Two Aspects of the Reintroduction of Flights to Cuba / Dimas Castellano

Dimas Castellanos, 5 October 2016 — With the landing in Santa Clara of an Airbus A-320 from Fort Lauderdale-Hollywood on August 31st, Jet Blue restarted commercial flights between Cuba and the United States, which were suspended in 1962.

To accompany the general travel permissions, the increase in the level of remittances, better access to communications, the arrival of cruise ships, and North American hotels, the US Department of Transport, approved the launch of 110 flights to Cuba. Of those, apart from Jet Blue, American Airlines will fly 56 times a week to Cienfuegos, Camagüey, Holguín, Santa Clara and Varadero. And at the end of the year, other companies, such as Frontier, Silver Airways, Southwest Airlines and Sun Country Airlines will start up. Continue reading “Two Aspects of the Reintroduction of Flights to Cuba / Dimas Castellano”

Nevertheless, not everything is positive. The reintroduction of flights has twin aspects, both good and bad.

The good bits are that they are the result of the re-establishment of diplomatic relations between the two countries — the most important political event in Cuba since 1959 — the evidence of the failure of the Castro regime and the embargo, and the continuing arrival of North American cruise ships and hotels. An opening which will keep widening out. We can also add that the price of one-way tickets with medical insurance* included will not exceed $100.

In the face of the chronic inefficiency of the Cuban economy, clearly shown in the disaster of the reforms, the decline in GDP, and massive emigration, doing tourism business deals with with the greatest economic power in the world, located just a few miles away from our coast, looks to be an essential component in Cuban development.

The bad part is that, after a lost half a century, we are going back to our starting point, in the worst conditions, for two reasons.

The first one is that the Cuba of the 1950’s was tied up in the development of the hotel industry, international flights, and the arrival of tourist car ferries. Havana had become an obligatory destination for foreign tourists. The clearest evidence was the opening of the Capri, Deauville, Riviera and  Havana Hilton hotels between the spring of 1957 and May 1958, with more than 1300 rooms. That plan, interrupted by the 1959 revolution, is starting up again now after about seven decades’ delay.

The second one is that Cuba is the only country in the region  where its people don’t enjoy the elementary right to participate as entrepreneurs in their country’s economy and to contract directly with foreign companies, in spite of having more than adequate professional training.

Because of those reasons, among others, getting out of the profound crisis in which the country is immersed will be impossible without removing the obstacles preventing Cubans from exercising their right to participate  in the opportunities now opening up.

The ball is in Cuba’s court. Flights starting up again should not only serve to consolidate the normalisation of relations, but also to give Cubans back their rights seized from them over fifty years ago. Without that happening on the Cuban side, the moves taken by the White House and the reintroduction of flights will not have a positive effect on Cuban society.

*Translator’s note: The Cuban government has made medical insurance is mandatory for visitors to Cuba

Translated by GH

Source

Two July 26ths, And The Same Crisis / Dimas Castellano

Dimas Castellanos, 5 August 2016 — In Sancti Spiritus, the second secretary of the Central Committee of the Communist Party of Cuba (PCC), delivered a speech marking the 63rd anniversary of the assault on the Moncada barracks. José Ramón Machado Ventura began by wishing Fidel Castro well on his 90th birthday and reasserting “the commitment to remain faithful to the ideas for which he has fought throughout his life, and keep alive the spirit of resistance, combativeness, dialectical thinking, and faith in victory he instilled in us.”He added that to write his remarks he studied Fidel’s speech in that same city on July 26, 1986.

A reading of the message conveyed by Fidel Castro at that time reveals a relationship to the critical situation today and the designation of Machado Ventura to talk, 30 years later, in the same place, and in the absence of a plan to rescue the country from a crisis. Continue reading “Two July 26ths, And The Same Crisis / Dimas Castellano”

During the first decade after the Revolution Cuba received enormous resources via agreements signed with the USSR. These resources, which could have served to construct an autonomous economy, were accompanied by an almost total nationalisation process, the loss of freedoms, and an exaggerated willfulness. El Cordón de Havana (The Havana Cordon), caturra coffee, and attempts to raise up to 12 million head of cattle, produce half a million tons of fish, and more milk and cheese than Holland, are some examples, followed by a campaign to produce ten million tons of sugar in 1970, which practically paralyzed the country and led to a “rectification” process that lasted for 15 years.

In the new period a system an economic management and planning system (EPDS) was implemented, in which economic mechanisms were to work institutionally to tie the leader’s hands, averting any arbitrariness. The consequences of corporate independence and the measurement of economic over “political” results scared those who opposed reform.

In 1972 Cuba entered the COMECON and adopted a model similar to that of its member countries, in exchange receiving tens of billions of dollars. At the same time it received loans and participated in collaborative projects with Japan, Spain, France, Sweden and Argentina, among others. With this support it achieved economic growth that tripled its GDP, and general wage reform was implemented aimed at stimulating workers’ interest, accompanied by parallel and free farmer markets, measures that bolstered the peso’s purchasing power.

In 1975 the 1st First Congress of the PCC approved the course charted by the SDPE. However, a few days later the leader of the Revolution made public his commitment to large-scale military engagement in Angola, which constituted a strong impediment to the development of the SDPE. To this we must add that the massive aid received lacked structural reform or the reincorporation of fundamental freedoms. The absence of these factors prevented the development of a “prosperous and sustainable” economy, as they say today. Instead, loans swelled the country’s external debt of 291 million pesos in 1969 to over 2.913 billion by June 1982, when, due to liquidity problems, Cuba had to renegotiate it. In 1986 the nation announced its definitive inability to pay.

The clash between the leader of the Revolution’s leadership style and the straitjacket entailed by the SDPE, headed up by Humberto Pérez, with the support of Raúl Castro, eventually sank the reform measures. Arbitrary decisions flouting the laws governing economic phenomena prevailed.

In 1986, the year in which Fidel Castro spoke in Sancti Spiritus, the “Process for the Rectification of Errors and Negative Tendencies” began. In that speech he listed all the works carried out in the province, from the mechanization of agriculture, the construction of dams and the sowing of rice fields, to dozens of supply centers, hundreds of cane combines, grain mills, sand washers, block factories, to the construction of a hydroaccumulator, to be complemented with the Cienfuegos nuclear power facility, which, in his words, would be “safer than any of the nuclear power plants built in the US.”

With this constructive endorsement he addressed the US president to say: “Behold how our people have worked with freedom! And without having worked all they should have, because, working in complete freedom, they have even taken the liberty of not working all that was needed.”He added: “This shows that, yes, this is one of the essential ways, really, to build socialism.” Later he listed deficiencies, such as dams that had been under construction for 10 years, work that was at a standstill, and overpasses built on freeways lacking approach roads, etc., assigning the reformers of the time responsibility for them.

He said: “We have done a lot during these years of Revolution, but we could have done more and better things if we had been more capable, if we had been more hardworking, and better workers, and if we had been more and better revolutionaries. In recent days we have talked about many classes in politics being given, about political philosophy and political history, and we have not been able to emphasize and inculcate that the revolutionary’s first duty is work … we must make it our intention to overcome all these negative trends and make an effort, to make a great leap forward in the Revolution … ”

Elsewhere in his speech he acknowledged: “We, who were not traditionally oil exporters, had converted our oil savings … into hard currency, and at those oil prices we were generating more than 400 million dollars in this area… ”

The result was a period of stagnation that worsened as of 1989. With the demise of the USSR, the country had to rely on its own efforts, and the Government was forced to implement short-term measures to alleviate the situation. With Chávez’s victory in Venezuela, subsidies based on ideologically affinity resumed, and the economy’s development was again put off indefinitely.

In 2008, when Fidel Castro stepped down as head of state, measures were introduced to change the window dressing while preserving the same content. The “updating of the economic model” yielded one less systemic and comprehensive than that of the SDPE, but similar in its fear of consequences and in opposition by a sector of the Government itself.

Thirty years after Fidel Castro’s speech, Machado Ventura claimed that the essential concepts expressed then could have been uttered today. He added, “With that clear consciousness we began the modernization of our economic and social model, characterized from the beginning by the broadest and most democratic and genuine participation, on a scale and of a depth unimaginable in countries that  declare themselves to be paradigms of democracy .. . Let us demonstrate every day, in every job, and with concrete facts, that we will be up to this new challenge … ”

Engrossed by the past, in his speech Machado Ventura ignored the most important political development since 1959: the resumption of diplomatic relations with the US, and the visit by that country’s president to Cuba.

The similarity between the speeches and situations are obvious:

1- Despite the Soviet aid in 1982, Cuba had to renegotiate its debt and, in 1986, suspend payments due to solvency problems. Now, though the debt was renegotiated, the insolvency remains.

2- Thanks to the millions of tons of oil delivered by the USSR, Cuba became an exporter of oil, and a reduction in prices hurt its revenues in this category. Now, the reductions in oil from Venezuela (part of which it seems to have exported) have also affected revenues, setting the country on course for a crisis worse than that in the 90s.

3- Before the USSR bought sugar at prices higher than those on the international market, and the country did not advance. Now, something similar has happened with Venezuela, and the country regresses.

4- In 1986 reform was halted, and reformers were publicly sidelined. Now another attempt is being made to stop reform and, although it has not been announced, it appears that some reformers will also be marginalized.

5- Fidel’s words about how “Behold how our people have worked with freedom! And without having worked all they should have, because, working in complete freedom, they have even taken the liberty of not working all that was needed…” are once again relevant, now with the country facing even worse conditions.

As if 30 years were not enough, today it is proposed that, faithful to that legacy, we must conceptualize socialism. Without understanding the role of time in politics, Machado Ventura believes that the Cuban people are going to sacrifice themselves in the defense of a system that has destroyed almost everything, including hope – as evidenced by the sustained and growing exodus of people from the country, both young and old alike.

Note: This translation was taken from Diario de Cuba’s English edition

Coffee: Relations with the US have revealed to the Cuban people the roots of the drop in productivity / Dimas Castellano

Dimas Castellanos, 18 July 2016 — The statement issued in May of 2016 by the National Bureau of Cuba’s National Association of Small Farmers (ANAP) in response to the US Treasury Department’s announcement that it would allow independent producers to export coffee Cuba to the United States should have come as no surprise. Said statement is a faithful reflection of the entity’s nature, as the ANAP does not represent the interests of producers, but rather those of the State, the Government and the Communist Party (PCC). An examination of its founding premises bases suffices to substantiate this.

The forming of associations of farmers and employers, a phenomenon that emerged in the 19th century, was fomented by the freedoms provided for in the Constitution of 1901, and flourished as part of a struggle to defend the interests of their members against eviction and for ownership, better markets, fair prices, low-interest loans and reduced rents, among others. Decree 16 of January 3, 1934, issued by the government of Ramón Grau San Martin, institutionalized the mandatory accreditation of association of producers. In 1937 the First National Farmers Congress was held, and in 1941 the National Farmers Association was founded. These developments would establish such associations as a key institution in Cuban society. Continue reading “Coffee: Relations with the US have revealed to the Cuban people the roots of the drop in productivity / Dimas Castellano”

As a result of the shift towards totalitarianism stemming from the revolutionary process in 1959, private property and the diversity of farmer and employer associations were eliminated. In October of 1960, wielding the argument that all sugar mills had been nationalized and, hence, there no longer were any hacendados (landowners), the most powerful of these organizations, the Asociación de Hacendados de Cuba, was disbanded.  Next to be eliminated was the Asociación de Colonos de Cuba, and in December of 1960 the leader of the Revolution advanced the following idea: “It is necessary for small farmers, instead of being sugar cane growers, or tobacco growers, etc., to be simply farmers, and for us to organize a National Association of Small Farmers.” This was an idea that, as usual, became law.

