembre de 2019. Identificar los problemas que lastran el aporte del sector a la economía nacional y elaborar una propuesta de medidas que los solucionen.
  2. Proceder a elaborar, con la participación de cuentapropistas, cooperativistas, empresarios estatales, académicos, juristas y funcionarios, las normas jurídicas que reconocerán las pequeñas y medianas empresas (PYMES) y les definirán deberes y derechos en la economía nacional. 
  3. Retomar la constitución de Cooperativas No Agropecuarias (CNA), en especial, en actividades que puedan ser propuestas por los ciudadanos y no solamente en las que son de interés de las autoridades. Someter a revisión las normas aprobadas para perfeccionar el sistema de gestión de las CNA publicadas en la Gaceta Oficial Ordinaria Nº 63 del 2019.
  4. Eliminar el listado de actividades autorizadas para ejercer el trabajo por cuenta propia y establecer un listado de actividades prohibidas. 
  5. Autorizar la prestación de servicios profesionales de forma individual como cuentapropistas y agrupados en CNA o PYMES en actividades como arquitectura, diseño de interiores, diseño gráfico, contabilidad, abogacía, consultorías, comunicación, publicidad, economía, desarrollador de software, marketing, producción audiovisual, entre otras.
  6. Fomentar y apoyar especialmente los emprendimientos asociados al turismo internacional, la agricultura, el desarrollo de software y otras actividades que puedan tener un impacto en las exportaciones o la sustitución de importaciones. 
  7. Reconocer a los TCP y a las PYMES como sujetos de la ley vigente para la inversión extranjera. Autorizar la participación legal, segura y ordenada de capital foráneo y de los cubanos residentes en el extranjero en los negocios privados. 
  8. Crear mecanismos de abastecimiento mayorista los cuales pueden ser gestionados por empresas estatales, por empresas extranjeras o por entidades mixtas. 
  9. Facilitar los créditos bancarios mediante los bancos comerciales estatales y también dando acceso a plataformas de microcréditos de instituciones y empresas extranjeras. 
  10. Ofertar la contratación de servicios de telecomunicación (telefonía fija, móvil e Internet) especialmente diseñados para cuentapropistas y las PYMES que ofrezcan precios ventajosos y un paquete de servicios a la medida de sus necesidades. 
  11. Facultar a los TCP para importar con carácter comercial, ya sea directamente o a través de empresas estatales autorizadas para tales efectos, materias primas, servicios, tecnología y equipamientos. 
  12. Facultar a los TCP que estén interesados o dispongan de las condiciones adecuadas para exportar sus productos y servicios, ya sea de manera directa o a través de empresas estatales autorizadas para tales efectos. 
  13. Modificar la política fiscal que se le aplica al TCP de manera tal que sea más flexible y ajustada a la realidad y particularidades de los tipos de negocios existentes. Entre otras cuestiones, se deberá permitir la deducción del 100% de los gastos obtenidos, gravar las utilidades en lugar del ingreso total y cambiar establecer una escala progresiva más justa y razonable para la determinación de los impuestos a pagar. 
  14. Eliminar el impuesto sobre uso de la fuerza de trabajo de manera tal que este impuesto no constituya un desestimulo a la formalización de los empleos en el sector y al pago disciplinado de los impuestos. 
  15. Crear una institución estatal que centralice los recursos y esfuerzos gubernamentales para fomentar, regular y apoyar el crecimiento e incorporación ordenada del sector privado a la economía nacional. 
  16. Autorizar la constitución de una asociación de empresarios privados y cuentapropistas que les permita canalizar sus intereses y dialogar con el gobierno de forma ordenada y ser tenidos en cuenta en los procesos de toma de decisiones en lo que a ellos respecta. 
  17. Permitir que los TCP y las PYMES por crear se afilien a la Cámara de Comercio de la República de Cuba, de manera tal que tengan acceso a los beneficios que ello implica y puedan participar en las ferias, eventos, misiones comerciales y delegaciones que ella organiza. 
  18. Establecer mecanismos de licitación transparentes, auditables y confiables en los que los TCP y las PYMES puedan concursar para prestar sus servicios a entidades e instituciones públicas. Transparentar y licitar de manera pública la entrega de locales estatales a TCP y CNA para el desarrollo de sus actividades. 
  19. Eliminar el papel intermediario que juegan algunas instituciones estatales en el caso de artistas, creadores, diseñadores y comunicadores. No constituir nuevas entidades de este tipo para otras actividades que en el futuro de vayan aprobando. A todos, una vez autorizados para realizar sus actividades de manera legal, se les permitirá contratar sus servicios directamente, y sin mediación de terceros, con empresas estatales, extranjeras y con personas naturales, hechos por los que solamente deberán pagar los impuestos correspondientes. 
  20. Crear un mecanismo para denunciar a los funcionarios corruptos que interpretan y aplican las regulaciones vigentes para el ejercicio del TCP con el objetivo de obtener sobornos o coimas. 

