This study provides an outline of the Cuban economic system controlled by the state and a general understanding of how the Cuban enterprise system functions.
(Image: Embajada de España—Oficina Económica y Comercial de España en La Habana. 2010. Estructura de la Administración y los grupos empresariales estatales en Cuba.]
The Economist Intelligence Unit forecasts for Cuba, “fiscal retrenchment will limit growth to only 2% in 2010. In 2011 policy relaxation will allow growth to pick up to 3.7%.”
The Royal United Services Institute (RUSI), a London-based independent think tank engaged in defense and security research, asks in its analysis of Cuba, how much of a threat does the Communist regime really pose to the world’s only superpower:
Raúl’s position as head of the Revolutionary Armed Forces (Fuerzas Armadas Revolucionarias – FAR), who were greatly bolstered by the controlled economic reforms initiated in 1993, suggested that the new president would be in favour of expanding such open-market conditions to benefit the rest of the country. In reality, however, Raúl’s loyalty may lie less with the introduction of capitalism and more with the military itself. He was in favour of the 1993 reforms because they benefitted the army, not because he saw them as an intrinsically positive development.
This allegiance to the armed forces is not unexpected, but may well be giving the US some cause for alarm. The Cuban military currently manages around 60 percent of the economy, making it the strongest institution in the country. With its former head now in charge, the chances of a military state arising appear to be rather high. Indeed, the military exercises of 2004, shortly after Fidel’s public collapse, were the largest executed in nearly twenty years. It is reasonable to suppose that this was intended as a ‘show of strength’, not just for Cuba, but for Raúl himself (knowing, as he would, that he was the obvious candidate for power after his brother) and an indication of the route down which Cuba will be heading.
Cuba’s government wants to increase its cargo (cement, fuel, aliments, fertilizers, equipment) transportation via railroad to 50%. The Transportation Ministry estimates that 25% of cargo (excluding sugarcane) is transported presently by rail. There’s acknowledgment by the government that an investment needs to be made in improving rail infrastructure for this sizable increase to take place [Granma]
(Image: Locomotives in Havana. By Robin Thom on Flickr.]
Raul Castro’s government has allowed farmers of the island to acquire supplies necessary to support limited productivity where they can pay with the national currency for goods in small private shops. This is a step toward modernizing the strongly centralized farming sector. [Europa Press]
Army General Raúl Castro gave Cubans a reprieve by allowing them to open small businesses, but doubts exist if the measure meets with the goal of reducing a bloated bureaucracy and help reanimate the economy “without market reforms.” The enlargement of “self-employment,” expected by many Cubans and suggested by economists, was announced by Raúl Castro on Sunday before the National Assembly as part of “structural changes” that seeks to make the economic model more efficient and avoiding a collapse of the socialist system. [AFP]
The Committee on Economic Affairs of the Cuban National Assembly of People’s Power (Asamblea Nacional del Poder Popular, ANPP) began today studying different issues related to the situation on the island, specifically, the precarious economic performance, which has increased demands for fundamental change by the populace.
Ministers and other leaders also notified members of the Committee on the implementation of the state budget in the first half of 2010, low labor productivity and import substitution. [El Financiero]
The Daily Telegraph on the future Cuban oligarchs awaiting in the wings for change, while Methuselah returns:
But one group is likely to be watching this strange political dance between the two Castro brothers with concern, as well as frustration: those who are preparing to amass vast personal wealth from Cuba’s eventual return to capitalism. They include senior officials within the regime.
[...]
And just as a select few Russians did after the collapse of Soviet communism, well-connected Cuban officials might make fortunes if they are in a position to control the sale of national assets, or hand out contracts for the development of the currently under-exploited, stagnant economy. Land, property, telecommunications rights, sugar and agriculture are among the many sectors which could be worth billions.
[...]
But who are the potential oligarchs? Esteban Morales has only named Mr Acevedo, the disgraced aviation boss. But his criticism appears to be aimed at corrupt government junior ministers and military bosses who manage parts of Cuba’s sprawling state run businesses.
While all government and military officials officially live on government salaries of as little as £25 a month, some already appear to be living far better-funded lifestyles. At a recent big-game fishing competition at the beach resort of Varadero, the Canadian expatriate competitors were surprised when they saw they were competing against some entirely Cuban teams, in motor yachts worth hundreds of thousands of dollars.
[...]
Yet those who hoped that, under Raul, a capitalist bonanza was about to begin have been disappointed by events over the last two weeks. Fidel Castro’s reappearance seems designed to send the clear message that he is back on the scene – and that, at least for now, real change is not yet in the air.
The Cuban parliament—National Assembly of People’s Power (Asamblea Nacional del Poder Popular, ANPP)—will “debate” on August 1st the country’s critical economic situation in its first annual ordinary session in the middle of expectations among the population of an opening. Permanent commissions, held before the parliamentary meeting, headed by Army General Raúl Castro “will look at important issues such as the economic, political, and social life of the country.” [Juventud RebeldeviaAFP]
Der Spiegel on the political and economic realities facing the Castro regime in its fight for survival:
But the release of the dissidents could also be a message to the Europeans, who have not been entirely sure what to make of the new president since he officially assumed office in February 2008. Raul is believed to be less of a fundamentalist and more of a pragmatist than his brother Fidel. “He is not someone who is out to change the system, but he does show an understanding for the problems,” says one of the Europeans in Havana.
At first, Raul Castro sparked hopes that reforms could be on the way. But so far his fellow Cubans have seen little change, except that they can now own mobile phones and computers with limited Internet access.
Europe, however, wants to see clear signs of liberalization, as a precondition of more intensive cooperation with Havana, especially “progress in the area of human rights and political freedom.” European governments reached this conclusion long ago, in December 1996, and the same conditions are still in place today. However, Castro has forced the Europeans’ hand by releasing the dissidents.
Faced with a catastrophic situation in Cuban agriculture, Raul Castro is urgently in need of aid from Europe. The sugarcane harvest this summer, once an important source of foreign currency, is the worst since 1905. It is even about half a million tons shy of the harvest in 2009, when hurricanes wreaked havoc on the country.
Cuba is now forced to import more than 80 percent of its food, while foreign investment and exports have declined dramatically. At the same time, the sugar island is practically bankrupt and has had to reduce imports of food products and spare parts by at least a third.
Tens of thousands of well-trained young Cubans are leaving the country every year to earn money for their families elsewhere. The numbers would probably be even higher if the government let them go. For this reason, EU diplomats expect more signals from Raul on July 26, a Cuban national holiday: more privatization in agriculture, more freedom to buy homes and a relaxation of restrictions on travel abroad.
Mauricio Vicent wrote in today’s El Paísthat in the official media of Cuba there is talk of “reforms” that will be launched after August.
According to sources consulted by the daily, the Raul Castro government will make ”changes,” which include:
expansion of self-employment and above all the cooperativization of some services;
continuation of reductions in subsidies and social costs with the aim of making the system sustainable;
slowly reduce health services, which will have a social impact;
elimination of a dual currency;
renegotiate debt to cut financial tensions
Even sources of the Catholic Church and Spanish Foreign Ministry have heard Raúl Castro say “of the reforms.”
Vicent further adds, that sources say, Raúl Castro does not bet on Venezuela as a source of financial support and wants to avoid a repeat of what was experienced with the former Soviet Union, and the devastating economic crisis of the 1990s.
This speculation leads to the question, are there profound reforms underway that will encompass economic and political change or are they mere cosmetic changes to give an illusion and bide enough time for the Cuban regime to stay afloat until the next crisis imperils its existence?
UPDATE 20100716 @ 1548: I received an email from Jorge Piñon (Visiting Research Fellow with the Cuban Research Institute at Florida International University and former president of Amoco Oil Latin America) pointing out that the Russians are not in deep waters, in fact, they are in two blocks of shallow waters as seen in the map (click image to expand further).
20100714 @ 0825: Russian state oil company Zarubezhneft plans to drill a shelf near Cuba in 2011. Zarubezhneft and the Cuban national oil company, Cubapetroleo, signed four contracts in November 2009 to conduct geologic explorations and hydrocarbon production. The contracts were the first long-term contracts between Russia and Cuba in the last 20 years. [RIA Novosti]
The faceless capitalists of Wall Street have long considered Venezuela a “sell” – the oil producing country’s foreign currency bonds are considered almost twice as risky as Greece’s. But might even Cuba’s revolutionary gerontocracy now believe the same?
For those who like to look at the world through the lens of financial conspiracies, that’s one tentative reading of why Cuba pledged last week to release 52 political prisoners. Yes, the issue was attracting unwelcome international attention. But it is also true that throughout its history, Cuba has been a master at playing its geo-strategic cards. The US and the USSR used to play the role of sugar daddy to the country before. Lately it’s been President Hugo Chávez’s Venezuela. But Venezuela’s economy, like Cuba’s, is now in a mess.
Any move that suggests Cuba wants to improve ties with the US – and freeing political prisoners is one step that could ease the US travel ban and, ultimately, the embargo – therefore represents a hedging of Cuba’s geo-strategic bets. Looked at another way, it is also a tacit recognition by Havana that Caracas, despite its similar ideological outlook and oil wealth, might now be, in traders’ parlance, an “underperform”.
The list of reasons of why Cuba – or Wall Street – might think so is long and growing. Venezuela this year tightened capital controls as it no longer has sufficient reserves to sustain the capital flight of the last year. Oil sector output – according to independent estimates – has fallen considerably over the past decade due to a lack of investment. And the country also faces a large and rising contingent liability in the form of unpaid compensation owed to private business that have been nationalised by Mr Chávez.
There are currently 11 lawsuits and arbitration claims totalling $43.5bn lodged with the World Bank’s International Centre for Settlement on Investment Disputes. The bulk of this relates to a $10bn claim by ExxonMobil and a $30bn claim by ConocoPhillips. Looked at another way, according to local consulting firm Ecoanalitica, Mr Chavez has announced nationalizations of some $23bn since 2006, and of that amount, the authorities have paid almost $9bn, leaving $14bn owing.
Lately, brokers only tend to recommend buying Venezuelan bonds on the basis of how long they need to hold them and not lose money. (About 4 years, assuming current 15 per cent yields and a recovery rate of 30 cents on the dollar.) With the largest oil reserves outside the Middle East, and a relatively comfortable foreign reserves position, Venezuela certainly can pay, should it wish to. The question for investors in a country where the government calls its private brokers a “tumor” is: how long will it? The Castro brothers may have given a clue.
