What Doesn’t Work in the Cuban Countryside

The private sector already leads agricultural production in many food groups. (Escambray)

14ymedio bigger14ymedio, Elías Amor Bravo, economist, 18 January 2024 — Communists continue to bet on the same policies as always that have shown, again and again, their failure. What is serious is that the State press does the unspeakable by trying to justify them. This is what happened with a joint exercise of control of the possession, use and legality of land and livestock, which, according to them, aims to achieve the transformation of production systems to increase food production. The experiment is carried out in 22 municipalities as part of a pilot program by the General Directorate of Land Control of the Ministry of Agriculture.

The belief that “putting order in the field guarantees greater food production,” is not only wrong but is a good example of what it means to put political and ideological decisions before productive and efficient technical decisions. Luckily, the announced “pilot program ” will be carried out in only 22 municipalities. If it were extended to the entire territory, as it seems that they intend, the famine would be fatal.

Every time the Cuban communists intervene in the agricultural production system, they end up destroying it. The first example was the so-called “land reform law” that collapsed the private farm system. Another example was the “10 million ton sugar harvest” that was never achieved. I insist, putting ideology before rational economic principles is fatal for any economy, but especially for the agricultural sector. The Cuban example is good for those who want to investigate objectively. continue reading

Because, in addition, what this experiment aims at is something that cannot be achieved with communist order and control, quite the opposite. If it is intended to increase agricultural production by promoting a decrease in the area of idle lands by improving the efficiency of those currently leased. Communist control leads to failure, because the bases of the productive system, which are the property rights of the land, are not removed.

The Vietnamese, faced with a similar scenario, had courage and launched the Doi Moi to generalize private farming property. What came next is known, a greater production of food that not only served to guarantee the food and nutritional security of the country, but also to export the surplus. The suppression of communist structures in the countryside of the Asian country caused economic agents, empowered by their property rights, and without communist controls like those that Cuba now wants to put in place in 22 municipalities, to launch mass production to increase their profits, and an end to communism in the Vietnamese countryside.

In such conditions, one would have to ask why the regime of Fidel and Raúl Castro is unable to do the same, and now they propose a reactionary return of communist inspiration to develop, they say, “an integrated work to organize local food systems.” They also announce that this experiment will be extended to all municipalities next March. We hope that before this decision is made they will be able to evaluate the failure that is going to happen, which is nothing more than a waste of time, efficiency and concentration on the technical-productive tasks that are what make production grow.

The ministry’s director of land control said that “the delivery of land in usufruct [a form of leasing] to natural and legal persons who request it is a priority, and main attention is given to young people who graduate from active military service, as a source of employment, and to those who do not have work.” And someone should remind her that the same thing has been done since he was authorized by Raúl Castro as soon as he came to power, and here are the results almost two decades later. The solution is not the delivery of land, but private property.

And of course, no one in their right mind at this point of Castroism can think that a solution to increase production is the delivery of land to the organizations, for the self-consumption productions of the workers and their families. Another example of waste and failure.

In line with strengthening control over the countryside, the director asked the relatives of land lieutenants who have died, “to update their situation in the records for which they have a period of 90 days, extendable for 90 more days, to carry out the procedure for the award of inheritance of land and agricultural assets,” while she again conveyed the fateful message that everyone expected: “the sale of land is between owners and renters is illegal.” And here we go again.

Another line that they are testing from the Ministry of Finance and Prices to increase production is contained in Resolution 303/2023, which includes tax measures for the calculation, payment and additional settlement of the Personal Income Tax, through the presentation of the affidavit for the agricultural sector. This regulation establishes a reduced tax rate of 2% for personal income tax, when the general tax rate is 5%. The difference in the percentage does not seem to have served as a stimulus for agricultural activity on the Island, which depends much more on other technical productive factors and property rights that the authorities will not modify. In fact, another threat has been the entry into force of Resolution 308/2023 of the Ministry of Finance and Prices, on the application of the tax on the idleness of agricultural and forestry lands, which requires the efficient production of the land to guarantee food for the population.

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

The Minister of Economy Who Never Told the Truth (II)

Alejandro Gil Fernández, Cuba’s deputy minister and minister of Economy and Planning, before the National Assembly of the People’s Power of Cuba. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 29 December 2023 — A good part of the State TV Round Table program was dedicated by Alejandro Gil, the Minister of Economy, to the SMEs [small- and medium-sized enterprises], of which he said that there is no stopping of the process or reprisals. Another lie. Because although it is true that in these two years the number of SMEs created has been important, the authorities have not provided data, and this is an essential indicator for evaluating the process. The functioning of SMEs has been conditioned by political action, and survival has been an obstacle course, which the regime, far from facilitating, has continuously complicated.

Along that line, the idea of transferring the powers of approval of SMEs to the municipalities must be interpreted as a control measure, which puts economic actors at the disposal of local communist leaders, who have little expertise in these matters and are obsessed with ideology. The idea of bringing the decision of the evaluation of those businesses, which are on a small scale, closer to their link with local, territorial development and municipal development strategies means that the SMEs will have limitations on their growth and scale and will operate at minimum unit costs, where profits are maximized.

The regime’s bet is that the SMEs remain small and weak, a measure that distances the Cuban economy from the free-market economy and sends a very clear message to those who do not want to see it. They say this process will be gradual, but it will not allow the consolidation of a strong private economic sector.

Local communist leaders have little expertise in these matters and are obsessed with ideology

Secondly, in addition to the transfer to the municipalities of the decision to approve SMEs, Gil announced the revision of the list of unauthorized activities for which they are carrying out an “in-depth analysis with the agencies and receiving criteria from the territorial governments.” In this regard, he said that “there will not be large annotations, but some issues will be corrected and clarifications made. There is no major transformation in the list of unauthorized activities.” Let no one expect much. continue reading

Third, Gil said that work is being done on the creation of an institute that will have as its function the coherent attention to the non-state sector of the economy and, later, be linked to the agencies of the Central State Administration for the promotion of policies and the implementation of certain rules. That is, on the one hand, competition is transferred to local powers, and on the other, a central bureaucratic body is created. What are we going to do? What is this tug-of-war?

It seems that this institute will exercise its functions over all non-state economic actors, not just for SMEs but also for non-agricultural cooperatives and self-employed workers. The institute will help lead the non-state economic actors, without direct intervention from the administrative point of view. Control and control. More bureaucracy where it is not needed.

And something that is noticed as soon as the organizational design is analyzed is that Gil’s Ministry of Economy is left out of this new, two-headed design of the national economy. It accesses an unexplored and critical terrain, whose final result is at least uncertain. However, the aim is to accentuate state control in the allocation of resources, fuel, currency and budgets, with attention to non-state economic actors, the national development plan and the country’s projected strategy. A communist hodgepodge that is difficult to digest.

It is hard to find in the world experiences like the ones that are proposed in Cuba. Another lie.

At this point, Gil said that there are sufficient experiences in the world that have been studied to identify the best way to proceed. It would help if he explained them, because it is hard to find in the world experiences like the ones that are proposed in Cuba. Another lie.

Fourthly, the Round Table has addressed the issue of subsidies on several occasions, because the economic system is unable to foresee their maintenance over time. The issue is whether to eliminate the subsidies or adapt them. No option has full support.

Progress has been made with respect to the past because Gil recognizes that subsidies aren’t free. Of course, in Cuban communism the Government pays for everything, and the price is high for the people and the economic entities because they must support a wasteful State. The subsidy to prevent the population from facing a certain high cost due to the productive inefficiency of the system has a direct cost in the state budget. Someone has to pay.