*Este texto fue publicado originalmente en la cuenta de Facebook del autor.

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SEIS LECCIONES DE LA POLÍTICA MONETARIA CUBANA

Posted on September 3, 2020 by Arch Ritter

El Sep 01, 2020 11:47 pm

August 31, 2020

Pavel Vidal

Profesor de la Universidad Javeriana Cali

En Cuba, como en la casi totalidad de las economías este año, la Covid-19 es la principal amenaza para la producción de bienes y servicios, el empleo y el bienestar social. Para mitigar sus impactos, ha sido necesario expandir el gasto y el endeudamiento público, lo cual genera otros desafíos en materia de estabilidad macroeconómica a mediano plazo.

Medir los equilibrios macroeconómicos en Cuba siempre ha sido embarazoso debido a las múltiples monedas y tasas de cambio, y a los rezagos y naturaleza incompleta de los datos oficiales sobre la balanza de pagos, la deuda externa y la inflación.

En el gráfico de este artículo se muestra la trayectoria de dos índices que intentan buscarle alguna solución a esta problemática. En vez de enfocarnos en el valor puntual de una variable, los índices examinan la tendencia común de un grupo de indicadores relevantes para aproximar la posición expansiva o contractiva de las políticas macroeconómicas.

Sin entrar en detalles técnicos, la metodología de los índices sirve para capturar el co-movimiento entre las variables asociadas a cada política en una perspectiva de largo plazo (desde 1985 hasta 2019). El índice de política fiscal incluye el gasto público total, el valor de los subsidios del gobierno a las empresas estatales y el déficit fiscal (los tres se toman del presupuesto del Estado y se calculan como proporción del PIB) y el salario promedio real en el sector estatal.

Elíndice de política monetaria incluye el dinero circulante y las cuentas de ahorro en pesos cubanos (como proporción del PIB), el índice de precios al consumidor en pesos cubanos (CUP) y la tasa de cambio del peso cubano en relación con el dólar estadounidense para la población.

En el gráfico se aprecia que los índices tienden a moverse juntos en el largo plazo, reflejando la dependencia de la política monetaria a la política fiscal debido al mecanismo de financiamiento de los déficits fiscales mediante emisión de dinero por parte del Banco Central (solo desde 2015 comienza a usarse la emisión de bonos públicos). Ambos índices tienen un pico expansivo a principios de los años 90, cuando los déficits fiscales superaron el 30% del PIB, la inflación se disparó a tres dígitos y en los mercados informales el peso cubano se depreció hasta 150 por dólar. Después llegó el ajuste macroeconómico de los años 1994 y 1995 a partir de las entonces llamadas “medidas de saneamiento financiero”. Luego se distingue un período de relativa estabilidad fiscal y monetaria, hasta 2005.

