• 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."

DOES THE CUBAN MILITARY REALLY CONTROL SIXTY PERCENT OF THE ECONOMY? ANATOMY OF A FAKE FACT

Posted on June 29, 2017 by Arch Ritter

William M. LeoGrande, Contributor, Professor of Government at American University

Huffington Post, 06/28/2017 11:39 am ET

Original Article: Fake Fact

President Donald Trump’s decision to prohibit U.S. transactions with Cuban enterprises controlled by the military has thrown a spotlight on the role of the armed forces in Cuba’s economy. That role is extensive, reaching across a number of different sectors, and it has grown in recent years along with Cuba’s tourism industry, where military-controlled firms are concentrated. These enterprises are managed by the holding company Grupo de Administración Empresarial S.A., GAESA, which reports to the Ministry of the Revolutionary Armed Forces (MINFAR).

The sudden spurt of media interest has produced widespread repetition of the spurious “fact” that the Cuban military controls 60% of the economy. “GAESA is the business arm of the Cuban Revolutionary Armed Forces and controls 60 percent of the island’s economy,” the Miami Herald reported shortly after Trump’s speech and repeated several times thereafter. The Economist, Politico, The Guardian, The Times of London, Business Insider, and others repeated it.

Even a cursory review of the composition of Cuba’s Gross Domestic Product demonstrates that this “fact” is ludicrous. Sectors in which the military has little or no participation easily comprise more than half of GDP, and in the other sectors, there are civilian as well as military-controlled firms (Anuario Estadístico 2015).

So how much of the economy do military enterprises really control and where did the 60% claim come from?

The Cuban government does not routinely report the revenue from individual enterprises, but we have a few data points for the largest military holding companies from which we can make reasonable projections.

Total revenue from enterprises managed by the military was reported as $970 million in 1997. Since a large portion of their revenue comes from tourism, let’s suppose that their revenue has increased in tandem with the rapid growth of that sector. In 1997, Cuba had 1.2 million foreign visitors (according to Cuba’s 2004 statistical year book, Anuario Estadístico). In 2016, Cuba had 4.1 million — a 249% increase. At that same rate of increase, projected revenue from military-linked firms in 2016 would be $3.4 billion.

We can check the reliability of this estimate with data from the three main military companies, Gaviota, Cimex, and TRD. Gaviota, the largest military-controlled conglomerate, is concentrated in tourism. Total revenue from the tourism sector was $2.8 billion in 2015 (Anuario Estadístico 2015). While Gaviota is the largest player, it does not hold a monopoly; it controls 40% of all available hotel rooms (though it has a higher proportion of the better ones), plus car rentals, tourist taxis, and restaurants. It is plausible, then, that Gaviota may generate as much as 60 percent of the earnings from tourism, or approximately $1.7 billion.

Cimex had 2004 revenue of $740 million. Using the same projection method based on the growth of tourism, Cimex’s estimated 2016 revenue would have been about $1.3 billion. The Havana Consulting Group, whose President Emilio Morales was formerly an executive at Cimex, estimates its revenue as $1.2 billion.

TRD, a chain of retail stores created to capture hard currency, had sales of $250 million in 2004. Using the same projection method, TRD’s estimated 2016 revenue would have been about $442 million.

Thus we estimate that the three largest GAESA companies taken together would have had 2016 revenue of about $3.45 billion, very close to the $3.4 billion initially estimated from the data on total MINFAR revenue. Emilio Morales at the Havana Consulting Group, using data he has collected over the past 15 years, estimates GAESA’s total current revenue at $3.8 billion.  Using Morales’ estimate, GAESA’s revenue constitutes 21% of total hard currency income from both state enterprises and the private sector, 8% of total state revenue, and just 4% of GDP (Anuario Estadístico 2015). That’s a long way from 60% of the economy, no matter what metric you use.

Where Did It Come From?

So where did the wildly inaccurate claim of 60% come from?

It first appeared in a February 2004 story in the Miami Herald about the head of Gaviota, Manuel Marrero Cruz, being named Minister of Tourism. “Cuba’s armed forces have taken over up to 60 percent of the island’s economy,” the Herald reported, citing the Cuba Transition Project (CTP), a U.S. government-funded project of the University of Miami’s Institute for Cuban and Cuban-American Studies.

In subsequent months, Institute Director Jaime Suchlicki regularly repeated the claim. In the proceedings of a November 2004 CTP conference, he wrote, “Today, more than 65 percent of major industries and enterprises are in the hands of current or former military officers.” In August 2006, he told the Associated Press, “They’re running 60 percent of the Cuban economy. All major industries are in the hands of the military’s active duty or former military people.”

Although no data or evidence was ever produced to support that claim, Suchlicki’s formulation was at least plausible, though misleading, because he included not just enterprises managed by the armed forces, but civilian enterprises and whole ministries led by active or retired military officers. The implication was that these entities were controlled by the armed forces, although there was no basis for such a conclusion. On the contrary, because the military has always been among the most efficient Cuban institutions, it has a long history of exporting managers to the civilian sector, going back to the 1970s.