And of course, the communists finally recognize that when the State subsidizes, it’s a cost that falls on everyone

And of course, the communists finally recognize that when the State subsidizes, it’s a cost that falls on everyone. When the subsidy is assumed by the budget, it is assumed by the country. And when the country assumes it, all citizens pay for it, and this requires, almost always, an increase in the fiscal deficit.

And here comes another idea that the communists have finally figured out: If the fiscal deficit is expanded and money is issued in circulation to be able to support that deficit, inflation is created, which is a tax that falls, above all, on people with lower economic resources and the most vulnerable groups. The injustices of the economic system recognized by Gil is responsible for them. Here there is no reference to the embargo or blockade. It is an internal problem that undermines the bases of the model devised by Fidel Castro at the age of 65. Subsidies, deficits and inflation may end up breaking down the model.

One has the impression that the web of subsidies and prices for products such as energy, electricity and gas has entangled Gil, and with the weight of communist ideology he is unable to see an exit from the vicious circle. In one moment of the Round Table, the minister asked himself a series of questions that, obviously, he didn’t answer.

“First, if we don’t raise the price of fuel, the question is who pays for it. The State? With what money? With the same money that we are collecting via taxes or not allocating somewhere else? With what currency do we buy the fuel that we are going to sell after it is subsidized? With the same currency that we stopped dedicating to food? With the same currency that we stopped dedicating to medicines?”

Gil was referring to the issue of budget design, but the problem is in the justification of the budget. It is not a simple matter of passing money from one item to another with political criteria, but of eliminating items that distort the market reality of supply and demand. The resources of the people, as the minister says, are for other things. What Gil calls the correction of certain prices, which have high levels of subsidies behind them, are not only unsustainable for the country but also assumed to be equal for all. Only the market economy of supply and demand can correct the budget, and the definitive suppression of central planning.

In fifth place, continuing, Gil then addressed the issue of savings.

What is Gil talking about when salaries and pensions are the main sources of income for Cubans and are destroyed by the pressure of inflation?

It is melodramatic that in an economy like the Cuban one there is talk of saving and of identifying incentives for saving. What is Gil talking about when salaries and pensions are the main sources of income for Cubans and are destroyed by the pressure of inflation?

Gil maintains that abroad, due to the price of gas, people are obliged to save, but in Cuba, the high consumption of energy in the non-State sector makes saving measures difficult. And what about the blackouts, Minister? How do we interpret those mile-long lines at gas stations? What savings is the minister talking about, and what else does he want Cubans to stop consuming? Maybe they should return to the era of caves.

The minister wants people who consume more energy or fuel to pay a higher price and incorporate savings measures into their lives. Now, if they can’t stop consuming they have to pay a higher cost. The minister knows who the wasteful are: he just has to look at the state offices or local authorities, organizations, and other public entities to see where they can save. That’s where the waste resides, but just ask the mayor’s office or a State building for self-adjustment.

And at this point, without providing practical solutions to the issue of subsidies, the minister addressed, in sixth place, the situation of the foreign exchange market and said that “it is today one of the main distortions that the economy is facing.”

He acknowledged the obvious fact that he had not designed that informal or illegal foreign exchange market in the country. Of course, the communists had nothing to do with a market governed by supply and demand, which works efficiently.

The minister blamed the SMEs for being the only ones that have products because they can import and sell and have flexibility for prices, while the State companies have their hands tied. What is the minister waiting for to untie them? The solution is clear and the way forward as well. It is to turn the purchase and sale of the currency into a regular economic activity. And then, the alarm comes when Gil says that “we have to control it.”

In this regard, he points out that “among the measures proposed is to recover the management of foreign exchange by the State, because part of what is happening to us today, the fact that there is less State supply and more supply from the private sector, is because the private sector, in some way, is acquiring hard currency in the informal market, the illegal market, and that currency is not entering the national financial system. Therefore, State companies are practically running out of sources of currency allocation.”

It is worth reminding the minister that at the time the fixed exchange rate system was provided in the Ordering Task,*  which set the official exchange of 1 dollar to 24 pesos, this lasted less than three months before the Central Bank recognized its inability to assume the exchanges. Does he want the same thing to happen again? The currency shortage is now worse than at the beginning of 2021. Beware of experiments.

Gil recognizes that the State is sometimes not in a position to offer goods and services as it should be, because hard currency moves in another circuit, the informal one. And if that currency is not in the State’s sphere, it’s because the State is inefficient or incapable. Of course both currencies can function, but normally in all countries there is only one market, operated by private agents, with the law of supply and demand and regulated, without State intervention. That model in Cuba is possible if the communist State recognizes the informal market as the one that must operate and provide the service. That would not be neoliberal, but efficient. Doing things right.

So the intervention of the State, Gil’s answer to the distortions, will not serve to ensure the economic sustainability of the country, nor will it provide responsible and effective management of the economy. Gil knows this, and when he says otherwise, he is lying.

*Translator’s note: The Ordering Task is a collection of measures that include eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso (CUP) as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency, which must be in the form of specially issued pre-paid debit cards, and a broad range of other measures targeted to different elements of the Cuban economy.  

Translated by Regina Anavy 


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

About Cuban Cooperatives: Playing With Fire

Cuban President Miguel Díaz-Canel attends the XIV International Meeting of Economists on Globalization and Problems of Development

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 16 November 2023 — The Cuban communists, since the early days of Fidel Castro, never willingly accepted the phenomenon of the cooperative movement and never gave it the deserved space it should have had, especially in the agricultural sector.

The origin of cooperativism in Cuba after the revolution was precarious. The few farmers who retained small plots of land, after the structural transformations of the so-called “agrarian reform,” understood that cooperativism could be a determinant of the productive efficiency of their lands.

And so a system of small cooperatives emerged on the Communist Island, of local implementation, which soon fell under the political control of the regime through the National Association of Small Farmers (ANAP). Immediately the communist leaders were at the head of these cooperatives, and any possibility of development, growth or improvement of these entities fell into oblivion. For more than 50 years, the Cuban cooperative sector was the closest thing to a private initiative in the Marxist interventionist desert, and therefore, it never managed to take off.

Sixty years later, the existing economic model on the Island still does not accommodate the cooperative movement, which struggles to occupy positions of power without success. And now, it has occurred to the communist leaders that cooperativism, in addition to being oriented to producing food and goods and services, has to be dedicated to a continue reading

participatory task that they call “community transformation.” To that end, “cooperatives must have a humanistic approach and social responsibility for the environment.” Unfortunately, we are very afraid this will give the death blow to the sector.

The hilarious idea that cooperatives be in charge of community transformation and that they are responsible for the environment, arose precisely during the second day of the XIV International Meeting of Economists on Globalization and Problems of Development, which is being held at the Convention Palace in Havana. Colleagues want to believe in it, but they can’t. They know that the economic model is useless, and they propose its replacement, but then they dedicate themselves to these flowery games that do not lead anywhere because they only serve those who run the country and reject any real change. It should not be expected that any leader put to sleep by these messages will take sides so that the cooperatives produce more and serve the interests of the population.

The Support for Agricultural Intercooperation (Apocoop) project cited by the state press, establishes a route “to strengthen the development of agriculture and the social responsibility of cooperatives for their environment” and has an active presence in four provinces of the country – Artemisa, Sancti Spíritus, Las Tunas and Guantánamo – benefiting a population of more than one million inhabitants, of which 46% are women.