On January 21 of 1961 all the employer organizations and existing farmer associations were supplanted by the Asociación Nacional de Colonos, which was renamed the National Association of Small Farmers (ANAP) in May of that year. Appointed to head it up was José Ramírez Cruz, from the insurrectional struggle and the ranks of the Popular Socialist Party (PSP).

The objectives of the ANAP were enshrined in its charter, its seventh statute stating: “To guide and lead the cooperatives and small farmers so as to comply with the agrarian policy of the Revolution, as well as the agreements and guidelines laid down by the Party and the organization itself at its respective congresses and plenary sessions.”

The eleventh article reads: “To achieve, through the organization’s political and ideological work, successful compliance with production plans and sales to the State, and to contribute effectively towards the implementation of the rules and procedures laid down by the economy’s governing bodies.”

Article fourteen, meanwhile, states: “To carry out profound political work with farmers so that they do not engage in the sale of agricultural products illegally; and to exercise, in coordination with the people’s councils and the MINAG, the control necessary to prevent landowners not associated with the ANAP from committing violations affecting farmers’ honor and dignity.”

These three items can be summarized as follows: 1) subordination to the Government’s objectives, 2) the supplanting of the work of private producers and their private associations 3) the use of the association to monitor, control and prevent the free sale of their products.

This explains why all the ANAP’s plenary meetings and sessions, ever since its founding, have been presided over by officials of the PCC’s Political Bureau, and why in January of 2013, violating the fundamental principles of these cooperative efforts, they replaced or released from duty 632 presidents of agricultural cooperatives.

Therefore, in response to the US Treasury Department’s decision to add Cuban coffee to its list of imports permitted by independent producers (whose impact was bolstered by Nespresso’s announcement that it would resume the sale of Cuban coffee in the US), the ANAP, unsurprisingly, declared its opposition.

It would have been another story if this body actually represented the interests of its members, who would be the main beneficiaries of the United States’ decision. Instead of scoffing at the decision, stating that “no one can conceive of a small farmer exporting directly to the US,” it should have demanded changes to the State monopoly so that it would be “conceivable” and a viable opportunity from which its “members” could benefit.

The ANAP’s subordination to the State, Government and PCC explains not only Cuban producers’ current defenselessness, but also their apathy, as reflected in the decline in Cuba’s coffee production; once the world’s coffee export leader, production has plummeted from 60,000 to just 6,000 tons annually. And it also explains the purchase of coffee from countries like Vietnam, when it was Cuba that taught the country how to grow it.

The results demonstrate that the ANAP has never been, nor will it ever be, able to replace or rival the National Association of Coffee Growers, or that of the landowners, or that of the ranchers, or the other associations, which all posted figures much greater than the paltry ones achieved today, by selling freely on the national or international market.

The State’s monopolistic control, its abusive supply prices, the countless restrictions to which it subjects producers, its restrictions on marketing any portions of crops outside the mandates imposed by the State, its land ownership relationships, its absence of an economic model capable of efficient production, and its fear of the development of a middle class, are among the main causes of Cuba’s coffee decline, the deterioration of agriculture, and the economy in general, and the new and inevitable crisis the country is headed for as a result of the loss of Venezuelan oil supplies.

Relations with the US have revealed to the Cuban people the true roots of the decline in production.

Translation taken from Diario de Cuba’s English site

The Cuban Economy Goes Into A Tailspin / Dimas Castellano

Raúl Castro and former Minister Marino Murillo. (INFOLATAM)
Raúl Castro and former Minister Marino Murillo. (INFOLATAM)

Dimas Castellanos, 1 August 2016 —  On 29 December, 2015 the Cuban president announced before the National Assembly of the People’s Power that “despite the impact of the international economic crisis, exacerbated in our case by the effects of the US blockade, maintained unchanged, and the external financial constraints, which have worsened during the second half of the year, the GDP grew 4% this year, which is undeniably a good result in the midst of these circumstances.”

Let’s take a look at this. The drop in GDP between 1989 and 1993 was 34%. Recovering from this decline requires sustained annual growth of 7%. The measures implemented for that purpose to date have failed. Between 2011 and 2014 the figure was 2.3%; in 2015, 4%; and during the first half of 2016 the GDP actually fell to 1%. According to these numbers, we are not looking at a “good result,” but rather the worsening of a prolonged crisis; something similar to the tailspin aircraft go into after they are hit. Continue reading “The Cuban Economy Goes Into A Tailspin / Dimas Castellano”

Blaming the “blockade” and “external financial constraints,” after the measures taken by the US administration, is baseless for the following reasons:

  1. Family remittances, which in 2011 hit 2.294 billion dollars, exceeded 3.13 billion in 2014, and in 2015 were estimated at about 3.99 billion.
  2. In 2014 the export of technical services was worth over 8 billion dollars.
  3. In 2015 tourism surpassed the 3.5 billion dollar mark, and a new record was expected in 2016.
  4. The biopharmaceutical industry saved the country more than 1.9 billion dollars in imports.

As for traditional products, like nickel, Cuba’s leading export, it comes in at 1.1 billion dollars a year; while sugar in the 2014-2015 harvest weighed in at some 1.9 million tons and accounted for sales of 600 million dollars; and for the 2015-2016 harvest, which did not exceed 1.6 million tons, it will bring in about 150 million dollars more than the previous one. Other items are not sufficient to explain the fall in the GDP.

As for the “external financial constraints,” renegotiations of debt, including that owed to the Club de París – which forgave 8.5 billion of 11.1 billion dollars – have created a favorable environment with creditors for the reintegration of Cuba into international economic relations.

If family remittances and tourism have increased; if exported medical services have not dropped; if the reduction in revenue from nickel and sugar, either due to lower prices or productive inefficiency, cannot explain the sudden reversal, then an analysis must address petroleum among the possible causes. According to a Reuters cable on July 8, 2016, the delivery of crude to the island dropped from 100,000 to 53,000 barrels per day. If so, as occurred in Soviet times, Cuba may have been exporting a portion, which could explain the plummeting GDP.

Whatever the cause of the decline, what is the plan to deal with the crisis? On July 8 General Raúl Castro told the National Assembly: “We must reduce non-essential expenses of all kinds, foster a culture of saving and the efficient use of available resources, concentrate investments in activities that generate exports, replace imports, and support the strengthening of our infrastructure, thereby ensuring the sustainability of electricity generation and the improved use of energy carriers. We must, in short, strive not to hinder, in any way, the programs that ensure the nation’s development.”

Reducing costs, promoting a culture of saving, concentrating investments in activities that generate revenue, replacing imports, etc., are measures announced year after year, and which invariably fail. Thus, what is new about this plan, if all its objectives have been missed, over and over again?

Setting them again, while ignoring the root causes of the repeated failure to attain them, demonstrates a lack of political will in a scenario in which it is impossible to roll back the small reform measures introduced, sever relations with the US again, find a new sponsor, or erase Cubans’ knowledge of the true causes of their troubles.

The Minister of the Economy and Planning, Marino Murillo Jorge, proposed, inter alia, the following five measures:

  1. “If the problem we have is our liquidity capacity, the first thing we must do is restrict payments in currency in the country … administrate the taking out of loans very carefully, to render the country’s future borrowing manageable … and adjust our energy carriers’ consumption … “
  2. “As activity levels fall, wages in the business system will adjust to production levels … in the business system there is a lower average salary estimated than what we anticipated in the plan  … “
  3. “With the currency that we have, what we must do is support what is the raw material for the core business, or the spending entailed by the main activity in each place … because the amount of money that we are going to give the bodies is nothing like what was envisaged in the plan … “
  4. “We will have to work on looking for financing solutions in the medium and long term, to definitively abandon the principle of making short-term investments, because then the payment of debt is very fast, and the debt is not paid with the return on the investment. “
  5. “Now, if you lower prices, and wages have more purchasing power, that means that the physical quantities sold are greater, and to support these purchase capabilities it has been necessary to buy 25,000 tons of rice, 32,000 of peas, 82,000 of chicken, 36,000 of oil, and 3,800 of dehydrated milk. “

The decrease in imports in order to avoid generating new debt will be reflected in further production declines. The average salary, whose insufficiency relative to the cost of living is a pronounced anomaly of the Cuban model, will suffer a further decline, which will be reflected in lower production, more corruption and criminal activities. Reducing the amount of currency that the bodies will receive cannot be taken advantage of on the world market because productive inefficiency makes it necessary to use those savings to buy what we are unable to produce.

Although Raúl Castro stated that payment obligations are being met, Murillo’s words denote difficulties honoring commitments to creditors after the renegotiation. The slight reduction in prices, aimed at endowing the Cuban peso with greater purchasing power, without productive backing, makes it is necessary to import more, when one of the country’s problems is, precisely, a lack of solvency. In short, five insurmountable contradictions that augur the model’s final collapse.

As the causes are not external, or circumstantial, but internal and permanent, the analysis must take another course.

In July of 2007 General Raúl Castro acknowledged the shortcomings, mistakes and bureaucratic and indolent attitudes illustrated by Cuban fields infested with sicklebush, and argued that rising food prices on the international market made it necessary to produce them in Cuba. In 2008 he emphatically stated: “We must make commit to our land! We must make it produce! ” Castro stated that food production was “a matter of the utmost national security.” However, the reform measures were, from the very outset, subordinated to the dominance of State ownership, socialist planning, the granting of rights to foreign entrepreneurs who refuse to employ Cubans, and ideological orthodoxy: four of the culprits behind the failure.

In March of 2012 Marino Murillo Jorge said that the Ministry of Agriculture “has presented an unfavorable economic and financial status for several years, which negatively affects business management,” and demonstrated that the actions and measures taken to date to reverse this had been insufficient. In May of 2013 he stated: “The measures which for decades have been implemented in order to manage the land have not led to the necessary increase in production.”

Practical experience and the science of economics have demonstrated that people pursue certain goals, in accordance with their interests. The loss of autonomy – which is to the economy what oxygen is to organisms – together with statism, voluntarism, command and control methods, central planning, the ineptitude of leaders and administrators, and producers who lack incentives to produce, combine to spawn the inefficiency that characterizes the Cuban economy, and have driven it to what appears to be this, its final stage.

From 1% we are headed for 0%, and on to initiate a stage of negative growth, which they are bound to call “special growth.”

Note: Translation taken from Diario de Cuba English edition

Randy, The Situation Is Worse Than In The 90s / Dimas Castellano

Randy Alonso (right) on the Roundtable TV show.
Randy Alonso (right) on the Roundtable TV show.

Dimas Castellanos, 3 August 2016 — The newspaper Granma recently published an article by Randy Alonso that commenced by dismissing “media vultures” who “revel in painting a dark picture, according to which Cuba will return to the direst days of the Special Period.”

It is telling that Randy Alonso and the daily Granma would devote time and space to responding to these “vultures,” extraordinary birds that, by feeding on animals in a state of decay, play a vital role in the health of their societies.

In the fulfillment of his mission, Randy quotes Cuban President Raúl Castro on July 8: “speculation and predictions have begun suggesting the imminent collapse of our economy and auguring a return to the acute phase of the Special Period that we faced in the early 90s, and we were able to overcome thanks to the resilience of the Cuban people and their unlimited confidence in Fidel and the Party. We do not deny that adversity may arise, even greater than that we are experiencing today, but we are prepared and better positioned than then to deal with it.” Continue reading “Randy, The Situation Is Worse Than In The 90s / Dimas Castellano”

Although Raúl Castro acknowledges that “adversity may arise, even greater than that we are experiencing today,” Randy focuses on demonstrating that the Cuban economy today is in a better position to weather it than in the early 90s. To do this he chooses ten issues, which I shall summarize and address below (the remaining three: the BioCubaFarma Group, petrol production, and self-employment are not relevant to this analysis).