(Image: Fidel Castro is seen on 18 June, 2008 in Havana during a meeting with Venezuelan president Hugo Chavez and his brother Raúl Castro. By AFP/GETTY Images.)
Spanish oil company Repsol YPF SA, said it plans to drill off Cuba, about 60 miles south of Key West, Florida, early next year. If successful, this would likely kick off a spate of exploration. Only one deepwater well has been drilled in Cuban waters, by Repsol in 2004. The effort found oil but not enough to justify commercial development. [Wall Street Journal]
(Image: Repsol offshore oil exploration rig. Spanish oil giant Repsol YPF has contracted with a unit of Italian oil company Eni SpA for a drilling rig that some sources said was bound for operation in Cuba’s still untapped offshore fields. 5 May 2010.)
China could help Cuba cover its banking system’s liquidity deficit with a multibillion dollar loan. Havana has already asked for a $3B loan. The cause of the liquidity crisis is attributed to lack payments by Cuban banks worth between $600M and $1B in 2009 according to United Nations’ CEPAL data (pdf). [ANSA]
The Cuban Council of State has relieved José Silvano Hernández Bernárdez of his post as the Minister of Light Industry.
Damar Maceo will replace him. Maceo, 47-years-old, has a degree in Economic Planning and held the post of First Vice-Minster of Domestic Commerce, reported Prensa Latina.
Hernández will be assigned other undeclared responsibilities as announced in an official note read on state-run television.
(Image: José Hernández sacked by the Council of State. By cubagov.cu)
The Cuban Economy has news of “a major technological breakthrough in the production of “NPI” (nickel pig iron), a substitute for refined nickel mined and concentrated in Cuba.”
This will probably reduce Cuba’s foreign exchange earnings from nickel exports in future, and will likely halt any expansions of nickel mining for years or even decades to come.
According to a Cuban National Statistics Office report released yesterday, international shipping to and from the island nation of Cuba fell by more than 60 percent in 2009 as the country slashed imports to deal with a foreign exchange crisis. [Reuters]
(Image: Port of Havana. By SchneiderSvan, Wikimedia Commons)
An audit conducted by the Cuban government in 20 percent of state-owned enterprises found in April “deficiencies,” “administrative chaos,” and a lack of respect for legal norms among other irregularities. [Granmaand EFE]
U.S. Army War College‘s Strategy Research Project released earlier this year two unclassified student reports on U.S.—Cuba policy.
Both reports characterize U.S. foreign policy of the last half-century towards Cuba as a failure. Thus, these reports give an inkling to the mindset of officers from the U.S. Army War College about the strategy of fostering democratic transition in Cuba.
The first report, “United States Security Strategy Towards Cuba,” is written by Lieutenant Colonel Sergio M. Dickerson (U.S. Army). Lt. Col. Dickerson questions whether Cuba poses a security threat to the United States, and contends:
Although Cuba poses no traditional threats to the U.S., geographically, their 90-mile proximity should concern us. Our proximity to Cuba assures U.S. involvement, be it voluntary or involuntary, in a major crisis. Consider a disease outbreak that begins in Cuba over a break down in hygiene, government pollution or other misfortune attributable to economic strife. The disease has no boundaries and quickly reaches the Florida shores via travelling Cuban American citizens. This scenario could be mitigated or even preventable under the auspices of better relations. Aside from the obvious medical benefits a partnership provides, established communications with Cuba would likely prevent an uncontrolled spread in the U.S.
Regarding U.S. policy, he suggests:
Building American and Congressional support for engagement…establish a formal infrastructure establish a formal infrastructure that communicates to Cuba and the International Community at large that we’re serious about diplomatic engagement with Cuba. Finally, we must loosen embargo restrictions and expose Cubans to U.S. open markets, business opportunities and 21st Century living.
Colonel Lance R. Koenig (U.S. Army) wrote the second report, entitled: “Time for a New Cuba Policy.” Col. Koenig writes:
Nearly fifty years of attempts to isolate Cuba through economic sanctions, travel restrictions, and broken diplomatic relations has not provided the results the United States policy towards Cuba aimed to achieve. It is time for the United States to pursue its national interests with regard to Cuba and implement a completely new policy in order to improve regional security and economic stability in Latin America.
He recommends:
The option with the greatest possibility of success and reward for the United States is to support the Cuban people, but not the Cuban government.
Lift completely the economic embargo. Establish banking and financial relationships to facilitate the trading of goods and services between the two countries.
Lift completely the travel ban to allow not only Cuban-Americans with relatives but also all other Americans to travel to Cuba. This interaction of Americans with Cubans will help raise the awareness of Cubans about their northern neighbor.
Lift completely the travel ban to allow not only Cuban-Americans with relatives but also all other Americans to travel to Cuba. This interaction of Americans with Cubans will help raise the awareness of Cubans about their northern neighbor.
Col. Koenig also briefly addresses the issue of property restitution:
This leaves the issue of compensation for United States companies and individuals whose property was expropriated by the Cuban government. With the embargo lifted, the United States should enlist the assistance of the European Union and Canada to apply pressure to Cuba as well as to assist in negotiations with the World Trade Organization to address issues with illegally confiscated property.
The title of the book is derived from the Chinese proverb: “He who rides a tiger can never get off or the tiger will devour him.”
In his book preview editorial in La Razón, Botin writes, “In the shadow of his brother Fidel, the political life of Raúl Castro has been dark and hard; he has been the executive arm of the maximum leader’s desires.”
Interesting tidbits from the editorial:
GAESA (Grupo de Administración Empresarial, S.A.), the Cuban Armed Forces’ holding company (managed by Raúl’s son-in-law Luis Alberto López Calleja), controls almost 70% of the country’s economy through transient businesses that generate almost 90% of exports, 60% of tourism revenues, around 25% of services revenues, 60% of currency revenues and more than 65% of all minor commerce in currency exchanges. The volume of annual profits surpasses $1B;
Raúl’s daughter Mariela Castro has taken the family’s monies out of the country with ease of travel as she is accompanied by her Italian husband, Paolo;
Raúl Castro visited Italy (after Fidel fell ill in 2006) to deposit millions of pesos, affirms exiled Cuban General José Quevedo;
Leninist machismo enjoys good health in Cuba as the perks of Raulistas within the military working in GAESA companies. They are a privileged class with higher incomes and a much higher standard of living not only to the civilian population but to their own comrades in arms serving a strictly military function in locations far away from the resorts.
Cuba’s government has allowedGranma (Cuban Communist Party’s newspaper) to publish letters to the editor (here and here) critical of an economy devastated by decades of corruption and centralized power.
(Image: Granma, Carta a la dirección, 7 May 2010.)
Dr. José Azel (University of Miami) will present his book, Mañana in Cuba: The Legacy of Castroism and Transitional Challenges for Cuba, which book explores the mindset of Cubans living in a totalitarian system and the multitude of obstacles present in modern-day Cuba at Books and Books in Coral Gables, Florida on Wednesday, June 2 — Courtyard Reception: 7 p.m; Presentation: 8 p.m.
The Financial Times on the destruction of Cuba’s sugar industry:
Cuba was once the world’s largest sugar exporter. But, according to a local expert, it “has been reduced to rubble by poor state management, a lack of capital, sanctions, hurricanes and other factors”.
Sugar production is expected to weigh in at around 1.1m tonnes this year, compared with 8m tonnes in 1990 before the Soviet Union collapsed and the poorest result since 1905.
Negotiations are under way with several groups to co-administer some of the eight largest mills, built after the revolution, say foreign business sources and Cubans with knowledge of the industry. It is a big shift in policy under Raúl Castro, president, whose brother Fidel insisted the island knew as much about producing sugar as anyone.
[...]
The Cuban sugar ministry will be replaced this year by a state-run holding company, similar to those that run the oil and nickel industries, the sources said. Cuban sugar minister Luis Manuel Ávila resigned earlier this month. His deputy, González Orlando Celso, is destined to be the island’s last such minister.
[...]
But Cuba is no longer a market force, sugar accounts for under 5 per cent of exports and just 60 mills still work, of which up to 20 will soon close.
El País reportson the Castro government investigating corporate scandals that are plaguing the regime:
A legion of 4,000 auditors and financial officers currently investigate the internals of 750 Cuban companies, which 20% operate in the island. This is a huge anti-corruption crackdown that is unprecedented, but without justification; in recent years, in the Cuba of Fidel and Raul Castro, cases of economic crimes, petty corruption, influence peddling and embezzlement have increased, and each time the actors reach the highest levels.
Frank Norton, a Florida real estate executive, writes in the Gainsville Times about what he and his wife experienced in their recent trip to Cuba:
Today, the Cuban people have lost all personal freedom, lost all personal property and now occupy government-owned, rotting, worn-out buildings that are crumbling around them. There is no pride of ownership, little pride of country; the communist government has taken much of this away from the once thriving Garden of Eden. Alas, poor Babylon.
[...]
Today’s Cuba is run by a small band of grumpy old men, distant and out of touch with the modern world and modern civilizations. These men, victorious in their waltz (not fight) into Havana on New Year’s Eve 1959, continue to celebrate their victory 51 years later while the spoils (Cuba) crumble around them.
Victorious yes; winners no! The past is past. Today’s reality is underemployment for 11 million people, living in huts, widespread poverty, rolling shortages and economic collapse. This Garden of Eden is overgrown with tangled twisted jungle and the biggest jungles are in the tangled minds of grumpy old men.
Independence will be difficult.
Is Cuba lost? Time has perhaps passed by Cuban independence; the generation that fled Cuba to America is 50 years older, the passionate revolutionaries, future liberators of a communist Cuba, are now dead.
Will their children have the same passion and drive to liberate, the desire to reclaim their country? Or will they, as American citizens, see their heritage as just a sidebar to their lives in their adopted country?
Who will lead Cuba back to the promised land? Who will be passionate enough to liberate Cuba? And bring it back into the 20th century, much less the 21st?
In the museum La Revolution, we saw a quote by a 1959 Castro that is a haunting message even for today: “For the first time in the history of this country, the people and the government have left aside the rich side and have joined the poor side.”