The question is immediate: has anyone in those four provinces seen their diet improved with Apocoop? Do you eat more and better? It would be good to get that information, because otherwise, we return to the debate about the means or the ends, which the communists like so much, but which does not serve to produce more and better, which is what the country needs.

Apocoop has served to contribute, they say, about a million pesos, which has been destined to “improve the living conditions of the communities in which they are located, mainly with the rehabilitation of basic service spaces and the realization of local food self-sufficiency.”

The immediate question is, what about the necessary capitalization for cooperatives to be able to invest more and better, and continue to grow? Does it vanish in “help”? It should be remembered that nothing is free, and that if a group of workers join to promote a cooperative, their objective is to improve their economic and social situation; that is, to earn money and make their project profitable.

Let’s imagine what can happen if the local communist leader tells them to forget that, the money has to be allocated to social and community responsibility. When the cooperative members see that this happens two years in a row, the cooperative is over and everyone goes home. And then they talk about the blockade of the United States, when the real blockade is internal.

There was also talk of promoting “other regulatory frameworks that lead the path of cooperativism and the promotion of second-degree cooperatives with powers to diversify their activities.” As it is unknown what regulatory framework they are talking about, in these cases it is better to leave things as they are before embarking on changes that may end up giving worse results.

It seems to me that the representatives of cooperatives from Mexico and the Dominican Republic attending the event took a fairly objective impression of the daily reality of the Island, in case there was any doubt, along with the entrepreneurs who visit international fairs and competitions on the Island but never return.

Communist leaders have no remedy. They don’t even trust cooperatives anymore. They want them submissive and obedient. They play with fire.

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

The Regime Is Determined To Fail With Foreign Investment

Container terminal at Mariel Special Development Zone. (Zedmariel.com)

14ymedio bigger 14ymedio, Elias Amor Bravo, Economist, November 5, 2023 — One of the main failures of Raúl’s reforms of the Cuban economy has been foreign investment. Unreservedly. Those plans that came with the infamous Law 118 that meant a controlled opening of the Cuban economy to international capital have been very far from the objectives initially set. Of the 3 billion dollars per year that the international capital regime intended to achieve to balance the commercial accounts with the foreign, what has really happened is that in almost a decade (which will end next year), less than those 3 billion has been achieved in cumulative terms. The landscape of the internationalization of the Cuban economy remains the same as it was before Law 118 in 2014.

However, the regime continues to try to attract foreign investment, and to that end, it organizes international fairs, such as the XXXIX International Fair of Havana that is happening now, to see if any business project will work, as if it were a raffle or a lottery in which they do not even buy the number.

In addition to the fanfare and the artistic touches, whose funds must be continue reading

difficult to mobilize given the budgetary tightness of the regime, the top leaders are committed and spare no expense for the event.

What is there to say, or not, about the event attended by Raúl Castro and Díaz-Canel to celebrate the tenth anniversary of the Mariel Special Development Zone? What is there to celebrate about this project, originally Brazilian and apparently abandoned to its fate?

It is a broken toy that no one wants, from which great business and opportunities were expected but which is still there without knowing why

The presence of the “retired” Raúl Castro at the event conveys a top-level political message, and in the presence of Díaz-Canel, along with a plethora
of party and government leaders, confirms what is already known. It is a broken toy that no one wants, from which great business and opportunities were expected but which is still there without knowing why.

So, to commemorate the ten years of validity of the Mariel project, the leaders organized a “political-cultural act” with no explanation about its relationship to foreign investment, which generally doesn’t pay attention to this type of thing, and if not, ask the Russians who continue to pressure the regime to give a push to that institutional economic framework that prevents the viability of businesses on the Island.

The Mariel ended up being a product of internal consumption of the regime, with a “a recognition for the work deployed by the entire collective of workers of the Mariel”: in total, 13 groups and 15 workers, representing the 1,161 founders who as of today continue to work in the Zone. Even Ulises Guilarte had his protagonist in the act, with the delivery to the Office of the Special Zone the 80th Anniversary Seal of the Workers’ Central Union of Cuba (CTC).

And then some economic data, as if they counted. Since the inauguration of the container terminal, which continues to be the main activity of Mariel, it was reported that 64 businesses have been achieved as of today, something like six per year. It’s not bad, if you think of the inefficient machinery that takes care of the viability of those projects and the complex conditions to pass the innumerable tests that the regime establishes.

It should be noted that there are only 64 projects in a decade with a very limited impact, practically zero

It should be noted that there are only 64 projects in a decade with a very limited impact, practically zero, on the strategic sectors of the national economy and its development. In other words, a counter-invoice analysis of the Mariel would allow us to conclude that in the absence of this pharaonic project in the area, the number of foreign investment projects that would arrive in Cuba would be more or less the same, or even more. The efficiency of spending leaves much to be desired, confirming that absolute failure of foreign investment policy in the Cuban communist system.

Highlight here, for example, that other communist countries, such as Vietnam, perfectly understood what had to be done to attract foreign capital to the country, which has been one of the factors of modernization after the Doi Moi reforms. And Vietnam, far from getting into trouble with “Mariels” and other communist nonsense, accepted the rules of the World Trade Organization and became part of the concert of nations of globalization. The Cuban communist regime is incapable of this type of strategic decision and continues to play cat and mouse with foreign businessmen.

Therefore, next week when the International Fair is inaugurated and with it the VI Foreign Investment Forum, the same thing will happen again as in previous editions, which is nothing other than those interested in investing in Cuba will return to their countries seeing that the company is unfeasible or has unaffordable costs. And someone will wonder about that direct rejection of the communist bureaucracy by foreign investors. The Russians have already said it on several occasions, but it’s good to remember why.

No businessperson, owner of their own money, who responds to a board of directors, likes that their project in Cuba has to be aligned or submitted or adapted to two instruments that are not understood, but that oblige and condition their activity, which are called the  “national plan for economic and social development until 2030,” and the “portfolio of foreign investment opportunities.” With these two instruments, the Cuban communist economy extends its tentacles towards the international investor. It is true that some accept it, and that’s how it goes; fortunately, most of them listen to the advice of international consultancies that warn of the risk of submitting themselves to the communist system.

At the fair they say that they will carry out theoretical activities, of little practical depth, such as the “panel on Cuban exports to be promoted with and from foreign investment,” in which “they will discuss exploration for potential investors; advice and workshops on access to the Japanese market, and support for the productive pole of Guantánamo.” It remains to be seen how many Japanese investors will stay in Cuba and, above all, how many private actors will participate in this type of agreement. At the moment, the foreign investment space in Cuba is open only to the state sector.

Another panel will refer to “industrial capacities with development potential with foreign participation” to promote business opportunities with foreign capital based on the installed industrial capacities, with reference to the portfolio of opportunities of the sectors of Industry, Food and Domestic trade.

What do you think will come out of all this political business bartering? The answer is nothing. Well, yes. The only thing that will remain is a hole in the public accounts of the regime because this type of pageantry has to be paid for by someone. And the bad thing is that Cuba is not ready for this. Cuba will continue to suffer by not receiving the necessary foreign capital that could help modernize the country and meet the needs of the population, but the regime’s strategy and its policy of parties and celebrations has not worked, nor will it. An average of six projects a year in the Mariel doesn’t justify any of this. They need to change and make a 180º turn.

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

Who Controls the Cuban Economy?

Several people wait their turn outside a bakery in Havana. (EFE / Yander Zamora)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 31 October 2023 — It seems like a lie, but now we are entering a new phase. For communist leaders, it is already recognized that even though the blockade continues to be the main threat to the economy, “there are many potentialities in different places that are not yet exploited.” That’s what President Díaz-Canel said at the meeting of the council of ministers led by Prime MinisterMarrero and echoed by the entire communist state press.