En el esquema de política monetaria diseñado tras la desdolarización, los beneficios de los acuerdos con Venezuela y la llamada Batalla de Ideas (incremento significativo del gasto público en programas sociales) se combinaron para conducir la política fiscal hacia una nueva senda expansiva desde 2005, que terminó con la crisis financiera doméstica en 2008 y 2009. Le siguió el reajuste macroeconómico impulsado por Raúl Castro durante sus primeros años en la presidencia. Sin embargo, desde 2015 tanto la política fiscal como la monetaria otra vez derivan hacia posturas notablemente expansivas.

Es normal y beneficioso para cualquier economía que las políticas macroeconómicas transiten por ciclos expansivos y contractivos siempre y cuando se respeten determinados límites que garantizan la estabilidad macroeconómica. En el caso cubano, seis principales lecciones pueden extraerse de la trayectoria de los índices de política fiscal y política monetaria:

  1. Antes de la llegada de la Covid-19 las políticas fiscales y monetarias venían expandiéndose para suavizar los impactos de los choques previos (crisis venezolana y escalamiento de las sanciones del gobierno estadounidense). Por tanto, son muy estrechos los espacios que en 2020 tienen las políticas macroeconómicas para acomodarse a las necesidades de la compleja situación económica sin provocar una aceleración de la inflación. Desde el presupuesto del Estado es poco lo que puede hacerse para incrementar los subsidios a empresas y familias y fomentar la inversión sin que ello añada riesgos a la estabilidad monetaria. Que se hayan agotado las municiones macroeconómicas para hacerle frente a este nuevo choque de enormes proporciones, es más alarmante en una economía sin un acceso fácil a los mercados internacionales de capitales y que no es miembro de las principales instituciones financieras multilaterales.
  1. Sin bien la tendencia expansiva de las políticas macroeconómicas es para preocuparse, en 2019 todavía los desbalances monetarios y fiscales no llegaban a los niveles más altos de los años 90. Pero falta ver qué sucede en 2020. En marzo se hizo una corrección del plan de la economía y del presupuesto del Estado para el año en curso, y muy probablemente el déficit fiscal vuelva a aumentar. Las informaciones anecdóticas revelan para este año significativos aumentos de precios y una depreciación del peso convertible (CUC) en los mercados informales. Las largas colas en las tiendas constituyen un síntoma de inflación reprimida.
  1. Debido a la caída que se debe producir en los ingresos al presupuesto del Estado, en medio de la actual recesión, es una prioridad ampliar el mercado de los bonos públicos. Para sostener un alto déficit fiscal sin añadir más presión a la inflación, una opción es emitir más bonos públicos. El Banco Central y el Ministerio de Finanzas y Precios (MFP) ya anunciaron que buscarán que no solo los bancos estatales compren los bonos, sino también las empresas y las personas. Pero un mercado de bonos no se crea de la noche a la mañana y varias cosas tendrían que cambiar en el MFP para que estos bonos sean atractivos y confiables. Deberían instrumentar una regla fiscal y trabajar con un marco fiscal de mediano plazo, por ejemplo.
  1. Las dos veces que el Banco Central decidió dolarizar parcialmente la economía (1993 y 2019) ha sido después de notables choques en la balanza de pagos, pero también después de que se acumularan sustanciales desbalances fiscales y monetarios tras excesivas posturas expansivas en las políticas macroeconómicas. Esos desbalances terminaron afectando la credibilidad y la convertibilidad de la(s) moneda(s) nacional(es). En estas circunstancias, las familias comienzan a preferir ahorrar y operar en monedas extranjeras. En el sistema empresarial, cuando las monedas nacionales pierden su convertibilidad, estas no permiten pagar deudas en divisas e importar insumos y se entorpece el funcionamiento del comercio exterior y de todo el aparato productivo. En respuesta, el gobierno autoriza el empleo del dólar para aislar algunos subsectores y mercados de estas distorsiones, buscando generar recursos externos en el corto plazo. Se acude a un sistema dual en el que unas empresas florecen, mientras otras languidecen sin garantizarse un crecimiento económico inclusivo y sostenible en el largo plazo. Si en el futuro el gobierno cubano quiere transitar de forma permanente a un sistema monetario regido por una moneda nacional tendrá que aprender a manejar las políticas macroeconómicas y los choques en la balanza de pago de una forma muy diferente.
  1. Hay factores en el manejo de la política monetaria que desde hace ya un rato vienen actuando contra la convertibilidad y estabilidad del CUC. En 2004 fue un error la decisión de romper la caja de conversión que respaldaba al CUC (por cada CUC en circulación había un dólar de reserva en el Banco Central) sin reemplazarse por otra regla regulando su emisión. La poca transparencia y la total discrecionalidad con que se manejó la impresión de CUC le dio vía libre al gobierno para financiar gasto público en esta moneda sin siquiera tener el control de la Asamblea Nacional. La necesidad de redolarizar en 2019 se explica, en el fondo, por todas estas fallas en el diseño del esquema de política monetaria tras la desdolarización en 2004. Lo que ocurre es que en las economías centralmente reguladas, con mercados segmentados y controles cambiarios y de precios los errores en las políticas económicas, toman más tiempo en manifestarse y reconocerse. Puede superar una década, como con el CUC.
  1. En 2004 el Banco Central consiguió desdolarizar la economía después de sostenerse la estabilidad fiscal y monetaria durante diez años. Por tanto, si el dólar acaba de reinstaurarse en la economía cubana tocará esperar tal vez otros diez años durante los cuales se corrijan los actuales desequilibrios y la confianza en la moneda nacional, antes de que al Banco Central se le ocurra proponer una nueva desdolarización. La unificación monetaria está descartada en el corto y mediano plazo. Se podrá sacar el CUC y hacer alguna corrección en las tasas de cambio, pero se mantendrá la dualidad CUP/USD.