1- In 1990 more than 80% of Cuban foreign trade was with the USSR and the countries of Eastern Europe. Today it is more diversified, by country and region.

Diversification in and of itself does not constitute any advantage. Trading with more and more countries does a nation no good if its productive inefficiency prevents it from taking advantage of that trade, and instead forces it to spend hundreds of millions of dollars abroad each year to buy what could be produced in Cuba, like coffee, rice and milk byproducts. The strongest evidence of this inefficiency is the drop in GDP from 4% in 2015 to 1% in the first half of 2016.

2- In 1990 Cuba had no sources of credit. Today Cuba’s debts have been renegotiated with its creditors.

Randy Alonso fails to mention that Cuba ran out of sources of credit due to the infeasibility of its economic model, which rendered it unable to pay either “friends” or “enemies.” It was renegotiated with Cuba because, in view of the normalization of relations with the US, creditors, aware that they would never collect, decided keep one foot in Cuba. But renegotiation also means you have to pay. The Club de París has forgiven 8.5 billion, and Russia, 31.7 billion. The former is now owed 2.6, and the latter, 3.5, to be paid over the next few years, precisely when GDP growth is close to 0%.

3- At that time (1990) foreign investment was almost nil, but during the current stage we boast revised legislation and the promising Mariel Special Development Area (ZEDM).

Cuba, according to its own authorities, requires sustained GDP growth of 5 to 7%, which means an annual flow of investment of between 2 and 2.5 billion dollars. That amount has not been achieved under the “revised legislation” because, among other things, it bars Cubans from participating as investors, and foreign companies from directly hiring them.

Meanwhile the ZEDM, which could help to lift Cuba out of this stagnation and insert it into the global economy, is plagued by delays in the dredging of the bay to make possible the entrance of mega-ships with a capacity for approximately 13,600 containers. Hence, it has had no significant impact.

In his presentation the Minister of Foreign Trade and Foreign Investment stated that the ZEDM “represented a profound modernization of the transformative process that was undertaken at the beginning of the Revolution to place the main means of production in the hands of the Revolutionary State.” In other words, the law intends to preserve the very nationalization that is the root cause of Cuba’s economic inefficiency.

4- Tourism, which back then (90s) was only emerging as a promising economic sphere, today is the second largest generator of foreign revenue.

Tourism is the country’s third source of foreign revenue after family remittances and the export of services. However, most of this revenue is lost buying what Cuba’s inefficient economy is not able to produce. In order for tourism to constitute “a promising economic sphere,” and for the country to be able to take advantage of the increasing flow of visitors, what is needed is greater and more active participation by the private sector, and the development of a domestic industry to mitigate the financial leaks caused by the model’s inefficiency.

5- The export of Cuban services was only getting underway in the 90s. Today it is the country’s largest source of foreign revenue.

The training of people in order to rent out their services is universally considered to constitute modern slavery. It is outrageous that the State rakes in 8 billion dollars a year for these services, over 75% of which it retains.

The fact that some ideological allies, in Brazil and Venezuela, for example, look the other way, does not guarantee its permanence or infuse it with potential, much less promising to sustain a country that is fast falling behind, and from which many professionals are fleeing.

6 – Electricity generation was (in 1990) based entirely on imported fuel. Today we have an electro-energetic system largely based on domestic fuel. In addition, we are increasingly using renewable energy sources.

It turns out that the Economy Minister actually asked the National Assembly of the People’s Power: “What are we missing?” And he answered his own question: “….we lack fuel, because everything we had planned on has not reached the country.” He added: “What we are talking about here is 7,862,000 tons of total fuel that the country receives.”

Therefore, if we subscribe to Randy Alonso’s own arguments, the Economy Minister’s analyses, and Raúl Castro’s speech before the National Assembly, make no sense. According to a Reuters cable on July 8, 2016, delivery of crude to the island fell from 100,000 to 53,000 barrels a day; this suggests that Cuba was exporting some of that oil, which could explain its plummeting GDP.

7- If then (in 1990) numerous investments were partially or totally paralyzed, without any possibility of their completion and commissioning; now the country has the capacity to preserve the financing of investments slated in sectors strategic to national development.

“The other measure that we have to take,” said the Minister of Economy and Planning, “is to carefully administer the taking out of loans, to make the country’s future debt manageable”. The aim is not, in the words of Randy Alonso, “to preserve funding” but rather, in the words of the minister, to “seek financing in the medium and long term and abandon the principle of making short-term investments, because then the debt payment is very fast, and the debt is not paid with the return on investment.”

What both the minister and Randy overlook is an inefficient economy that cannot pay its outstanding debts to creditors, such that there will be no financing in the medium and long term.

In short, with an inefficient economy:

1- Trade diversification cannot be capitalized on.

2- Suppliers and creditors cannot be paid reliably, so obtaining new loans is difficult.

3- The “revised legislation” has not achieved its objectives.

4- The private sector must be permitted a greater and more active role in the Tourism industry, so as to develop a national sector, which is impossible under the current model.

5- The export of services, in its variant of modern slavery, has no future.

6- The lack of available fuel,although its price has been reduced by the market, will lead to serious problems in the country.

7- Obtaining financing in the medium and long term will be impossible if current outstanding debts with creditors are not paid, unthinkable give the sharp reduction in the GDP.

If, in addition to all this, we add Cubans’ disbelief, despair and disinterest, we must concur with the director of the Roundtable television show and the CubaDebate site that the situation today is, in fact, not like that in the 90s … it is simply and categorically worse.

Note: Translation taken from Diario de Cuba’s English site

The Need for a Cuban Middle Class / Dimas Castellano

Dimas Castellano, 15 April 2016 — Economic and social stagnation in Cuba are related to the lack of a middle class. To defend this thesis and promote debate, I submit the arguments below.

According to Karl Marx, social classes are structured around the ownership of the means of production, while Max Weber saw it from the position of a market that defines access to goods and opportunities. Within this structure, which ranged from the high bourgeoisie to the proletariat, there was the middle class. Since it did not have large amounts of capital, its power and wealth derived from direct participation in business management. Continue reading “The Need for a Cuban Middle Class / Dimas Castellano”

Based on a culture of personal effort, hard work and sobriety and given its beneficial role in economic and social development, the middle class thrived after the 17th century liberal revolutions in England and spread to other countries — particularly the United States — well into the 20th century. There, technical innovations such as the production line made the price of manufactured goods cheaper, raised salaries and created a dynamic economy, which resulted in an improved quality of life and the rise of the American middle class.

Its origins in Cuba date to the 16th century. In conjunction with the emergence of large cattle ranches, a class of small farmers arose, which formed the basis of Cuban national identity. Its growth accelerated with the increased demand for sugar, which led to the collapse of Haiti at the end of the 19th century. This in turn led to the transformation of a large proportion of cattle ranches into sugar plantations and an increase in the number of sugar mills.

However, the introduction of modern machinery and the construction of large mills spelled doom for small producers. This caused a split between agriculture and industry, which gave rise to the colono, a system dedicated exclusively to the production of sugar. This concentration of property ownership increased at the beginning of the 20th century with decrees issued by the government of occupation, which authorized the purchase and expropriation of land for the construction of railroads and new mills to the detriment of small and medium-sized farms.

A parallel process was generating a countless number of small production facilities, shops and services from which a national business class emerged that became an important economic sector during the first half of the 20th century

Cuba’s business community — a sector recognized in the constitution of 1940, which envisioned the state complementing rather than supplanting private initiative — provided the country with one of the three highest standards of living in Latin America. The constitution’s weakness was the absence of commensurate laws that would have allowed for the kind of real reform that would have led to diversification in agricultural property ownership.

In pre-1959 Cuba micro-businesses (those with ten employees or less) predominated, followed by small businesses (ten to forty-nine employees) and medium-sized businesses (fifty to two-hundred fifty employees). Of the roughly 2,300 industrial establishments of that period, half were micro-businesses, a figure that speaks to their broad reach.

In October 1960 the revolutionary government nationalized nearly all Cuban industries that employed more than twenty-five people. The 1959 and 1963 agrarian reform laws brought more acreage under state control than that of all the large estates combined. And the Revolutionary Offensive of 1968 dealt the death blow to tens of thousands of small private businesses which had managed thus far to survive. Their owners were replaced by bosses and administrators who did not share their interest, knowledge or business backgrounds. We are all too familiar with the results.

The failure of its nationalization program forced the government to implement a system of private sector employment under the euphemism trabajo por cuenta propia [literally translation: employment through individual account].*

In October 2010 there were one-hundred seventy-eight authorized types of self-employment. Today there are two-hundred, almost all in the service sector. The number of self-employment licenses went from 121,000 in 1994 to 165,000 in 2005. Today that number is 500,000. This increase along with previous economic reforms have turned this sector into an embryonic new Cuban middle class.

The way to turn this possibility into reality requires freeing the economy from political obstacles; increasing the number of micro, small and medium-sized businesses to include all areas of agriculture, manufacturing and service; establishing Cubans’ right to own property; providing them with legal protections and the freedom to buy, sell and interact with other foreign and domestic producers; motivating them with low tax rates and bank loans; creating a wholesale market, providing them with free Internet access; and instituting freedom of association in order for them to defend their interests. All of which depends solely on the Cuban government.

Creating a middle class was a constant concern throughout Cuban history. In 1808 the bishop of Havana, Juan Jose Diaz de Espada, outlined a system based on a diversified economy of small farms. In 1832, Jose Antonio Saco proposed converting slave plantations into small agricultural plots. In 1857, Francisco de Frias, Count of Pozos Dulces, stated that Cuba should be the country par excellence of small plots and farming on a smaller scale. Martin Morua Delgado, proposed democratizing land ownership. Enrique Jose Varona was a proponent of small farms and encouraged a national middle class. Jose Marti, who defined a rich nation as one with many small land owners, said that it is not the country with a lot of wealthy men that is rich but rather the one where each man has a bit of wealth. Manuel Sanguily, who realized that taking land out of the control of Cuban hands was a blow to nationality itself, submitted a bill to the Senate on March 3, 1903, that prohibited “the sale of lands to foreigners.”

How then does one view the Cuban economic landscape of 1959 as described by the journalist and editor Lisandro Otero in interviews with the country’s business leaders and directors at the time? Their comments shine light on the thinking of that sector, which was swept away by the revolution. Due to space limitations, I am citing excerpts from four of them below:

— Pepin Bosch, president of Bacardi, replied, “I have always had great faith. Cuba is not a poor country. It is past government leaders who have been impoverished by a lack of honesty and competence. They have been incapable of achieving anything near the level of national development that private industry and agriculture have.”

— Victor Pedroso, President of Banco Pedrosos, commented, “In a recent meeting between Prime Minister Fidel Castro and the banks, we discussed agrarian reform, the industrialization of the country and the National Institute of Savings and Housing… What is undeniable is that, if all these plans are implemented in a farsighted and well-studied way, they will achieve greater prosperity for the Cuban people… By adopting new investment measures, the public will learn how to invest, how to do business and in turn gain the satisfaction of having contributed to the collective well-being.”

— Enrique Godoy, CEO of the Godoy and Sayan Organization, noted, “Honesty and the ability to unfailingly instill confidence are the two vital factors for the development of national wealth, capital and employment… Now more than ever before, I envision the development of a middle class: a large consumer of all types of products and services, one that enjoys a high standard of living, constant advancement and the virtual elimination of unemployment.”