So Díaz-Canel now says that “the main call at this time has to be to produce more with our own effort, with our own talent and with our own abilities and potentialities. There is no other way out, because there are no magical measures that can change, from one moment to the next in the short term, the current situation that the country is experiencing.”

What a big lie. Of course there are recipes, and not magical but practical ones, based on the economic rationality alien to communist postulates. The Vietnamese are a good example of this. Something is occurring to the leader of Fidel Castro’s regime. At any moment, he will figure it out, if he hasn’t already. continue reading

According to Díaz-Canel, “in different places there are resources that are not yet taken advantage of, essential to promote popular participation in all processes; therefore, this also starts from having a dialogue, a permanent conversation with our population.” Anything except recognizing that market and private property rights are what’s needed.

And Cubans anxiously wonder, where will those resources come from? And the answer is clear: “From the savings, energy efficiency and adjustment in economic and social activity that were adopted to face the specific situation we had with the fuel deficit.” In other words, by tightening the regime’s belt that permanently suffocates any glimpse of economic activity. Instead of giving flexibility, opening spaces and releasing supply and demand, the communist solution is not to remove the leash but to tighten it even more.

And for this, the most dissimilar and controversial scenarios are proposed, like bakeries finding alternatives to ovens (wood and charcoal), or using transport more efficiently (animal power), both intended to conserve energy. These images envision a terrible return to the worst of the Special Period and the subsequent suffering of the people.

Díaz-Canel justifies those measures, because “they showed a result, because we managed to pass that stage, I would say with fewer effects than those that could exist for the severity that was presented to us in the last weeks of September.” You have to see how little he contemplates the reality that surrounds him. He has no idea.

Energy efficiency and savings become the axis of the communist leader’s speech, who at the same time announced his intention to “rectify everything that has not gone well, listening a lot to what the people propose and constantly attending to the population’s opinions,” and also to “the proposals being made by economists, experts, academics on the possible solutions to face the current situation.” Let’s see if it’s true.

Díaz-Canel believes that “we must demand that institutions fulfill their state functions in all areas, as well as give priority to working in an organized way and breaking the criterion that things are resolved from above, because by solving the problems of the municipality and the community, the problems of the province and the country are solved.”

And this, of course, leads him to the main role in the economy that he hopes to confer on the municipalities, pointing out that “they must work according to the implementation of national policies, provincial policies and municipal policies that are approved and agreed, but with the support, at the level that corresponds to them, of national institutions, provincial institutions and the institutions themselves and the actors that participate at the municipal level.” Someone must have considered that this is not an easy thing to accomplish with all these parts.

The leader also raised the need to “stimulate the production of goods and the supply of services, to produce food, because “that is the first thing that must happen according to the population, with better prices.” Here he returned to dissimilar proposals, such as “you have to produce food with agroecology techniques, knowing that efficiency is not going to be the same, but you have to produce.” That is, knowing that the efficiency will be zero, he insists on hitting the insurmountable wall.

Díaz-Canel said that the main source of food for the population “cannot be what the country imports centrally to distribute with a certain equity or social justice, which sometimes falls into egalitarianism.” Does this mean that non-central import will be used? When? Under what conditions? So that no one can expect anything new, attention is paid again to what happens at the local level, from the local balance sheets to everything else that matters to the country, a commitment to an inefficient technical scale that prevents taking advantage of increasing yields and productivity.

Díaz-Canel, referring to the entrepreneurial sector, believes that “it must be able to take advantage of all the potential that companies have, which is not always taken into account,” but he says this without the slightest knowledge of the forces that govern an economy. Specifically, he says that with the skilled labor they have, when the fuel deficit or other causes prevent them from carrying out their main purpose, they must “look for how other productions and services can be carried out to the population that we are not doing today.” By magic, the communist leader wants companies to do the impossible.

He also talked about promoting the creation of MSMEs [micro, small and medium-sized enterprises] in the state sector. There were a few, and we can see what happened. The more MSMEs believe that they are linked to political power, the greater the shadow of doubt about their belonging and/or relationship with the leadership: a bad business that can jeopardize the entire process of the MSMEs.

Díaz-Canel summarizes all this by saying, “We need businessmen to bet everything on the country, to think like a country, and of course that also carries a demand from the management structures of all organizations.” Nary a word about the institutions and the communist model that govern the economic destinies of the country. Everything is good.

He not only referred to reducing the inequalities in our society but also to the need to stop the exodus of the labor force, especially of the qualified workers. Let there be no confusion: the exodus for Díaz-Canel is the one that occurs from the state sector to the non-state sector.

He insisted on giving priority to health and education and improving the functioning of the social programs that exist in the country. And in an instant of clarity, he spoke of “correcting the measures that have been implemented as part of the Ordering Task* and have shown that they must be modified.”

The rest was last-minute vagueness repeating the same thing about the potentialities one doesn’t want to lose by “working in a different way.” At least he forgot about the blockade. Who knows why.

And of course, Minister Gil is still in office. And for this reason, he took care of presenting the situation of the Cuban economy in September to his colleagues in the council of ministers, glimpsing a gradual improvement in tourism. This was his own data, because the reality is very different, with the hospitality industry at barely 17% occupancy and many private businesses closed due to lack of demand. Playing with the data, when the ONEI [National Office of Statistics and Information] website is under permanent updating, is not very sensible. In the end, a liar can be caught very easily.

According to the minister’s figures, as of September, 1.8 million visitors had arrived in the country, just 75.5% of what was expected, and almost 55% of the figure for the same period in 2019. That is, the level of demand is almost half for that accounting year, when all destinations in the Caribbean have already recovered their pre-pandemic figures.

The even more serious Cuban case has to take into account that since those dates, they haven’t stopped building hotels and rooms, so with less demand and more supply, the occupancy levels, which have to do with profitability in the hotel business, remain at rock bottom. It is not useful that the minister has stated that exports of tourist services grew by some 46% if that increase is really due to prices and not to real activity.

And of course, since there is not much to hold onto, the rest of the minister’s presentation before his colleagues was devastating. Specifically, he said what everyone knows, that the national production of agricultural food has experienced a decrease in deliveries in practically all products, specifically rice, beef, fresh milk and eggs, without specifying figures and alluding only to problems that according to Gil are related to the deficit of inputs and fuel, low productivity, performance and organization.

And after saying all this, what should a responsible minister do? What should be done in a democratic and free country? Of course, never applaud or show solidarity with terrible management, but question and ask for explanations. Does anyone believe that this happened in the Council of Ministers or in the Cuban press? Not even in your dreams.

Without recognizing his own responsibility, the minister continued to ask for “greater self-management in the municipalities to support the population’s demand for food,” a suicidal strategy that this blog has warned about on numerous occasions, which also must be linked to the Economy Plan,” undoubtedly the main failure of the Cuban communist economy.

And since there was not much more to say about the situation of the economy, the council of ministers approved a new portfolio of foreign investment opportunities in the country, the umpteenth, which now aims to channel 729 projects, of which 139 were presented by local governments. This covers a lot, puts on the pressure, and for reasons exposed in this blog and in other posts, the portfolio of opportunities does not ensure foreign investment. Experience confirms it.

As much as the regime wants foreign investors to put their money into projects “to supply the domestic market with basic necessities and supplies,” the truth is that foreign capital is not on the same wavelength. The mismatch of criteria means that investment levels do not meet the needs of sectors such as food production, industry, mining, transport and logistics, among others. There is no point in opening the economy to foreign capital if the communist regime, first, does not put it at the service of Cubans.

