Dual Currencies: Before 1959 and Today / Dimas Castellano

One peso note, Cuba, 1969

Dimas Castellanos, 22 January 2018 — The reform measures implemented in Cuba in 2008 failed: voluntarism, statism, centralized planning, and subordination to policy and ideology dashed them. The coexistence of two currencies confirms this.

In 2011 monetary unification formed part of the Guidelines approved at the Communist Party’s 6th Congress. In 2013 a timeline was announced to implement it, and there was talk of a prompt solution. In 2016 its elimination was said to be urgent.

In 2017 buying with Cuban pesos was authorized for use at retail establishments, and bills of 200, 500 and 1,000 pesos were placed in circulation to facilitate transactions. Then, in December, President Raul Castro stated: “the elimination of the dual currency system constitutes the most pivotal process to make progress on the updating of our economic model. Without solving this, it will be difficult to advance correctly.” He concluded by saying: “I must recognize that this issue has taken us too long, and its solution cannot be put off any longer.” (Granma, 22 December 2017)

In this article I limit myself to the historical background of the dual currency system; that is, its past and present. continue reading

Dual currency in Cuba before 1959

In the period between 1878 and 1895 two key events took place.

First: the explosion of the sugar industry and the export of more of 90% of Cuban sugar to the U.S.A. allowed the American Government to impose the Bill McKinley agreement on Spain, a commercial reciprocity treaty that allowed the free flow of Cuban raw materials to the American market, including sugar, which accounted for 94 of every 100 pesos the island took in.

The second: the important role of American investments in the structures of agrarian holdings, sugar plants, and mining facilities.

Both developments, after Spanish domination, facilitated the introduction of the dollar into Cuba as a monetary resource.

The Spanish centén and the French luis continued to circulate in Cuba until 1914, but official payments were made according to the exchange rate established by the dollar. In order to diminish dependency on it, in October of that year the Government of General Mario García Menocal created the National Monetary System, whose first measure was the “Economic Defense Law,” which gave rise to a national currency based on the gold standard, with the same weight and law as the American dollar.

Although it arose subordinated to the dollar, which was legal tender, after the Economic Defense Law the peso began to prevail.

In 1924 86% of the currency in circulation consisted of dollars. In 1934 an acute depreciation made it necessary to devalue the peso, which continued to function as a measurement of value, but the means of circulation was assumed by the peso de plata (silver peso) and certificados de plata (silver certificates), legal tender as of 1935.

In 1939 the Currency Destabilization Fund was founded, and in 1948 the National Bank of Cuba was created, which replaced the peso de plata with notes from the National Bank, obligatory and unlimited legal tender.

In The Monetary Unification of 1914 Elías Amor sums up the results with just a few words: “The introduction of the National Monetary System created a reliable, modern and well-built system that allowed the national currency to become a store of value, on the basis of which commercial and financial transactions and operations ensued that made possible a remarkable dynamism and growth of the economy under the Republic.”

Dual currency in today’s Cuba

The revolutionaries who rose to power in 1959, imbued with high doses of subjectivism, and believing themselves to be immune from the laws that govern economic and financial phenomena, moved to eradicate mercantile relationships and money. They nationalized the national and foreign banks, and placed these responsibilities in the hands of “loyal” people.

An example was the case of the economist Felipe Pazos Roque – founder and first president of the National Bank of Cuba, in 1948 – who, opposed to the coup d’etat of 1952, resigned his post. Pazos, who participated in the civic struggle against the Government of Fulgencio Batista, in 1959 was again assigned this responsibility, but his ideas were found not to be “loyal.” Months later he was replaced by Commander Ernesto Guevara.

Eighty years after the advent of the Cuban peso, with a deficient economy, but buoyed by Soviet subsidies, extended for ideological and geopolitical reasons, and as socialism was crumbling in Eastern Europe, Cuba was in the throes of a severe crisis, dubbed with the euphemism  “Special Period During Peacetime,” during which, between 1990 and 1994, the country’s GDP contracted 34.8%.

The Government limited itself to implementing measures to subsist, but without really changing. After 35 years of revolution and confrontation with the U.S.A., it decided to introduce, for the second time in the history of Cuba, the enemy’s currency.

To erase the negative image of the greenback, the CUC was created, a convertible peso assigned a value similar to that of the dollar, but without its attendant backing. A 10% tax was placed on the dollar, the CUC appreciated in relation to it by 8%, and ultimately achieved a one-to-one value, but the 10% tax on the dollar was maintained. In summary, Cuba features the peculiarity of having two currencies, neither of which is based on gold or on the GDP to be truly convertible.

The monetary duality exacerbated social differences and accelerated the loss of the Cuban peso’s already scant value. Its effect was evident in the inflation of prices in the black market, and meager wages and pensions. It frustrated production, reduced productivity, and lost or diminished its functions as a value of measurement and instrument for the acquisition of goods, savings, settling debts and making payments.

Monetary unification stands, along with the restitution of citizens’ liberties, as an inescapable necessity, one that cannot be put off, despite challenging conditions, particularly because the entity that must enact this unification, the Government, is the same that introduced the dual system, and until now has not demonstrated the political will necessary to carry out a critical analysis of itself and implement the only possible solution. The fact is that 60 years in power make it responsible for both the good and the bad.

The Cuban peso lacks support for the payment of goods and services sufficient to recover its functions and for it to be comparable to other international currencies. Monetary unification, by itself, will not solve the crisis. The solution calls for efficiency and an increase in production, which is impossible without major investments. Foreign because the monetary duality is an obstacle; national because the power refuses it.

A project is pressing, headed by this Government or that which replaces it, that features the decentralization of the economy, restitutes citizens’ rights and liberties, allows for the development of a middle-class, and removes the obstacles that restrain production and productivity. But none of this is possible under statization and a planned economy subordinated to the interests of those in power.

Note: Translation from DiariodeCuba.com

Three Points to Solve the Embargo / Dimas Castellano

A bicyclist in Havana. (MARTINOTICIAS)

Dimas Castellano, 20 November 2017 — On November 1, 2017, Cuba presented to the UN General Assembly the project entitled “Need to end the economic, commercial and financial blockade imposed by the US against Cuba.”

In his speech, Cuban Foreign Minister Bruno Rodriguez criticized the policy contained in the Presidential National Security Memorandum on the strengthening of the US Policy towards Cuba, issued on 16 June 2017.

He criticized the prohibition of economic, commercial and financial transactions with Cuban companies linked to the Armed Forces and the Ministry of the Interior; the elimination of individual travel in the category of people-to-people exchanges; the prohibition of travel to Cuba outside the framework of the 12 authorized categories; the opposition to actions that promote the lifting of the “blockade”; the repeal of the Normalization of Relations Policy issued by President Obama in October 2016, and the conditioning of the suspension of the “blockade” to changes within Cuba. continue reading

Likewise, he criticized moving the issuance of visas services from Havana to US consulates in third countries; the warning to American citizens to avoid visiting Cuba; the expulsion of Cuban personnel from the Consulate General in Washington and the reduction of US personnel in the embassy in Havana.