PVA Política Monetaria (ed) + Access.pdf

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DOLLAR BACK IN CUBA AS PANDEMIC AND US SANCTIONS HAMMER ECONOMY

Posted on August 21, 2020 by Arch Ritter

The communist government has been forced to allow citizens to spend US currency at special shops, formalising a split between haves and have-nots

Ed Augustin in Havana

The Guardian, Tuesday 18 Aug 2020 10.00 BST

Original Article: https://www.theguardian.com/world/2020/aug/18/cuba-dollar-stores-coronavirus?CMP=Share_iOSApp_Other

 

On Paseo del Prado, a boulevard in Havana’s colonial district, dozens of people waited expectantly as the staff raised the shutters to open a tatty but revamped shop.

Soon after, Alejandro Domínguez, 23, emerged, brandishing meatballs and a giant tin of chopped tomatoes he had just bought with US currency left as tourist tips at his family’s restaurant. “This is a way to get products you can’t find elsewhere,” he said.

The dollar is back in communist Cuba.

For the first time since the fall of the Soviet Union, Cubans with access to greenbacks are able to buy higher-quality products in exclusive hard currency stores.  In the last two years, Cuba has been increasingly boxed in by declining deliveries of cheap oil from its main ally, Venezuela, and hardened sanctions imposed by a Trump administration eyeing the Cuban-American vote in Florida.

But the island’s cash crisis was brought to a head by the coronavirus pandemic, which has left Cuba without revenue from tourism for four months.

“We’re at a crossroads where there’s practically no other way out,” said Oscar Fernández, professor of economics at the University of Havana. “The state is looking for alternatives so it can keep buying food and medicine.”

So on 20 July, the cash-strapped island opened 72 new “dollar stores”, selling everything from cheese to power drills.

Cuba last opened dollar stores in 1993 as an emergency stopgap when its economy was tanking during the so-called Special Period. The dollar was taken out of circulation and replaced by the CUC in 2004.