*Translator’s note: The Ordering Task is a collection of measures that include eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso (CUP) as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency, which must be in the form of specially issued pre-paid debit cards, and a broad range of other measures targeted to different elements of the Cuban economy.

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

Customs is Not at the Service of the Cuban Economy. Quite the Opposite

Customs Officer in the process of confiscating the belongings of Eliecer Avila. (Somos+)

14ymedio biggerElías Amor Bravo, Economist, 8 October 2023 — The richest areas of the planet are committed to free trade, the absence of tariffs and customs taxes. Competitiveness and tax collection are normally favored by this type of fiscal design. It so happens that in Cuba the communists go in the opposite direction, and thus, the regime boasts of the control exercised by customs management, considered as a “guarantee of safe trade”.

Nothing could be further from the truth. The growing threat of illicit activities such as smuggling, drug trafficking and terrorism, which the regime’s leaders use as arguments to defend the interference of the customs system in the functioning of the economy, does not correspond to the observation of reality. For example, in the European Union, where customs have been demolished for decades, nobody is thinking about smuggling, drugs or terrorism, with higher levels than in other areas of the planet. The argument of the Cuban authorities is not supported by reality, like many other communist ideological maxims inserted in the mechanisms of political control that the Castro regime possesses.

Instead of lightening the customs burden, Cuban communists have embarked on a process of attempting to perfect both customs processes and the application of tools that guarantee compliance with the responsibilities and functions of Customs, which, far from benefitting trade, employment, and economic activity, serves to impose control and surveillance upon economic actors that try to open spaces in the heavy bureaucratic structure of the economy.

Many Cubans were victims of those practices and were dispossessed of their scarce belongings through pillaging practices, orchestrated by the communist party with customs officers at their service to appropriate items that were later redistributed

Cubans know well what the Customs General of the Republic represents, as if, since the beginnings of the revolutionary process, it took a path of repression and sanctioning that accompanied those who were fleeing communist oppression until the last minute of searches carried out in continue reading

airports. Many Cubans were victims of those practices and were dispossessed of their scarce belongings through pillaging practices, orchestrated by the communist party with customs officers at their service to appropriate items that were later redistributed.

The confiscation practices of those revolutionary moments reached such dimensions that I remember that, during the Special Period, a compatriot that was visiting the island was able to verify that jewels that had belonged to his family were being auctioned off at hotels in the capital. It’s incredible how time sorts things out. So no one should find it surprising that Cubans view their Customs as nothing other than one more repressive instrument at the service of the regime’s state security.

For that reason, however much propaganda seeks to clean up this image, it is not an easy task. Customs is not seen as a public service that serves the citizens or as an instrument to collect indirect taxes in order to fulfill state customs policy for international traffic of transportation, goods and travelers. Nobody thinks of it that way– Customs is seen in a completely different light.

The regime wants customs management to serve the protection and security of the borders, but, in Cuba, this activity is carried out by practically the entire institutional and party organization, including the CDR’s (Committees in Defense of the Revolution) and popular organizations at the service of the regime, thus the practical sense of Customs is of no interest– it is redundant. It is just an agency that generates abundant employment, not well-paid of course, similar to many others that make up the budgeted sector, and not much more.

Another turn of the screw to further control and surveil economic actors, just the opposite of economic freedom and the opening of borders, which is what economic efficiency demands

The state press has included statements from Nelson Cordovés, head of Customs, who said that “all of the regulations related to the border are being reviewed in order to ensure security in trade, as well as transparency and agility in these processes”. It’s enough to make one tremble. Another turn of the screw to further control and surveil economic actors, just the opposite of economic freedom and the opening of borders, which is what economic efficiency demands.

The communists want Customs to be a guarantee of safe trade and that, in light of the “growing threat of illicit activities such as smuggling, drug trafficking and terrorism, customs processes must be improved and strategies must be applied to ensure compliance with the responsibilities and functions of Customs”. A reasoning that is based on an erroneous assumption and turns into a statement that generates more than a few doubts and uncertainties.

Specifically, the leaders intend to implement a series of measures in customs management.

The first is to improve the “confrontation” system by acting on “the selection and updating of risk profiles, the physical recognition model with the requirements and instructions for the execution of red channels, the employment of canine methods, and the utilization  of images and the interpretation of the x-ray screening of containers, in addition to achieving a consolidation of the Global Container Control Program”.

More control and bureaucracy in the “confrontation” that will lead many to stop their activities, diminishing the products and goods that enter the country through this route. The communists have offered data on inspections carried out in the last months and have entertained  themselves by enumerating the sanctions applied to “errors in the country of origin, of classification, in the invoice value, in the filling out of the Goods Declaration (Declaración de Mercancías or DM), the distribution of expenses; surplus merchandise not legalized  with customs; incorrect use or non-use of preferential agreements; and not concluding the processing of documents in the Single Customs Window (Ventanilla Única de la Aduana or VUA)”. Unbelievable.

Because if they were to follow protocol, at least 75% of the Customs staff would have to be cut

The second has to do with eliminating obstacles with an impact on customs clearance. Why only these and not all of them in general? Because if they were to follow protocol, at least 75% of the Customs staff would have to be cut. It’s important to remember that this entity extends its tentacles to actions related to the Ministry of Agriculture, and to the temporary admission of goods to be exhibited at fairs, exhibitions, and other similar events, which is usually given an opportunistic internal exit when the events in question are over. It also extends to foreign investment, focusing on aspects that influence the process of obtainment and certification by national regulatory bodies.

The third measure is related to the single window, whose new services that display the data and status of the Goods Declaration, settlement statement, error statement, summary of operations, time frames, and report on the information of the maritime and air manifests, among other options, allow a better use and presentation of documents of the declarant. The question is, how many actors would really benefit from this service, and above all, who? There would be surprises.

The fourth has to do with the increased inclusion of economic actors in the authorized economic operator program.

This is a certification granted by Customs to a company, in theory almost all state-owned companies dependent on the regime, which are part of the supply chain, and that comply with customs standards, in order to ensure the security of the foreign trade logistics chain.The entity is recognized as a safe and reliable operator in the supply chain for Cuba’s Foreign Trade, embedded in the changing dynamics of global trade and international standards. At the moment, the small and medium-sized enterprises or self-employed workers included in this certificate can be counted on one hand.

The fifth step involves making improvements in the management and procedures of customs revenue collection. Income has to be obtained by any means necessary because the state’s coffers are suffering from the weakness of the economy. Here, the communists are working to implement electronic payment through the Single Window, a further step in the process of hierarchical access to banking services imposed by the regime.

Customs, directed by the communist organization and under the ideological control of the regime, will do whatever it deems opportune, but we must say beforehand that none of this will benefit the functioning of the Cuban economy. Customs acts as a control and collection barrier that makes no sense and does not meet the efficiency requirements needed for an economy to prosper. With this type of Customs, the memory for many Cubans will continue to be the same as during the years of repression. It would be best to close it.

Translated by Lucie McCallum and Jesus Tunon as part of Spanish 321 (University of Miami)


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

The Foundations of the Unproductivity of Cuban Agriculture

Vietnamese technicians in Sancti Spíritus. (Granma/Archive)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 28 October 2023 — We’re back to where we started. Talking for the sake of talking. Now the regime wants to tell us how to bring agricultural products from the field to the table. And the talking has been done by none other than the Minister of Agriculture, Ydael Pérez Brito, the author of the “63 measures” that were going to make the Cuban agricultural sector take off, and you can already see how that’s going.