Former Chilean leftist Senator Carlos Ominami (whose adoptive son is Marco Enríquez-Ominami, a Socialist who ran as an independent in the recent Chilean presidential election supported by Max Marambio) said the distancing of the Cuban regime with businessman Max Marambio (background here and here) is due to a “settling of scores” after the departure of Fidel Castro from power, in an interview he gave to The Clinic.
Ominami adds: ”I think what happened to Max (Marambio) falls within the same process that took as its latest victims Carlos Lage, Felipe Perez Roque and Gustavo Ramirez and (Rogelio) Acevedo, who is none other than the last living guerrilla with Che in the Sierra Maestra.”
He goes on further to say:
I think there are political reasons for the settling of scores. Fidel and Raul are not going to fight ever because they know that the minute they do, the Cuban revolution collapses. But they have allowed the existence of political power subsystems that will. And it is clear there are two lines: the Revolutionary Armed Forces (FAR) and Ministry of Interior (MININT). In Cuba, both institutional leaderships have troops and those troops have rivalries. MININT Special Troops have rivalries with the FAR and finally what you’re experiencing is a history of that conflict.
Former Mexican Foreign Affairs Minister Jorge Castañeda questions whether this is the beginning of the end of the Castro regime in his El País op-ed, where he formulates three factors precipitating an end: (i) a fierce economic crisis; (ii) the death of Orlando Zapata, Damas de Blanco movement and Guillermo Fariñas hunger strike; and (iii) Fidel Castro is no longer at the helm of day-to-day affairs.
Cuban Vice President Jose Ramon Machado Ventura during the sessions of the National Association of Small Farmers (ANAP) of the provinces of Matanzas, Ciego de Avila and Sancti Spiritus on Sunday announced that the country invests more than $1.5 Billion dollars annually buying food, part of which can be substituted by national products if the areas of cultivation and the yields increase.
Also in attendance were Cuban Minister of Agriculture, Ulises Rosales del Toro, and ANAP President Orlando Lugo Fonte addressing key elements on the development of Cuban agriculture.
Reuters is reporting Cuba’s sugar ministry will close in the coming months and be replaced by a state-run corporation, according to its business sources.
The wire story went on to say: plans to create the new sugar corporation and revitalise the industry by, among other things, allowing foreign investment and closing inefficient sugar mills are nearing final approval by President Raul Castro.
Reuters also provides a timeline of Cuba’s sugar industry and policies since the 1959 Revolution:
1959 – Fidel Castro sweeps to power in a nationalist revolution with the sugar industry in private hands. He promises to diversify Cuba away from its one-crop economy.
1959/60 – The last harvest in private hands weighs in at 5.6 million tonnes of raw sugar, of which 2 million are purchased by the United States and 2.5 million by Communist countries.
May 1960 – Diplomatic relations are restored with the Soviet Union.
June 1960 – Sugar plantations are nationalized, though mills remain in private hands.
July 1960 – The United States cuts the sugar quota under which it was required to buy half the Cuban sugar crop at $.02 per pound above the market price. The Soviet Union offers to purchase the sugar that the United States relinquished.
August 1960 – U.S.-owned mills are nationalized, with the remainder of foreign-owned mills following in October.
January 1964 – The Soviet Union agrees to purchase a growing percentage of the crop through 1970. Castro announces plans to raise annual production to 10 million tonnes by 1970, saying this will lead to industrialization and end sugar dependence. Cuba fails to achieve the 10 million tonnes goal.
1970-1989 – Sugar production goes from 5.9 million tonnes of raw sugar in 1970/71, to 7.4 million in 1980/81, 7.3 million in 1985/86 and 8.1 million in 1988/89.
1991 – Sugar accounts for 90 percent of Cuban export earnings, when the Soviet Union falls apart leaving Cuba without a preferential sugar market.
1995/96 – The sugar harvest is 4.3 million tonnes.
1996 – The U.S. Helms-Burton law, a reinforcement of the U.S. trade embargo on Cuba, lays down heavy penalties against foreign third parties for investing in expropriated Cuban properties including almost the entire sugar industry.
October 1997 – The economic report adopted by Cuba’s ruling Communist Party states: “Sugar production must significantly reduce costs … and reach a minimum 7 million tonnes with much greater net earnings than today’s.”
2000/01 – The harvest is 3.4 million tonnes.
2002 – Cuba downsizes its sugar industry by 50 percent and cuts land dedicated to raw sugar production by up to 60 percent. Citing “garbage-dump” world sugar market prices, the sugar ministry says Cuba will limit future raw sugar production to a maximum 4 million tonnes per year, and exports to those that turn a profit. A maximum 70 mills, out of Cuba’s 156, will produce raw sugar in the future, another 14 mills will produce byproducts and the remainder will be closed permanently.
2005 – Cuban President Fidel Castro says: “Cuba will never live off sugar again. That belongs to the era of slavery. … This country’s means of support is now its source of ruin.”
2005 – The sugar ministry announces more mill closings and plans to build more than 100 factories to produce pastas, chocolate, candy, and process soy beans and corn to replace mills. More sugar cane land is taken out of production.
2005/06 – The harvest falls to 1.2 million tonnes.
2006 – The sugar minister says the process of downsizing the industry is over with the number of mills reduced to 66.
2008 – Industry sources report the medium-term output goal is to reach 3 million tonnes of raw sugar.
2009 – The government moves former sugar plantations to the agriculture ministry and the industry’s railways to the transportation ministry.
2009/10 – With 44 mills grinding, plans call for this year’s harvest to total 1.3 million tonnes, though by April output lagged by 100,000 tonnes.
Yesterday, Army General Raul Castro delivered a speech (full text here) before the 9th Young Communists League (UJC) Congress at Havana’s Convention Center.
Some excerpts of his speech as the Cuban government becomes more entrenched:
Today, more than never before, the economic battle is the main task and the focus of the ideological work of the cadres, because it is on this work that the sustainability and the preservation of our social system rest.
Without a sound and dynamic economy and without the removal of superfluous expenses and waste, it will neither be possible to improve the living standard of the population nor to preserve and improve the high levels of education and healthcare ensured to every citizen free of charge.
[...]
If we do not build a firm and systematic social rejection of illegal activities and different expressions of corruption, more than a few will continue to make fortunes at the expense of the majority’s labors while disseminating attitudes that crash into the essence of socialism.
[...]
As I said at the beginning, the celebration of this Congress has coincided with a huge smearing campaign against Cuba, a campaign orchestrated, directed and financed by the imperial power centers in the United States and Europe, hypocritically waging the banners of human rights.
[...]
The young Cuban revolutionaries have a clear understanding that to preserve the Revolution and Socialism, and to continue having dignity and being free, they still have ahead many more years of struggle and sacrifices.
Cuban raw-sugar output is about 100,000 tons behind plans to produce 1.3 million tons this season. (German research firm F.O. Licht via Bloomberg News)
While the Cuban government may open sugar production to foreign investors for the first time since the 1959 revolution to stem the precipitous free fall of production.
Today’s The Economist addresses the Cuban government’s failed agricultural reform:
TWO years ago last month Raúl Castro formally took over as Cuba’s president from his convalescent elder brother, Fidel. The switch raised hopes of reforms, especially of the communist country’s long dysfunctional agriculture. But change has been glacial. Official figures show that in the first two months of this year deliveries to the capital’s food markets were a third less than forecast. Nobody starves, but hard-currency supermarkets go for weeks without basics such as milk and bread.
What has gone wrong? Cuba’s state-owned farms are massively inefficient, and rarely provide more than 20% of the country’s food needs. Three hurricanes in 2008 made matters worse. Raúl Castro has acknowledged the problem, and introduced some changes. Idle state land has been leased to private farmers. The government has raised the guaranteed prices it pays for produce. Farmers can now legally buy their own basic equipment such as shovels and boots, without having to wait for government handouts.
[...]
But Raúl continues to move very cautiously. So Cuba will buy much of its food from foreign suppliers. Foreign exchange, never abundant—partly because of the American economic embargo—is again in short supply. The world recession cut Cuba’s earnings from nickel and tourism last year. Imports fell last year by almost 40%.
A foreign businessman in Havana says there have been signs of a further squeeze this year. Transfers abroad by foreign businesses have been blocked, or delayed, for months. The Spanish owner of Vima, a food importer which supplied many hotels and state-run restaurants, made the mistake of publicly criticising delays in getting paid. His contracts were promptly revoked. Foreign companies have been warned that the government may stop selling them staples, such as meat and rice, for their staff canteens. “They told us bluntly that their priority is feeding the general population, that the situation is very serious, and that we should make our own arrangements,” says a manager of one joint-venture.
Kenneth Chandler’s (a former editor and publisher of the New York Post) op-ed on the catastrophe in the making for Cuba.
Havana is a city of sorrow — a once elegant and prosperous capital brought to despair by 51 years of deliberate neglect and isolation. A country that has been plundered by a succession of foreign powers, homegrown dictators and mobsters imported from America now languishes in a bizarre time warp where little has changed in more than half a century.
Its people go about their daily routines bereft of consumer goods, nutritious foods, meaningful jobs or adequate housing — most of them born after the revolution that swept Castro to power in 1959 and now, thanks to rigid censorship, largely conditioned to accept their impoverished lot.
To listen to Castro’s cronies — those among the political and business elite whose loyalty is secured with perks unavailable to ordinary Cubans — the economic situation is solely the fault of the US embargo imposed after the revolution.
More thoughtful Cubans discreetly offer a different explanation: They blame Fidel’s feckless experiments with communism — his initial seizure of $25 billion worth of private property from Cubans and the nationalization of all businesses, forcing the middle class to flee to Miami; his bizarre decision to send 300,000 Cubans out of a population of only 11 million to fight wars in Africa in the 1980s; his Cold War alliance with the Russians that left his country bankrupt and saddled with antiquated technology when the Soviet Union collapsed.
Cuban economic minister Marino Murillo announced before a meeting of the National Association of Cuban Economists (Asociación Nacional de Economistas de Cuba) that the lack of liquidity in currencies is an urgent problem for the government, reported Cuban state media.
Cuba’s Office of National Statistics (Oficina Nacional de Estadísticas (ONE) released last month a report entitled: “Economic and Social Panorama, Cuba 2009″, which provides information on the development of demographic, economic and social indicators for 2009.
Cubans are bracing for hard times in 2010 as President Raul Castro slashes imports and cuts government spending to get Cuba out of crisis — and they are growing impatient with the slow pace of economic reform.