Finally, the Cuban foreign minister said: “The blockade is the biggest obstacle to the economic and social development of Cuba.”

In 1992 only 59 countries voted in favor of the Cuban resolution and in 2016 — with the exception of the US and of Israel which abstained — all voted in favor, without affecting the US embargo in any way, because the resolutions of that body constitute recommendations and, therefore, compliance with them is not mandatory. Therefore, when obtaining the maximum possible result in the UN, action in that forum was exhausted.

From that moment on, the atmosphere of detente generated by the restoration of diplomatic relations recommended directing the solution through bilateral negotiations.

Three points to consider are the following:

The Internal Causes

As the resumption of diplomatic relations did not emerge from victory, but from the failure of both contenders, each party was obliged to change to move towards normalization.

This was what General expressed in a conversation held in 1977 with two American senators: “Our organizations are like a bridge in time of war. It is not a bridge that can be easily built, nor as quickly as it was destroyed, but if we both rebuild parts of the bridge, each one its own part, we will be able to shake hands, without winners or losers.” Inthese words the Cuban leader recognized the bilateral character of the conflict and its solution.

For these words to become relaity, the normalization of relations with the US had and will have to be accompanied by the empowerment of Cubans, with the restoration of rights and freedoms for their effective participation in national problems. And this is not at all to cede sovereignty to an external force, but to give the Cuban people the participation that belongs to them in said sovereignty.

It is a matter of retracing the road traveled since the nationalization of US property in Cuba led to the rupture of diplomatic relations and the enactment of the Embargo Law. In this confrontational context, the Cuban government dismantled the existing institutions, disarmed civil society, laid on inefficiency and avoided any commitment to human rights.

Beginning in 2008, General Raúl Castro implemented a package of measures whose main result was to reveal the exhaustion of the model and the depth of the crisis. Therefore, it is now a matter of abandoning the grasp of state control, centralized planning and the absence of freedoms that, without ignoring the negative effects of the embargo, are the main causes of the crisis in which Cuba finds itself.

Cuba-United States Relations

The policy of the Obama Administration provided an opportunity for change that was wasted by the Cuban side to remove obstacles within the country.

This policy, by not demanding the democratization of Cuba as a premise to reestablish relations, contained a danger for the conservation of power: the external contradiction would gradually shift towards internal contradictions, which explains the insoluble contradiction of the Cuban government: to change and at the same time to preserve power.

President Barack Obama issued six sets of modification: the first extended general travel permits, offered commercial facilities to Cuban private companies and small farmers, increased the amount of remittances and donations, expanded commercial exports of goods and services from the US, increased Cuba’s access to communications, and provided commercial telecommunications and internet services with lower prices.

These sets of measures were reflected in the increase of authorized trips to Cuba, the arrival of the first cruise ship from the US to Cuban ports, the resumption of flights, the start of direct mail and transportation between the two countries, the establishment of agreements with several American telecommunications companies. The measures facilitated negotiations with other countries and revived expectations and hopes for change.

If these measures — including the Presidential Directive of October 2016, aimed at trying to make the progress achieved irreversible — did not produce a greater result, it is because the corresponding measures on the Cuban side were missing, which limited itself to allowing Cubans to stay in Cuban hotels previously reserved for tourists; to buy computers, DVDs and mobile phone lines; to sell their houses or cars; to leave the country without having to ask the State for permission and to stay abroad for up to 24 months without losing their right to return; and established public WiFi access points. Measures that, more than advances, clearly denote the point t which rights in Cuba had regressed.

The Example of Vietnam

As the suspension of the Embargo is the prerogative of the US Congress and not of the UN, the practical thing since the vote in 2016 would have been to introduce in Cuba internal changes in the style of those introduced in Vietnam.

The United States dropped three times as many bombs on Vietnam as those used during the Second World War; 15% of the population was killed or injured; 60% of the villages in the south were destroyed and, after the war ended, the country faced an economic blockade and border attacks. In spite of this, after the victory, the implementation of the system of a planned economy plunged the country into hunger and superinflation until, in 1986, the “Vietnamese Renewal” was launched under the slogan of “Economic reform, political stability.”

Instead of dedicating itself, year after years to presenting UN resolutions or developing ideological campaigns against imperialism, Vietnam undertook a systematic program of reforms, based on the introduction of market mechanisms, autonomy of producers, the right of nationals to be entrepreneurs and delivery of land to the peasants who developed the initiative, interest and responsibility of the Vietnamese.

Because of the results of these measures, the US suspended the embargo on Vietnam. In 2008 the country focused it efforts on leaving the list of underdeveloped countries, in 2010 it set itself the goal of entering the group of middle-income countries, in 2014 it ranked as the twenty-eighth largest exporter in the world, and in 2016 it approved measures to move it toward becoming an industrialized nation.

Cyclones, Housing and Revolution / Dimas Castellano

Havana after Hurricane Irma. (ELSALVADOR.COM)

Dimas Castellanos, 13 October 2017 — According to information from the National Defense Council, Hurricane Irma, a category-five storm, hit Cuba between September 7 and 9, causing 14,657 houses to collapse, and another 16,646 to partially collapse, thus totaling 31,303 —not to mention the tens of thousands that suffered other kinds of damage.

Between 2002 and 2004, in the Pinar del Río province alone, Hurricanes Isidore, Lili, Charley and Ivan – categories one, two, three and five, respectively – damaged more than 98,000 properties. In 2008 the tropical storms Fay, Hanna, Gustav and Ike totally demolished around half a million houses; and in 2005, Hurricane Dennis, a category-three storm, damaged more than 80.000 homes in Pilón (Granma), more than 70% of the homes in Casilda (Trinidad), 5,241 homes in Santiago de Cuba, more than 25,000 in Granma, some 400 in Jaruco (Mayabeque), more than 3,200 in Matanzas, 8,200 in Sancti Spíritus, and 1,828 homes in the capital. continue reading

The magnitude of this damage was such that the sum of the houses damaged by cyclones alone is similar to the figure for the housing shortage that the Revolution inherited: according to the Economic Commission for Latin America and the Caribbean, the housing deficit until 1959 was of about 700,000 homes, while the pace of construction between 1946 and 1953, according Erich Trefftz, was 26,827 as an annual average, a figure that increased between 1953 and 1958.

In 1953 Fidel Castro proposed “A revolutionary government would solve the housing problem by resolutely lowering rents by 50%, sparing from any contribution those homes inhabited by their own owners, tripling taxes on rented houses, demolishing the infernal barracks and erecting in their place modern high-rises, and financing the construction of houses throughout the island on a scale never seen before, based on the idea that it is ideal, in the countryside, for each family to owns its own land, and, in the city, for each family to live in its own house or apartment.”