— Julio Lobo, the majority shareholder of 11 sugar mills, said, “With an honest, capable and progressive public administration, Cuba will be one of the richest and most developed nations in the world. It’s only natural that the Communists would try to infiltrate the new government and its agencies, as has happened even in the United States and throughout the world. But with a capable, honest and progressive administration, it will be difficult for the Communists to find an opening.”

The level of development prior to 1959 cannot be explained without the existence of micro, small and medium-sized businesses or a national middle class. A new middle class can be justified by the current economic stalemate, by the role the middle class played before 1959 and by the lack of arguments for its absence.

*Translator’s note: The term, which is unique to Cuba, is almost always translated into English as “self-employment.” The common term for this in Spanish, autoempleo, was purposely avoided by Cuba’s communist government.

How Democracy Disappeared from Cuba / Roberto Alvarez Quiñones

From the blog of Dimas Castellano: In response to an article in Diario de Cuba about different views on human rights, one reader noted that he would like to read an account of how democracy disappeared from Cuba. In response, Roberto Alvarez Quiñones wrote “At Democracy’s Funeral,” an article which I am posting below.

At Democracy’s Funeral
by Roberto Alvarez Quiñones

Concept

Although — etymologically speaking — the term  means power of the people, the existence and functioning of democracy requires, among others, the following instruments, rights and freedoms: Suffrage, to designate their representatives; equality before the law, to compete for positions; the referendum, to reject or approve the provisions of government; the plebiscite, to approve or disapprove rules and laws; the popular initiative, to submit proposals on issues of national interest; revocation, to override by vote government decisions and to dismiss officials; juries, to collaborate with the judiciary; separation of powers, to avoid its concentration in one or more people; a multiparty system, to provide choices between various options and candidates. Continue reading “How Democracy Disappeared from Cuba / Roberto Alvarez Quiñones”

For these instruments to be effective, people must enjoy the freedoms of opinion, expression, assembly and association. They are the foundation for political, economic, social, cultural, environmental and informational rights. These requirements, endorsed in the constitution, form the basis of the rule of law, which allows the people to be the active agent of power.

Background

The seeds of Cuban democracy can be found in the Constitution of Guáimaro. They took shape in the form of freedoms of press, association and assembly, as outlined in the first article of the Zanjón Pact. They were expanded in the Constitution of 1901, which added key instruments such as habeas corpus and separation of powers.

Worker, student, farmer, racial and women’s movements achieved successes such as the eight-hour work day, university autonomy, women’s suffrage, the collapse of Gerardo Machado’s government, the constituent assembly of 1939 and the Constitution of 1940. Article 37 of this constitution allowed for the existence and operation of political organizations opposed to the elected government. Article 40 legitimized resistance for the protection of individual rights (the legal basis of Fidel Castro’s defense during his trial for the Moncada attacks). Article 87 recognized the legitimacy of private property and, more broadly, its key role in society. And article 97 instituted “universal and equal suffrage through secret ballot” by which Cuban women could exercise the right to vote.

With this democratic foundation, the people elected as president Fulgencio Batista in 1940, Ramón Grau in 1944 and Carlos Prío in 1948. However, the increase in the cost of living along with political and administrative corruption and the growth of organized crime during this period created instability and led to a military coup that upended the constitutional order in 1952.

Among the many responses to the coup, two stood out. The first occurred on July 26, 1953 when Fidel Castro led the assault on the Moncada Barracks, The second took shape in January 1954 with the Civic Resistance Movement led by José Miró Cardona.

Seeking legitimacy, in 1954 Batista called “elections” in which he was ratified as president. On taking office in 1955, he reestablished the 1940 constitution and granted amnesty to political prisoners, among them the Moncada Barracks attackers.

During the struggle against the Frank País dictatorship, the head of sabotage for the 26th of July Movement (M-26-7) suggested that Fidel Castro, its leader, and members of the Civil Resistance Movement form a provisional government. To this end, a meeting was held in the Sierra Maestra in July 1957 which included Raúl Chibás, head of the Orthodox Party, and Felipe Pazos, former president of the National Bank of Cuba. The resulting document was the “Manifesto of the People of Cuba.” Three months later Felipe Pazos along with M-26-7 members Lester Rodriguez and Jorge Sotús met with exile civic associations and signed the “Pact of Miami,” which outlined “the manner in which the Revolution should be led and the political program that would be put in place after victory.”

The leadership of M-26-7 rejected the pact. In a letter dated December 14, 1957 Castro told its signatories that what was important “was not unity in and of itself but rather the foundation on which unity is based.” On May 3, 1958, an agreement was reached at Alto de Mompié in the Sierra Maestra to adopt a single, centralized command structure, with Castro as both secretary general of M-26-7 and commander-in-chief of all revolutionary forces. On July 20, 1958 a meeting was convened in Venezuela with representatives of various exile organizations, which led to the creation of the Revolutionary Civic Front and the “Caracas Pact.” On August 11, 1958 José Miró Cardona was named coordinator of the Revolutionary Civic Front and Manuel Urrutia was nominated as provisional president of Cuba.

On day 1, after the victory of rebel forces in January 1959, Manuel Urrutia assumed the presidency. The next day, in violation of the 1940 constitution — which stated that the President of the Republic was the supreme commander of the country’s land, air and sea forces — he declined this leadership role in favor of Fidel Castro. On day 3 a cabinet made up of reformists, conservatives and revolutionaries was formed, with José Miró Cardona serving as prime minister.

On February 7, the Revolution — the new source of law — replaced the Constitution of 1940 with the Basic Law of the Cuban State. It conferred the powers of the presidency on an unelected prime minister and the powers of Congress on the newly created Council of Ministers, without any separation of powers. On February 13 José Miro Cardona resigned and on February 16 Fidel Castro assumed the post of prime minister.

The posts of governor, mayor and city council member were abolished, judicial bodies dissolved, and judges and magistrates relieved of their duties. There was no more separation of powers and cabinet members who had belonged to the civic movement were replaced.

Disputes between Manuel Urrutia — an enemy of communism — and Fidel Castro worsened in the first months until, on July 17, 1959, Castro resigned. This forced the resignation of the president and Castro’s return as prime minister.

Gone were the traditional parties — the March 13 the Revolutionary Directorate, the Socialist People’s Party and the M-26-7 — which in 1962 were folded into the Integrated Revolutionary Organizations (ORI). After its leader, Anibal Escalante, was dismissed, it was taken over by Fidel Castro. In January 1963 the ORI became the United Party of the Socialist Revolution, which in 1965 became what is now the Cuban Communist Party (PCC). From that moment on, the positions of commander-in-chief of the armed forces, head of government and secretary of the only political party were held by one person. The promise to hold elections became the slogan “Elections. What for?” Democracy had received the coup de grace.

On January 22, 1959 the CTC (Cuban Confederation of Workers) was replaced by the Revolutionary CTC. The variety of student, women, farmer and employer associations were reduced to the Union of Young Communists, the Federation of Cuban Women and the National Association of Small Farmers. The rest vanished or became subordinate to the PCC.

University autonomy, guaranteed in article 53 of the Constitution of 1940, ceased to exist. The written and broadcast press, the vast network of cinemas, publishing and cultural institutions — all came under the control of the PCC. Cuban society lost its independent associations and opportuniites for civic engagement. It became constrained by a slogan from Castro’s June 1961 speech: Within the Revolution, everything: outside the Revolution, nothing. Ownership of the means of production became increasingly concentrated in the hands of the state until the Revolutionary Offensive of 1968 dealt the final blow.

As conflicts between states tend to de-escalate the conflicts within states, so too did confrontation with the United States facilitate the disarmament of democracy. But it was not the cause. The dismantling began before the rupture in diplomatic relations.

In spite of advances made between 1952 to 1959, the way in which democracy disappeared from Cuba indicates that Cubans’ civic formation had not reached the level of maturity necessary to prevent its loss. It was a hard and painful lesson that demonstrates the importance of instruments, rights and freedoms that allow the people to be active agents of power.

Havana, April 8, 2016

Notes:

1. http://www.diariodecuba.com/derechos-humanos/1458904386_21198.html

2. Cuban Revolutionary Government; Genesis and First Steps, Luís M. Buch Rodríguez. Social Sciences Publishing House, Havana, 1999, p.6

3. Manuel Urrutia, presiding jurist in the trial in Santiago de Cuba in Which a panel of judges unanimously resolved the defendants Involved in the assault on the Moncada Barracks.

Cuba’s Constitution of 1976: An Historic Setback / Dimas Castellano

Dimas Castellano, 1 March 2016 —  “Two Benchmarks of the Cuban Republic” — an article by Pedro Antonio Garcia which appeared in the journal Granma on February 24 — makes a comparison between the 1901 and 1976 constitutions that merits further discussion. Let us look further at three of the author’s main points.

1. It was not the Cuban Revolution that brought down representative democracy but rather the coup d’etat, led by Fulgencio Batista on March 10, 1952, which interrupted the constitutional rhythm of the country. Batista dismissed the president-elect, dissolved Congress and abolished both the constitution of 1940 and the electoral statutes of 1943. Continue reading “Cuba’s Constitution of 1976: An Historic Setback / Dimas Castellano”

The constitution of 1940 had retained the separation of powers and the rights recognized by the 1901 constitution while adding several others, such as the right to organize public protests and to form political associations which opposed the regime. It also guaranteed the autonomy of the University of Havana, declared any attempt to prohibit or limit citizen participation in the nation’s political life a criminal offense, and recognized the legitimacy of opposition intended to protect the rights of individuals. The coup d’etat that led to the suspension of this constitution in 1952 is an historical fact. But thanks to actions by civilian and military leaders — including Fidel Castro’s assault on the Moncada Barracks — Fulgencio Batista restored it in 1955.

Rather than being fully restored after the 1959 revolution, however, it was replaced with the Fundamental Law of the Cuban State, some of whose statutes conferred on the head of state, the prime minister and the Council of Ministers responsibilities previously held by Congress. This modification was similar to one carried out by Batista in 1952, when he implemented the Constitutional Statutes. The Fundamental Law remained in effect until 1976, when the first revolutionary constitution was adopted. This constitution was slightly modified in 1992 and became a means of preserving the status quo when in 2002 it declared that the political system, as it existed at that time, was irrevocable and would no longer reflect the kinds of changes that regularly occur in any society. Thus, the people — who supposedly are sovereign — cannot amend this Law of Laws, which declares eternal a system that those born after 1992 as well as those yet unborn did not choose.

As a member of the constitutional assembly of 1901, Juan Gualberto Gomez — a man Garcia acknowledges as a key figure of Cuba’s struggle for independence — opposed an attempt to constitutionally codify anything that might act as a brake on social change. Juan Gualberto Gomez stated, “I consider this to be an anti-liberal document. Having been given a specific mandate, we are taking advantage of our presence here by trying to toy with the future, by cutting off the people’s right to tomorrow and hindering their momentum.” He was referring to a counter-productive and harmful attempt to legislate in place of others, something we forget we when we deem the current political system to be irrevocable.

2. The articles of the constitution of 1901 established the principle of independence and sovereignty, and nullified other existing laws that undermined this principle. It excluded women from voting while extending universal suffrage to men. It granted the President of the Republic powers formerly held by the Spain’s colonial governor. Obviously, it protected private property.