Hurricanes, the global recession, U.S. sanctions and the inability of the communist-run island’s command economy to maneuver have put an end to recovery from the 1990s crisis that followed the Soviet Union’s demise.
Division General Leonardo Andollo Valdés (Deputy Chief, General Staff) announced for the first time on Cuban state television that the Cuban military prepares for internal warfare against the people.
However, with Bastion 2009, that fundamental is evolving for the first time to include for the preparation of the armed forces’ internal war against the people.
La Jornada reports Division General Leonardo Andollo Valdés’ (Deputy Chief, General Staff) comments on the Mesa Redonda (Round Table) state television program surrounding the FAR and MININT’s military exercises beginning today.
Was this a slip of the tongue for Andollo or was he sanctioned by the military hierarchy to make it abundantly clear for internal/external consumption the government’s plan to crush, without hesitation, social instability affecting internal security?
The economic implosion (e.g. energy crisis, falling exports, limited capital inflow, eliminating food rationing booklet) the Cuban government faces caused by a stagnate command economy with meager traces of capitalism is propelling an inevitable social upheaval that the military and security forces will confront.
Bastion 2009 exercises are further evidence of such a fundamental change to the military’s mission to now quash social instability which has been publicly announced by a high-ranking general of the Cuban military’s high command.
The government of Army General Raul Castro suffers from an asphyxiating lack of liquidity which has caused a fall of 36% in Cuba’s foreign trade in the first nine months of 2009.
And the solutions to the economic crisis are a period of wartime and deprivation: not paying debt nor to those of other countries or to creditors, restricting fuel consumption by closing unprofitable companies, asking the population to tighten their belts and further cut what Army General Castro called “excess gratuities,” starting with the food ration booklet.
Issues covered in the article, which is written by Dr. Terry Maris, Ph.D., include: the Special Period, how the Cuban military quietly embraced the teachings of capitalism, perfeccionamiento empresarial, and military industries, among others.
Maris concludes, “a thorough examination of Cuban history reveals an evolution of the revolution that personifies the principles of both strategic and military management”.
Small though the change is, it is of huge symbolic import. It is the first step in a wider, albeit stealthy, abandonment of Fidel Castro’s half-century effort to forge a “new man” in Cuba by limiting individual reward in favour of all-embracing social provision, with the state imposing its choice of consumption as well as of production. Granma said that after the plan was “perfected” some 3.5m Cubans could expect their 24,700 workplace canteens to close too, and would get a similar wage increase.
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Cuba is close to bankruptcy. Foreign businesses have been waiting for months for permission to transfer abroad hundreds of millions of dollars in profits from joint ventures that are sitting in local banks. The government has slashed imports by more than 30% this year, and budgets for state companies and ministries have also been cut. Cuba does not produce enough and its population is ageing. Theft and absenteeism are rife in workplaces across the island.
Raúl has placed trusted military men in charge of economic policy. Their aim is to save foreign exchange and raise output. They reckon that Cubans do not value the true cost of free services. Workplace canteens used some $350m in imported food last year, according to Granma.
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What nobody is saying publicly is that Raúl is tossing into the dustbin of Cuban history the idea espoused by Ernesto “Che” Guevara, at the start of the revolution that Cuba’s communist economy should be based on “moral incentives”, rather than material ones, and that this process would create a “new man”. Through various zigzags Fidel never wholly relinquished that idea. When opponents criticise Cubans’ derisory wages (averaging $20 per month), officials always point to the additional “social wage” of free housing, health, education, transport and food rations.
Some of this will now go. Raúl, a practical man, has no time for Utopianism. He gives every sign of knowing that if Cuban communism is to survive its founders it will have to supply people with a few more material goods. But he may find it hard to raise wages by much without more radical reform.
The UAE and Cuba signed two agreements to enhance political consultations and boost economic, commercial and technical cooperation between the two countries.
The agreements were signed by Shaikh Abdullah Bin Zayed Al Nahyan, UAE Foreign Minister, and Cuba’s Foreign Trade and Investment Minister Rodrigues Dias, in Havana.
The consultations between Shaikh Abdullah and his counterpart focused on investment opportunities in the tourism, trade and renewable energy sectors in both countries.
Nearly two decades after the end of the Cold War, Cuba remains a policy dilemma for the United States. The transition from Fidel Castro to his brother Raúl, which began when Raúl assumed the responsibilities of the presidency of the Council of State on July 31, 2006, as a result of Fidel’s illness, is still ongoing after three years. Fidel remains alive—perhaps even to a point revived—but with very limited exercise of authority. Raúl has taken charge of government, but he must still contend with Fidel’s legendary presence.
Expectations of change under Raúl Castro have been largely unmet; continuity remains the key theme of his regime. Meanwhile, the election of Barack Obama in the United States has resulted in a reexamination of U.S. policy toward Cuba, including some meaningful, however limited, first steps to reach out to the regime in Havana. The U.S.-Cuba bilateral relationship is likely to remain a work in progress well into the future. This report, which outlines conclusions reached from the seven panel discussions with experts in the field, is intended as a point of reference for decisionmakers in and out of government who deal with Cuba.
Cubans began taking a hard look this week at entrenched customs like food rationing, pilfering on the job, cradle-to-grave subsidies and black market trading in a national debate called by Army General Raul Castro. Authorities have circulated a ten-point agenda for thousands of open-ended meetings over the next month at work places, universities and community organizations to “rethink” Cuban socialism, focused on the economic themes highlighted by Castro in a speech to the National Assembly in August.
RAND describes Chinese global activism as “continually changing and has so many dimensions that it immediately raises questions about its current and future intentions and the implications for global stability and prosperity.”
Moreover, the study “examines how China views its security environment, how it defines its international objectives, how it is pursuing these objectives, and the consequences for U.S. economic and security interests.”
Chinese expanded strategic interests (including business interests) in Latin America and Cuba is accelerating at a fast pace.
As this study points out:
China is building political relationships to diversify its access to energy and other natural resources, with a focus on Africa, the Middle East, and Latin America. Energy security encompasses diversifying both suppliers and supply routes.
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China’s expanding involvement in Latin America is primarily (but not exclusively) driven by economic considerations: gaining access to markets, investments, and resources. The growth in China’s merchandise trade and investment in the region offers strong evidence of Chi- na’s economic motives. Trade between China and Latin America and the Caribbean has rapidly increased over the last several years, and as a result, this region has become more important to China. From 1999 to 2006, total merchandise trade increased from $8.2 billion to close to $70 billion, an almost tenfold increase. In 2006, Latin America and the Caribbean accounted for 4 percent of China’s total world trade, increasing its share by 1.7 percent since 1999.
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China’s investments in Latin America are growing as well. China currently has projects in Argentina, Brazil, Chile, Cuba, the Domini- can Republic, Guyana, and Venezuela, among other nations. China’s investments in Brazil, Argentina, Chile, and Venezuela are mainly focused on facilitating access to such natural resources as iron ore, copper, and oil (in the case of Venezuela); as such, its investments have been in the mining, transportation, manufacturing, and petroleum sectors.
A crackdown on corruption by Army General Raul Castro is causing consternation among ordinary Cubans, who say it is biting into the flourishing black market and reducing a prized source of cheaper food and other items.
The complaints are tempered by the expectation that inventive Cubans, driven by economic necessity and seasoned by years of filching from the centralized socialist economy, will soon restore the pipeline of illicit goods to full flow.
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But Cubans say the offer of products on the black market, where goods generally are much cheaper than in stores, has dropped off noticeably. The average salary in Cuba is about $20 a month, so the black market helps Cubans stretch their money or, if they are sellers, supplement their income.
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Castro’s transfer of many retail businesses to military control has caused state employees who once routinely stole goods to stop, or at least think twice. Military managers are said to exercise better inventory control and be less tolerant of filching.
China provided Cuba $600 million dollars in loans and grants Wednesday during a visit to strengthen ties by the Asian giant’s parliamentary head Wu Bangguo, diplomatic sources said.
The Cuban government is considering easing its stranglehold on the retail sector in an effort to legalise the underground economy and reduce massive theft. A recent communiqué from the Communist party’s central committee suggested change was coming to one of the world’s two remaining Soviet-style command economies, the other being North Korea…Cuba is battling a liquidity crisis, shrinking production and increased pressure from a frustrated public and creditors.
This week’s issue of The Economist has a briefing article assessing Latin American geopolitics aptly titled “The dragon in the backyard.”
The diversification of Latin America’s economic ties has raised in some minds a nagging question: does it foreshadow geopolitical changes? In the United States some Republicans worry that China’s growing economic weight poses a political threat. Hillary Clinton, the secretary of state, has noted that China and Iran are making “disturbing” gains in the region. But many Latin Americans prefer to see China’s expanding ties to their region as an opportunity. The region, with Brazil in the lead, is forging “south-south” alliances with China, India, Russia and South Africa to push for changes in what they all see as an unjust world economic order.
But for Latin America two other questions may be just as important, if not more so. The first is whether the industrialisation of China and India is helping or hindering its own economic development. The second is whether growing economic and political ties with non-democratic countries such as China, Russia and Iran could undermine Latin America’s own hard-won commitment to democracy.
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Chinese investment has so far been overwhelmingly concentrated in mining and oil. (An early and still unusual exception is a joint venture with Brazil, dating from the 1980s, to produce communications satellites, in which China provides 70% of the finance and the technology.) Toromocho is just one of three big investments in copper projects in Peru. Chinese companies have become the biggest foreign investors in Ecuador’s oil industry.
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Venezuela under Mr Chávez has sought closer ties not just with China but also with Russia and Iran. During the cold war the Soviet Union bankrolled Cuba for almost three decades, and supported left-wing movements and governments throughout the region. Last year Dmitry Medvedev became the first Russian president since those days to visit Latin America. Russia also sent a small naval flotilla to the Caribbean for joint exercises with Venezuela and Cuba. This was a tit-for-tat gesture after the United States sent ships to support Georgia after its brief war with Russia last summer.