Before long, the claim of military control devolved into a claim that MINFAR enterprises themselves constituted 60% of the economy. “The University of Miami’s Institute for Cuban and Cuban-American Studies estimates that soldiers control more than 60% of the island’s economy,” the Wall Street Journal reported in November 2006.

Other conservatives picked up the theme. “The military… controls about 60 percent of the economy through the management of hundreds of enterprises in key economic sectors,” wrote Carl Gershman, President of the National Endowment for Democracy (which also received U.S. government funding for “democracy promotion” in Cuba), and Orlando Gutierrez, national secretary of the exile organization Cuban Democratic Directorate. A 2008 Heritage Foundation report declared, “Serving or former military officers direct an estimated 60 percent of Cuba’s business and industry.”

By 2016, Suchlicki himself, who had originally been careful to specify that he was talking about major industries and enterprises run by military officers and former officers, had lapsed into the broad, unqualified claim that “more than 60% of the economy is under military control.”

Various newspapers and web sites repeated the claim over the years, setting the stage for this oft-repeated “fact” to be widely circulated when President Trump’s announcement made the Cuban military’s role in the economy a news story, as exemplified by the Miami Herald’s declaration, “GAESA…controls 60 percent of the island’s economy.”

It’s a case study in how fake facts become legitimated and spread, even without the boost of social media. Promulgated by a university-based center, which gave the claim credibility, it began as an exaggeration of the military’s control, lumping together military enterprises and civilian enterprises run by officers and former officers.

Gradually, those details fell away, perhaps because the flat statement of 60% control was more dramatic, or a better sound-bite, or perhaps because journalists failed to understand the nuances of the claim. As more and more sources quoted it, it gained credibility. By the time of President Trump’s June 16 policy announcement in Miami, it had become conventional wisdom that Cuban military enterprises controlled 60% of the economy, even though that “fact” was spectacularly wrong.

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CAN TRUMP COMPETE WITH OBAMA ON CUBA?

Posted on June 28, 2017 by Arch Ritter

LEER EN ESPAÑOL

By JORGE I. DOMÍNGUEZ,  New York Times, JUNE 27, 2017

Original Article: TRUMP ON CUBA

CAMBRIDGE, Mass. — “Effective immediately, I am canceling the last administration’s completely one-sided deal with Cuba.” Thus said President Trump on June 16 in Miami to wildly enthusiastic applause from the remaining veterans of the failed 1961 Bay of Pigs invasion of Cuba. Yet, in practice, Obama administration policies toward Cuba remain in effect. President Trump has set up political, bureaucratic and diplomatic bargaining for months to come.

Through its actions since Jan. 20 and its policy announcements on June 16, the Trump administration has ratified bipartisan policies of engagement with Cuba. These include United States-Cuban military collaboration on the perimeter of the Guantánamo base, collaboration by air and sea to interdict and punish drug trafficking, Coast Guard and military all-purpose collaboration on the Straits of Florida, and security collaboration to stop undocumented migration, expanded in January consistent with President Trump’s preferences.

The Trump administration has ratified Obama administration immigration policy toward Cuba, which ended privileged status for undocumented Cuban migrants who are to be treated now like all similarly situated migrants. It has also left intact diplomatic relations, United States commercial flights to Cuba, 12 Obama administration categories of authorized group travel to Cuba — even cruise ships — as well as unfettered financial remittances from the United States to Cuba and agricultural exports to Cuba, worth well over $5 billion since President George W. Bush authorized them in 2001.

So, what changed on June 16? Check the Treasury Department’s website. The most common refrain in the frequently-asked-questions section related to the announcement is, “The announced changes do not take effect until new regulations are issued.” In other words, right now nothing has changed. A White House fact sheet reports that the issuance of the regulatory amendments is a “process that may take several months,” an opportunity to relive bureaucratic and political battles over Cuba policy.

The most likely eventual regulatory change is to cancel “self-directed, individual travel” and require more paperwork for those authorized to engage with Cuba; the administration will also stop attempting to undo United States sanctions on Cuba. The most intriguing topic is how to carry out the intended blocking of funds for Cuban state tourism and other agencies associated with the Cuban military. If taken literally, lawfully authorized United States travelers will not be able to contract tour services or stay at good hotels, but the delayed enforcement and the president’s own speech imply an openness to negotiate with Cuba.

The core of the president’s speech asks Cuban leaders, in effect, for unconditional surrender. Yet the president also said, “We challenge Cuba to come to the table with a new agreement”, and detailed possible deals: returning “the cop-killer Joanne Chesimard,” which requires a decision on just one person; “release the political prisoners” — the number of whom would be one-digit, according to the Amnesty International definition, but in the three digits according to the organized Cuban opposition definition. The White House fact sheet also refers to possible “further improvements” in United States-Cuban relations depending on Cuba’s “concrete steps.”

