Tourism as a National Development Priority / Elias Amor Bravo

Several tourists take pictures in the Havana’s Plaza Vieja. (EFE)

Elías Amor Bravo, Economist, July 2, 2018 — No one doubts that tourism is a top priority for the Cuban economy. Whether or not the communist authorities are managing it well is another matter. It is no surprise that President Díaz-Canel stresses “the priority of tourism for the country’s development given that it has become one of the main income generating activities in the island’s economy.” The issue, however, is not just about setting priorities but how to execute them and achieve results. As any Cuban peasant knows, it’s one thing to talk but action is something quite different. The distance between the two can be painfully large.

Let’s consider why.

In terms of absolute growth Díaz-Canel considers tourism in Cuba to be a success. In fact, as a Granma article notes, the so-called “government commission to stimulate and manage the tourism sector” can point to “impressive” growth since the 1990s under the direction of Manuel Marrero Cruz. continue reading

Back when the country was in the depths of the “Special Period,” a high-level communist official recognized Cuba’s potential as a tourist destination. With little hard currency and facing insolvency, the regime began to accept — with a certain degree of resignation — the arrival of foreign tourists in the country. It was an activity that, after the triumph of the so-called “Revolution” in 1959, had been largely banned due to its association wth the bourgeoisie and the wealthy, who were considered enemies of the new Cuban regime.

But, in fact, figures back up Díaz-Canel’s claims. The 18,000 rooms available to tourists in all of Cuba had grown to 67,000 by the end of 2016 according to figures from the National Office for Statistical Information. And that may not even include rooms rented out in private homes through social media sites and other online platforms that have begun springing across the island.

The Castro regime did the math. To turn tourism into the locomotive of the Cuban economy, it had to produce hotel rooms. The reality, however, is that the determinist Marxist system, which has done so much damage to countries that embraced it, rarely produces the expected results. And Cuba proved to be no exception. Tourism is still not an engine, much less a locomotive, or anything resembling one. Díaz-Canel himself has recognized this.

The president defends the Cuban tourism sector, citing “the comfort of its hotels, the beauty of its beaches and scenery, the country’s low crime rate.” But at the same time he acknowledges weaknesses, including the fact “that many products which could be produced domestically are still being imported, which raises costs.” His solution is “to further develop agriculture as well as sources of renewable energy and new technologies.” In short, what he calls the “so-called industry without chimneys.”

As a corollary, Díaz-Canel cites challenges to the sector, including “focusing attention on the growing number of visitors, raising the quality of Cuban tourism and finding replacements for imports.”

Developing the tourism industry requires taking all these factors into consideration. But there are many others that Díaz-Canel’s communist regime is not even mentioning. However, he has only to ask his advisers for a brief description of tourism successes in other parts of the world to recognize that “talk and actions are very far apart.” I also have the impression, an admittedly pessimistic one, that they are not willing to do the things it takes to be successful. Let’s look at them one by one.

First, tourism is a private sector activity. Nowhere else in the world does the state own hotels unless there is some concrete reason (national patrimony, cultural significance, historic preservation) to justify it. And even in those cases there is no question that overall operation and management is best left to the private sector.

As a private sector activity, the hospitality industry needs a legal system which respects private property rights and does not create obstacles — other than those related to legal and urban planning issues — to business development. Owners of tourism related businesses respond more quickly to the tastes of their consumers and are much more familiar with their needs. They can more easily direct financial resources to the needs of their businesses and, once those businesses are profitable, are more able to expand or increase their operational bases. If we look at examples from other countries, we see this is nothing new.

Secondly, tourism requires training and expertise. Can anyone tell me in what university or trade school run by that “accomplishment of the revolution,” the Cuban educational system, can someone study gastronomy or learn how to be a professional chef? Where can someone learn how to be a waiter, maitre d’, sommelier, bartender, hotel receptionist, housekeeper… in short, any of the various jobs within the field of hospitality?

Not only must training centers be created as soon as possible, foreign language instruction along with the full range of administration and facilities management must be promoted. Given the country’s backwardness in these areas, companies must be able to rely on funding for employee training.

Third, tourism requires intelligent promotion. Cuba is competing with financially stable, high quality tourist destinations in an area of the world which attracts the most affluent segment of the tourism market. Its competitors have more experience and their promotional campaigns in target markets guarantee them a steady and growing stream of visitors, even when the economic climate becomes difficult, as happened in late 2008.

Tourism promotion in Cuba is controlled, directed and carried out by the state. It does meet its publicly defined objectives because basically it does not adequately support what Cuba has to offer, which are its competitive advantages. All consumer demand from overseas is channeled through package deals arranged by international tour operators. Tourists who want to travel freely to the island must deal with a shortage of information that prevents them from being able to experience the country on a modest budget.