On October 14, 1960, in its Urban Reform Law the revolutionary government established that: “Every family has a right to decent housing, and the State will ensure this right in three stages; in the medium term, the State will build, with its own resources, homes that it will cede in permanent usufruct, free, to each family.”

The final provision of said Law stated: “Exercising the Constituent Power wielded by the Council of Ministers, this Act is declared an integral part of the Basic Law of the Republic. Consequently, this law is granted constitutional force and hierarchy.”

However, as an annual average, the first plan, from 1960 to 1970, was unable to exceed 11,000 homes; and the second plan, from 1971 to 1980, barely reached 17,000. Thus, in the first 20 years the pace of annual construction was lower than that of the period from 1946 to 1953. Thus, instead of relieving the housing shortage, it was aggravated.

To recover from the setback, it was proposed to build 100.000 per year starting in 1981, but in the first decade it was unable to exceed 40,000 per year. This plan was interrupted in 1995 by the crisis known as the “Special Period”. Carlos Lage Dávila, secretary of the Executive Committee of the Council of Ministers, then presented a report to the National Assembly of the People’s Power in 2005, in which he assured that due to the “improvement of the country’s financial potential,” they were going to “construct and finish no less than 100.000 new houses per year as of 2006.” That is, a second plan of 100,000 homes would be undertaken.

According to the National Bureau of Statistics, in 2008 about 45,000 were built, but in the year 2013 there were fewer than 26,000 (a figure again below the average for the period from 1946 to 1953, when the population of Cuba was half today’s). That is, in five years construction decreased by about 19.000 houses.

A conservative estimate of the non-fulfillment of the plans, and houses destroyed by atmospheric phenomena, yields a shortage greater than the 700.000 that were calculated before 1959. And this figure would be even worse if it were not for the more than two million Cubans who have left the country since 1959.

If we accept the fact that the figure remains at 700,000, at the rate of about 25,000 per year, it will take 28 years just to make up for the shortage. If we also account for Cuba’s new needs, due to demographic growth, the ageing of existing housing, the lack of maintenance, the increasing number of collapses, the shortage of construction materials, and the effects of natural phenomena … it will take about half a century. We are, then, dealing with a major housing crisis and all its implications.

The Urban Reform Act of 1960 stated that “The State, with its own resources, will build the homes, which it will give in usufruct, permanently and free, to each family.” Then the General Housing Law of 1984 defined the “microbrigade” as the main instrument for their construction. Meanwhile, the failed plan for 100,000 placed the responsibility on families, a demonstration of the incapacity of the State to tackle the housing issue alone.

An abridged account of the 50 years that separate us from the Urban Reform Law of 1960 reveals a shift, spanning from the State’s promise to build and to grant decent housing, permanently and for free, to the construction of houses with palm trees toppled by the hurricanes, with roofs of zinc tiles or asbestos cement, likely to be demolished by future hurricanes. But it also reveals the impossibility and inability of the totalitarian state to solve the housing crisis, as this would require joint action by Cubans, equipped with basic instruments, such as the rights and liberties of citizens, to contribute to the resolution of a problem as vital as housing, one of the basic components of integral human development.

Translation from DiariodeCuba.com

Last Episode of This Cuban Electoral System / Dimas Castellano

Election billboard in Cuba (MartiNoticias)

Dimas Castellanos, 7 September 2017 — The Cuban electoral system includes general elections every five years for deputies to the  National Assembly of People’s Power and delegates to provincial elections, as well as partial elections every two and a half years for district delegates and municipal assemblies.

During this month the nomination of candidates corresponding to a new election period will take place and on Sunday October 22 municipal elections will be held, a process that will culminate in February of 2018 with the designation of the new National Assembly and the election of the next revolutionary Government. (Ed. note: Due to Hurricane Irma the election calendar was extended after this article was written.) continue reading

Article five of the Constitution defines the  Cuban Communist Party (PCC) as “the leading force of society and the state,” therefore, the electoral system is designed to ensure the continuity of the PCC in power. This explains that although in the districts the people nominate and directly elect delegates, in forming the municipal, provincial and national assemblies, which is where the true power is concentrated, the Candidature Commissions, made up of the leaders of the mass organizations — constitutionally subordinated to the PCC — have the power to name 50% of the candidates, even if they have not been elected by the people.

In a context characterized by economic decline, the latent danger of the end of the subsidies from Venezuela, widespread lack of interest, moral corruption due to the need to survive and growing despair, the “elections” announced will be, in addition to the most difficult, the last under the current electoral system which, exhausted, will have to give way to a new electoral law. The reasons on which this thesis is based are the following:

In 1959: 1- The revolutionaries who came to power in 1959 were legitimized by arms; 2 – The economy that they found allowed them to lower prices and redistribute wealth, which allowed them to gain popular support; and 3 – Without any economic results, in the middle of the Cold War, they were sustained by Soviet-Venezuelan subsidies.

The current crisis of the electoral system — a reflection of the crisis of the Cuban model — is not ignored by the government. On February 23, 2015, at the 10th Plenum of the PCC Central Committee, it was announced that a new law would be adopted for the general elections of 2018. However, the setbacks suffered by the “Bolivarian” left in the region, the loss of the Parliament for Chavismo in Venezuela and the tight victory [for the government candidate] in the second round in Ecuador seem to have led to the postponement of the new law. To this is added that, in the municipal elections of April 2015 the number of Cubans who did not vote at all or who canceled their ballots totalled 1,700,000 Cubans, or 20% of the electorate.

To this complexity are added: 1- The presentation of dozens independent candidates, which despite their not representing an immediate danger for the conservation of power, is a sign of the need for changes and 2- The recent restrictive measures against private work.

The recent Resolution No. 22/2017 of the Ministry of Labor and Social Security prohibits the granting of new licenses for dozens of self-employment activities ranging from the rental of housing to the pushcart vendors selling agricultural products; activities that the State has been and is unable to carry out. It is, therefore, a setback aimed at preventing the development of an independent national middle class that Cuba needs so much in order to maintain its power.

All this has generated great concern for the Cuban authorities as evidenced by the following three facts:

  • The Granma newspaper of Thursday, July 13, 2017 reproduced the following words of Carlos Rafael Miranda Martínez, national coordinator of the Committees for the Defense of the Revolution (the block watch committees that are “the eyes and ears of the Revolution”), calling for a great battle. He said: “This time they must be on the front line to ensure the success of the Cuban electoral process, the great battle is to nominate colleagues and comrades with a proven revolutionary prestige, with a trajectory in favor of the neighborhood and community.”
  • The Cuban president, at the closing of the National Assembly, on July 14, 2017, said: “It is not idle to emphasize the transcendent political importance of this electoral process, which must constitute an act of revolutionary reaffirmation on the part of our people, which requires an arduous work of all the organizations and institutions.”.
  • The Committees for the Defense of the Revolution initiated the “Neighborhood discussions for the patriotic and anti-imperialist duty,” in which a bulletin of that association is discussed with the directions that its members arrive at the nomination assemblies ready.