The government’s rationale for reopening hard currency stores – to increase supply and to rake in foreign currency – is broadly accepted but the mordant irony of the measure escapes few.  The new policy is an implicit admission that the CUC – officially valued at 1:1 with the US dollar – is not worth as much as claimed. Photograph: Yamil Lage/AFP via Getty Images

Recognising the dollar – possession of which was once a criminal offence – as legal tender is a reluctant nod to the financial power of the United States. But it’s also an implicit admission that the CUC, which is officially pegged at 1:1 with the dollar, is not worth as much as the government claims.

The measure draws a line between the haves and the have-nots.  On a recent morning, Elio Núñez, 45, a welder who receives dollars from abroad, was queueing outside one of them, hoping to buy soap, coffee, ham or “whatever’s in stock”. Achieving absolute equality, he said, is a chimera. “Some people can afford things, others can’t. It’s like that the world over.”

Perhaps with optics in mind, the new supermarkets do not allow customers to pay in cash. Rather, Cubans must deposit greenbacks in a dollar-denominated account and pay by debit card in store.

In a stormy speech last month, President Miguel Diáz-Canel said “the enemy” would cast the measure as “economic apartheid”. But dollar stores were necessary, he said, to generate the foreign exchange needed to keep the regular shops Cubans use better supplied.

Cuba’s domestic response to Covid-19 has largely been successful, but the fallout has brought longstanding problems with the island’s listless, centrally planned economy to the fore.

Agriculture, a perennial achilles heel, has been clobbered: state media recently announced that the country is on track to produce just 160,000 tonnes of rice this year – less than a quarter of what it consumes. Figures like these leave Cuba even more dependent on food imports at a time where there is less cash to make purchases.

This dearth of supply brings stark consequences. While there are no queues at bodegas (which guarantee bare-essential food and hygiene products at heavily subsidised prices), queues outside local-currency supermarkets are mammoth.

In Regla, one of Havana’s better-supplied municipalities, the state has intensified rationing: people must now take their ID cards to make purchases, and can only buy chicken once a fortnight. Crowds gather before dawn, and by 9am, hundreds are waiting outside the main supermarket. People are sweaty and perturbed. The occasional scrap breaks out.  In the east of the island, citizens have set up action groups to stop people cutting in line.

Dayana Blázquez, a 35-year-old social worker who was queueing outside a dollar store to buy meat, said that although the effects of US sanctions on the island are “palpable”, decades of economic mismanagement mean the state shares the blame. “Right now things are worse than normal, but we’ve had shortages for years,” she said. “Old and new generations have lived this.”

For Blázquez, the inequity of selling some products in dollars runs deep. “It’s not fair for those who work their whole lives and have to depend on others to get by when they retire. It’s not fair for graduates and professionals. It’s not fair for anyone.”

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CUBA OPENS FOREIGN CURRENCY-ONLY SHOPS, ENDS TAX ON DOLLAR

Posted on August 21, 2020 by Arch Ritter

Andrea Rodriguez | AP

Washington Post, July 20, 2020 at 7:04 p.m. EDT

HAVANA — Cuba opened shops Monday that accept only foreign currencies and eliminated a special tax on the U.S. dollar, deepening a process of collecting stronger currencies to face the country’s economic crisis. By morning, long queues had formed in a half-dozen such shops in Havana dedicated to the sale of food and toiletries. Under the new system, people buy merchandise using national or foreign cards backed by hard currencies, especially dollars, including Visa or Mastercards. Cash is not accepted.

The shelves of a large foreign-currency warehouse store visited by Associated Press journalists contained products currently missing from peso-sale stores, including detergent, minced chicken, beef and canned goods.  “It looks to me like at this critical time, when the country is going without food, there is everything” in the market, said Lenon Fernández, a 32-year-old entrepreneur who went shopping at a supermarket known as 70.

The shortages have worsened since the middle of last year when the Trump administration tightened sanctions to pressure for a change in the island’s political model. Now, on top of sanctions, a cut in remittances from abroad and internal inefficiencies, Cuba is losing tourist revenues because of the coronavirus pandemic and its GDP growth is close to 0%. The result has been long lines and exasperation due to the lack of food.