Is such a negotiation likely? Mr. Trump’s Cold War rhetoric and his audience of Bay of Pigs invasion veterans tell Cuban leaders what the president wants them to relinquish. The president’s words may have undermined his negotiating objectives. Cuba negotiates best under different circumstances. On Dec. 17, 2014, when the two governments broadcast a shift in their relationship, President Raúl Castro also announced his government’s “unilateral” decision under “Cuban law” to free dozens of prisoners “about whom the United States government had shown an interest.” Concessions? No. Parallel gestures in the context of cooperation? Yes.

The Cuban government’s first response to President Trump’s speech displayed expected indignation. Yet in context, it was moderate: “The government of Cuba reiterates its will to continue with a respectful dialogue and cooperation on topics of mutual interest, as well as the negotiation of bilateral issues still pending with the United States government.” It affirms that the last two years showed that the two countries “can cooperate and coexist in civilized fashion, acknowledging differences yet fostering everything that would benefit both countries and peoples.” Alas, it warned, do not ask for concessions.

Cuba’s foreign minister denounced the tone and content of the president’s speech but blamed “bad advisers,” not the president. The minister confirmed that Cuba will “honor the agreements that have been signed” and be open to negotiate others regarding bilateral relations, but not Cuba’s domestic circumstances. He noted that Cuba has granted political asylum to some who have fled the United States, but he also picked up one specific issue raised by the president. The minister recalled that in recent years Cuba has turned over to United States authorities 12 American fugitives. Both the asylum grants and the repatriation of criminals were “unilateral,” good-will acts in accord, he said, with Cuban and international law.

Could President Trump understand not just how to pressure but also how to negotiate successfully with a Cuban leadership that has outlasted his 11 presidential predecessors and resisted the kind of sanctions that his administration has just revived? Will Mr. Trump the negotiator negotiate? President Obama got dozens of political prisoners freed from Cuban prisons and a dozen criminal fugitives repatriated to the United States. The score thus far for President Trump is zero. Will Mr. Trump be able to compete with Mr. Obama on the terms he has set out?

Jorge I. Domínguez is a professor of government at Harvard.

 

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LAS FUERZAS ARMADAS REVOLUCIONARIAS, LA MAYOR EMPRESA DE CUBA HAVANA TIMES

Posted on June 24, 2017 by Arch Ritter

HAVANA TIMES, Junio 16, 2017 | | | 0  38  0    38

 En Cuba alquilar un coche, dormir en un hotel, hacer submarinismo o comprar en una tienda tienen un punto en común: las empresas que dan esos servicios pertenecen al Grupo de Administración Empresarial S.A. (GAESA) dirigido por las Fuerzas Armadas Revolucionarias, reportó dpa.

GAESA es el mayor holding cubano y suma un conglomerado de más de 50 empresas, todo ello dirigido bajo las leyes del mercado y presidido por el general de brigada Luis Alberto Rodríguez López-Callejas, ex yerno del mandatario Raúl Castro.

La compañía más conocida es la cadena hotelera Gaviota, que tiene más de 29.000 habitaciones en todo el país, muchas de ellas en gestión compartida con compañías extranjeras como Meliá, Iberostar o incluso la estadounidense Starwood, de la cadena Marriott.

La joya de la corona de GAESA es el sector turístico, con una cuota de mercado del 40 por ciento, pero este conglomerado es mucho más amplio de lo que muchos piensan, llegando a casi todos los sectores de la economía, siempre y cuando den beneficios.

Luis Alberto Rodríguez López-Callejas

GAESA es propietaria de una naviera, tiene su propia compañía aérea, empresas de construcción, venta de automóviles, inmobiliarias, bancos o la empresa Almacenes Universales S.A., que controla el tráfico de contenedores en el Puerto del Mariel con su Zona Especial de Desarrollo, la gran apuesta del Gobierno cubano para atraer inversiones extranjeras a la isla gracias a los beneficios fiscales.

En sus inicios, el Ministerio del Interior y el de las Fuerzas Armadas Revolucionarias tenían sus propias empresas, separadas unas de otras, para autofinanciar sus actividades diarias. Asegurar a cada institución una parte del pastel económico garantizaba una paz entre ellas.

El equilibrio existió hasta 2010, cuando CIMEX, el mayor conglomerado comercial de la isla fundado por el Ministerio del Interior, fue absorbido por los militares, con lo que estos aumentaron sus cadenas de tiendas, pero sobre todo los servicios financieros y la capacidad de importación y exportación.

El imperio GAESA aumentó el año pasado con la adquisición de Habaguanex, la compañía que gestiona las empresas turísticas del casco histórico de La Habana Vieja y hasta entonces en manos del poderoso historiador Eusebio Leal.

La otra absorción fue la del Banco Financiero Internacional (BFI), la principal entidad de su tipo para la gestión de divisas. Ambas adquisiciones hicieron que GAESA continuase copando sectores económicos altamente rentables por su relación con el mercado exterior.