For the reasons listed, the new generation of revolutionaries who will take over the leadership of the government in February 2018: (1) that has not been legitimized by arms or by the ballot box; (2) that will find a stagnant economy, in a frank retreat, that prevents them from having anything to offer the people; (3) in an international context without a foreign power prepared to subsidize them for ideological reasons; and (4) amid widespread weariness and discontent that will inexorably lead to a new electoral law.

Cuba, Elections and Electoral Reform / Dimas Castellano

Dimas Castellanos, 4 June 2017 — The “electoral” process which will take place in Cuba between October 2017 and  February 2018 lacks any relevance. Raúl Castro’s replacement as president does not mean he is relinquishing power, as, up until 2021, he will occupy the position of Secretary of the Communist Party, which is, constitutionally, the top man in the society and the state.

For the elections to have any influence on social progress you would need an electoral reform which would re-establish sovereignty of the people and, although in February 2015 a new electoral law was announced, it was not mentioned in the meeting of 14 June 2017.

According to Jean-Jacques Rousseau, from the joining together of those who wish to defend and protect their property emanates a general will to convert the cooperating parties into a collective political body.   The exercise of this general will is known as sovereignty and the people who do it are sovereign. continue reading

In Cuba the republican constitutions of 1901 and 1940 endorsed sovereignty as residing in the people, with all public powers flowing from that. In 1959, with the emerging of revolutionary power they promised they would hold elections “as soon as possible”. Seventeen years later, they enacted a law abolishing the sovereignty of the people. As long as this situation goes on in Cuba there will be no true elections.

In the year 2003, the total share of Cubans who did not go to vote and destroyed their voting papers was 6.09% of the electorate. In 2008 it went up to 7.73%, in 2013, 14.22% and in April 2015 was over 20%. That is to say 1,700,000 Cubans. In a totalitarian country without civic and political rights, these statistics demonstrate the need for a law that satisfies this part of the Cuban people. You can add to that those Cubans inclined to vote for opposition representatives – not legally recognised – as happened in the 2015 elections, when the opposition put up candidates in the Havana districts of Arroyo Naranjo and Plaza.

According to the Secretary of the unicameral Cuban parliament, in 2014, during the fourth round meetings where delegates give the electorate an accounting of what they have accomplished,  there were over 600 assemblies with fewer than half the electors present.

The present law limits the electorate’s direct voting to the Delegates of the Municipal Peoples’s Power assemblies, which may not exceed 50% of the total number of candidates. The other half is nominated by the Candidate Committees – made up of leaders of peoples’ organisations with the authority to include unelected people. Then, candidates for provincial and national positions are directly appointed by these committees. Therefore the Cuban parliament and government are the product of the decisions of these Candidate Committees, which are subordinate to the Communist Party, which cuts out the sovereignty of the people.

Transformations are needed in terms of rights – such as the right of association and a multi-party system – so that Cubans can take an active part in determining where their lives and the nation is going. Until that occurs, you can’t talk about true elections in Cuba and there is no indication that that will happen in the upcoming elections.

The absence of peoples’ power and the non-existence of the citizen as legal entity have been, and are, determining factors in the structural crisis of the Cuban model, which is reflected in  inefficient production, insufficient salaries, uncontrollable corruption, hopelessness and an unstoppable exodus.

Published in El Comercio, Lima, Peru.

Translated by GH

Corruption Versus Liberty: A Cuban Dilemma / Dimas Castellano

Dimas Castellanos, 18 November 2016 — The evil of corruption–the act of corruption and its effects–has accompanied the human species since its emergence. It has been present in all societies and in all ages. Its diverse causes range from personal conduct to the political-economic system of each country. In Cuba it appeared in the colonial era, it remained in the Republic, and became generalized until becoming the predominant behavior in society.

To understand the regression suffered we must return to the formation of our morality, essentially during the mixing of Hispanic and African cultures and the turning towards totalitarianism after 1959, as can be seen in the following lines.

The conversion of the island into the world’s first sugar and coffee power created many contradictions between slaves and slave owners, blacks and whites, producers and merchants, Spanish-born and Creole, and between them and the metropolis. From these contradictions came three moral aspects: the utilitarian, the civic and that of survival. continue reading

Utilitarian morality

The father of utilitarianism, Jeremy Bentham (1748-1832), said that utility is measured by the consequences that actions tend to produce, and came to the conclusion that all action is socially good when it tries to procure the greatest possible degree of happiness for the greatest number of people, and that each person has the right to be taken into account in the exercise of power.

That thesis of Bentham became a popular slogan synthesized in the phrase: “The greatest happiness for the greatest number.” Such a concept crystallized in Cuba as a creole variant of a utilitarianism that took shape in exploitation, smuggling, corruption, banditry, and criminality, which turned into the violation of everything predisposed as an accepted norm of conduct in society.

The gift of a plant by the sugar planters to the governor Don Luis de las Casas; the diversion of funds for the construction of Fortaleza de la Real Fuerza de la Cabaña, which made it the most expensive fortress in the world; the gambling house and the cockfighting ring that the governor Francisco Dionisio Vives had for his recreation in the Castillo de la Real Fuerza, whose government was known for “the three d’s”: dancing, decks of cards, and drinking, for which reason, at the end of his rule, there appeared a lampoon that said: “If you live (vives) like Vives, you will live!”; the mangrove groves; bandits like Caniquí, the black man of Trinidad and Juan Fernandez, the blond of Port-au-Prince … are some examples.

Utilitarianism reappeared on the republican scene as a discourse of a political, economic, and military elite lacking in democratic culture, swollen with personalismo, caudillismo, corruption, violence and ignorance of anything different. A masterful portrait of this morality was drawn by Carlos Loveira in his novel Generales y doctores, a side that resurfaced in the second half of the twentieth century.

Thus emerged the Republic, built on the symbiosis of planters and politicians linked to foreign interests, with a weak civil society and with unresolved, deep-rooted problems, as they were the concentration of agrarian property and the exclusion of black people. The coexistence of different moral behaviors in the same social environment led to the symbiosis of their features. Utilitarianism crisscrossed with virtues and altruisms, concerns and activities on matters more transcendent than boxes of sugar and sacks of coffee.

Throughout the twentieth century, these and other factors were present in the Protest of the 13, in the Revolution of the 30, in the repeal of the Platt Amendment, in the Constituent Assembly of 1939, and in the Constitution of 1940. Also in the corruption which prevailed during the authentic governments and in the improvement accomplished by the Orthodox Dissent and the Society of Friends of the Republic. Likewise, in the 1952 coup d’etat and in the Moncada attempted counter-coup, in the civic and armed struggle that triumphed in 1959 and in those who since then and until now struggle for the restoration of human rights.