And as if it were a deja vu, which does not stop happening, the minister appeared on State TV on the Roundtable program — in which difficult questions are never asked to the powerful – to talk about the main challenges of the sector, the inadequacies and the main work actions. And by the way, to point out the key to bringing agricultural products from the field to the table.

Of course, as always happens, taking responsibility for the obvious failures is not part of the agenda for Cuban communist leaders. The minister said from the first moment that “one of the main factors impacting the sector’s performance is the global crisis resulting from COVID-19.” Totally false. The crisis began before COVID-19, and unlike what happened in other countries, it has continued after the disease was overcome, even worsened.

The crisis has its origin in the absurd so-called Ordering Task* and more recently, in Putin’s atrocious war in Ukraine with its impact on world markets, especially food, raw materials and intermediate goods. Cuban communists are trapped in their lies. continue reading

Pérez said that “corn used as animal feed has increased its value by 167%, soybean flour by 151%, monocalcium phosphate by 258% and methionine by 162%. Similarly, fertilizers and urea have seen a 300% increase in their prices, and other chemical herbicides and pesticides have doubled and tripled their prices.”

He is right about this, but those same price increases have impacted the Dominican Republic, Costa Rica, Panama and the rest of Latin American countries, and none of them lack food. There is something about Cuba’s production that turns the Island into a disastrous economy, where the agricultural sector is unable to meet the food needs of the population.

So, using any justification such as climate change to evade responsibility, Pérez cited migration from the countryside to the city as a factor that has a negative impact on the sector. And in that sense, he again gave half-truths, because it’s true that only 15% of the Cuban population lives in the countryside, but the employment of the sector is close to 20% with an average agricultural productivity of 20% of the total. A disaster.

Then, in this same argument, he blamed the blockade for the lack of availability of funding, and pointed out that “only 40% of the required diesel fuel, 4% of fertilizers and 20% of animal feed have been acquired.” Another falsehood. If the regime does not achieve financing, it is not because of the blockade, but because of its non-payment of debt, which prevents access to international markets. When will they realize Fidel Castro’s terrible inheritance as a debt evader?

From there, Pérez stressed “the need to increase the areas planted; however, this would require a greater use of fuels and people dedicated to the activity” that are not available, so they recommence in that vicious circle that they don’t know how to get out of, or do not want to.

And the rest of the program was a continuous narrative of misfortunes that could only lead viewers to a single conclusion: these people are not going to solve anything. For example, referring to the poultry program, Pérez Brito said that, in the best moments, “it was possible to have 8 million chickens” (without indicating when), but “today we only have an average of 2.9 or 3 million laying hens,” a decrease caused by the fact that vaccines could not be purchased and “the replacement program was stopped, which has caused us to be working with a very high percentage of aging chickens.”

And for this, they are “replacing 300,000 chickens per month and must end the year with a million replaced,” and he said again that “the program has had many obstacles with food, especially with soy and corn, whose prices have increased. As a result, production has decreased from 5 million per day in 2020 to 2.2 million. This only allows us to supply the current 5 eggs in the standardized family basket” [allocated through the ration system]. In short, the instability in the feed causes a decrease in the efficiency of the laying. And that’s why eggs have disappeared from the basic basket or are sold at very high prices.

Regarding the situation of the pig program in the country, the minister said that of a total pork production of 199,700 tons in 2017, the figures fell in 2022 to only 16,500 tons of production. An absolutely unpresentable collapse that has no possible explanation.

Again, the disaster occurred because there was less food for the pigs, which reduced the number of breeders from 96,200 in 2018 to 35,892 last year, a drop of nearly two-thirds, and now the recovery of this program is expected by increasing the planting and harvesting of animal feed in the country, as well as enhancing the planting of soybeans and a harvesting program to guarantee part of the necessary protein. In other words, things will take a long time.

Meanwhile, the regime is entertained by the recovery of the Multiplier Centers and Breeding Units and continues with the delivery of land for the production of pig feed “to produce 60% of the raw material.” They do not understand that the delivery of land for rent is not the solution, but rather a legal framework of private property rights for the land.

At this point, the minister surprised the audience when he said “that the country has relatively new infrastructure for the production of grains” and specifically, for rice: “More than 300,000 tons were produced in the country.” But then, as a result of the lack of inputs, such as fertilizers, production fell to 10%. So with less rice, he had to depend on external donations.

The minister then said that “we have to plant rice” because of the high cost in the international market, and many traditional producers have stopped exporting to meet the national demand, which makes it very difficult to supply abroad. This happens to Cuba, because other countries that import rice do not have these difficulties; they have financing and credit to do so. As always, communist ministers remain on the threshold of the problems.

In the case of beans, he said that more than 50,000 tons were delivered for the basic basket despite the lack of inputs to combat pests and other natural causes that caused a 9% decrease in production compared to 2016. He also quoted, with respect to corn in this case, a much greater drop of 30% in production.

To reverse this situation, the minister proposes ideas such as increasing the area under irrigation dedicated to grains by 35%, increasing yield using more productive varieties and hybrids and working with foreign investment and collaborative projects to acquire financing. As always, arriving late to the problem with a state interventionism that leads nowhere.

With regard to coffee production, the minister said that the demand to meet the basic basket and domestic consumption is 24,000 tons, but in 2023 the production will be about 9,000 tons, which represents only 38% of the demand. Looking out to a 2030 horizon, the situation will not improve significantly, so there will still be a lack of coffee. Cuban communists still believe in the “strengthening of the coffee program in the plains.”

And at this point, the minister spoke of the miraculous “Food Sovereignty and Nutritional Education Plan of Cuba,” according to him, “a national platform to achieve full sovereign food security, as a strategic contribution to national security.”

To this end, the law of the same name proposes an agri-food development of Cuba, based on projections for the development of food production in the socio-economic cultural field, from processing and marketing to the final consumer. In other words, more of the same, as usual. Passing over the problems, without getting into them.

But in addition, it is alarming that the minister says that “we must make a change in agriculture, in the way we manage it, taking into account the current economic conditions of the country and also the climatic conditions.” Because no one has any illusions. Nothing about strengthening the private sector and entrepreneurship.

The minister wants to change the management to promote “the relationship of the municipality, the province and the nation, which are as a whole the agricultural system, so that production is at the local level and the importing matrix is changed, for security and sovereignty.” A commitment to a scale of production that does not take advantage of increasing returns at scale and impedes any possible increase in productivity in the medium and long term.

Food sovereignty is not achieved in this way, one which only relies on failed structures of the communist model, such as the OSDE [Superior Business Management Organization] of agriculture and the business system in the sector, whose improvement only involves decapitalizing them with fewer employees and activity. The same can be pointed out for the companies served by the municipal governments, which is nothing more than hiding the state in the municipal.

Cubans will have to continue waiting for that sovereignty and food security, because the path chosen does not serve to advance the nation’s ability to produce, as the minister said, “food in a sustainable way and give the entire population access to sufficient, diverse, balanced, nutritious, safe and healthy food, reducing dependence on external means and inputs, with respect for cultural diversity and environmental responsibility.” That will continue to be unattainable if production conditions do not change.

During his long appearance on the Roundtable, the Minister of Agriculture dedicated time to saying that “in addition to the State and the business structure, another of the backbones of the agricultural system is the producer,” and he pointed out what seems evident, that “the whole system revolves around him” so that “ways must be found for him to develop and feel more stimulated, so that the amount in the Cuban fields increases.”