Russia’s abiding interest in Latin America is focused on arms sales. Between 2005 and 2008 Mr Chávez bought Russian weapons worth $4.4 billion, including 24 Sukhoi fighters. As the oil price sank last year, shrinking Mr Chávez’s kitty, Russia offered a $1 billion credit line for further arms purchases. This month Mr Chávez said he would seek “battalions of tanks” from Russia on his next visit to Moscow, in response to an agreement letting America use military bases in neighbouring Colombia. But his most worrying purchase was of 100,000 Kalashnikov automatic rifles and a production line to build more. Colombian officials fear that some of these rifles will end up with the FARC guerrillas.
Associate Professor of Political Scientist Javier Corrales who teaches at Amherst wrote a report titled “Petro-Politics and the Promotion of Disorder,” for one of the workshops where he analyzes how Venezuela’s windfall of profits from oil production/sales has been the “Chávez government’s principal tool for exerting influence beyond Venezuela’s borders,” which has been instrumental in the dismantling of democracy within the Venezuelan state and propping anti-democratic forces in bordering states.
Corrales focuses on the Cuba-Venezuela economic relationship in the following paragraphs:
Among Venezuela’s authoritarian allies, Cuba is probably the most important for the regime’s self-image, and the relationship is distinguished by a unique exchange of financial support for ideological endorsement. From Cuba’s perspective, Venezuela has replaced the Soviet Union as its main sponsor, supplying handsome oil subsidies that allow the island state to reexport as much as 40 percent of the fuel it receives. This allowance is provided with almost no political or other conditions, unlike any aid or investment Cuba might obtain from international organizations or democratic countries. In return, Cuba serves as the issuer of a certificate of good “radical” credentials, permitting Chávez to flaunt his anti-imperialism and score points among the most extreme elements of the left in Latin America. Cuba also provides tangible assistance in the form of almost 40,000 technical experts, including doctors, nurses, teachers, coaches, and military and intelligence personnel.
Since Raúl Castro became president of Cuba, there has been speculation that the Cuban government is growing wary of the island’s dependence on its new benefactor. There are rumors, for instance, that Castro does not like Chávez personally, and that he is pursuing ways to diversify the country’s economic ties. Nevertheless, there are reasons to believe that the special relationship between Cuba and Venezuela will endure. Each country is providing the other with assets that are cheap for the donor and valuable to the recipient. Venezuela’s subsidy to Cuba consists of a small fraction of its oil production, while Cuba has a surplus of trained technical experts. The ideological endorsement, of course, costs Cuba nothing.
In a speech marking Revolution Day, Fidel Castro’s successor, Army General Raul Castro, said that the global economic crisis means tougher times ahead for Cuba, but the country has no one to blame but itself for poor farm production that leads to frequent shortages of fruits, vegetables and other basics.
David Ronfeldt, a former senior political scientist at the RAND Corporation who is now retired, has written several reports and monographs on Cuba’s political system and politics dating back to the mid-1970s.
The TIMN model refers to Dr. Ronfeldt’s “review of history and theory, four forms of organization — and evidently only four — lie behind the governance and evolution of all societies across the ages: tribal, institutional, market, and network.” (For further analysis see his working paper from RAND.)
Dr. Ronfeldt states: “I think Cuba is an interesting case for illuminating some theoretical principles that may be important for building the TIMN framework and understanding its implications for how to achieve social evolution.”
He further illustrates:
“One aim of the TIMN framework is to provide clarity as to why systems like Cuba’s are so limited — in fact, self-limiting. The framework also shows how to think about Cuba’s future from an evolutionary standpoint.
Briefly stated: In the name of revolution, Fidel Castro committed a strategic error of devolutionary proportions. He rejected developing Cuba in T+I+M directions, and fell back to construct a hyper T+I system. If this could have served to prepare Cuba for an eventual new transition to a +M system, the outlook for post-Castro Cuba might be promising. But his regime’s practices have not assured that Cuba will get a +M transition right, even though it is the inevitable next phase. Meanwhile, +N forces are even more suborned and restricted, especially among civil-society NGOs.
Fidel represents a supreme contemporary expression of the fusion of T+I ideals and principles. Accordingly, he has believed that if people would just behave like one big family under his chieftaincy, then everything would work fine. He did not see that the organizational forms on which his ideals rested — the tribal and institutional forms — have performance capabilities that are self-limiting, especially with regard to economic growth. Indeed, Cuba’s low level of development today reflects the inherent incapacity of T+I designs to promote and manage increasing levels of economic complexity. As with the feudal and absolutist systems of long ago, as well as recent Soviet systems based on central planning and social exhortation, this design can produce a strong, aggressive state and military, but not an advanced, multi-purpose economy and society.“
Dr. Ronfeldt also addresses current U.S. policy regarding greater channels of information and communication flows.
He argues for sustaining the embargo as evidenced in the following:
“Idealistic notions are sprouting anew — here and here, for example — that ending the embargo would ameliorate Cuba’s hard-line T+I behaviors and induce +M effects: Thus, it is said, lifting the embargo would deprive the regime of an anti-American rationale — a scapegoat — for maintaining its tyranny and explaining away Cuba’s economic woes. It would generate maneuvering room for reformers who want political and social as well as economic liberalization. It would encourage free-market reforms, and a more open, pluralistic civil society.
Yet, there is no evidence — only speculation — that ending the embargo unilaterally would have such positive effects under current circumstances. More likely, it would reinforce Fidel’s sense that he is winning and provide him with extra resources and rationales for staying his course. And there is evidence for this contrary prospect.
The infusion of foreign investments and tourists from Canada, Europe, and elsewhere since the mid-1990s, by providing new income for the regime, actually enabled Fidel to slow or reverse the modest liberalizations he had grudgingly permitted in order to ease the economic shortages following the collapse of the Soviet Union. Little new liberalization has occurred since then. Moreover, European governments that have increased their trade and investment with Cuba have been rebuffed when they have pressed for even modest shifts in the regime’s human-rights behavior.”
Dr. Ronfeldt succinctly sums up his analysis on future perspectives with this viewpoint:
“In sum, Fidel Castro remains committed to a theory of social evolution that is fundamentally erroneous. He is not entirely wrong to rail against the evils of capitalism — it can have detrimental effects, and what’s happening in the United States today provides new evidence. But by failing to see that the market system is essential for continued social evolution, and by not figuring out how to make it apply in a balanced, positive way in Cuba — even so that it deserves a name other than capitalism — he keeps Cuba’s potential arrested in an evolutionary cul-de-sac of his own fabrication.
Eventually a breakout will occur. Odds are, a multitude of U.S. actors will then rush ahead with their usual patterns about promoting democracy and freedom, including free enterprise. But if the objective is to see Cuba turn into a balanced T+I+M system, new kinds of advice and assistance may be needed. The United States has policies and strategies for promoting capitalism — basically saying, open your markets, and we will come. But do we really have adequate policies and strategies for building a properly free, fair market system? I gather not, for that’s never been as major a goal as promoting capitalism. It’s time to rethink. Otherwise, assuming that the post-Fidel regime endures, the model it prefers next may be a mild kind of fascism rather than a potential liberal democracy.”
The stark reality of Monday’s purge was not solely to streamline government structure for efficiency, but in fact, it was also Army General Raul Castro’s mission to rid himself the remnants of Fidel Castro’s loyalists.
The Commander-in Chief (CINC) of the militarized island nation now exercises complete control of the regime’s levers of power — lock, stock and barrel.
He has supplanted key government posts with past and present members of the single most loyal institution to him – the Revolutionary Armed Forces (FAR).
These military entrepreneurs (retired and active flag officers) are tied to the politico-economic survivability of the regime — more so now than ever, as their ranks have swelled in a host of strategic positions throughout government.
(For further analysis on the military’s involvement in the Cuban economy, click here to read my research on the subject.)
In large part, thanks to Raul, they will make pivotal decisions forging ahead a path for the island nation.
Throughout Cuban history, the military has played a decisive and instrumental role in politics, immersing itself as an arbiter of power in Havana. Tracing its lineage from the colonial period where a Spanish military governor ruled with an iron fist, to army politics during the 1930s and beyond, the armed forces has heavily shaped destiny for the Cuban populace.
However, what cohesion will the military have once the former maximum leader makes his terrestrial departure?
Will we see the status quo prevail — a military elite that manages state enterprises generating wealth for a chosen few?
Or will mid-level officers simmer with discontent in seeing their superiors bask in monetary perks instead of sharing the grand pi
A permanent concern for Raul Castro’s government is how will it sustain feeding the populace as aliments continue to diminish due to shortages and the costly purchases of increasing imports, which poses a security dilemma for the regime.
The U.S. Department of Agriculture’s Office of Global Analysis published a report last year titled: “Cuba
Col. Crowther discussing how the war in Iraq will affect U.S.-Latin America Relations at George Washington University. Image: GWU
Colonel Alexander Crowther, a Research Professor of National Security Studies in the Strategic Studies Institute, U.S. Army War College, has written an editorial titled: “Kiss the Embargo Goodbye” for SSI’s monthly newsletter calling for the end of the U.S. embargo against Cuba.
He has written prior editorials and papers on Cuba and its military.
Col. Crowther outlines the reasons that have supported the embargo and why it should be lifted.
On the support of:
we need to continue pressuring the regime to motivate it to reform;
the Cuban community in Miami wants us to continue
And the reasons for its lifting:
the cost to the Cuban people
the embargo is the only excuse that the Castro regime has to maintain its tyranny
to show the world that we are willing to try a new approach to motivate the Cubans to move towards democracy
to open up the Cuban market to the United States
He further goes on to say: “To maintain the status quo is to continue failing to engender reforms in Cuba and to continue empowering the dictatorship.”
Admiral Dennis Blair USN (Ret.), new Director of National Intelligence, testified today before the U.S. Senate Select Committee on Intelligence outlining the annual assessment of national security threats to the United States.
The following section of his written testimony includes Cuba:
Avoiding a social explosion is foremost on the minds of the Cuban nomenklatura. "El Maleconazo" which occurred on the streets of Havana's famous seawall in August, 1994 was the most significant demonstration of social unrest in the island.
A chorus of those sympathetic to the Cuban regime and/or part of the nomenklatura are voicing their opinion about the need to reform Cuba’s system or else social instability caused by a lack of change to the status quo will lead to political destabilization through violence.
A member of said chorus is Ignacio Ramonet (penned an autobiography of Fidel Castro and was editor-in-chief of Le Monde Diplomatique) who wrote a revealing article last week giving a purview of the current situation in Cuba.