Fourth, as a result of the secular amnesia that began in 1959, Cuba has arrived late to global tourism. Its new importance stems from official statements about being the locomotive of national development, something that upon arrival the tourist does not perceive. I refer to the current state of the country’s abandoned infrastructure, roads, communications media and services in general.

The tourist who wants to experience the reality of Cuba is confronted upon arrival with a backdrop of social devastation, creating feelings of anxiety that one does not associate with the idea of a pleasant vacation. The next year he does not come back. These are the kinds of things of which one should take note.

Mogherini’s Real Interest in Havana

Federica Mogherini in Havana this month (Radio Cadena Agramonte)

Cubaeconomía.com, Elias Amor Bravo, 5 January 2018 – The Castro regime, in its urgent need to find external financing for the economy, has developed a strategy of approaching the European Union that has come to an end, at least for the moment, with the recent visit of Federica Mogherini to Havana. The agreement is a vague text, with language so general it can mean anything, but it does not deceive anyone in terms of its objectives.

Behind this propaganda scenario, Cuba wants to access the economic funds, certainly substantial, of the so-called Cotonou Agreement, the central axis of the collaboration between the European Union and its member states with another 79 countries belonging to three continents, Africa, the Caribbean and Pacific, abbreviated as the ACP countries, which had been, in their day, colonies of different states now in the Union. continue reading

The Cotonou Agreement, signed in 2000, has as its main objective the reduction of poverty to contribute to its eradication, offering support to the sustainable economic, cultural and social development of its partner countries, and facilitating the progressive integration of their economies into the world economy. Its antecedents start from the founding text of the Treaty of Rome in 1957, with the cooperation later expanded by the two Conventions of Yaoundé and the four of Lomé.

The Agreement establishes a framework of close collaboration between the signatory countries, based on a series of fundamental principles:

  1. The Agreement partners are equal.
  2. The countries determine their own development policies.
  3. Cooperation is not only between governments; parliaments, local authorities, civil society, the private sector and the economic and social partners also play a role.
  4. The cooperation agreements and priorities vary according to some aspects such as the levels of development of the countries.

Since its entry into force, joint institutions have been created to support the implementation of the Agreement, such as the ACP Council of Ministers, which receives assistance from the Committee of Ambassadors and maintains political dialogues, adopts political guidelines and makes decisions for the implementation of the Agreement. This institution is responsible for presenting an annual progress report to the ACP-EU Joint Parliamentary Assembly and as an advisory body it presents recommendations on the achievement of the objectives of the Agreement.

There is no doubt that the political dimension of the Cotonou Agreement is important since it includes, among other elements:

  1. A full political dialogue on national, regional and global issues,
  2. The promotion of human rights and democratic principles,
  3. The development of policies for the consolidation of peace and the prevention and resolution of conflicts, and
  4. The handling of issues related to migration and security, including the fight against terrorism and the proliferation of weapons of mass destruction.

To date, the Agreement has been based mainly on the promotion and development of cooperation activities whose objectives are: the economic development of the industrial, agricultural and tourist sectors of the ACP countries; social and human development to improve health, education and nutrition services, and regional integration and cooperation to encourage and develop trade between the ACP States.

All these activities are financed through the European Development Fund, which between 2014 and 2020 has a budget of 33.1 billion euros. However, it contains important clauses on trade in services, information and communication technologies, as well as capital movements.

Seen from this perspective, the interest of the Castro regime to accede to the Cotonou Agreement is more than evident, since it can act as a beneficiary, both receiving aid for internal development, as well as participating in the health, education and nutrition programs, which receive outstanding financing.

In addition, this Agreement depends on the representative of European foreign policy Federica Mogherini, hence the maximum attention she received in Havana and the displays of fondness and affection such as the visit to Old Havana with Eusebio Leal and the cardinal.

The regime, which agreed to generous plans for debt cancellation with the signatory countries of the Paris Club, and its subsequent conversion into development aid, now has an essential instrument in the Cotonou area to channel programs and give them a politically responsible format. All perfect.

But in addition, it may be known in Havana that the Cotonou Agreement will end in 2020, after the review carried out in 2010, which adapted the collaboration to focus more on issues such as climate change, food security, the fight against HIV/AIDS, the sustainability of fisheries, the strengthening of security in fragile regions, and the achievement of the Millennium Development Goals (replaced in 2016 by 17 Sustainable Development Goals).

Through this gateway to the EU, Cuba is prepared to participate fully in the negotiations of the future Agreement that the Union can elaborate and, in due course, sign with the ACP countries.

To occupy an active position and to be integrated into the more than 100 countries that make up the Agreement can serve the regime to obtain the much needed financing to close its external accounts and avoid structural liquidity problems.

Having exhausted the resources from Venezuela, Havana turns its eyes to Brussels. Will it work?