El envío de remesas a Cuba está monopolizado por su Financiera Cimex (Fincimex), que tiene acuerdos con empresas como Western Union.

También Fincimex controla en la isla los procesamientos de las tarjetas internacionales Visa y Mastercard.

Estas alianzas financieras internacionales están ligadas también al sector turístico, porque es vía Fincimex que las empresas que envían remesas pagan en Cuba a los dueños de casas y apartamentos que utilizan los servicios de la compañía estadounidense Airbnb, especializada en alquiler de habitaciones.

Kempinski Hotel, Gaviota’s Newest Five-Star Hotel.

 

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WHAT TRUMP’S NEW CUBA POLICY MEANS FOR AMERICAN BUSINESS

Posted on June 23, 2017 by Arch Ritter

By Mimi Whitefield

Miami Herald, June 23 2017

Some U.S. executives that do business with Cuba breathed a sigh of relief after President Donald Trump outlined his new Cuba policy in Miami because it won’t have much impact on their companies. But others have pressed the pause button until they see how the new regulations implementing the changes are written.

Lawyers who help firms navigate the thicket of laws and regulations governing the embargo and dealings with the island have been combing through a memorandum that Trump signed on June 16 as well as three pages of frequently-asked questions issued by Treasury’s Office of Foreign Assets Control (OFAC) and a White House fact sheet to get a sense of the new policy.

Until the regulations are written, that’s all they have to go on. Trump has mandated that the regulation-writing must begin by mid-July.

“Until the regulations change, everything is status quo,” said Yosbel Ibarra, a Miami lawyer on Greenberg Traurig’s Cuba practice team.

How long it will take to write new rules is anybody’s guess, but it isn’t an easy task because multiple agencies and departments will be involved. Some key posts that would have oversight over the new policy also have yet to be filled by the Trump administration, according to lawyers.

Don’t expect a rush by U.S. companies that have proposals pending before the Cuban government to get deals inked before the new rules go into effect, say lawyers and business consultants.

“The way corporations are, when they know rule-making is underway, they are always going to hold up until the regulations are written,” said Robert Muse, a Washington lawyer who specializes in U.S.-Cuba law. “They are not going to set themselves at the far end of the branch based on a Q&A from OFAC.”

There will be important changes in the new policy: it bars most business by U.S. companies with Cuban entities owned or controlled by the military or intelligence services and cuts out people-to-people trips to Cuba by individuals. Group travel in that category is still OK – although there is expected to be more scrutiny of all Cuba travelers to make sure the purpose of their trips isn’t tourism.

The prohibition on doing business with the military is significant because since the 1990s, the Cuban military has been taking control of ever larger chunks of the economy, partly because military managers are viewed as more efficient. Many officers have been sent abroad for business training.

Now the military conglomerate GAESA controls an estimated 40 to 60 percent of the economy, with heavy involvement in the tourism industry, logistics and retail operations.  The military’s Gaviota Tourism Group, for example, controls or has joint ventures with foreign partners in 64 hotels and villas, including many resort hotels as well as the Saratoga, a favorite of visiting Congressional and business delegations, and the new luxury Gran Hotel Manzana Kempinski in Havana.

Even though former President Barack Obama opened up more opportunities for U.S. companies to do business in Cuba, not that many agreements have been finalized. Most are in the transportation sector, the telecommunications industry (notably roaming agreements and Google’s deal to install its servers on the island) and in the hospitality sector.

Some of the U.S. companies have inked deals with military entities. Telecommunications projects, for example, go through ETECSA, the state communications company that is controlled by the military, and Starwood Hotels & Resorts, now a part of Marriott International, has signed an agreement with Gaviota, the military tourism company, to manage a Cuban hotel as a Four Points by Sheraton.

But the administration has said it doesn’t want to hurt American businesses that have engaged in lawful commercial opportunities with Cuba and those agreements will be grandfathered into the new Cuba policy. That’s also true of any other projects that are in place prior to issuance of the new regulations.

Meanwhile, the coming prohibition on doing business with the Cuban military has prompted calls from clients who want to make sure exactly who their Cuban counterparts and business partners are, said Ibarra.

But even companies looking at business that seemingly have nothing to do with the Cuban military are wary.      “I’ve already had a client from New York call and say I guess I’m not going forward [in Cuba],” said Charles Serrano, a Chicago business and travel consultant who has taken clients on more than 130 trips to Cuba.

He is helping four other companies that have signed agreements, have submitted proposals or are in negotiations. But Serrano, managing director of The Antilles Strategy Group, said: “This will slow the interest of American businesses in exploring opportunities in Cuba. They calculate risk based on real things.”

The next battleground is how the new regulations are written.   “After the announcement there was a little sense of relief because companies now know more or less what the landscape will look like and the direction policy is going,” said Pedro Freyre, chairman of Akerman’s international practice, which includes clients doing business or trying to do business in Cuba. “But now the next level of anxiety is about what the regulations will look like. Depending on how they are crafted, they could shut down a lot of business activity.”