The constitution of 1901 endorsed fundamental rights. Article 16 restored habeas corpus: “All those detained will be released or remanded to the competent judge or tribunal within twenty-four hours of their detention.” Article 25 granted freedom of expression “in speech and in writing, through the press or any other method.” Article 28 allowed freedom of association “for all lawful purposes.” And Article 29 enshrined freedom of movement. These universal, indivisible, sacred and inalienable rights and freedoms form the foundation for civic participation and popular sovereignty.

The constitution of 1901 was so ahead of its time that the rights it encompassed were not universally recognized until the adoption of the Universal Declaration of Human Rights in 1948, almost half a century later. Notably, the first proposal submitted to the United Nations’ Social and Economic Council for further consideration was presented by the Cuban delegation at this constitutional event.

The Protest of the Thirteen; the peasant struggles at San Felipe de las Uñas, Realengo 18 and Ventas de Casanova; student protests and university autonomy; the strikers movement from 1902 until the overthrow of Machado; the repeal of the Platt Amendment; the ultimate consensus of various factions at the 1939 Constituent Assembly. These historic struggles are examples of the blossoming of Cuban civil society, whose foundations were laid by the 1901 constitution.

The article’s author points out two limitations to the 1901 constitution: denying women the right to vote and extending the powers of the colonial governor to the President of the Republic.

Regarding the first issue, it is certainly true that the 1901 constitution did not grant universal suffrage. However, by taking advantage of the liberties recognized in this founding document, women founded multiple associations and media outlets, and organized meetings and gatherings to promote their rights. In 1917 women were granted custody of their children and control of their financial resources. In 1918 the Divorce Law was approved. The First National Women’s Congress was held in 1923, followed in 1925 by the Second National Congress, which led to a promise by President Gerardo Machado to grant women the right to vote.

After the overthrow of Machado in 1933, the National Feminist Alliance appealed to the interim president, Carlos M. de Cespedes (son), demanding the right to vote. As a result of those negotiations in January 1934, during the government of Ramon Grau San Martin, a Constitutional Convention was convened which recognized the right of women to vote and to be elected. During the presidency of Colonel Carlos Mendieta an interim constitution was approved, whose Article 38 formally extended the vote to women. And in February 1939, prior to the Constituent Assembly that drafted the Constitution of 1940, the Third National Women’s Congress called for “a constitutional guarantee of equal rights for women.” This demand was endorsed in the constitution adopted in 1940. As a result Cuban women legally exercised the right to vote in the elections of 1940, 1944, 1948, 1954 and 1958.

Regarding the latter — in other words the powers granted to the President of the Republic, which had formerly been those of the Captain General — one need only compare the powers of an executive branch, which are limited by legislative and judicial branches, with the powers established after 1959, which are those of a totalitarian, one-party state with monopoly control and ownership of the means of production. Need I say more?

As we can see, while the republic founded in 1902 was not exactly what Cubans had fought for, the undeniable fact is that Cuba was able to join the international community of nations with its own legal framework, close the door on annexation, disentangle itself from the Platt Amendment and convene a constitutional convention, which drafted the glorious constitution of 1940, the same constitution that provided the legal foundation of Dr. Fidel Castro’s defense at his trial for the assault on the Moncada Barracks.

3. By 1975, a time when country was undergoing profound transformations, the constitution of 1940 was no longer applicable to that moment in history. A new Law of Laws was needed for this new stage of the revolution. A group of jurists, appointed by the political and mass movement organizations, produced a draft constitution. In every school, workplace, military unit, city block, farm and rural village people discussed the document and made corrections and additions.

If Cuba was without a constitution from 1959 until 1976, it was not necessary to draft a new constitution. Since the 1959 statutes did not provide such a framework, what was needed was simply a constitution.

The 1976 constitution recognized rights and freedoms such as equality under the law, suffrage for both sexes, freedom of speech, of the press, of association and the right to protest. Where it differed from the constitutions of 1901 and 1940 was that these rights were subordinate to Article 5, which recognized the communist party as the dominant driving force of the state and society, whose goal was to build socialism and advance towards communism. This was summed up in an address by Fidel Castro to Cuban intellectuals: Within the revolution, everything; outside the revolution, nothing. Subsequently, articles six and seven stipulate which organizations are to be recognized, protected and fostered by the communist party, which led Cuba’s constitutional traditions to suffer an historic setback.

Originally published in Diario de Cuba

The Foreign Investment Law: A Litany of Squandered Opportunities / Dimas Castellano

Dimas Castellanos, 11 March 2016 — Under the title of “Inversión extranjera, puntal para el desarrollo (Foreign investment, Key to Development” on Friday, March 4, 2016, the daily paper Granma  published a conversation between journalists Sheyla Delgado and Óscar Sanchez with Déborah Rivas, representing the Foreign Trade and Investment Ministry.

In the introductory paragraph the journalists cited how the Professor of Negotiation Emilio Rodríguez Mañalich used to say in class: “Opportunity is like a white blackbird that flies by just once … and if you fail to take advantage of it, you might never see it again.” They go on to say that: “It is precisely opportunities that have been the most immediate result of Law No. 118 on Foreign Investment in the country…” Continue reading “The Foreign Investment Law: A Litany of Squandered Opportunities / Dimas Castellano”

Professor Rodríguez Mañalich was right. Time is an exacting judge, and opportunities rarely resurface. What neither the journalists nor the minister recognised is that the Cuban authorities are those who have squandered the most opportunities, and continue to.

No country, and much less underdeveloped ones, can ignore the important role played by foreign investment. Cuba continued to reject it, before and after the collapse of Socialism in Eastern Europe. Despite the poor results obtained from Decree-Law 50 of 1982, and Law 77 of 1995, the restrictions were kept in place, as was the absence of guarantees and the negative treatment, leading to a drop from some 400 joint ventures operating in 2002 to just 200. We had to wait 20 years, however, and witness the paltry results of the reform initiated in 2008, before we amended them.

It should be underscored that our current economic stagnation traces its roots to the process of nationalisation carried out between the agrarian reform laws of May 1959 and October of 1963, through which the economy, subordinated to ideology and politics and, was forever impaired.

The new legislation, Law 118, though more flexible than the preceding one, is not enough to overcome the crisis. According to the Cuban authorities themselves, the country needs sustained growth in its Gross Domestic Product (GDP) of between 5 and 7%. To achieve this it needs accumulation and investment rates of no less than 25%, which would require an annual investment flow of between 2 – 2.5 billion dollars.

The emerging scenario of resumed diplomatic relations with the US represents a great opportunity to make a leap forward, but it will be impossible without the corresponding political will. The nature of the current model, and its repeated failure, mean that it cannot be updated. Rather, it must be replaced.

When presenting the bill the Minister of Foreign Trade and Investment, Rodrigo Malmierca Díazstated that it “has major political implications, as it constitutes a profound updating of the transformative process undertaken at the beginning of the Revolution, placing the main means of production in the hands of the Revolutionary State.” That is, the declared intent behind it is to maintain the model of state ownership that generated economic inefficiency in the first place, such that its on-going failure is guaranteed.

Some of the current Law 118’s shortcomings are:

1- The Government is seeking sources of external funding even while it denies Cubans’ right to participate as investors.

2- It does not recognise the social function of property, and does not allow for private property. Instead, it declares that it will not allow for its concentration in the hands of natural or legal persons.

3- It limits self-employed Cubans to a list of activities almost entirely restricted to services, and denies them any legal personality as providers of the same.

4- While it provides investors certain “guarantees”, the subordination of the judiciary to the Party and the State make the Government a supreme judge and jury, placing investors at an acute disadvantage.

5- It does not allow for the free hiring of personnel, assigning this function to a State enterprise.

6- It does not recognise Union Rights (the freedom of workers to form unions without prior authorisation),  a principle enshrined in the Constitution of the International Labour Organization, set down in said organization’s Convention 87, and incorporated into the Universal Declaration of Human Rights, the International Covenant on Civil and Political Rights, the International Covenant on Economic, Social and Cultural Rights, the American Convention on Human Rights and the European Convention on Human Rights.

These, among other limitations, prevent it from seizing the opportunity offered by the current scenario, in which the US has begun to ease the embargo, while the Paris Club and other creditors are renegotiating Cuba’s debt and forgiving all or a part of it.

In the conversation with Granma, in reference to the impact of the Foreign Investment Law, the official explained that: “The US blockade against Cuba remains the greatest obstacle to attracting foreign capital.” That statement evades the truth. While it is true that the embargo has not been overturned, it has undergone significant changes. Before the commencement of the negotiations the US made modifications to the Treasury and Commerce Department rules, and implemented a package of measures that weakened the embargo and encouraged other nations to negotiate with Cuba.

If it wishes to take advantage of its opportunities, the Cuban Government should take measures to foster a situation conducive to the lifting of the embargo. Such measures would neutralise the forces that oppose it, strengthen the private sector, and facilitate the emergence of the middle class that our economy so direly needs.

It would behoove the Cuban government, thus, to seize the opportunity, not only for the normalisation of relations with the US, but also for the most important thing: to return to Cubans the rights and freedoms that were wrested from them, and without which there will be no positive results.

The present situation represents an unacceptable violation of the current Constitution, whose Article 14 states that: “the economy is based on all the people’s socialist ownership of all the basic means of production.” And a denial of the concept, upheld by José Martí, of the Republic as a state ensuring equal rights for all those born in Cuba, for the free expression of thought, and for many small property owners.

From Diario de Cuba

The Importance of Obama’s Visit / Dimas Castellano

A man in an Obama shirt on Havana's Malecon
A man in an Obama shirt on Havana’s Malecon (Reuters, Havana)

Dimas Castellanos, 18 March 2016 — The damage done to US economic interests by the 1959 Revolution led to the deterioration of relations between the two countries. In the midst of the Cold War, disagreements led to a rupture in relations and Cuba’s alliance with the Soviet Union. In this context the Cuban government, in defense of its national “sovereignty”, nationalized the economy, dismantled civil society, restricted freedoms, and took the road towards totalitarianism.

The economic inefficiency of the model introduced was patched up by Soviet subsidies until the collapse of socialism in Eastern Europe unveiled the mirage and sunk Cuba into a crisis – dubbed with with the euphemism of “Special Period in Time of Peace” – that has still not been overcome. From that point forward the changes introduced, including the reforms initiated in 2008, have failed. Shortages, high prices, low wages, discontent, corruption and the exodus characterized Continue reading “The Importance of Obama’s Visit / Dimas Castellano”

a crisis exacerbated by the turmoil facing Hugo Chávez’s allied regime in Venezuela, and the end of subsidies from that country.

Meanwhile, the ten presidential administrations that have occupied the White House since then, from  Eisenhower to Bush, all failed in their attempts to bring about change in Cuba, losing influence in the region. The Obama Administration, from his first term in 2009, began to relax the embargo measures, and in his second term abandoned the failed policy and implemented new measures, including the latest on the eve of his visit, which practically constitute those previous policies’ death certificate, to be ratified by the US Congress sooner than later.

As the use of force has failed, and the approach based on winners and losers has come to an end, a return to politics has been embraced. Unable to find a new sponsor, the Government of Cuba took the road of rapprochement with the United States, while President Barack Obama, with a platform that ruled out being the direct agent of change on the island, chose the most effective path to collaborate towards the democratization of Cuba. Both sides, based on a dose of political realism, held secret talks that led to the restoration of diplomatic relations, one of whose effects is President Obama’s visit to Cuba.

These developments, regardless of their interpretation, have certainly given rise to hope in what has been a dejected and demoralized country, where people are struggling just to survive, or to flee anywhere else in the world.