Ramonet states: “Raul Castro and his team have dedicated themselves to three pressing problems: food, public transportation, and housing. Three domains where shortages, poverty, and dysfunctions favor permanent unrest of the population.”
The Economist takes a look at the last 50 years of the Cuban revolution:
Half a century on, the euphoria is long gone. Everyday life in Cuba is a dreary affair of queues and shortages, even if nobody starves and violent crime is rare. It is the only country in the Americas whose government denies its citizens freedom of expression and assembly. Cuba
Cuban police motorcyclists patrol the streets of Havana. Image: AFP/Getty
La Jornada (Mexico) reports Cuba’s black market “could place in jeopardy the revolution’s very existence,” whereby the national police has hardened its vigilance against the underground economy which could become a high priority mission, according to an official communique released Sunday.
“There is a war without barracks against illegalities and crime,” the unsigned communique published in the Havana weeklyTribuna.
Reported were raids executed in the last two months in the capital including operations against 100 factories, 60 shops and 200 clandestine warehouses.
The campaign started in September in the aftermath of the hurricanes including a system of searching passengers in police checkpoints throughout roadways.
China National Petroleum Corp., the nation’s largest oil explorer, and Cuba’s state oil company agreed to jointly develop oil and gas fields.
The companies signed an agreement on Nov. 25 to cooperate in oil field engineering services and oil equipment trading, the Beijing-based company said in a statement on its Web site today.
Russian President Dmitry Medvedev concluded his visit to Havana. He met with Fidel Castro and said that a new bilateral accord will be waiting for President Raul Castro when he visits Russia. Medvedev and Raul Castro signed mining and oil exploration deals and discussed “military technical cooperation.”
Raul Castro said that he is willing to meet with President-Elect Obama on “neutral ground”
The National Intelligence Council (NIC) is the center for midterm and long-term strategic thinking within the United States Intelligence Community (IC). Yesterday, NIC released a report titled: “Global Trends 2025: A Transformed World,” which attempts to “stimulate strategic thinking about the future by identifying key trends, the factors that drive them, where they seem to be headed, and how they might interact.”
Latin America, according to the report, will have “moderate economic growth, however, with continued urban violence.” Cuba in specific, along with Venezuela, “will have some form of vestigial influence in the region in 2025, but their economic problems will limit their appeal.” Furthermore, “Absent support from Venezuela, Cuba might be forced to begin China-like market reforms.”
Hurricane Gustav and Hurricane Ike inflicted misery on millions of Cubans. But when the Castro dictatorship looks at the devastation, it sees opportunity.
The Economist Intelligence Unit’sCountry Risk Service publishes regular ratings on 120 sovereigns. The ratings for emerging markets are updated monthly while those for most developed countries are updated bi-annually. The sovereign rating measures the risk of a build-up in arrears of principal and/or interest on foreign- and/or local-currency debt that is the direct obligation of the sovereign or guaranteed by the sovereign.
Cuba’s rating:
Month: Jul-08 Rating: CCC Outlook: Stable
CCC = Questionable capacity and commitment to honour obligations. Patchy payment record.
Foreign direct investment in the sugar industry is acceptable to the Cuban government for producing alcohol and other derivatives, but it continues to be a topic that the authorities prefer not to talk about, at least in public, although experts regard it as desirable for the recovery of the industry.
At present there are seven joint ventures involving capital from Spain, Italy, Canada and Mexico, all of which concentrate on the diversification of the sugar industry, Liobel P
The United States ranked among communist Cuba’s top five trading partners for the first time in 2007 despite the decades-old U.S. trade embargo, as U.S. agriculture sales increased by $100 million.
Trade data for 2007 posted on the Web site of Cuba’s National Statistics Office (www.one.cu) placed the United States fifth at $582 million, compared with $484 million in 2006, including shipping costs.
The United States, which began selling food to Cuba in 2002 under an amendment to the embargo, placed seventh in 2006 and 2005.
Revolutionary ally Venezuela and communist China were Cuba’s top trading partners at $2.698 billion and $2.457 billion respectively, with Canada placing third and Spain fourth, each at more than $1 billion.
The Economist has a piece on the effects of the embargo and foreign investment in Cuba:
FOR almost half a century, the United States has imposed a trade embargo against Cuba. And yet it sometimes seems barely visible. Across the island, American brands are ubiquitous. Tourists can order a Coca-Cola (made in Mexico) in state-run hotels. Computers running Microsoft software have appeared in the capital
La Razon reports on the creation of a super-ministry charged with overseeing the production of food (a vital national security issue for Cuba):
While rumors of a next government crisis runs insistently throughout Havana, the name of Ulises Rosales del Toro is beginning to be heard with greater impetus among diplomats and journalists. Rosales del Toro is the current Minister of Sugar, a two star general, 66 years-old with a brilliant service record for the regime.
According to unofficial sources, it seems Rosales del Toro will play a vital role in the restructuring of the Cuban government once Raul Castro sends the plan to parliament (National Assembly) before the end of the year.
“I know what you know,” responded Vice-Minister of Sugar Juan Godefroy to a query made by a US news agency interested in the role of that ministry in the unification of four ministerial posts that are linked to the production of food in the country.
Expected unification
Even though there is speculation without official confirmation point to Rosales del Toro, former chief of the General Staff of the Armed Forces, as the center of the expected unification or reorganization of the Ministries of Agriculture, Sugar, Food and Fishery.
The restructuring of the departments linked to the production of food which is a national security issue in Cuba began with sharing by municipalities of “many decisions that have been up to now made centrally in the Ministry of Agriculture,” opined Cuban economists who asked to remain anonymous.
“Unification of decision making” in the sector will be reached through that path but they declined to advance the names of who will head the new structure.
Houston Chronicle reports on the Cubans’ apathetic feeling and prices spiraling upward even for a mango yet the Cuban government has a difference view:
Cubans face economic difficulties, but “there are no tanks on the street corners,” said Miguel Alvarez, chief adviser to Ricardo Alarcon, president of Cuba’s National Assembly. Cuba, Alvarez said, is a “stable country, a tranquil country.“
United Aircraft Corp., the Russian state aerospace group, and OAO Aviaexport agreed with Cuba’s Civil Aviation Institute to sell the Caribbean nation airplanes and set up service centers for local clients.
A memorandum of understanding was signed last week during Deputy Prime Minister Igor Sechin’s visit to Cuba to deliver models including OAO Tupolev Co.’s Tu-204 mid-range planes and Antonov An- 148 regional jets, Russia’s Industry and Trade Ministry said in a statement on its Web site today.
Russian drugmakers OAO Pharmstandard and OOO Pharmapark also agreed with Cuba’s Center of Genetic Engineering and Biotechnologies to cooperate on producing vaccines in Russia, according to the statement.
On the surface, this looks like any old state visit between the Russians and the Cubans. But there are a number of reasons why this visit in particular caught Stratfor
Ever since long-standing Cuban leader Fidel Castro handed power to his brother, Raul, to undergo gastric surgery, expectations have been for change on the island -
Army General Raul Castro delivered a speech in Santiago de Cuba yesterday commemorating the 55th anniversary of the start of the communist revolution. Castro warned the populace of more hard times ahead.
Relevant parts of the speech:
The majority of our nation has demonstrated sufficient familiarity and maturity to understand these truths, which turn out to be inescapable. On the other hand, other persons stubbornly try to close their eyes before the world’s problems. I repeat that the Revolution has done and will continue to do everything in its power to foster its development and reduce to a minimum the unavoidable consequences of the current international crisis for the population. However, we must inform our people in a timely manner of the difficulties so that they may be prepared to face them. We have to get used to not receiving just good news.
[...]
As great as our desires may be to resolve each problem, we cannot spend more than what we have, and in order take the greatest advantage, it is vital to save everything, primarily fuel.
[...]
As a poor country without easily exploitable large natural resources, which has to work hard to earn a living in a world where most of the people live in the direst poverty, the material objectives of our people cannot be too ambitious.
[...]
Aside from production, our defence will not be ignored regardless of the outcome of the next presidential elections in the United States. Defence preparedness is going well. In November 2007, we carried out the Moncada exercises in the western and central part of the island with good results. In the eastern territory, we carried them out in June because we decided to postpone them in order to not affect the recovery efforts in the aftermath of last year’s heavy rains. We continue the favourable development of Operation Caguairan which has translated into a significant increase of reserve preparedness, who complement active duty and militia troops. At the same time, we have continued developing the military theatre of operations, upgrading of armaments and other of the resources, and developing and training officers; more than 2,000 graduated this year, the highest rate in the last 10 years.
The conditions have been created to carry out the strategic exercise Bastion 2008 with highest quality and rigour in November.
The project attempts to measure governance by synthesizing the views and reports of diverse sources, including Economist Intelligence Unit, Latinobarometro, Afrobarometer, World Economic Forum, Freedom House, Gallup World Poll, Bertelsmann Transformation Index, Institutional Profile Database by French Government Agencies, OECD Development Center African Economic Outlook, Global Integrity Index, Political and Economic Risk Consultancy in Asia, and Reporters without Borders, among others.
Governance is defined by the WGI authors as the traditions and institutions by which authority in a country is exercised. This includes the process by which governments are selected, monitored and replaced; the capacity of the government to effectively formulate and implement sound policies; and the respect of citizens and the state for the institutions that govern economic and social interactions among them.
In addition, the project reports aggregate and individual governance indicators for 212 countries and territories over the period 1996
Army General Raul Castro warned of tough economic times ahead for the island from spiraling international fuel and food prices in his July 11 speech before the National Assembly. Food was mentioned a total of 14 times in his speech.
One instance:
When speaking of oil there are other factors as well, such as agro-fuel production, financial speculation, and the devaluation of the dollar, to name just a few. These have caused a rise in price for almost every food product and the resources used in their production. Three examples: in July of 2007, the price of importing rice had risen to $435 per ton. Today it costs $1,100 per ton. It used to cost $435. A similar amount of wheat, one ton, cost $297 when we spoke in Camaguey last year. Now it costs more than $409. During that same address in Camaguey on 26 July I said that a ton of powdered milk at that time cost the astronomical sum of $5,200, whereas four years earlier it cost $2,100, less than half. Everything is more expensive. On top of everything, fertilizer prices are among those that are climbing fastest. One of the most important fertilizers rose from $303 per ton in July 2007 to $688 now. Another commonly used one, [word indistinct] cost $400 a year ago but now costs almost $700. It seems like the work of the devil.