The new stores in the capital and other Cuban cities add to a dollarization process of retail trade that began in late 2019, when shops were opened under the modality of foreign currency sales for household appliances. The effect was an increase in the value of the dollar on the black market.

Before then, any transactions in currencies other than those issued by Cuba was prohibited since 2004, when the dollar was withdrawn.

This new form of sale in foreign currencies for food and cleaning goods was announced last week by President Miguel Díaz-Canel as a way of obtaining income and providing goods to the population.  The measure reflects the reality on the communist-run island of social sectors with money and dollars to spend – such as entrepreneurs, relatives who receive remittances, employees of foreign companies, etc. – and those who do not.

The government said it will keep stores in convertible pesos or CUC – almost equal to the dollar – and in Cuban pesos (24 for a CUC), which are the other two currencies circulating on the island.  It will also continue to support monthly quotas of basic foods such as rice, beans, some chicken or meat, milk, coffee and sugar.

“In the midst of an economic crisis of very uncertain scope and duration, the Diaz-Canel administration is using the political credit of its successful management of the pandemic to implement economic reforms postponed for more than a decade,” said Cuban economist Arturo López-Levy, professor at Holy Names University in California.

Cuba has managed to control the spread of the new coronavirus. In four months, authorities say it infected 2,446 people. But they reported no new confirmed cases on Monday.

In general, Cuban authorities have resisted changes – despite a timid process initiated by former President Raúl Castro in 2010 – claiming they want to limit the negative effects of inequality and not hurt vulnerable sectors.

The elimination of a 10% tax on the use of the U.S. dollar, in force since 2004, went into effect Monday. When anyone exchanged 10 dollars for CUC in the local market, they only received nine CUC.

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Cuba: Getting Serious about Reform?

Posted on August 21, 2020 by Arch Ritter

Cuba: Getting Serious about Reform?

By Ricardo Torres*

AULA Blog, August 17, 2020; Original Article: https://aulablog.net/

Cuban President, Miguel Díaz-Canel Bermúdez/ Cubadebate/

The economic reform proposals that the Cuban government announced on July 16 sound promising, but they feel very similar to past efforts, and authorities have yet to demonstrate commitment to implement them in a manner that matches today’s serious global and national conditions. The measures come at a time that Cuba is experiencing its worst economic crisis in 30 years. According to the Economic Commission for Latin America and the Caribbean (CEPAL), the country’s imports fell 41 percent in the first five months of 2020 – more than any other country in the region except Venezuela. The commission predicts the island’s gross domestic product will decline 8 percent this year – a conservative estimate in view of its dependence on tourism, remittances (almost all from the United States), and distant trading partners.

  • The announced measures are too general to permit a detailed analysis of their potential impact, but a substantial number of them represent a more flexible interpretation of policies agreed upon during the Seventh Party Congress in 2016. They feature a 180-degree shift of focus on the private sector and cooperatives, which just two years ago the government was taking steps to severely limit. The greater use of the U.S. dollar – an inevitable consequence of the severe balance-of-payments crisis – is also noteworthy.

The political and economic moment calls for measures that are bold enough to change expectations – reduced because of past non-performance – and produce real results. After years of false starts, the government’s willingness to make the reforms a reality remains in question. The biggest doubts deal with how far the authorities will go toward restructuring state enterprises – an unavoidable step for any true transformation. The government faces five immediate challenges to managing the current crisis and ensuring a positive impact from the package of reforms.