The visit, in addition to being the first to Cuba of an official character by an American president (that by Calvin Coolidge in 1928 was to inaugurate the 6th Pan American Conference in Havana) is of enormous significance. Representing the effect of the restoration of diplomatic relations, preceded by concrete measures and public statements in the defense of human rights, it will also further the same because:

1- It backs up the statement issued by the White House which stated that it “will serve to reinforce the progress made towards the normalization of relations between the two countries, advancing commercial and personal ties that could improve the welfare of the Cuban people and express our support for human rights.”

2- It represents a major barricade to regressing to the period prior to 17 December 2014.

3- It places those reactionary Cubans who insist on speaking of the “enemy” and “the besieged plaza” in an awkward position, exposed to the entire world.

4- It contributes to Cubans’ gradual empowerment, a favorable outcome for both governments, and especially for the Cuban people.

If we add to this that the United States – separated by less than 100 miles from Cuba – is the world’s third largest in area, and with the third biggest economy, it is not difficult to appreciate what normalization will mean for Cubans.

What happens after the visit will be the sole responsibility of Cubans, of our understanding of the moment, and our ability to act on a stage in which disagreements between the two governments will be gradually displaced by the internal tension between the Cuban people and their government.

Out of pragmatism and responsibility, the problems that have accumulated, which are many and complex, require an approach in accordance with the changing times. With the “enemy” gone, and Cuba dependent on relations with the West, it will be extremely difficult to sustain the approach based on alleged differences in conceptions of human rights, in this way justifying their non-ratification of the universal agreements on civil, political, economic, social and cultural rights.

Harder still will be defending the fallacy contained in the editorial of the newspaper Granma last March 9, contending that “Cuba defends the indivisibility, interdependence and universality of human, civil, political, economic, social and cultural rights,” as the recognition of any civil, political or cultural rights is utterly undermined by the simultaneous denial of economic and social rights. In the same way, it is impossible to exercise and enjoy economic and social rights in the absence of civil and political rights.

Despite the existence of strong internal and external obstacles, the strong legacy of human rights in Cuba shows us the path to take – one that began in 1878 with the emergence of Cuban civil society, reflected in the pro-independence and republican constitutions of 1901 and 1940, which in many respects portended the content of the Universal Declaration of Human rights of 1948, and which suffered an unacceptable setback under the current Constitution, which only recognizes the right to defend the totalitarian system that mired the country in the deep structural crisis in which it finds itself.

From Diario de Cuba

Crisis in Agriculture: Land for Those Who Work It / Dimas Castellanos

By Dimas Castellano, 9 February 2016

Property and crisis

Once the Cuban Government arrived in power, imbued by an exacerbated voluntarism, it ignored the laws that govern the economy and subordinated them to ideology. From this moment on, the loss of the autonomy that is required by economic processes was converted into a factor of poverty.

In 1959, with the first agrarian reform law, the Government handed over property titles to 100,000 farmers but concentrated in its own hands some 40.2 percent of cultivable land. In 1963, with the second agrarian reform law, the 1,000 farms that had more than five horses swelled the fund of State lands, which grew to almost 70 percent.

In 1976, with the objective of decreasing the numbers of small owners, the Government initiated a project of “cooperativization,” through which it created the Cooperatives of Agricultural Production (CPA), thereby raising the share of land that was State property to 75 percent. The result was inefficiency, scarcity of products and high prices, which obliged the Government in 1993 to convert Continue reading “Crisis in Agriculture: Land for Those Who Work It / Dimas Castellanos”

a part of unused State land into the Basic Units of Production Cooperative (UBPC), while retaining the property ownership for itself.

Fourteen years later, on July 26, 2007, in his speech in Camagüey, General Raúl Castro recognized the deficiencies, errors and bureaucratic or indolent attitudes reflected in the fields infected with the marabú weed, and he announced the decision to “change everything that should be changed.’

And in 2007, he promulgated Decree Law 259, through which he began the handing over of idle land to private individuals. However, the measure sidestepped the declaration of changing everything that should be changed and was limited to transferring — through a form of leasing known as ’usufruct’, which is the right to use the land without actually owning title to it — a part of the land that the State wasn’t able to make productive. The poor result obtained from this measure did not achieve what was proposed.

Of the 420,000 acres held by the 1,989 existing UBPCs, almost 40 percent remained idle; their expanse, although comprising 27 percent of the agricultural area of the country, produced only 12 percent of the grain, food and vegetables, and 17 percent of the milk, and only 27 percent had satisfactory results. In 2010, 15 percent of the UBPCs closed with losses, and another 6 percent didn’t even submit a balance sheet.

In order to stop the deterioration, in August 2012, the Council of Ministers issued a package of 17 measures and a new General Regulation for the UBPCs that recognized what before had been denied: the capacity to acquire rights and to contract obligations; that is, juridicial personality [a legal term meaning an entity that has a distinct identity, with rights and obligations].

In December 2012, without altering the structure of the property, Decree-Law 300 was substituted for Decree-Law 259. It alleviated some restrictions, but it kept others and implemented new ones. Article 11 said that lands in usufruct could integrate with a State farm with a juridicial personality, to a UBPC or a CPA, for which “the usufruct cedes the right of usufruct over the lands and the improvements to the entity with which it integrates.”

In May, 2013, at the meeting of the Council of Ministers, Marino Murillo Jorge, Vice President of the Council of State, recognized that the measures, which for decades had been put into practice for managing the land, hadn’t led to the necessary growth in production. Finally, in 2014, Decree-Law 300 was modified with Decree-Law 311.

The loss of autonomy — which is to the economy what oxygen is to living bodies — together with voluntarism, the methods of command and control, the centralized planning, the inability of the bosses and administrators, and the diminished interest of the producers, shaped the agricultural inefficiency that has characterized Cuban agriculture for several decades.

The process described shows the impossibility of resolving the crisis in agriculture with the monopoly of State property and leads to the analysis of usufruct and the cooperatives in Cuba.

The cooperatives and usufruct 

As far as cooperatives are concerned, the Declaration of the International Cooperative Alliance (ACI), adopted in 1995, defines cooperatives as autonomous associations of persons who unite voluntarily to cope with their needs and their common economic, social and cultural aspirations, through an enterprise of conjoined and democratically controlled property.

In agreement with this definition, the ones created in Cuba — with the exception of the Cooperatives of Credits and Services, where, although without juridicial personality, the farmers conserved ownership of the land and the means of production — are not classified as such.

The Sugar Cane Cooperatives, created in March 1960 in areas that formerly belonged to private sugar mill owners, almost immediately were converted into State enterprises. The emergence of the CPAs in 1976 with the purpose of reducing, even more, the quantity of land in private hands, was also a State decision. And the UBPCs, organized in 1993, didn’t result from a true socialism but from the crisis in State agriculture.

If the cooperatives in Cuba are created by the will of the State; if the Council of Ministers  regulates them; if the entity that authorizes their constitution is the entity that controls, evaluates their functioning and defines when the “members” can contract with salaried workers; if the activities and tasks that the “partners” can assume are created in places decided by the State and “deal with segments of the market that are not competitive with the State”; and, on top of this, if the State retains ownership over the fundamental means of production, then they are not true cooperatives, but State cooperatives in usufruct.

A convincing proof of this false cooperativism was the report published in the newspaper, Granma, on Friday, January 25, 2013, which announced the decision of the National Association of Small Farmers to replace or remove from their positions 632 presidents of agricultural cooperatives.

For its part, usufruct consists of the use and enjoyment of a good belonging to others. If there had been consistency with the principle of changing everything that should be changed, the idle lands, infected with marabú, would have been handed over to those who work the land.

Nothing justifies making private producers — who have demonstrated they can be efficient — owners in usufruct, and giving ownership to the State, which is responsible for the inefficiency. The question sends us to one of the reasons declared by the 1959 Revolution: to return the land to the farmers. Why now does the land not belong to those who work it?

Neither the State lands, nor the cooperatives created by the State, nor the 17 measures of 2012, nor the successive decrees that handed over land in usufruct have managed to pull Cuban agriculture out of the crisis created by the State monopoly of property.

On the contrary, the crisis has worsened.

Such a result, like it or not, places on the agenda the need for a new reform directed at eliminating the large State land holdings, converting the present owners in usufruct to owners in title and transforming the rest of State property into private property and large cooperative enterprises.

Therefore, what is needed is to determine what are the most effective forms of property in each moment and place for personal and social development, which will make the institution of property a foundation of personal and social order.

Not recognizing this need explains how the administrators of cooperatives can be separated, not by the members, but by a para-State institution like the National Association of Small Farmers, or that the Second Secretary of the Communist Party of Cuba threatens the owners in usufruct with the emphatic declaration: “The land belongs to the State. Without discussion.” The obvious question is: And what is the State going to do with land that it never managed to make productive?

The answer is requires the democratization of economic relations, so that parallel to the State, Cubans participate like subjects with institutionalized rights.

From Diario de Cuba

Translated by Regina Anavy

What People Are We Talking About? / Dimas Castellanos

Havana (El Nuevo Herald)

Dimas Castellanos, 18 January 2016 — A commentary on five foreign policy issues raised by the Cuban president, Raul Castro, on December 29, 2015 during the closing session of the National Assembly of People’s Power.

1. Since 2015 there have been benefits from mutually advantageous, cooperative relationships with various countries, particularly the Bolivarian Republic of Venezuela.

True, but these benefits are the result of a relationship that does not follow the normal laws of commerce. The reduction or total loss of Venezuelan petroleum subsidies and its impact on Cuba would be a repeat of what happened with subsidies from the former Soviet Union. Both examples illustrate the impossibility of sustaining an economy that is not self-supporting and the government’s inability to learn from past lessons. The cold, hard fact is that events in Venezuela help explain the real cause of the reported decline in GDP in 2015. Continue reading “What People Are We Talking About? / Dimas Castellanos”

2. At the close of the last regular session of the National Assembly, I noted that an imperialist and oligarchic offensive has been launched against progressive Latin American revolutionary undertakings, which our people will challenge with determination.

We are sure that new victories will come to the Bolivarian and Chavez Revolution under the leadership of Comrade Maduro against the constant, destabilizing onslaught from the right, encouraged and supported by outside forces.

We rely on the commitment of the Venezuela’s revolutionaries and its people, overwhelmingly Bolivarian and Chavista, to follow the legacy of the unforgettable President Hugo Chavez.

We are convinced that the Venezuelan people, as they did in 2002, and the civil-military alliance will not allow the achievements of the Revolution to be dismantled and will know how to turn this setback into victory.

Cuba will always stand beside the Fatherland of Simon Bolivar and call for an international mobilization to defend the sovereignty and independence of Venezuela, and for acts of interference in its internal affairs to cease.

To claim that what has occurred in Venezuela is the result of an imperialist offensive is to sidestep the incompetency demonstrated by the Chavez regime. The use of a substantial portion of the bonanza generated by the high price of petroleum in order to export Bolivarian populism to the region instead of using it to diversify an economy entirely dependent on the production of oil only proves this point. The obsession for expansion over diversification has had a greater negative impact than any “imperialist offensive” in creating the disastrous situation in which this South American country finds itself.

To say that events there will be confronted by “our people” is to deny that the majority of Venezuelans, after supporting Chavez for years, cast a protest vote. Given this situation, one must ask the following questions. What people are we talking about? Do the millions of Venezuelans who voted for the opposition candidates not also make up the people? Who and what criteria define who the people are? When were “our people” asked to challenge the decision by those categorized as non-people?

Suggesting that new victories will come to the Bolivarian revolution led by Maduro, evoking commitments by revolutionaries to the legacy of Chavez and ignoring the popular will as expressed at the polls is a manifestation of interference in the internal affairs of another country, something that the government of Cuba has always accused the United States of doing.