Increased food prices have become a security concern for developing nations and in the case of Cuba, a possible destabilizing variable from a hungry populace who can ill afford to pay spiraling prices of foodstuffs. How will the Cuban regime address this factor, remains to be seen.
Rafael Tenreyo Perez, the exploration manager for CubaPetrol, told a few reporters in attendance at the World Petroleum Congress, ministerial session, that production sharing agreements that Cuba has signed with foreign companies are a step towards a more detailed look at the offshore blocks that Cuba is hoping to lease,
Army General Raul Castro wearing a white guayabera gave a televised address before the National Assembly (Cuban Parliament) yesterday addressing critical issues befacing the country.
The BBC calls Castro’s address his most sombre assessment of Cuba’s economic situation since he succeeded his brother Fidel in February. He said would have to lift restrictions on salaries more slowly than anticipated and key reforms could be affected by global rises in food and oil prices.
Castro said “the salary problem” was being studied and would be addressed “gradually and according to priorities” but that quick action may not be possible.
Cubanmedia reports Army General Raul Castro presided over a joint meeting of the Politburo and Council of State. The economic and social situation of the country were analyzed. Food production and rise in the main branches of productive activity and services were among other topics of discussion.
Also debated were some issues to be discussed at today’s session of the National Assembly (Cuban Parliament).
The European Courier has published an article titled “The Future of Cuba,” which discusses the new role of Cuba in a world in which the US is becoming less dominant (see hypotheses written by Parag Khanna of the New America Foundation and Fareed Zakaria, editor of Newsweek International) and is forcing Cuba to form new relationships with the US, the EU and most importantly China.
According to Juventud Rebelde, Cuba continues to face a mass internal migration from the provinces to the capital of Havana.
City of Havana continues to be the primary point of attraction for a great majority of Cubans who decide to move. And as so it happens in the rest of the world, the grand metropolis offers wonders
The new leadership of the Communist Party of China (CPC) is ready to work with Cuba to promote further development of relations between the two parties and the two countries, a senior CPC official said.
He Guoqiang, member of the Standing Committee of the Political Bureau of the CPC Central Committee, made the remarks in his talks with Jose R. Machado Ventura, member of the Political Bureau of the Central Committee of the Communist Party of Cuba.
He, also secretary of the CPC’s Central Commission for Discipline Inspection, said the new CPC leadership attaches great importance to and treasures the traditional friendship between China and Cuba.
Since China and Cuba established diplomatic relations 48 years ago, the two countries have witnessed steady growth of friendly cooperation, frequent exchanges of high-level visits, growing economic and trade exchanges as well as fruitful results of bilateral reciprocal cooperation, He said.
He arrived in Havana Sunday evening on a four-day goodwill visit to Cuba, the first leg of his four-country visit that will also take him to Trinidad and Tobago, Brazil and Angola.
The Ecomomist Intelligence Unit published at the end of May its Country Risk Ratings (assesses credit risk across 100 emerging markets and 20 developed economies) analyzing European stability. The top 5 countries in order were: (1) Switzerland, (2) Norway, (3) Finland, (4) Sweden, and (5) Austria. At the very bottom, (115) Cuba joining (116) Nicaragua and (117) Sudan.
EIU view:
Cuba’s score was stable at 66 following Fidel Castro
The Cuban Communist Party’s (PCC) Assembly in Havana held a meeting on Sunday to discuss the increase of production in food, which was presided by Cuban Vice-President Jose Ramon Machado Ventura. In attendance were also members of the Central Committee’s Secretariat. Ulises Guilarte D
Soaring fuel and food import costs have hurt Cuba’s state-run economy, even as President Raul Castro works to meet a pledge to improve citizens’ lives, a senior government official said.
Cuban Vice President Carlos Lage broke the news in a weekend speech to municipal government leaders, carried by the Juventud Rebelde newspaper on Sunday.
Hard work and greater efficiency could dampen the impact of international trends that Cuba could not escape, Lage said, charging that “the blind laws of the market have converted the world economy into a casino.”
“Due to the economic impact of rising fuel and food prices, and practically everything we import … some of the main investment projects have been reduced and further reductions will be necessary,” he said, providing no details.
Communist Cuba imports about 50 percent of its minimum fuel and food requirements.
The Caribbean island has gradually emerged in recent years from an economic crisis in the 1990s that followed the demise of former-benefactor the Soviet Union.
An integration agreement with oil-rich Venezuela, soft credits from China and high nickel prices have produced significant growth and investment, eliminating blackouts, improving public transportation, the availability of consumer goods and increasing investment in social services and housing.
Raul Castro took over from his ailing older brother Fidel in February, saying his government would improve living conditions on the island.
Efforts to increase food production and the lifting of some restrictions on daily life have fueled expectations among a population that has endured hardship since the Soviet collapse.
“The country spent $1.47 billion last year to import 3.423 million tonnes of food and to import the same amount this year at current prices will cost $2.554 billion, a billion dollars more,” Lage said.
“The 158,000 barrels of oil per day that we consumed last year cost $8.7 million per day and this year costs 32 percent more, or $11.6 million per day,” he said.
Domestic gasoline and food prices have remained relatively unchanged in Cuba this year due to state-control of the economy and prices, forcing the government to spend more on subsidies.
At the same time recent prices for its most important export, nickel, have fallen from the highs of a few years ago.
Rafael Hernandez is the editor of Temas magazine, a Cuban political journal and outlet for critical public debate, as well as a forum where writers broach previously taboo subjects, like the prevalence of domestic violence in Cuba or the fact of racial discrimination.
Stratfor has recently examined organized crime in Mexico, Italy and Russia. Their fourth installment focuses on Cuba.
A snippet of the report (for Stratfor.com members):
Stratfor’s fourth in-depth look at organized crime focuses on Cuba. In atypical fashion, organized crime in Cuba is run by the state and stems from a long tradition that places Cuban military and intelligence apparatus into positions of control over the island’s industry while both fostering and profiting from drug traffickers and smugglers.
Venezuela supports the entry of Brazil and Cuba into the Organization of Petroleum Exporting Countries as their exploration programs are likely to make them exporters, Venezuelan President Hugo Chavez said.
Brazilian President Luiz Inacio Lula said he wanted Brazil to join the group, less than a year after Chavez first joked about the possibility in the wake of an oil find that may be the biggest in the Americas since 1976. State oil company Petroleos de Venezuela SA agreed a year ago to explore blocks off Cuba.
Chavez, a long-time advocate of higher oil prices, said Venezuela shouldn’t produce too much oil now as it must safeguard resources for the future. He doesn’t plan to reduce oil sales to the U.S., he said. Venezuela sold the least oil in five years to the world’s largest consumer in March.
Abdalla El-Badri, OPEC’s secretary general, will visit Venezuela to discuss “a variety of topics,” Chavez said, without elaborating further.
El Badri will discuss Venezuela’s oil output in a visit to the country, Dow Jones Newswires reported April 21, citing Energy and Oil Minister Rafael Ramirez. The topic is a source of contention, as OPEC uses estimates from outside consultants to gauge its members’ production, while Venezuela wants to report its own number.
OPEC published its individual members’ output targets on the Internet in September and then removed them. Venezuela says it produces 3.3 million barrels a day of oil and condensate. Bloomberg estimates crude output at 2.34 million.
Brazilian political scientist and diplomat Antonio Rangel Bandeira, a leftist and admirer of Ernesto “Che” Guevara, believes the “reforms” initiated by Cuban leader Ra
Cuban Foreign Investment and Economic Collaboration Minister Marta Lomas and Honduran Technical Cooperation Secretariat representative Karen Zelaya lead the meeting of the First Bi-national Joint Commission being held in Havana today and tomorrow. The aim of the meeting is to coordinate bilateral relations between nations and fulfillment of the work program agreed between Havana and Tegucigalpa in 2007.
Americas Quarterly published by the Americas Society offers a preview of its Spring edition, and presents summaries of two articles on Cuba.
Cuba No Libre by Gary Marx and Cecilia Vaisman
On February 19th, Fidel Castro made it official: he was resigning the presidency and ending his 50-year reign over Cuba. Many exiles, U.S. officials and Cubans on the island had been waiting for this historic day, confident that it would not only mark a new beginning but signal that fundamental change was coming to the hemisphere
Cuba uses the dominant convertible peso known as the CUC — introduced four years ago to replace the U.S. dollar, which had been circulating for more than a decade — and the Cuban peso known as moneda nacional. Those with jobs in hotels, airlines and shops and on the thriving black market earn CUCs, referred to as “the dollar” and worth about 25 times the peso. The peso is the currency given to all state workers and pensioners, which must be converted to CUCs to purchase most goods. The Cuban government retains the peso because it lacks sufficient foreign reserves to back and circulate only CUCs. The U.S. dollar, which circulated in Cuba from the mid-1990s to late 2004, was removed by then-President Fidel Castro and now is subject to a 10% tax whenever it is converted to CUCs — in effect a devaluation by the state. The tax is felt most by tourists and the estimated 10% of Cuban households receiving money from relatives abroad.
[...]
The government of Raul Castro, the 76-year-old younger brother of the ailing Fidel Castro, has acknowledged since Raul was named president in February that the two-currency economy has produced social strains and a class divide. He has pledged to restore equality by reunifying Cuba’s monetary system. Many foreign economists, however, deem that impossible unless everyone is forced back to the dysfunctional system in which prices are arbitrarily fixed by the state and goods disappear from stores when their production cost exceeds what they can sell for.
The Economist Intelligence Unit’s central forecast assumes that there will be no sudden rupture in the political system. The new president, Raul Castro, is under no immediate threat from the outlawed domestic opposition or from the US; there are no signs of ruptures within the government; and the population’s frustrations are focused mainly on economic hardships, which are slowly being relieved. Nevertheless, the departure of Fidel Castro has opened the way for a gradual shift in the political structure. Under Raul, authority will be less centralised, but we assume that the one-party system will remain.
Relations with the current US administration will remain hostile, and US sanctions will remain intact. However, a gradual re-engagement is possible under the next US administration, which will take office in January 2009. This would require strong political will on both sides to overcome resistance based on ideology and vested interests, but if it occurred would herald new possibilities for both political and economic liberalisation. Even without full normalisation of relations, a relaxation of sanctions could result in an increase in bilateral economic relations by 2012.