  • Convincing domestic and foreign public opinion that this time reform is for real and will be sufficient and permanent. Decisions over the past four years have been erratic, undermining the conceptualización that then-President Raúl Castro announced in 2016 as an “updating” of “the theoretical bases and essential characteristics of the economic and social model.”
  • Creating and consolidating new, agile, and effective mechanisms for decision-making. The country lacks a system for guaranteeing that the best ideas for transformation reach the highest levels of government, are examined, and are adopted in a timely fashion. Ensuring that bureaucrats do not distort the policies is also essential.
  • Avoiding the hidden traps of some measures that have already been tried, which will remind Cubans of the worst moments of the Special Period in the 1990s. The dollarization scheme implemented back then, for example, was complicated by rule changes the government made midstream. Authorities also rejected the necessary restructuring of the enterprise system and public sector. Cuba survived – collapse was avoided – but emerged without a sustainable economic model. Genuine development was not achievable.
  • Achieving a critical mass of changes that become self-reinforcing and overcome trenchant ideological resistance and create enough momentum to refloat the economy. In the 1990s, Cuba benefited from a world economy that was growing – radically different from today. The current situation requires much greater internal efforts.
  • Adding social justice as a priority in the reform package. Although a central talking point in official discourse, it is either totally missing from the new strategy or implemented in ways that are not relevant to the new social structure of the island. Cuba needs a debate about modern social policies to address its multidimensional inequalities.

So far, the big winners in this new scenario are the private sector and cooperatives as well as people who have access to U.S. dollars. But the entrepreneurs face obstacles, such as the requirement that they use government-controlled enterprises in all foreign trade. The idea that the state intends to create its own micro, small, and medium enterprises also detracts from the reform message.

  • Expanded dollarization will further segment the productive sectors, but this time it probably will allow producers to purchase capital goods – an essential step in any process of stimulating production over the long term. The potential impact will be greater if combined with the promised, but often delayed, move toward a sustainable monetary and exchange scheme. The big question remains, however, if the government is serious about making it happen this time.

August 17, 2020

*Ricardo Torres is a Professor at the Centro de Estudios de la Economía Cubana at the University of Havana and a former CLALS Research Fellow.

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JOE BIDEN WILL HAVE TO WIN BACK CUBA’S TRUST IF HE WANTS TO REVIVE OBAMA-ERA THAW IN RELATIONS, SAYS EX-U.S. DIPLOMAT

Posted on April 30, 2020 by Arch Ritter

NEWSWEEK,  David Brennan April 16, 2020

This week marked five years since President Barack Obama requested that Congress revoke Cuba’s designation as a “State Sponsor of Terrorism,” a key step in re-establishing diplomatic relations with the Caribbean nation after decades of antagonism between the Cold War foes.

Obama went on to become the first U.S. president to visit the island since 1928, lift some travel restrictions and reopen the U.S. embassy in Havana, closed since 1961. The then-president hailed the thaw and described his visit as an “extraordinary honor.”

The move faced opposition from both sides of the U.S. political spectrum. Anti-normalization figures pointed to the historic human rights abuses on the part of the island’s revolutionary and totalitarian regime, plus its seizure of private property—including that owned by Americans.

When President Donald Trump came into office, he announced he was “canceling” the deals struck between the Obama administration and Cuba. Though some of the agreements remain in place, Trump oversaw new financial sanctions on regime figures and fresh travel restrictions.

But with the November presidential election looming, another shift in U.S.-Cuba relations could be on the cards. Presumptive Democratic nominee and former Vice President Joe Biden was part of the administration that upended the long campaign against Cuba, though in recent months has attacked former rival Sen. Bernie Sanders for praising the regime’s achievements.

Biden was critical of the Cuban regime before the Obama-led detente, supporting existing trade embargoes on the island. But the former vice president dropped his opposition in support of the president, and has since criticized the “outdated” antagonistic ideology towards Cuba and trade and travel restrictions, which he described as forming an “ineffective stumbling block” to relations with other nations in the Americas.

Biden was fiercely critical of Trump’s decision to undo Obama policy, describing the new president’s wider Latin America approach as a “Cold War-era retread and, at worst, at worst, an ineffective mess.”

Biden argued that Trump’s restrictions would throttle Cuban entrepreneurs—undermining their independence from the communist regime—and limit the ability of Cubans in the U.S. to support their families at home.

Asked to comment on Biden’s Cuba stance, a campaign spokesperson pointed Newsweek to an interview with the former vice president published in Americas Quarterly in March.