Hardliners can be expected to make the case that the rules should be written so as much U.S. business activity as possible is precluded. But the Cuban Study Group, which includes executives and professionals who favor engagement, wants the administration to narrowly interpret what it means to do business with the Cuban military.

“There is a vast difference between a Fortune 500 company forming a joint venture with the Cuban military and a U.S. humanitarian worker buying a water bottle at a government-run store,” said the group in a statement. Among the military’s holdings are retail stores where visitors often buy bottled water.

“Nothing stops business like uncertainty,” said Ibarra. “The more clear and transparent the new regulations are, the better.”

Eventually, the State Department is expected to publish a list of military concerns that are off limits for U.S. companies.

Despite military links to airport and seaport operations in Cuba, the new policy allows cruise lines from the United States to continue to call at Cuban ports, U.S .airlines to keep on flying and limited legal trade, under exceptions to the embargo, to keep flowing.  “Carnival Corp. is pleased that the policy changes announced by the Trump administration will allow our ships to continue to sail to Cuba,” said spokesman Roger Frizzell. He said Carnival plans to review how the tightening of travel rules potentially might affect its passengers.  But he said all cruise passengers since Carnival’s social impact line Fathom inaugurated the first regular cruise service by a U.S. line to Cuba in March 2016 have been traveling under permissible categories for travel to Cuba.  Carnival Corp. has discontinued its Fathom service to Cuba, but its Carnival Cruise Line currently calls in Cuba and its Holland American Line plans to begin sailing there in December.

Other cruise lines also have jumped into the Cuban cruise market. With current sailings and service that is planned, nearly 200,000 travelers are expected to sail from the United States to Cuba this year.

American Airlines, which offers 70 flights weekly to six Cuban cities, doesn’t expect too much impact from the new Cuba policy. Because all but one of its flights — a Charlotte-Havana route — depart from Miami, they have proved popular with Cuban Americans whose travel is not restricted by the new policy.  “Because Miami is the heartland of Cuban exiles, we have a strong market of passengers visiting family and friends in Cuba,” said Martha Pantin, an American spokeswoman.  Since it began regular scheduled flights to Cuba last year, American has opened a ticket office in Havana, begun selling tickets at the Havana airport and installed self-service kiosks there too. “By July, we expect to have self-service check-in at all the airports we serve in Cuba,” said Pantin.

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TRUMP’S HARD LINE ON CUBA IS A BLUFF, AND HAVANA KNOWS IT

Posted on June 22, 2017 by Arch Ritter

William M. LeoGrande | Tuesday, June 20, 2017, World Politics Review

Original Article here:       World Politics Review


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TRUMP POLICY COULD CUT REMITTANCES TO A MILLION CUBAN FAMILIES

Posted on June 20, 2017 by Arch Ritter

Huffington Post, 06/20/2017 12:45 pm ET

William M. LeoGrande and Marguerite Rose Jiménez

There is a poison pill hidden in President Donald Trump’s National Security Presidential Memorandum (NSPM) on Cuba that could deprive over a million Cuban families of access to remittances from their relatives abroad—a declaration of economic war on the very people that Trump claims his policy will empower.

Section 3(d) of the NSPM redefines “prohibited officials of the Government of Cuba” expansively, potentially including almost a quarter of Cuba’s entire labor force. The significance: Cubans who are “prohibited” are not allowed to receive payments from U.S. persons, and that includes remittances (Cuban Assets Control Regulations, §515.570).

The previous regulatory definition of prohibited officials was very narrow, limited to members of the Council of Ministers and flag officers of the Revolutionary Armed Forces. The new definition proposed by President Trump includes hundreds of senior officials in every government agency, thousands of ordinary Cubans who volunteer as leaders of their local Committees for the Defense of the Revolution, and—most importantly— every employee of the Ministry of the Revolutionary Armed Forces (MINFAR) and Ministry of the Interior (MININT).

Bottom of Form

MINFAR has some 60,000 active duty troops and MININT has some 35,000 police and Border Guards, and that’s not counting their civilian employees. Military service is compulsory for both men and women, so almost every family on the island will be affected by this new definition at some point.

More importantly, according to the U.S. government’s Cuba Broadcasting service, over a million Cubans are employed by the two big holding companies, GAESA and CIMEX, that report to MINFAR. If all these people are now to be considered “prohibited officials,” then a quarter of the Cuban labor force will no longer be eligible to receive remittances.

For Cuban state employees who are paid an average salary equivalent to about $25 a month, cutting them off from family remittances will have a devastating impact on their standard of living. By what possible logic can a clerk at GAESA, a truck driver at CIMEX, or a private in the Cuban army be defined as an “official” important enough to be prohibited from receiving help from their family abroad?