Civic morality

Civic morality, the cradle of ethical values, was a manifestation of minorities, shaped by figures ranging from Bishop Espada, through Jose Agustín Caballero to the teachings of Father Felix Varela and the republic “With all and for the good of all” of José Martí. This civic aspect became the foundation of the nation and source of Cuban identity. It included concern for the destinies of the local land, the country, and the nation. It was forged in institutions such as the Seminary of San Carlos, El Salvador College, in Our Lady of the Desamparados, and contributed to the promotion of the independence proclamations of the second half of the nineteenth century, as well as the projects of nation and republic.

Father Félix Varela understood that civic formation was a premise for achieving independence and, consequently, chose education as a path to liberation. In 1821, when he inaugurated the Constitutional Chair at the Seminary of San Carlos, he described it as “a chair of freedom, of human rights, of national guarantees … a source of civic virtues, the basis of the great edifice of our happiness, the one that has for the first time reconciled for us the law with philosophy.”

José de la Luz y Caballero came to the conclusion that “before the revolution and independence, there was education.” Men, rather than academics, he said, is the necessity of the age. And Jose Marti began with a critical study of the errors of the War of 1868 that revealed negative factors such as immediacy, caudillismo, and selfishness, closely related to weak civic formation.

This work was continued by several generations of Cuban educators and thinkers until the first half of the twentieth century. Despite these efforts, a general civic behavior was not achieved. We can find proof of this affirmation in texts like the Journal of the soldier, by Fermín Valdés Domínguez, and the Public Life of Martín Morúa Delgado, by Rufino Perez Landa.

During the Republic, the civic aspect was taken up by minorities. However, in the second half of the twentieth century their supposed heirs, once in power, slipped into totalitarianism, reducing the Western base of our institutions to the minimum expression, and with it the discourse and practice of respect for human rights.

Survival morality

Survival morality emerged from continued frustrations, exclusions, and the high price paid for freedom, opportunities, and participation. In the Colony it had its manifestations in the running away and insurrections of slaves and poor peasants. During the second half of the twentieth century it took shape in the lack of interest in work, one of whose expressions is the popular phrase: “Here there is nothing to die for.”

It manifested itself in the simulation of tasks that were not actually performed, as well as in the search for alternative ways to survive. Today’s Cuban, reduced to survival, does not respond with heroism but with concrete and immediate actions to survive. And this is manifested throughout the national territory, in management positions, and in all productive activities or services.

It is present in the clandestine sale of medicines, in the loss of packages sent by mail, in the passing of students in exchange for money, in falsification of documents, in neglect of the sick (as happened with mental patients who died in the Psychiatric Hospital of Havana of hypothermia in January 2010, where 26 people died according to official data), in establishments where merchandise is sold, in the workshops that provide services to the population, in the sale of fuel “on the left” and in the diversion of resources destined for any objective.

The main source of supply of the materials used is diversion, theft, and robbery, while the verbs “escape”, “fight” and “solve” designate actions aimed at acquiring what is necessary to survive. Seeing little value in work, the survivor responded with alternative activities. Seeing the impossibility of owning businesses, with the estaticular way (activities carried out by workers for their own benefit in State centers and with State-owned materials). Seeing the absence of civil society, with the underground life. Seeing shortages, with the robbery of the State. Seeing the closing of all possibilities, with escape to any other part of the world.

Immersed in this situation, the changes that are being implemented in Cuba, under the label of Guidelines of Economic and Social Policy of the PCC, run into the worst situation regarding moral behavior. In this, unlike in previous times, everyone from high leaders to simple workers participates. A phenomenon of such a dimension that, despite its secrecy, has had to be tackled by the official press itself, as can be seen in the following examples of a whole decade:

  • The newspaper Juventud Rebelde on May 22, 2001 published an article titled “Solutions against deception”, where it is said that Eduardo, one of the thousands of inspectors, states that when he puts a crime in evidence, the offenders come to tell him: “You have to live, you have to fight.” According to Eduardo, neither can explain “the twist of those who bother when they are going to claim their rights and instead defend their own perpetrator.” It results in the perpetrator declaring that he is fighting and the victims defending him. The selfless inspector, thinking that when he proves the violation he has won “the battle,” is wrong. Repressive actions, without attacking the causes, are doomed to failure.
  • The same newspaper published “The big old fraud”, reporting that of 222,656 inspections carried out between January and August 2005, price violations and alterations in product standards were detected in 52% of the centers examined and in the case of agricultural markets in 68%.
  • For its part, the newspaper Granma on November 28, 2003, in “Price Violations and the Never Ending Battle” reported that in the first eight months of the year, irregularities were found in 36% of the establishments inspected; that in markets, fairs, squares, and agricultural points of sale the index was above 47%, and in gastronomy 50%.
  • On February 16, 2007, under the title “Cannibals in the Towers”, the official organ of the Communist Party addressed the theft of angles supporting high-voltage electricity transmission networks, and it was recognized that “technical, administrative and legal practices applied so far have not stopped the banditry. “
  • Also, on October 26, 2010, in “The Price of Indolence”, reported that in the municipality of Corralillo, Villa Clara, more than 300 homes were built with stolen materials and resources, for which 25 kilometers of railway lines were dismantled and 59 angles of the above-mentioned high voltage towers were used.

If the official newspapers Granma and Juventud Rebelde had addressed the close relationship between corruption and almost absolute state ownership, with which no one can live off the salary, with which citizens are prevented from being entrepreneurs, and with the lack of the most elementary civic rights, then they would have understood that repression alone is useless, that the vigilantes, policemen, and inspectors are Cubans with the same needs as the rest of the population.

In order to change the course of events, it is necessary to extend the changes in the economy to the rest of the social spheres, which implies looking back at citizens’ lost liberties, without which the formation and predominance of civic behavior that the present and future of Cuba require will be impossible.

 Ethics, politics, and freedoms

In Cuba, the state of ethics – a system composed of principles, precepts, behavior patterns, values and ideals that characterize a human collective – is depressing; While politics – a vehicle for moving from the desired to the possible and the possible to the real – is monopolized by the state. The depressing situation of one and the monopoly of the other, are closely related to the issue of corruption. Therefore, its solution will be impossible without undertaking deep structural transformations.

The great challenge of today’s and tomorrow’s Cuba lies in transforming Cubans into citizens, into political actors. A transformation that has its starting point in freedoms, beginning with the implementation of civil and political rights. As the most immediate cause of corruption – not the only one – is in the dismantling of civil society and in the nationalization of property that took place in Cuba in the early years of revolutionary power, it is necessary to act on this cause from different directions.