Economic policy is under review, and a reform process has begun that is likely to bring major changes in the coming year. Our forecast assumes that the state will continue to exercise substantial direct control, but reforms will expand the role of the market. The Banco Central de Cuba (BCC, the Central Bank) will play a pivotal role in a realignment of prices, wages and exchange rates, using a broad range of direct and indirect instruments. We forecast an increase in real wages in 2008 and a revaluation of the unofficial value of the Cuban peso in 2009. Both adjustments will serve to increase real consumer spending. The fiscal deficit (which is monetised) will widen in 2008 before moderating to 4% of GDP by 2012.
We expect annual GDP growth (using the standard definition, not the Cuban accounting method) to decelerate after a surge since 2004 driven by new export markets and sources of external finance. With a stable population, an average GDP growth rate of around 5% in the forecast period will bring significant improvements in living standards. Higher consumer spending and state investment will provide momentum in the medium term. Close ties with China and Venezuela leave Cuba vulnerable to any reversal of fortune in those countries.
Although the new president, Raul Castro, is introducing a number of reforms, the Economist Intelligence Unit expects gradual, rather than sudden, political (and economic) transformation.
There will be no easing of tensions with the US in 2008, but some rapprochement is possible from 2009, depending on the outcome of the US presidential election in November 2008.
The government has started to introduce a series of reforms to improve economic management, but progress will be constrained by conservatism and its commitment to full employment.
A strategy for moving towards a single currency and single exchange rate is under way, but until this objective is achieved, the economy will continue to be plagued by dislocation and perverse incentives.
We expect growth to moderate in 2008-09, and it will remain below potential as a result of continued US sanctions and restrictions on private investment.
A small current-account deficit is forecast, as a widening goods trade deficit is partly offset by larger services and current-transfers surpluses.
Monthly review
Some resented restrictions have been lifted, allowing Cubans to use facilities previously been reserved for tourists and to buy mobile phones; these reforms will make real income differences more conspicuous.
Government officials and representatives of the intellectual community have stressed the need not only to improve economic efficiency but also to air disagreements.
Diplomatic hostilities between Cuba and the US have flared up over US support to dissident groups.
Cuba’s relations with the EU have remained overshadowed by differences over the application of conditions on the removal of diplomatic sanctions, while relations with Russia have strengthened.
Reform measures have been introduced to expand opportunities for consumption and improve incentives, and more have been promised.
The authorities’ anti-corruption drive has continued.
No data have been published on economic performance in the first quarter, but the available information suggests that the economy has continued to grow.
Cuba will provide assistance to Jamaica in developing its agricultural sector, according to an agreement signed in Havana as Prime Minister Bruce Golding wraps up a three-day official visit.
In a campaign that bears much similarity to Soviet leader Mikhail Gorbachev’s 1980s appeal for glasnost, Cuba’s President Raul Castro has been urging the public to investigate social shortcomings, denounce them and propose improvements.
And in concessions to allow Cubans some access to 21st century technology, Castro’s government recently announced the lifting of bans on cellphones and personal computers.
The top-down decisions granting citizens the ability to communicate with one another and to brainstorm solutions have been a hallmark of Castro’s leadership since he took the reins of a nation in crisis 21 months ago from his older brother Fidel.
Cuban intellectuals and common folk are embracing the straight-talk notion, as did Russians 20 years ago. But here, as in the Soviet Union, the leadership is walking a tightrope, risking the collapse of a struggling, authoritarian system by granting long-denied freedoms.
After Fidel Castro announced that he was resigning the presidency of Cuba on Feb. 19, shares of OfficeMax rose 12%. The reason? It has a claim worth $2.5 billion dating back to when its property there was seized in the wake of the 1959 revolution. Similar claims made by nearly 6,000 companies are currently valued at $20 billion, and U.S. laws require all claims to be settled before trade can be normalized.
U.S. companies are not looking for a check, however, according to Patrick Borchers, an international-law professor at Creighton University, who studied the issue for USAID: “[They want] assets back or replacement assets or development rights.”
While the office-supply chain, OfficeMax, no. 288 on the 500 list, was never in business in Cuba, it came to own Cuba’s national electric company through a merger with papermaker Boise Cascade. Boise had earlier bought a Florida company with a stake in Cuban Electric.
Other claimants paint a picture of pre-Castro consumer life: Colgate-Palmolive, maker of the island’s most popular toothpaste;Coca-Cola, whose soda machines were ubiquitous; and GM, maker of the ’50s-vintage cars still being driven around the island. A predecessor of Exxon Mobil owned an oil refinery, and Chiquita Brands bought a firm that owned fruit orchards.
One company that’s been particularly interested in updating its claims is Starwood Hotels. In 1998 the global hotel group acquired part of a claim worth $1.4 billion when it bought a piece of the ITT conglomerate, which had owned a radio station in Cuba. Then, in 2005, after a former ITT manager in Cuba contacted the company, Starwood asked the Justice Department to recognize an additional claim of $51 million worth of land near the Havana airport and on the ocean. It was approved in 2006, but don’t book your room yet.
Raul Castro has delivered only a few major speeches during the twenty-one months since he took the reigns of power, a period of time in which his brother would typically have emitted a hundred or more. Public performance has never been Raul
Wilfredo Cancio Isla of El Nuevo Herald reports on the Cuban government’s possible implementation of further changes. They include:
Cuban citizens may soon be allowed to travel abroad without official permits.
Freedom to rent homes and rooms, both to foreigners and Cuban citizens and the controlled sale of real estate by registered owners.
No restrictions on the sale of automobiles; previously prohibited from transferring titles. The government is also considering selling vehicles to the public.
Elimination of the decree that limits citizens from traveling freely within the island, especially toward Havana.
Also being studied by the Cuban government are the following measures that could be instituted by this year or next:
Revaluation of the Cuban peso in relation to the convertible peso (CUC) to the tune of 19 Cuban pesos per CUC; with the intention of gradually aligning the values until there is a single monetary currency.
Flexibility of restrictions for private enterprise and freelancers; allowing citizens to open small businesses.
Reorganization of government agencies by fusing those that are currently governing similar sectors.
A Cuban government official who requested anonimity told El Nuevo Herald: ”These are the most complex measures, because they have legal implications and repercussions for the nation, and have generated much debate within the directorate levels.”
The head of the US Southern Command, Admiral James Stavridis, told lawmakers Tuesday the changes in Cuba under President Raul Castro were “interesting,” but that only time would tell if they were real or “cosmetic.”
“I think it is too early to tell as yet, but it is interesting that Raul is opening some of the economic freedoms such as cellphones, access to tourist hotels, property rights,” he told a congressional panel looking into his command’s budget.
“We need to watch to see if this is a sincere change or just cosmetic,” he added.
Stavridis was questioned on the reforms Raul Castro, 76, has introduced in Cuba since he took over as president from his ailing brother Fidel, 81, in late February.
Raul Castro recently lifted a series of bans on Cubans renting cars and hotel rooms and purchasing goods such as pressure cookers, DVD’s, electric bikes and cell phones.
He is also considering agriculture reforms that include opening up the sector to greater foreign investment and closing down farming cooperatives that have proven to be inefficient.
Cuba watchers say there is likely a short-term political benefit of allowing greater economic openness, though they also warn that too many reforms by Cuba’s centrally-controlled, one-party regime could build pressure for more change than the government is prepared to allow.
Stratfor’sGlobal Market Brief assesses Cuba’s future economic reforms, which will be slow paced.
Some snippets of the brief:
Meanwhile, the Cuban economy faces significant problems. Its black market is growing significantly. Inequality is on the rise, along with corruption and crime. Its agricultural output is in decline and its industry inefficient. Though Cuba is unlikely to address these problems by embarking upon an openly free-market, capitalist course, it is no secret that Raul has been looking to China and Vietnam as candidates for economic emulation.
Raul Castro clearly would prefer to model any economic reforms on China, which has maintained state control along with its rapid gross domestic product growth. China is approximately 86 times larger in population than Cuba, but with a much larger proportional rural population
The following snippet from Jane’s Country Risk provides an assessment of Cuba’s political current:
Raul Castro has held most of the powers of the Cuban presidency since Fidel Castro announced his temporary retirement to undergo intestinal surgery in July 2006. The 76-year-old Raul has already consolidated his power and Fidel’s announcement of permanent retirement on 19 February will therefore have relatively little immediate impact on day-to-day administration. Nonetheless, Fidel’s formal retirement is highly significant in that it removes both a powerful symbolic presence and a compulsively meddling egotist from the Cuban political scene.
Raul is widely perceived as an uncharismatic technocrat about whom relatively little is known. Yet an analysis of his career as the world’s longest serving minister of defence provides some useful indications of likely developments under his presidency.
His track record suggests he will be not just a guardian of the political status quo but also a promising leader of the first, cautious stages of the post-Fidel transition, especially within the armed forces and the economy. In his public speeches since 2006, he has repeatedly hinted at “structural and conceptual changes” to the economy, prompting speculation that Cuba is on the cusp of embracing a mixed communist system on the Chinese model, with party control maintained while the economy is partially liberalised.
Raul will be an important stabilising presence in the short term. His underlying objective was and remains essentially conservative – to secure the future of the one-party socialist system, with central economic planning and a strong military at its heart. Any reforms will therefore be motivated more by a pragmatic desire to contain popular dissent than any genuine desire to democratise politics or liberalise the economy.
Forecast
One of Raul’s key objectives is to decouple the communist regime from Fidel’s cult of personality. Raul will seek publicly to promote younger figures within the government and accelerate the transition to the next generation of communist leaders. Genuine democracy is not on the agenda for now.
Look a bit further ahead, and two broad scenarios seem possible in Cuba. The first is one in which the Communist Party oversees the introduction of capitalism while retaining political control
The Cuban Council of State has relieved José Silvano Hernández Bernárdez of his post as the Minister of Light Industry.
Spanish journalist 
GDP to increase in 2011
5 September 2010 at 1409 in Commentary, Economy, Government by Armando F. Mastrapa 3d
The Economist Intelligence Unit forecasts for Cuba, “fiscal retrenchment will limit growth to only 2% in 2010. In 2011 policy relaxation will allow growth to pick up to 3.7%.”
Tags: Cuba, economist intelligence unit, Economy, eiu, GDP