The alleged premise of Trump’s policy is to empower the Cuban people by directing U.S. funds to them, rather than to the Cuban government. Remittances are the very best way to do that because the dollars go directly to family on the island, at a rate of about $3 billion annually.

President Trump could have imposed limits on remittances directly and openly, as previous presidents have done, but that would have been very unpopular in the Cuban American community, so instead he has disguised a potentially massive cut behind the small print of an obscure regulation. Now it is up to the Treasury Department’s Office of Foreign Assets Control to write the new regulations in a way that averts this travesty.

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STATEMENT BY THE CUBA STUDY GROUP REGARDING THE CONCLUSION OF PRESIDENT TRUMP’S CUBA POLICY REVIEW

Posted on June 19, 2017 by Arch Ritter

Original Statement: Trump and Cuba

President Trump’s announcement today indicates how far the Cuba policy debate has moved, despite intense pressure from scarce congressional hardliners. Many of the gains of normalization remain intact. At best, this is a partial victory for those who hoped to reverse increased bilateral ties. However, the Cuba Study Group reiterates its view that the completely free flow of people, ideas, information, and goods helps, rather than hinders, the cause of meaningful reform on the island. We therefore urge President Trump to reject the half-measures he proposed today and pursue a policy of full normalization with the island.

Restricting U.S. travel isolates Cubans from knowledge of American political, economic, and human rights norms. Also, it is tendentious to purportedly champion freedom in Cuba by limiting the freedoms of U.S. citizens. The U.S. does not impose similar travel restrictions on any other country, including North Korea and Iran. 81% of Americans, 75% of Cuban-Americans, and virtually all Cubans support the freedom of U.S. citizens to travel to Cuba. Claiming to support a “better deal” for Americans, Cubans, and Cuban-Americans, while ignoring their desires, is highly disingenuous.

Restricting U.S. travel as the Trump administration has proposed will also harm Cuban private business owners far more than the government. Even if not broadly applied, the threat of further enforcement will have negative repercussions on Cubans on the island. Individual U.S. travelers utilize privately-rented rooms at a higher rate than visitors from any other country. Beyond lodging, many small businesses (restaurants, shops, etc.) depend on U.S and other visitors for their livelihood. Limiting people-to-people travel once again to organized groups will significantly impact the Cuban people the President says his measures are intended to support. Moreover, contrary to the stated policy’s objectives, this measure will push remaining U.S. travelers into tours overseen by the Cuban government, rather than allowing real paths for citizen-to-citizen exchange.

President Trump should narrowly interpret the prohibition against trade with organizations tied to the Cuban military. There is a vast difference between a Fortune 500 company forming a joint venture with the Cuban military and a U.S. humanitarian worker buying a water bottle at a government-run store. Regardless, the task of enforcement and oversight will be onerous. We note the irony of a Republican administration burdening Americans with regulations of little clarity or use.

The limited scope of the review’s conclusions represents an admission of defeat by previously intransigent hardliners. In statements defending the new policy, they adopted pro-normalization positions they once scorned: the importance of continued diplomatic engagement and of supporting Cuba’s private sector.

Nonetheless, the tone of hostility in the President’s address may jeopardize crucial government-to-government ties on issues of mutual concern—counterterrorism, counter- narcotics, and migration cooperation—that administration officials ostensibly want to preserve. We urge President Trump to pursue a policy of full normalization that benefits the U.S. economy, serves U.S. interests, and can help place Cubans on a path to a better future.

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IN CUBA, TRUMP’S REVERSAL COULD HURT SMALL BUSINESSES

Posted on June 17, 2017 by Arch Ritter

New York Times, JUNE 16, 2017,  Hannah Berkeley Cohen and Azam Ahmed

HAVANA — For Yasser González, a software developer who now makes his living as a bike tour guide in Havana, the onset of American tourism has been akin to a second Cuban revolution.  For a nine-hour tour marketed by Airbnb, Mr. González, 31, can pull down as much as $700, a princely sum in a country where the average state salary is just a little over $20 a month.  “The majority of my clients are American,” he said. “With Airbnb, I have become independent. I market and sell my own product that I have total control over.”

Such entrepreneurial dreams were precisely the sort of change that the United States government had in mind when President Barack Obama formally opened relations with the communist nation.

And now, many Cubans say, it is also the kind of economic transformation that could be threatened if President Trump follows through on his decision to reverse core elements of Mr. Obama’s Cuba policies, as Mr. Trump

Mr. Trump and White House officials outlined several major reversals to Mr. Obama’s policies, most notably scaling back the ability of Americans to travel to Cuba, which Mr. Obama had vastly expanded. Mr. Trump is also curtailing American transactions with companies controlled by the Cuban military, which largely runs the tourism industry.

Mr. Trump said the restrictions would pressure the Cuban authorities to embrace democracy and human rights by cutting off one of their most important lines of income — American dollars.  “For nearly six decades, the people of Cuba have suffered under Communist domination,” Mr. Trump said Friday in Miami after calling out the names of Cuban dissidents in the crowd. “The previous administration’s easing of restrictions on travel and trade does not help the Cuban people. They only enrich the Cuban regime.”