“As president, I will promptly reverse the failed Trump policies that have inflicted harm on the Cuban people and done nothing to advance democracy and human rights,” Biden said, lauding Americans “and especially Cuban-Americans” as the “best ambassadors for freedom” on the island.

Jeffrey DeLaurentis served as Obama’s top diplomat in Cuba, and was nominated as ambassador to the island though was never approved by the Republican-controlled Senate. He told Newsweek he believes that any new president would have the backing of “the majority of the American public,” which supports a better relationship with Cuba “despite the differences we may have.”

“The current administration’s decision to roll back the opening just repeats a failed policy from the past,” DeLaurentis believes. “You can’t continue doing the same thing and hope for a different result.”

DeLaurentis argued that better cooperation between the U.S. and Cuba on issues including migration, counter-narcotics and climate change could improve American national security. Any such policies should “help, not hurt, the Cuban people,” he added.

Prominent lawmakers—particularly in Florida where some represent much of the Cuban diaspora that fled Fidel Castro’s revolution—have long believed the price of negotiating is too high. Florida Sen. Marco Rubio—the son of Cuban migrants—is one of the most prominent among Republicans, and according to Politico has more or less masterminded Trump’s Cuba strategy.

After Sanders recently praised some elements of the regime in Cuba and suggested its achievements had the support of many Cubans, Rubio shot back noting that the Castro brothers retained power because dissidents had been “jailed, murdered or exiled.” During his unsuccessful run for president, Rubio suggested Obama’s Cuba policies were “in violation of the law.”

The Cuban diaspora represents an important electoral question for Biden and Trump. A hard line on the regime in Havana could swing some Cuban descendants behind the Republican party in Florida—a vital swing state.

“The Trump administration already has the 2020 elections in mind,” DeLaurentis suggested. “And so clearly the policies are designed to secure maximum popularity with a certain constituency in a key state.” Indeed, Trump made a point of attacking his predecessor’s Cuba strategy in his most recent State of the Union address, claiming to be “standing up for freedom in our hemisphere.”

Cuban-Americans are not a voting monolith, but the scars of the revolution run deep. When Sanders praised the regime, Florida Democrats rushed to condemn his remarks and demand an apology. “Donald Trump wins Florida if Bernie is our nominee,” warned Rep. Javier Fernandez.

The Trump administration maintains that Cuba is a malign power that needs to be contained, not negotiated with. A spokesperson for the president’s re-election campaign told Newsweek that Trump “has held Cuba’s corrupt communist government accountable for its actions, reversing the failed policies of the Obama-Biden administration.”

The spokesperson claimed, “If it were up to Joe Biden, America would revert back to sympathizing with communists and implementing foreign policy that compromises our national security and weakens our standing in [the] world.”

Elsewhere, the Cuban regime is deeply involved in Venezuela, propping up beleaguered President Nicolas Maduro who has been indicted in the U.S. Secretary of State Mike Pompeo has identified Cuba as a central facilitator of Maduro’s regime.

A senior Pentagon official told Newsweek earlier this month that U.S. intelligence “has evidence that Maduro is trafficking drugs using naval vessels between Venezuela and Cuba,” an allegation denied by the Cuban government.

The Biden campaign spokesperson who spoke to Newsweek declined to comment on questions regarding Cuba’s influence in Venezuela and the allegations of drug smuggling.

DeLaurentis said that Cuba’s role in Venezuela would “certainly be one of the big challenges” for any president who wished to revive relations with Havana. “In this situation, you can’t negotiate with just the people you want to negotiate with, you have to negotiate with the people who are involved,” he said.

But after three years of Trump, there is no guarantee that Cuba would be willing to come back to the table. “You would have to make an effort to win back their trust,” DeLaurentis said. “Although a number of Cuban officials have indicated that they’d certainly be willing to return to the negotiating table.”

The Cuban foreign ministry did not reply to Newsweek‘s request for comment.

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