All indications are that what occurred there could occur here if truly democratic elections were held. It seems, however, that the takeaway lesson is to postpone once again any step that could lead to democratization. The great danger is that without democratization there will be no solution to the numerous and serious problems facing Cuban society. Nevertheless, the process underway is unstoppable, especially given the change in mentality that is occurring among Cubans since diplomatic relations have been restored with our neighbor to the north. Democratization will come one way or another, but it will come. Trying to stop it is a march against history, against the winds of change sweeping through the region, against the destiny of the Cuban nation. And therefore it will fail in the end.

3. The proclamation of Latin America and the Caribbean as a zone of peace by all the heads of state at the second CELAC summit, which took place in Havana in January 2014, is a solid basis for developing relations between our countries and internationally. 

At this conclave the Cuban president stated, “For years our region has been a zone free of nuclear arms… but we believe that is not enough. We believe it is necessary for the region’s heads of state and heads of government to formally agree that any difference, any conflict, shall always be resolved through the dialogue of negotiation and that it will never end in threats or the use of force.”

Contrary to these emotional words, the decision to challenge the results of democratic elections in Venezuela could lead to civil war. Then the declaration of Latin American and Caribbean countries as a zone of peace would be nothing more than an empty slogan if these nations do not renounce the domestic use of violence. It would reveal a lack of political will to achieve it whenever peace is threatened by revolutionary populism.

4. As indicated in the Declaration of the Revolutionary Government, published on December 1, the “wet foot dry foot” policy, the Parole Program for Cuban doctors and the Cuban Adjustment Act remain the principal incentives driving the abnormally high level of emigration from Cuba to the United States.

The principal incentives are not US policies. For one action to be the cause of another, it has to precede it. The massive and continuous exodus that has turned Cuba from a country to which people immigrated to one from which people emigrated began in 1959, before these policies even existed. The real cause is the nature of the totalitarian system itself, which — while depriving Cubans of their civil liberties — has been unable to develop a viable economy capable of satisfying the basic needs of its citizens.

Beyond the impact that the prolonged conflict between the two governments might have had, it is only logical that there would be migration from a country with a poor economy to one with the most advanced economy in the world.

Given this reality, the only thing that could halt the exodus would be a structural transformation capable of guaranteeing Cubans’ basic needs, something that ideological entrenchment prevents.

The best proof of this is the increasing emigration from other parts of the world to destination countries which have not adopted anything even resembling the Cuban Adjustment Act. People simply move from areas where conditions are bad to where they are better, something that even certain species of animals do, including migratory birds, who do not relocate because of some “wet wing–dry wing” policy.

Also, the United States is not the principal country to which doctors are fleeing. They have to be recertified there, which involves paying for licensing exams and getting by until they are granted permission to practice medicine.

The only doctors going to the United States are those willing to work at anything or the few cases in which family members assume the costs of recertification. A bigger factor in the exodus of doctors is the fifty thousand physicians rented out to other parts of the world, a situation in which the level of exploitation is not difficult for them to understand.

5. We have reiterated that, in order to normalize bilateral relations, the government of the United States must lift the embargo and the seizure of territory occupied by the Guantanamo Naval Base without insisting that Cuba abandon the cause of independence or renounce the principles and ideals for which several generations of Cubans have fought for a century and a half.

As stated, these demands are not feasible. Once bilateral relations have been reestablished, solutions must be sought through bilateral negotiation. If the Cuban government does not want to make concessions to a foreign government, it must make concessions to its people, who are denied means of expression, institutions, rights and freedoms.

If it acts in this way, it would strengthen the position of the US president, who has demonstrated a willingness to move towards full normalization of relations with Cuba, weaken the position of the members of Congress opposed to lifting the embargo and advance the goal much more quickly than by levelling accusations and condemnations through the United Nations. More than ever, the solution ultimately depends on the course of conduct the government of Cuba decides to follow.

Originally published in Diario de Cuba

Five Points: Sorting Through Raul Castro’s Economic Speech

Dimas Castellanos, 16 January 2016 — A commentary on five economic issues raised by the Cuban president on December 29, 2015 during the closing session of the National Assembly of People’s Power.

1. The president stated that, though the effects of the US blockade remain unchanged and external economic constraints have worsened in the second half of the year, Cuba’s gross domestic product (GDP) grew by 4% in 2015.

Not only have the effects of the “blockade” changed, financial constraints have eased. Measures taken by the White House after the announcement of restoration of diplomatic relations between the two countries have led to a relaxation of the embargo. Meanwhile, negotiations to reduce external debt have eased economic constraints, especially after the Club of Paris wrote off three-quarters of Cuba’s debts. Continue reading “Five Points: Sorting Through Raul Castro’s Economic Speech”

With regards to GDP, the Cuban government has acknowledged that, in order to achieve significant development, the annual growth rate must reach 7%. However, from 2011 to 2014 it grew by only 2.3% on average, with a growth rate of 1.3% in 2014. In July 2015 Raul Castro reported that the slowdown in GDP growth had been reversed and estimated that by year’s end it would be in the neighborhood of 4%, now the reported target figure.

In order to understand this reduction in growth, one has to keep in mind that between 1989 and 1993 GDP fell by 34%. However, whether the 4% forecast is realistic or not, it would not mark a true recovery, as we can see from the following four examples.

A – According to economics minister Marino Murillo, the sugar industry grew by 16.9% in 2014. However, this fell short of the 73,000 ton target, requiring the transfer of some 30,000 tons intended for domestic consumption to fill the gap in the export supply.

B – The manufacturing sector grew 9.9%, but obsolete technology in the industries that make up this sector led to considerable shortages of products intended for sale in the network of hard currency retail stores. As a result thousands of tons of chickens and thousands of cases of beer had to be imported, with a resulting reduction in hard currency earnings.

C – The transport sector grew, but inefficiencies in cargo delivery impacted other sectors and the time cargo vessel spent in port led to additional costs.

D – Agriculture grew but, due to a shortfall, 50,000 additional tons of rice and an additional amount of milk had to be purchased to fill the gap. Given these deficiencies, the 4% figure says little and has even less impact on the lives of Cubans.

2. Next year gross domestic product will continue to grow but at a lower rate of 2%. As a result, financial constraints associated with falling income due to lower prices on the world market for traditional exports such as nickel are projected.

First of all, if arithmetic is independent of ideology, then half of four is two. Therefore, if GDP goes from 4% to 2%, that does not mean a better growth rate in 2016. That is a decrease.

Secondly, if debt was reduced through write-offs and negotiations — the Club of Paris, for example, forgave Cuba $8.5 million of its $11.1 million in debt — and if improved relations with the United States increased family remittances from $1.4 billion at the end of 2013 to $2 billion, and if tourism and medical services continue to generate additional billions of dollars, the projected decrease cannot be explained simply on the basis of alleged financial constraints without mentioning other causes, among them the possible reduction or total loss of hundreds of thousands of barrels of oil, which Cuba receives on a daily basis from Venezuela.

3. Though the number of visitors from overseas has risen to three and a half million, it cannot be overlooked that this has occurred in spite of the fact that Cuba is still the only country in the world that US citizens are prohibited from visiting as tourists.

The number of visitors from overseas did not increase in spite of the fact that American citizens are prohibited from visiting Cuba. On the contrary, this was achieved in large measure because President Obama expanded the twelve categories established by the Treasury Department under which tens of thousands of Americans and tourists from other places of origin have been able to travel to the island since the beginning of last year. Without this action, the increase would not have been possible. Similarly, further growth will be considerably influenced by the imminent arrival of new, regularly scheduled flights and the advent of ferry service, all of which are expected as a result of the restoration of relations between Cuba and the United States.

4. In spite of economic constraints, the fulfillment of commitments made during various negotiations to restructure debts with foreign creditors has reinforced the trend towards gradual recovery of our economic credibility internationally. The latest evidence of this was the agreement reached on December 12 with the Club of Paris. This agreement facilitates access to financing in the medium and long term, which is essential in securing the investments projected in our development plans.

Rather than the fulfillment of commitments, the outcome resulted from a) the pragmatism of the creditors, who realize that the critical condition of Cuba’s finances make it impossible to recover their loans, b) pressure by companies from creditor nations to invest in the island under the new scenario, knowing that detente with the United States creates opportunities on which Americans cannot yet capitalize, c) expectations arising from the resumption of diplomatic relations with the United States, and d) persistent propaganda by the Cuban government to demonstrate “economic recovery.”

The actions of the Cuban government are driven by a different logic. The failure of its economic reforms and the crisis in Venezuela have exacerbated the cash shortage. Therefore, access to short and medium term financing, especially from Club of Paris member countries, breathes new life into the economy without having to broaden relations with the United States.

What has been forgiven, however, is the enormous amount of interest accumulated over the years. The principal remains as outstanding debt. The Club of Paris forgave Cuba $8.5 billion of its $11.1 billion in debt, but the agreement imposes stiff penalties if the Cuban Government defaults again.

Thus, the game starts over with a gesture of generosity but with clear rules: Cuba must honor its commitments, which it has never been done. This will be impossible in the medium to long term if the structural changes that the economy and society require are not instituted. Undertaking this is as necessary as it is impossible without the corresponding political will. Fear of commitment seems to explain Marino Murillo’s statement to the National Assembly last December. He noted that, if we do not achieve sustained growth in the economy, “we must work towards a sustainable debt.”

5. It is up to us to maximize excess capacity, concentrate resources on activities that generate export earnings and encourage domestic production, make the investment process more streamlined and grow investments in the manufacturing sector and infrastructure, prioritizing sustainable power generation and increasing the efficiency of energy providers.

This is more of the same. We can find hundreds of proposals like this in speeches given by Cuban officials for more than five decades without any result whatsoever. Excess capacity does exist but it is elsewhere. It is in reform, for which — given its situation — Cuba cries out.

Originally published in Diario de Cuba

The Cuban Exodus: Causes and Effects / Dimas Castellanos

A raft is transported to the coast during the ’rafters crisis’ in 1994. (WILLY Castellanos)

Dimas Castellanos, 30 November 2015 — The unstoppable exodus of Cubans has become a crisis once again. While thousands of our compatriots are stuck at the border between Costa Rica and Nicaragua, the Government of Cuba chooses to ignore the main cause.

In recent months, thousands of Cubans have been traveling through Central America for the United States. On 15 November the Nicaraguan authorities blocked their way. On 17 November, Cuba’s Ministry of Foreign Relations stated that these Cubans are “victims of the politicization of the immigration issue by the Government of the United States, of the Cuban Adjustment Act and, in particular, of the application of the call ’wet foot-dry foot’ policy.” Continue reading “The Cuban Exodus: Causes and Effects / Dimas Castellanos”

On 24 November the foreign ministers of the nations that make up the Central American Integration System met find a regional solution to the crisis. And on 26 November the Government of Ecuador decided to require visas to Cubans as of 1 December.

Human migration is a geographical shift that occurs when the natural or social conditions of a place make it impossible for residents to meet their needs, or threaten their lives. Emigrants leave places where things are bad and go to places where they are better. Thus, thousands and thousands of refugees are arriving in Europe even though there is no country in that region with an  “Adjustment Act.”

As statistics show, throughout its history Cuba has been a country of immigrants. Suffice it to recall that between 1910 and 1925 the island absorbed one-third of migrants from Spain to the Americas, and in 1920 11,986 immigrants were admitted to the island, while in 1920 the figure rose to 174,221.

The permanent exodus began in 1959 with the diversion of ships or aircraft and the abrupt breaking of diplomatic missions and desertion of those from missions abroad. First white Cubans, and later those of all colors, including adults, seniors, children and youth.