But from the perspective of many Cubans, the biggest victim will not be the state. Instead, they say, the small but growing group of entrepreneurs who have ridden the wave of tourism to a prosperity unthinkable even a few years ago will feel the brunt of the restrictions.“They want to return to a failed policy,” said Carlos Alzugaray, a former Cuban diplomat in Havana. “The failed policy is that by punishing Cuba and the Cuban people, they can produce a regime change in Cuba. That was the old way of thinking, and that didn’t work.”

Hundreds of thousands of American visitors have landed in Cuba over the past two years, bringing an enormous infusion of cash into an anemic economy that has long been starved of foreign currency.

Under the new policy described by the White House, Americans will be restricted from spending money at many military-controlled enterprises, like restaurants and hotels. That could represent a serious disruption for government revenue.

But Cuba’s budding private sector could take a serious hit as well. The surge of American visitors has been fed by a constellation of private restaurants, and many Americans have chosen to stay in a private residences through services like Airbnb as opposed to a state-run hotel.

In short, many Cubans believe that the Trump administration’s new policy will hurt those it is ostensibly meant to help: the average Cuban who has struggled under the weight of a battered economy for decades.

“It’s not just the people who have rental homes or who have a private business specifically targeted at an American audience like myself,” said Marla Recio, an event planner who created a business to serve the booming demand of Americans wanting to host celebrations on the island. “But there are also the people who have simple cafeterias or beauty salons whose audience is mainly Cuban, and those people are also stimulated by the flow of people who bring money to the island.”

Mr. Trump is taking aim at one of the principle changes made under Mr. Obama, who allowed Americans to organize trips to Cuba for cultural or educational purposes on their own, without special permission from the American government and without a licensed tour company.  Now, these trips, often called “people to people” exchanges, will again require a licensed tour group. That is expected to increase the costs of traveling to Cuba and significantly reduce the number of American visitors.

Policy analysts and Cuban citizens alike fear that many of the Americans traveling to Cuba — those most likely to dine at private establishments and stay in private housing — will simply stop going if they risk breaking the law by doing so.  “Trump claims to be a businessman, so he should understand that reversing the new policies would be bad business,” said Rafaelito Fiterre, 22, who is majoring in tourism at the University of Havana. “That should interest Trump.”

The issue is complicated, experts said, because it is difficult to target the military without affecting the Cuban people at large.   “While I understand and sympathize with the argument that when you travel and stay in a Cuban hotel you enrich the military, it is not a zero-sum game,” said Christopher Sabatini, a lecturer at Columbia University’s School of International and Public Affairs.  “Some dollars actually create political and economic space: Look at the paladares,” he said, referring to privately run restaurants, “or even the small pizza shops. They will be at risk too.”

Over all, 614,433 Americans visited in 2016, including 329,496 Cuban-Americans and 284,937 other Americans, according to Cuba’s government. While the travel restrictions are not expected to apply to Cuban-Americans, the restrictions on spending money at businesses controlled by the Cuban military are expected to apply to all Americans.

“Is the State Department going to print up a map that says where people can and can’t go?” asked John Kavulich, the president of the U.S.-Cuba Trade and Economic Council.

The impact on American business could also be heavy. Airlines from the United States have scrambled to arrange daily flights. Starwood Hotels & Resorts signed on to renovate and oversee three hotels in Havana. Airbnb in particular has had a profound entry into the market, offering more than 22,000 homes across the country and hosting more than half a million visitors.

In Havana, the presence of Americans on the streets these days is palpable. Old Havana, especially, teems with visitors from the United States, many of whom say they are eager to see the nation before it changes and becomes more like any another Caribbean destination.  Older Americans, Brooklyn fashionistas and families willing to pay top dollar come to stay in one of the opulent, albeit shabby, old homes that line Havana’s boulevards. Even in the hot months of the otherwise off-season, some hotels began doubling rates, paving the way for a boom in private sector accommodations.

Even though ordinary Cubans may find themselves hurt by a change in American policy, they are, in some ways, the best equipped to adapt. Having endured various iterations of hardship over the years — including the so-called special period in the 1990s, when Soviet largess vanished and daily life became a scramble — struggle has become something of a normal state of being for many Cubans.

Alberto González, 38, a chemical engineer who is now a taxi driver, has seen benefits from the influx of Americans to his country. But he also understands the fickle nature of international politics and opportunity in Cuba.  “I used to drive a standardized route, mainly for Cubans, charging the legal rate of .50 per customer,” he said. “And now since there are more tourists, many of them American, I can drive direct routes and charge more. But I never relied on an inflated market and I never got used to that comfort. If the day after tomorrow the Americans suddenly vanish, we will be fine.”

“We Cubans are always fine,” he said.