The minister must be made aware that these ways are well known and that if he wants to check, he just has to go to Vietnam and ask about the Doi Moi, where he will find that producers don’t have to be “motivated, trained, expand their capacities or be advised and change mentalities.”

All that is a waste of time. What producers want is to own the land they work so that any improvement they make on it allows them to earn money from their commercialization or expansion. The path is the consolidation of a legal framework of private property rights. There is no alternative.

The solution of putting the municipality into production, or developing it in a more organic way by applying differences between the territories, only makes sense if the producers manage to appropriate the income they generate.

Therefore, the projects that the regime is managing, such as the food program, with the development of the extra-dense banana, under the principles of science and innovation imposed by Díaz-Canel’s doctoral thesis, still do not give practical results, and the young people of the country do not want to spend their lives in the agricultural sector.

To attract young people to the countryside, it is not enough to help them, give them credits, accompany them, or give priority to the best. The key remains in land ownership, especially for young people, who with a longer life cycle can expect a greater capitalization of the value of their properties.

And at this point, Pérez showed the contradictions of the communist regime, recognizing that “we have a lot of empty land, a lot of idle land, a lot of poorly exploited land and, at the same time, the need to produce food and bring the country forward,” confirming that the model is inefficient, does not work and must change.

He also referred to boosting the production of small livestock, where he acknowledged that the desired results are not achieved and proposed “to get producers to raise more.” For the same reason, they will raise more if they own the cattle and can determine their destination without state interference.

Of the agricultural cooperatives, he pointed out that there are more than 270 cooperatives with problems, of the more than 4,000 existing ones, a scenario that starts from the application of the Ordering Task and that remains unresolved. It seems to the minister that “it is only necessary to strengthen the search for links with producers, also taking into account relations with the non-state sector. We have to unite and make cooperative productions.” Nothing about the legal framework of property rights.

Regarding the MSMEs [“private” enterprises], he was pleased that his ministry has 27 state-owned, which has made it possible to complement some points of agricultural production. Really, it’s a result that leaves a lot to be desired.

In the final stretch of the program, Pérez returned to defending as a ministry that “we have to work better in our state functions; we have to be better as regulators and controllers of the State.” Not even a small space for private property, business and independent economic activity. For the minister, it is essential that “we should control the use and possession of land and livestock,” the same thing that the communist regime has been doing since the approval of the agrarian reform laws.

A good example was the announcement that the Ministry of Agriculture is now working together with the Ministry of the Armed Forces “with the aim of looking for more producers, helping more who deserve it and restoring legality where there is a problem.

We also are working to return the land to the management of the State when it is not well exploited.” The control of the agricultural sector by the communist army is a step backwards, an increase in repression and control, and an indicator that bad times, very bad, are coming for Cuban farmers.

*The Ordering Task is a collection of measures that include eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso (CUP) as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency, which must be in the form of specially issued pre-paid debit cards, and a broad range of other measures targeted to different elements of the Cuban economy. 

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

The Balance Sheet Is Not Going To Solve Inflation in the Cuban Economy

Margarita Acosta, Director of Price Policy for Cuba’s Ministry of Finance and Prices . “When one talks about Price we are referring to one of the most complex and controversial economic categories.”

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 21 October 2023 — Does updating the balance sheets really help to achieve more rational prices? Perhaps in communist Marxist logic, yes, but for a long time economists have known that the laws of the market are far superior to any instrument of central planning. The Cuban economy is a good example of this.

Apparently Margarita Acosta, director of Price Policy for the Ministry of Finance and Prices, believes that yes, it is possible to face the drama of inflation that the country is currently experiencing by publishing legal rules, which aim to “make costs and expenses transparent, seek efficient reserves and from there promote price decreases.”

It should not be only Ms. Acosta who believes in the superiority of planning. Her action must also be supported by President Díaz -Canel, Prime Minister Marrero, and up and down the ladder. The communist hierarchy is hard to determine in some cases.

What does this curious action of the Ministry consist of?

First of all, it is mandatory to prepare the so-called “cost sheet” for all economic actors. Both non-state and state producers and providers of technical-productive services must submit to this instrument of the regime’s economic control. The measure is considered key among those undertaken in the country to achieve more rational prices and face the abusive ones, a claim of the population. A claim that, in this way, goes nowhere. continue reading

Secondly, the rule will be published when only two and a half months have passed since Resolution 148 of 2023 was issued, published in Official Gazette No. 64 of July 6, in which the Ministry “conducts a process of preparation and training with its territorial directorates, local governments, universities and the National Association of Economists and Accountants of Cuba.”

In statements to the Cuban News Agency, Margarita Acosta Rodríguez, director of Price Policy of the Ministry of Finance and Prices (MFP), clarified that the main objective of the legal norm is to make costs and expenses transparent, look for efficiency reserves and go from there to price decreases, as long as it does not imply deterioration of the results or that the products are sold at a loss.

Thirdly, what is striking is that the authorities recognize that the established methodology and the cost sheet themselves do not solve inflation problems. Of course not. Inflation is not only a supply phenomenon but is also based on the imbalance with demand. No matter how many balance sheets are concocted, the price that the consumer is willing to pay has a much greater influence on inflation. They’re wasting time. Or they don’t do what needs to be done. And that’s how it goes.

This is why the authorities defend the cost sheet, because they point out that “it constitutes the starting point for the evaluation of price agreements, which lead to more effective and favorable regulatory measures for the population in products and services with the greatest impact, and in social consumption.” Price adjustments. Yes, you have heard correctly, it is a twisted way of trying to avoid market adjustment via supply and demand. The regulation and price intervention of the communists do nothing but distort the free adjustment of the markets and create conditions for harmful shortages.

Fourth, the leaders say that a “training process is underway at all levels given the complex context in which the regulations must be implemented.” Unbelievable. In all the economies of the world, millions of transactions between sellers and buyers occur every second, and you don’t have to train for anything.

Those who interact in the markets know their objectives, products and needs well, so there is no need for other agents outside the processes to interpret in their own way “concepts, purposes and how much can become a decisive tool in the negotiations between the parties and in the price agreements of local governments with the economic actors.” Precisely, that negotiation of the local powers with the economic actors should be liberalized and not subject to any control, and that could be an important path to improvement.

The Ministry’s director of price policy said that representatives of more than 3,500 entities of the business system, including budgeted units and more than 12,000 non-state economic actors, have been trained on Resolution 148/23. Figures, in any case, absolutely insufficient if compared to the dimensions of the Cuban economy. In the seminars it has been explained “that the cost sheet can be made with a criterion of flexibility, according to the characteristics and complexities of each activity, but this does not mean that prices are formed by spending methods and that this procedure replaces the Cost System of the entity.”

In short, they want to prepare the cost sheet anyway but at the same time point out that “prices must indicate what national productions and services cost and the real cost of imports, which will gradually allow the elimination of subsidies to business activity, promote greater negotiation between the parties, stimulate the search for reserves of efficiency in costs and expenses, and make real social spending transparent.”

It is a serious mistake. Prices  come from supply, as in this case, but also from demand. A product can be released on the market with a high or low price. Marketing strategists know this and set up different mechanisms in each case. You can’t walk blindly like they do in Cuba, or with only one eye, when you need both. That’s what the communists are unable to recognize.

And here come the different methods. For the formation of prices by correlation, “that is, by comparison, [they use] the references of import and export of goods and services, similar to the external and also domestic market, provided that their origin and the general bases for their determination in reasonable ranges are demonstrated.”