The wave of expropriations that began with foreign companies, continued with the national companies, and did not stop until the last fried-food stand became “property of the whole people”, combined with the dismantling of civil society and the monopolization of politics, brought as a consequence a lack of interest in the results of work, low productivity, and the sharp deterioration suffered with the decrease of wages and pensions. Added to these facts were others such as the replacement of tens of thousands of owners by managers and administrators without knowledge of the ABCs of administration or of the laws that govern economic processes.

The result could not be otherwise: work ceased to be the main source of income for Cubans. To transform this deplorable situation requires a cultural action, which, in the words of Paulo Freire, is always a systematic and deliberate form of action that affects the social structure, in the sense of maintaining it as it is, to test small changes in it or transform it.

Paraphrasing the concept of affirmative action, this cultural action is equivalent to those that are made for the insertion and development of relegated social sectors. Its concretion includes two simultaneous and interrelated processes: one, citizen empowerment, which includes the implementation of rights and freedoms; and two, the changes inside the person, which unlike the former are unfeasible in the short term, but without which the rest of the changes would be of little use. The transformation of Cubans into public citizens, into political actors, is a challenge as complex as it is inescapable.

Experience, endorsed by the social sciences, teaches that interest is an irreplaceable engine for achieving goals. In the case of the economy, ownership over the means of production and the amount of wages decisively influence the interests of producers. Real wages must be at least sufficient for the subsistence of workers and their families. The minimum wage allows subsistence, while incomes below that limit mark the poverty line. Since 1989, when a Cuban peso was equivalent to almost nine of today’s peso, the wage growth rate began to be lower than the increase in prices, meaning that purchasing power has decreased to the point that it is insufficient to survive.

An analysis carried out in two family nuclei composed of two and three people respectively, in the year 2014, showed that the first one earns 800 pesos monthly and spends 2,391, almost three times more than the income. The other earns 1,976 pesos and spends 4,198, more than double what it earns. The first survives because of the remittance he receives from a son living in the United States; the second declined to say how he made up the difference.

The concurrence of the failure of the totalitarian model, the aging of its rulers, the change of attitude that is occurring in Cubans, and the reestablishment of diplomatic relations with the US, offers better conditions than previous decades to face the challenge. The solution is not in ideological calls, but in the recognition of the incapacity of the State and in decentralizing the economy, allowing the formation of a middle class, unlocking everything that slows the increase of production until a reform that restores the function of wages is possible. That will be the best antidote against the leviathan of corruption and an indispensable premise to overcome the stagnation and corruption in which Cuban society is submerged.

Why Foreign Investments Don’t Work in Today’s Cuba / Dimas Castellano

Photo: Mariel Special Development Zone – ZEDM – the operation of which is tightly controlled by the government.

Dimas Castellanos, 17 January 2017 — By 2007, after forty-eight years of revolutionary rule, inefficiency and a lack of productivity had turned state-run farmland into fields infested with marabú weed. Meanwhile, food prices were increasing on the world market. In light of this situation, General Raúl Castro proposed “changing everything that needs to be changed.”

Fast forward five years to May 2013 when the vice-president of the Council of State, Marino Murillo Jorge, publicly acknowledged that the methods used for decades to manage agricultural lands had not led to the necessary increase in production.

The inefficiency was reflected in the gross domestic product (GDP), which fell regularly for years until reaching 1% during the first quarter of 2016 before falling to 0.9% at year’s end. In other words, Cuba entered into recession, a period of negative growth, in 2017. The result made the need for foreign investment a priority, a need from which no nation can escape, much less an underdeveloped country in a state of crisis. continue reading

In 1982 Cuba passed Decree-Law No. 50, which legalized foreign investment. At the time, the prevailing attitude towards investors in those parts of the world which received Soviet subsidies was hostile. But the dissolution of the Soviet Union made it imperative in 1995 for the government to enact Law No. 77, a statute with many restrictions and an absence of legal protections for investors, who suffered the negative consequences.

Of the roughly 400 joint venture firms that began operation in 2002, half ended up leaving the country. In spite of the negative result, the government did not repeal the statute until it became clear that investors were showing little interest in the Mariel Special Development Zone.

Law  No. 118 was passed in March 2014 but, though more flexible than its predecessor, it too proved to be inadequate. According to Cuban authorities themselves, the country needed sustained GDP growth of 5% to 7%. Achieving this would have required income and investment rates of at least 25%, which would have meant annual investment figures of between 2.0 and 2.5 billion dollars.

Last year, foreign investment did not exceed 6.5% of these figures. Under current conditions the only way of even getting close to this target would be to implement a series of measures, including the following:

1. Allow Cubans — both those living on the island as well as those living overseas — to directly invest in the economy.

2. Acknowledge the social purpose of property and private propeerty. Abolish prohibitions against its concentration in the hands of individuals or legal entities, the only purpose of which is to exclude Cubans from economic enterprise.

3. Allow Cubans to engage in all manner of private sector manufacturing and customer service, and grant them legal status.

4. Provide investors with legal guarantees that allow them to settle disputes with their Cuban business partners before a judicial body that is not subordinate to the party or the state, which otherwise would make the government both judge and plaintiff.

5. Allow employers to freely hire their own employees.

6. Eliminate the dual currency system and its different exchange rates, which would provide for the emergence of a domestic consumer market and which would, in turn, encourage investment.

7. Recognize the right of workers to organize and form labor unions, a principle enshrined in Convention 87 of the International Labor Organization, to which Cuba is a signatory; in the Universal Declaration of Human Rights, of which Cuba was one of the promoters in 1948; and in the UN’s Covenant on Civil and Political Rights and the Covenant of Economic, Social and Cultural Rights, which Cuba has also signed but has not ratified.

These obstacles arise out of a history of antagonism towards investors and a failure to pay creditors. Therein lies the main cause of the country’s poor foreign investment climate, not the US embargo, which was relaxed under President Barack Obama. The level of Cuba’s state imvolvement in investment is uncommon for companies which operate in a market economy. Until that changes, the results will remain the same.

In a meeting of the Cuban parliament on December 27, the head of the Economic and Planning Ministry, Ricardo Cabrisas, observed, “Foreign investment continues to be quite low. It is not yet playing a significant role in economic development.”

Meanwhile, the president of the Council of State, Raúl Castro, stated, “Reinvigorating foreign investment in Cuba is of great importance… It is necessary to overcome, once and for all, the outdated and pervasive prejudice against foreign investment. We must divest ourselves of unfounded fears of capital from overseas.”

Therefore, if reviving a stagnant economy is impossible without a strong injection of capital and if “changing everything that needs to be changed” is more than mere rhetoric, then either a new investment law is needed or the current one needs to be substantially overhauled. In either case the word “foreign” should be dropped, making it simply the Investment Law.