This is therefore, a process that has been sustained before and after the embargo (1961), before and after the Cuban Adjustment Act (1966), before and after the timid and partial reforms undertaken by the government of Raul Castro (2008), and before and after the restoration of diplomatic relations with the US (2015).

An exodus whose critical moments include Operation Peter Pan (sending unaccompanied children to the United States), and the departures crises through the ports of Mariel, with the Mariel Boatlift, and through Camarioca and the Guantanamo Naval Base.

Its long duration, the sociological diversity of migrants, the damage caused and threats faced by those taking the opportunity to leave, are reasons enough to set aside the unsuccessful escapes and confront once and for all the true causes, among them: miserable wages, a prohibition on entrepreneurs in their own country, the direct recruiting of foreign companies, the terrible state of transportation, an untenable housing situation, multiple obstacles to rural producers and the absence of civil, political and economic rights.

In the same year Law 989 was enacted with “measures toward real estate and personal property, or any other kind of value, etc., towards those who abandon the country with unforgivable disdain toward the national territory.” At the same time, new labels were applied to regime opponents who were called traitors to the homeland and the nation, scum and antisocials, and emigration was used to throw out the malcontents. Still today, the authorities still do not accept that any Cuban, despite his or her high level of education, may have a different idea in political, economic and cultural matters.

In “the other Boatlift” of Camarioca, in 1965, 2,979 left; in April of 1973 260,000 Cubans left by aire. In the Mariel Boatlift in 1980, 125,000 left the country. By way of the Guantanamo Naval Base in 1994 about 33,000 others left. During those three massive waves any number of tragedies occurred. Suffice it to mention the case of the 13 de Mar Tugboat which, on 13 July 1994, with 72 people on board and seven miles out from the bay of Havana, was purposefully rammed and sunk by other tugboats, with a toll of 41 dead, including ten children.

All of this is indisputable proof that, regardless of any external factors, the root cause lies in the unworkability of the economic model and the lack of civil liberties, such that none of the measures taken since 1959 to today have been able to stop steady flow of Cubans to other parts of the world. That picture has made of the diaspora a process sustained over time through as many pathways as the imagination and desperation of Cubans can design.

Besides the loss of life, the family separations and the multiple tragedies recorded, two of the side effects of permanent exodus are:

1. The decline and aging of the population at the rate of developed countries but in this case in one with a sustenance economy; and

2. The loss of the professionals (university graduates, technicians and skilled workers) who had constituted one of Cuba’s comparative advantages relative to other countries in the region.

Between 1931 and 1940, 9,571 Cubans emigrated to the United States; between 1941 and 1950, 26,313 did so; and between 1961 and 1970, 208,536 left for the U.S.

According to the Population Census of that country, in 2010 there were 1,213,418 Cubans living in Florida, representing an increase of 45.6% compared to the Census of 2000.

The solution to the immigration crisis is impossible without solving the structural crisis in which we are immersed, for which a heavy dose of political will is required, something absent to date.

The many measures taken by the Government of Cuba since 1959; the lack of a regional solution that could be offered by the Central American Integration System for Cubans stranded between Costa Rica and Nicaragua; Ecuador’s decision to require visas for Cubans in order to stop the migratory flow; and accusations against the United States; all these point but to effects but still fail to address the causes, which are internal and structural, so the exodus has continued and will continue at its own pace.

The closing of the chance to leave by way of Ecuador, one of the measures of the effects, will be reflected in illegal departures by any other means, including the return to the fragile marine vessels. The only solution is to attack the causes and this involves removing the political, social and economic model that generates this massive and ongoing exodus.

Originally published in Diario de Cuba

The Growth of GDP, and the Cuban Railway: Past and Present / Dimas Castellano

Dimas Castellano, 31 July 2105 — According to a report presented by the Minister of Economy and Planning, Marino Murillo Jorge, in the Fifth Ordinary Sessional Period of the National Assembly of Popular Power, during the first haf year of 2015, the GDP grew by 4.7%.

In reference to transport, among other things, he said: in the first half year of 2015 this sector grew 6.5%, but the goods sector fell short by 700,000 tons, so that there is production which could not be transported and raw materials which was not delivered on time to its destination; between 20 and 25% of the $2,100,000 which, up to the month of March, was paid for demurrage of containers and ships was caused by deficiencies in the railway system and road transport. In order that delegates might understand the importance and characteristics of transport, he explained that for journeys of over 280 km the best way to transport things is the railway, so that, it is important that its activity levels return to normal. Continue reading “The Growth of GDP, and the Cuban Railway: Past and Present / Dimas Castellano”

A quick look at the history of railways in Cuba permits a clearer evaluation of his proposals

Among the freedoms conceded by the cities to the Creole-Cuban landowners at the end of the 18th century was the right to import machinery, whose introduction onto the island was a decisive move for the sugar industry.

In 1794, during Francisco de Arango y Parreño and Ignacio Pedro Montalvo’s first technical study journey, what most attracted their attention was the steam engine. Arango y  Parreño saw in that the solution to the bottleneck in the Cuban sugar factories. In order to experiment he ordered a Watt, as these machines were called, named after their inventor. [1] Although the steam engine was not invented for specific purposes, the one acquired for Cuba was the first in the world which was applied to sugar production. [2] From 1820 on its use increased, continued in 1840 with the vacuum evaporator, as substitute for the open Jamaican trains, (a reference to the type of pails used in the processing machinery, and nothing to do with railway trains) and from 1850 on with the centrifuge to mechanise the purification operation. All of this made Cuba into the world’s largest sugar producer.

With the application of the steam engine to the wheels of the wagons, came the locomotive in 1804. In 1825, the first public railway in the world was opened in England and, in 1830 the first line for the haulage of passengers and goods. Arango y Parreño, being aware of the latest advances in the technology, understood the importance of its introduction on the island. On November 19, 1837, only twelve years after England, the fourth railway in the world was opened in Cuba. That day Havana was linked up with Bejucal. The following year the Havana – Güines line was completed, and twenty years after that all the sugar-producing areas in Cuba were joined by rail.

The railway dealt with the high cost of transportation, which was one of the brakes on the sugar industry. Up to 1830 the shipment of sugar from Güines to Havana represented 25% of the value of the product and, when the railway started up between those two points (1838), the transportation costs fell by 70%. But, apart from the economic considerations, the railway accelerated the unification of the island which had begun at the end of the 17th century, creating a similar physical and social picture throughout the island, leading to the emergence of Cuba as a social and economic entity.

Between 1899 and 1908, the Cuba Central Railway and the Cuba Eastern Railway were created. One of their objectives was to integrate the railways which had been constructed since colonial times. That process was speeded up by Military Orders 34 and 62 enacted by General Leonardo Wood, during the government of occupation, which developed the sugar industry as much as it did the railways. In 1909, when Major General José Miguel Gómez took on the presidency of Cuba the cities of Havana and Santiago de Cuba were already connected by the Central Railway.

Taking into account the fact that Cuba is a long thin island, it was understood since colonial times that the railway was the ideal mode of transport and consequently an efficient infrastructure was created which united the country from north to south and east to west.

Owing to the deterioration suffered after 1959, the Revolutionary government proposed the building of a central double-track line, 1,149 km long, for high-speed trains. On January 29, 1975, Fidel Castro opened the first 24.2 km section, but the plan collapsed, as such things nearly always did. Thirty-one years later, the same Fidel said: “We were intending to construct a new line employing all the technical resources required. Many curves were straightened out, but the work could not be finished, not just because we did not have the experience, but also for international problems which were arising. ..” In the same speech, delivered in 2006, he added: “Today we have just taken delivery of 12 locomotives, and not just any old locomotives; they are simply the best we have ever received in our country; the most modern, the most efficient, and the most economical.” [3]

From the year 2006 up to the present the official Cuban press provides information on what happened regarding the railway. The deterioration due to lack of attention in a 15 metre strip on both sides of the track, including some stretches which remained buried under rubble, required, in the year 2010, 30 million pesos to clean up and restore. [4]

With an integrated focus on the matter, Cuba arranged the purchase of 550 wagons, tankers and rolling stock, while at the same time investing in 112 Chinese-made locomotives. [5]

They did not put enough effort into solving the difficulties presented by the railway lines; in spite of spending nearly 600 million dollars in the last five years on the acquisition of equipment, machinery, tools, material and new productive lines capable of reversing the grave deterioration in the railways.

On January 20, 2011 capital repairs were started on the 40 km of the Central Line, planned for that year. According to the engineer Bárbaro Martínez, principal specialist in the National Company of Lines and Construction Works of the railway, “The damage ws such that we had to carry out a very major reconstruction task, equivalent, you could say, to building a new line.” [7]

The deficiencies in the tracks continue to be the principal cause of accidents. Interviewed by the newspaper Granma, the engine drivers of railcar 2125, Jorge Inerarity Estrik and Joan Camayo del Pino, recognised that, apart from the deterioration of the track, many accidents occur due to crew negligence, basically due to getting drunk, and other violations, and not complying with instructions. And frequently the cattle owners intentionally let their herds wander and wait with bags and knives until they are run over [because it is illegal to kill a cow in Cuba]. [8]

In 2011, manual maintenance of more than 7,000 km of track was realised, more than that delivered in 2010. Nevertheless, in spite of the achievements in the rail system, there are still factors obstructing all the effort put in to deal with all the accumulated deterioration over decades as well as the difficult economic situation in Cuba.

The Capital Industrial Works Company (Railway Sleepers)  of Villa Clara last year was unable to meet its production plan, in spite of having built a new line with Italian technology, and a surface treatment plant. There was no lack of concrete or ballast, but there were difficulties with plastic for the excavation mechanism, the cleaning, the die-making, the service provided by the national mechanical industry, and other problems.  and other problems. “For these reasons they failed to complete 45 thousand units, which prevented the renovation of 24 km of track.” (one km of track needs 1,800 railways sleepers. Right now, they are working with the left-overs from the last half-year of 2011, having not received any supplies.

From the foregoing analysis we can draw at least three conclusions:

1 – that the importance of the railway was understood by the ranchers over two hundred years ago, and from then up to 1959 the railway worked efficiently, so much so that you could set your clock by the punctual timekeeping of the trains;

2 – the goods left untransported in the half year examined is not news, it is the result of problems related to a common factor: the non-viability of the present Cuban model; and,

3 – the surprising fact is that in spite of the effect of the railway on the other sectors of the economy, the latter increased by 4.7%.

Footnotes

1: James Watt (1736-1819) Scottish engineers who invented the double-action steam engine
2: “The sugar factory, Cuban economic and social sugar complex” (Fraginals, Manuel Moreno)
3: Juventud Rebelde (Cuban daily paper). Alina Perera Robbio “We have procured the best locomotives in the world”, Sunday January 15th, 2006
4: Granma. Lourdes Pérez Navarro “Clean up the mess next to the railway track”.
5: Granma. Lourdes Pérez Navarro “The railway is waiting for its time”, Thursday, August 19, 2010
6: Granma, Lourdes Pérez Navarro “Investments which move trains” Friday May 28, 2010.
7: Lourdes Pérez Navarro. “Opening the way for the Central Line” Granma, Friday, 11 February, 2011.
8: Lourdes Pérez Navarro. “Accidents keep happening on the railway”. Granma, Thursday February 17, 2011.
9: Maylin Guerrero Ocaña. “Railway renovation moving on.”, Granma, Thursday, May 17, 2012
10: Lourdes Rey Veitía. “Without linking things up, the railway won’t advance” Monday, March 5, 2012.

Translated by GH