FOUR SMALL ENTERPRISE AREAS THAT WILL BE HURT BY THE TRUMP CHANGE IN US POLICY: RESTAURANTS, BED AND BREAKFASTS, TRANSPORT, AND TOURISM

Casa Particular Symbol

 

 

 

 

 

 

 

 

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TRUMP’S POLICY TOWARDS CUBA, JUNE 16, 2017.

Posted on June 17, 2017 by Arch Ritter

The White House, Office of the Press Secretary, June 16, 2017

Full text:  “National Security Presidential Memorandum on Strengthening the Policy of the United States Toward Cuba

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DID RUBIO TRADE THE INTEGRITY OF U.S. FOR A CUBA-POLICY SHIFT FROM TRUMP?

Posted on June 9, 2017 by Arch Ritter

BY FABIOLA SANTIAGO, Miami Herald, June 8, 2017

It may be hard to fathom outside of Miami, but the faraway island of Cuba and Cuban-American politics could have played a role in Thursday’s historic hearing of the Senate Select Committee on Intelligence investigating Russian interference in the 2016 election.

Did the influential Republican senator from Miami on the committee, Marco Rubio, trade the integrity of this country for the pledge of a U.S. policy shift on Cuba from President Donald Trump? The optics — and the timing of a yet unscheduled visit by Trump to Miami to announce a rollback advocated by Rubio of President Barack Obama’s engagement policy — certainly make it seem that way.

Before Rubio’s intervention, the testimony by former FBI director James Comey had grown impressively damning to President Trump in the same manner a steady, thoughtful, and detail-oriented prosecutor builds a case.

Comey testified that, in a series of uncomfortable conversations before Trump fired him, the president had given him high praise and demanded loyalty. Trump made it known to him that he wanted the criminal investigation into National Security Adviser Michael Flynn dropped and the “cloud” of the investigation into Trump’s campaign ties to Russian interference “lifted,” Comey said.

There’s no understating the moment — it was grave.

Obstruction of justice easily came to mind — but then, it was Rubio’s turn to ask Comey questions.  Or, more like it, to turn Comey’s testimony around and ask rhetorical questions that inserted doubt into Comey’s candid revelations. Rubio shifted the attention from Trump to leaks to the media. As for information, Rubio seemed most interested in getting Comey to publicly admit that President Trump “was not personally under investigation” than in obtaining any new evidence for the Senate investigation.

It was as if Rubio — who has become a fixture at the White House and has voted to confirm all of Trump’s controversial appointments — was acting as Trump’s defense attorney instead of as member of a bipartisan committee investigating crucial national security issues.

Rubio’s defense comes from a senator who called Trump a “con man” when they were both running for the Republican nomination, and who vowed to become the checks-and-balances senator the president might need. Well, this was the moment — and Rubio was only there to cast doubt on Comey, whose testimony could cost Trump the presidency.

Plain old partisan politics, perhaps, but there’s more.

President Trump has a two-faced view of Cuba. Although he made a campaign pledge to Bay of Pigs veterans in Miami that he would restore a hard-line approach to dealing with its government, his administration includes executives who eagerly embraced engagement and traveled to Cuba to explore business ventures.

Donald Trump, the citizen, also wanted to do business on the island.

During former FBI Director James Comey’s testimony before the Senate Intelligence Committee, Senator Marco Rubio (R – Fla.) questioned the former director on his decision to not announce publicly that President Donald Trump was not under the investigation.

Long before President Obama restored relations with Cuba in 2014, executives from the Trump organization visited Cuba to explore opening a luxury golf course, buying a hotel and erecting a Trump Tower in Havana. These excursions without Treasury Department approval, in violation of the U.S. embargo against Cuba, were well documented by Bloomberg, Businessweek and Newsweek.

Despite the campaign promise, a reversal of Cuba policy wasn’t a sure thing. Trump’s inauguration Cuba policy has been “under study,” always a bridesmaid but never the bride to other policy priorities, as well as the president’s mounting scandals. But during the controversial healthcare vote, the Trump administration began making political deals.

For Rubio, an ultra conservative who courted Florida’s and the nation’s tea party voters with zeal, up-ending one of President Obama’s most significant legacy achievements in foreign affairs is a top priority — and personal.

When President Obama announced on Dec. 17, 2014, that he was shedding 50 some years of failed Cuba policy — a historic moment embraced on both sides of the Florida Straits — the president did the unthinkable: He didn’t consult with Cuban Americans in Congress.

Rubio called it “a new low” and “a slap in the face.”

With Trump’s troubles swept aside, Rubio gets the opportunity to slap back — and take his victory lap in his home turf of Miami.

Without Trump, the policy of engagement takes a backseat to the crisis in the nation’s leadership, and if only by default, remains intact.

The former FBI director testified that Russia unequivocally was coming after the United States. He also said that the White House “lies, plain and simple.” He made a case for the president to be investigated for obstruction of justice.

Trading the integrity of this country for a political shift on Cuba policy is disgraceful

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