Cuba is the only country in the region whose residents lack a right as basic as being able to participate fully in economic activity in spite of ample business opportunities and the professional training to do so. If this problem is not resolved, it will not only be a denial of our economic history but also of our social struggles and José Martí’s republican principles, which envision equality before the law for all those born in Cuba and for its many small property owners.

Besides being harmful to the nation, this prohibition violates the current constitution, which in Article 14 states, “The economy is based on socialist ownership by all the people of the fundamental means of production.” In other words the people, the supposed owner, has no right to participate in the investment process, a status contrary to law, western culture, of which we are a part, our economic history and human dignity.

A new investment law, one without qualifiers, would be an important, necessary and long-awaited sign of change. Proof that, despite long delay, the government is really willing to change everything that needs to be changed.

The Challenge of a Government without Fidel / Dimas Castellano

Machado Ventura, Fidel and Raúl Castro.

Diario de Cuba, Dimas Castellano, 15 December 2016 — Fidel Castro spent decades leaving his personal imprint on Cuba. Wielding absolute power and imbued with a high degree of of messianism, populism and voluntarism, he determined the fates of several generations. He undertook important social projects but hampered the economy and rolled back civil liberties. The government under his leadership anchored the country in the past and missed the opportunities for change provided by his various and continued failures. His death, given the time and conditions in which it occurred, will undoubtedly have a strong impact on Cuban society.

Due to their limitations, slow pace and the contradictions inherent in a kind of power sharing arrangement, the reforms implemented since 2008 under the leadership of Raúl Castro did not yield positive results. A 1% drop in GDP in the first half of 2016, a projected recession in 2017 and an increase in the mass exodus of Cubans in recent years are confirmation of their failure. continue reading

These timid and limited reforms did, however, give birth to an embryonic private sector that the government cannot afford to ignore. Relations with the United States, even if tense under the incoming administration of Donald Trump, established areas of mutual interest that preclude their being reversed. Finding a new godfather in the international arena to replace Venezuela is not an option. And the package of measures put together by the Obama administration, which breathed life into Cuba’s relations with the West, revived tourism and created expectations that will not continue without changes in Cuba itself.

Under this scenario, the government has only two options: to slam on the brakes, which amounts to leading the country into total ruin, or to go forward. The latter is the more likely choice since choosing the former means we would all be losers, including those in power. Even if the political will is lacking and this turns out the be the chosen option, change will come soon enough. We will then see if the current leadership is capable of handling the complexities of getting the country out of stagnation and moving it forward. In any event, any chosen path will, sooner or later, inexorably lead to the democratization of the country.

Given the magnitude of the challenge, what is most important and urgent now is to refrain from judging the actions of the past. Though necessary, the results are already clear for all to see and will, in time, be subject to the implacable judgement of history. Instead, the task at hand is to define the path ahead and to move forward. It is this path that, in the absence of alternative forces capable of imposing rhythm and direction, the Cuban government will have to first define. With no maximum leader or two heads of state, it alone has the resources to initiate any transformation.

With the exception of the fledgling private sector, very little in the economy is working. Dependent on tourism, the Port of Mariel Special Development Zone and a few factories, it is concentrated in the hands of the Business Administration Group (GAESA) under the direction of Major General Luís Alberto Rodríguez López-Callejas.

As for the Revolutionary Armed Forces (FAR), the Cuban constitution stipulates that the president of the Council of State is supreme commander. His principal deputies are army generals Leopoldo Cintra Frías, Álvaro López Miera, Ramón Espinosa Martín, Joaquín Quinta Solas. There are also Brigadier General Lucio Morales Abad, Raúl Rodríguez Lobaina and Onelio Aguilera Bermúdez, who trained under the command of Raúl Castro when he led that institution. All of them are members of the Communist Party Politburo and Central Committee.

Additionally there is the National Defense Council, which can be summoned by the  president of the Council of State at will. In special circumstances, it can become the main organ of governmental and and political power, to which even the provincial and city party secretaries are subordinate.

As a result, the current President holds all the reins of power, allowing him to take Cuba down the necessary path with little or no opposition.

Since the unfeasibility of the current political and economic model is the root cause of people’s apathy and despair, of the mass exodus and of economic inefficiency, any reform that is implemented must attack this fundamental cause. Adopting measures aimed at changing things in order to avoid change, as happened before, would be totally useless today.

Time has completely run out. Although it holds all the reins of power, the government cannot afford to use them for anything other than to effect profound transformation. This is as necessary for resolving the crisis as it is useless for making cosmetic changes or trying to hold onto power in the long term.

Time has been lost but the new scenario, though more complex than those before, offers one last chance for those in power to effect significant change to in a orderly fashion. Totalitarianism is utterly spent. Therefore, regardless of what the government wants, change is inevitable for the government itself. This is the unique feature of the new scenario, which is the ultimate outgrowth of process begun in 1959.

Among the many difficulties are the need for large investments and, therefore, a large influx of foreign capital, which would require new revisions to the country’s investment law; implementing constitutional changes to give legal legitimacy to successors who did not participate in the 1959 revolution; an economy capable of reassuring a dissatisfied populace; changes to property laws to allow producers to own their means of production. For these transformations to be beneficial, they have to be accompanied by transformations in the area of human rights and freedoms.

One of the most feasible possibilities is for the government to take the Vietnamese route. The dilemma of such an approach is that Vietnam’s reforms did not address civil and political freedoms. Given Cuba’s history and culture, this is something that will be impossible to ignore once economic reforms are under way.

In the short term, what happens from this point on will be decisive for Cuba and its society but also for the current government. It is a difficult but inescapable challenge in a landscape without godfathers, without Fidel, with an economy in freefall, and for a people without hope.

Donald Trump and Raul Castro / Dimas Castellano

(Ilustration: Giovanni Tazza)

Dimas Castellano, 29 November 2016 — The great majority of Cubans were surprised by Donald Trump’s electoral victory. Surveys in other countries, and the official Cuban press, labelling Hillary Clinton as the favourite, created false expectations.

Since the results have become known, all sorts of opinions have been put forward. Some believe that Trump is a dangerous man, who will damage things, others that he will demand more from Havana, and they are happy about that, and many are worried that there will be a setback to relations and regret his triumph, while a majority are unhappy with the official press campaign against president Barack Obama’s policy.

What almost everyone is agreed upon is the poor state in which Cuba finds itself, and the need to emigrate. continue reading

Going back on the established improvements in relations will be extremely difficult. Why is that? Because of the division of public authorities, the existence of a diversity of interest groups, and its institutionalisation in the United States.

The president could limit or eliminate some things, but not everything, because that would imply affecting North American interests. Quite simply, electoral populism is one thing, and presiding over an institutionalised country is quite another.

Even supposing that Trump really could be a threat to the improved relations with Cuba which Barack Obama managed to achieve — in my opinion the most important political act in the last half century in Cuba — the biggest danger of sliding backwards up to now has been, and still is, the Cuban side of things.

Nationalisation, centralised planning, and the absence of liberties, are among the principal causes of the permanent crisis in which Cuba finds itself. The Obama administration’s policy offered an opportunity for change, which was missed by the Cuban side.

Therefore, whatever risk the Trump administration might represent would be less than the negative influence of the Cuban government, trapped in an insoluble contradiction between changing and at the same time preserving power.

Fidel Castro’s thesis that “Cuba already changed, in 1959,” produced a more pragmatic vision than General Raúl Castro’s one of “changing some things to hold onto power.” Nevertheless, the measures implemented to that end have not brought about the desired result, because of a conflict of powers. Instead, they have revealed the unviability of the economic and social model and the depth of the crisis.

The series of measures enacted by the White House have, among other things, led to increased tourism and remittances sent to families, the first cruise ship has arrived, flights have restarted, agreements reached with American telecommunication companies, negotiations with other countries and restructuring of external debts. Meanwhile the Presidential Decision Directive of last November was aimed at rendering irreversible the advances achieved.

If those measures have not produced a better outcome, it is because the obstacles in the path of production and the absence of civil liberties in Cuba have prevented it. For that reason, changes are dependent on the Cuban authorities, rather than on Trump. To tackle these changes now, albeit very late, would neutralise any intention by Trump to set things back.

Bearing in mind that the suspension of the embargo is the prerogative of the United States Congress, what is needed now, after the “physical disappearance” of Fidel Castro, is to get on with a comprehensive structural reform, like that carried out by the Vietnamese, who, having abandoned centralised planning and adopted a market economy, have positioned themselves as the 28th largest exporter in the world.

Taken from: El Comercio, Peru

Translated by GH

Donald Trump, Cuba, and the Example of Vietnam / Dimas Castellano

Dimas Castellano, 5 December 2016 — The majority of analysts looking at the change of direction which may be experienced in the relations between Cuba and the United States, following the 8th of November elections, have concerned themselves solely with the policies on Cuba to be pursued by the new occupant of the White House, ignoring the fact that these are bilateral relations.

Their forecasts range from those who consider that Donald Trump will fulfill his electoral promise of going back on Barack Obama’s policy, up to the possibility of an improved understanding with the Cuban authorities. In nearly all cases, the emphasis is on what the new President will do, as if the Cuban side of things had nothing to do with what could happen from next 20th of January onwards. continue reading

A retrospective analysis of relations between the two administrations indicates otherwise. Taking into account the fact that the Cuban people don’t have human or political rights to influence that process, and that the weakness of the emerging civil society makes it difficult for it to take the role of an opposition, the analysis has to limit itself to intergovernmental relations.

Appealing to electoral populism is one thing, and leading the greatest power in the world is another. Setting back the development in re-establishing relations during Barack Obama’s presidency will be extremely difficult. The institutionalisation of public powers, the existence of diverse sectors with interests in our island, and regional interests in the face of incursions by other powers, will hinder it. In those conditions the President-elect could limit of eliminate some things, but he could not nullify everything, because it would affect his country’s own interests.

The re-establishment of diplomatic relations between Cuba and the United States – the most important political act since the 1959 revolution – responds to the interests of both nations. The supposition that Trump constitutes a threat to the relations which the Barack Obama administration succeeeded in moving forward is one side of the coin. The brake applied by the Cuban government to the advances is the other side.

The obstinate obsession with dragging everything into public ownership, centralised production, and the absence of liberties for Cubans, are among the principal causes of the crisis in which Cuba finds itself. The Obama administration’s policy offered an opportunity for change, which was missed by the Cuban side, to remove internal obstacles in the country. Therefore, along with the potential risk represented by the Trump administration, there is the real negative in the form of a Cuban government lacking the necessary political will to face up to the present situation. An insoluble contradiction consisting of changing and at the same preserving power.

Fidel Castro’s thesis that “Cuba already changed, in 1959,” produced a more pragmatic vision than General Raúl Castro’s one of “changing some things to hold onto power.” The measures implemented to that end over eight years have not brought about the desired result. Instead, they have revealed the unviability of the model and the depth of the crisis, in the face of which the only way forward is implementing major reforms.

If the series of measures  enacted by the White House – including the Presidential Decision Directive of last October aimed at rendering irreversible the advances achieved – have not produced a better outcome, it is because they were not accompanied by the necessary measures on the Cuban side to free up production and restore civil liberties. For that reason, the solution for Cuba lies in its own authorities, as opposed to what might happen during the Trump administration. To tackle these changes now, albeit very late, would neutralise any intention to set things back on the part of the new occupant of the White House.

Bearing in mind that the suspension of the embargo is the prerogative of the United States Congress, what is needed now, after the “physical disappearance” of Fidel Castro, is to get on with a comprehensive structural reform, which should have been started a long time ago, commencing with, at least, what Vietnam did, with a crippled economy, in a country which had had, in ten years of war, three times the number of bombs dropped on it than were used in the Second World War, where 15% of the population perished or were injured in the struggle, with 60% of the villages in the south destroyed and which, after the war ended, confronted the economic blockade and frontier attacks, and, instead of ideological campaigns, launched reforms.

The Granma daily of November 4th, in a report entitled The Vietnam of the Future, says that the province of Binh Duong, previously mostly agricultural, is now predominantly industrial. This province has more than 2,700 projects funded by foreign investment; its GDP is, since 2010, increasing at an annual 14%; it boasts 28 industrial parks with factories constructed by companies from more than 30 countries; in the last two years it has launched nearly 370 new investment projects, and, between 1996 and now it has created more than 90,000 jobs.

The same paper, on 11th November, published The Miracle of the Vietnam Economy, where it reported that the World Bank had placed Vietnam among the most successful countries, which had, in 30 years, tripled per capita income, between 2003 and the present had reduced the level of those in poverty from 59% to 12%, and, in 20 years, had lifted more than 25 million people from destitution. It added that in 1986 the average Vietnamese income was between $15 and $20 a month and now varies between $200 and $300, and that in 1986 they eliminated centralised control and implemented a market economy, with a socialist orientation.

With these results, the United States suspended the embargo which lasted 30 years. In 2008 they directed their efforts to exiting the list of developing countries, in 2010 established the objective of entering the group of countries with medium income, in 2014 they found themselves among the 28 highest exporters in the world, and in 2016, they approved measures to convert themselves into an industrialised nation.

In that same time period, Cuba anchored itself in the past, with a policy of “Rectifying errors and negative tendencies,” and managed to get the United Nations to condemn the embargo for a period of 25 years.  Now, we have to lay out millions of dollars on importing food which we could produce in Cuba, and, after teaching the Vietnamese how to grow coffee, we have to buy the beans.

Havana, 28th November, 2016.

Translated by GH

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

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

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

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

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

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