For setting prices in the non-state sector, the regulations are based on the agreements of local governments with economic actors in the commercialization of products and services with the greatest impact on the population and entities, which is established in resolutions 329/20, 84/21 and 263/22, all from the Ministry of Finance and Prices. In this negotiation, the local powers impose conditions on economic agents, almost always unfavorable, which takes away their interest in negotiating.

The authorities insist that in order to conduct business, “it is essential to know the cost sheet of each producer, an essential tool in the negotiations between the parties, and therefore it is planned to close the year with progress in this task.” From this point, “a gradual effect is expected on the decrease in wholesale prices in some productions and services, so that they contribute to lowering the retail prices of those products in high-impact activities, such as in the fast-food economy.” They make it clear.

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

Agromarkets Give a Blow to the Cuban Regime’s Banking Reform

Trade fair on Galeano Street, where the use of electronic channels was promoted, such as the Transfermóvil and EnZona payment gateways, for the payment of goods and services. Photo: Ismael Francisco/ Cubadebate.

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, October 6, 2023 — There is more news about bancarización.* The state press analyzes the relationship between agromarkets and electronic payments and describes it as “a union that is not yet consolidated.” It’s a good example that bancarización as a hierarchical order issued by the regime, mandatory for all, is not well focused. The reason? It has already been highlighted in previous entries. Cubans prefer to make cash payments and use paper money. They don’t trust the banks and what the communists call “electronic payments.” What is not in demand can hardly get anywhere. The law of supply and demand makes its way inexorably into the Cuban communist economy. What we are seeing is a rebellion of the Cuban people against the regime, and we will see who wins.

The state press complains that in certain areas of the country there is slowness and resistance when it comes to adopting electronic commerce mechanisms in agromarkets. In these spaces in which many Cubans solve their basic food needs, bancarización is of no interest. Neither to buyers nor to sellers, and, therefore, in businesses that now have the QR Code for payment, the use of electronic means is almost null. Interesting.

This information is not trivial. In those agromarkets, thousands of transactions take place every day that materialize, apparently, in cash. People don’t use electronic mechanisms, despite having the facilities for it. The payment by digital e-commerce platforms for one or two malangas (sweet potatoes), a few bananas and two or three mangoes does not justify using bancarización.

And although it’s true that the average transaction in these agromarkets is small in value, although at current prices nothing is cheap in Cuba, as numerous operations are carried out every day, the weight of operations in the total retail market is very high, and this lowers the regime’s expectations to extend bancarización to all branches of the economy. People pay in cash not only for food. In these agromarkets, many other transactions escape the trap of electronic payments, like the training of workers and the leasing of premises. continue reading

It’s in this area of the agromarkets where it will be very difficult for the regime to achieve the integral bancarización of operations, and, therefore, it will continue to handle paper money and cash in transactions, which will require people to have those funds. And of course, since what is happening in the agromarkets does not please the leaders, the state press contemplates the spontaneous process of transactions between buyers and sellers as the “survival of the fittest without regard for the rules” and insists that agromarkets should not be allowed “the stealing that lends itself even to not paying taxes.” Unbelievable.

It then claims that rents for the market stalls by the Provincial Property Management Company should be paid compulsorily by electronic commerce using the EnZona platform, in addition to the cash charge, which must be reduced to the minimum expression. The complaint goes further and says that in the areas leased to the self-employed, the “providers only take cash.” And this should not be allowed.

Faced with this pressure from the authorities to implement bancarización, even if it is not among most people’s priorities, opinions begin to divide. And so appear those who believe that the use of cards is not complicated and that people should get used to it. Even those who provide the Extra Cash service, which gives cash to buyers in the agromarkets to make up for the poor functioning of ATMs, received a recommendation to change procedures and use electronic payments, despite the fact that the population, in general, positively values having the Extra Cash.

From the perspective of agromarkets it seems evident, as the state press points out, “that there is a long way to go to make bancarización effective and to provide access for most of the population to electronic payment channels, no longer as an option for suppliers, but as an indispensable condition when providing a service or marketing a product.”

The regime’s imposition of bancarización is taking place at a particularly complicated time in the Cuban economy, where stagflation drags economic operators into a vicious circle in which internal and external imbalances limit the ability of the authorities to get out of the dark hole.

Nothing that is mandatory and that doesn’t respond to the real needs of society can be successful. Neither producers nor consumers have the slightest interest in electronic payments in agromarket transactions, even indirect ones. Forcing and compelling them is a serious mistake that can lead to a reduction in transactions, with devastating effects on private consumption.

The most serious thing is that Acopio, the state monopoly on the distribution of agricultural products, is also not offering signs of incorporating electronic payments into its operation, despite the orders received. The incorporation of QR codes of the EnZona platform in the aisles and agromarkets, and the actions to install Point of Sale Terminals (TPV or POS) in businesses aren’t advancing at the necessary pace, and numerous Acopio transactions continue to be carried out in cash, with the use of electronic means being almost non-existent in some places, as the state press points out.

The regime’s propaganda emphasizes that the elderly are the ones who pose the most problems in making electronic payments, while young people do not. They should worry about it, since Cuba’s aging trend forces them to be very careful with the needs and preferences of the elderly, who in many cases do not have mobile phones or other devices. Likewise, the regime concentrates its attacks on sellers, who are described as unprepared and unwilling to incorporate electronic payments, without taking into account that if this is the case, it’s because their customers don’t want it.

The agromarkets give a blow to the regime’s bancarización strategy. They are not the only ones. The chosen path, to order and command, is not the most appropriate.

*Translator’s note: Bancarización— banking reform –in effect since August 3, 2023,  is a set of measures intended to move Cuba to a “cashless” society based on electronic banking.  So far, the fast-falling peso, soaring consumer prices, the inability of the Island’s infrastructure — subject to constant blackouts — to support required elements as simple as ATMs, along with widespread distrust among the population, have stymied the effort.

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

Electricity and Gas Services Go From Bad to Worse

Cuba’s Minister of Energy and Mines, Vicente de la O Levy, during a visit to the Cienfuegos thermoelectric plant. (CanalCaribe)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 1 October 2023 — Not many days ago, Cuba’s Minister of Energy, Vicente de la O Levy, announced the great success of drilling a third gas well that would allow the joint venture Energas to increase electricity generation. The state press welcomed the information as if it were the solution that all Cubans were expecting.

This year two wells had already been drilled, in the months of May and June, to provide 14,125,867 cubic feet of gas and thereby increase electricity generation. In those months, 330 MW of power were not available due to lack of fuel, and before this, the electricity moved between 250 and 260 MW.

De la O Levy then announced, surprisingly, that Energás would begin a mandatory maintenance process, which had been delayed since May, so that the plant in question could go into operation on October 3, with higher generation power thanks to the third well.

And here comes something eye-catching. A few days later, the state press reported that there would be an immediate impact on the manufactured gas service in Havana, because the maintenance work at the Energas production plant would cause a decrease in the volume of natural gas that is supplied to the capital from 9:00 pm on Sunday, October 1 until 6:00 am on Tuesday, October 3. So one is broken; one is disconnected, and the third well is at rock-bottom. continue reading

The service impact, which could be partial or total but wasn’t clarified, would be felt in the municipalities of Plaza de la Revolución, Cerro, Old Havana, Central Havana, 10 de Octubre, Playa and Marianao.

Citizens don’t know what to say. On the one hand, they have a minister who announces more gas supply, and on the other, the directors of the entity responsible for the service who, as a result of the maintenance work, decide to reduce it. A few weeks ago, similar work in the Refrigeration Section of Energas began on September 20 and produced a bad smell of gas in numerous areas of the capital that alarmed the population.

So despite the drilling of a third well and the construction of a 13-mile pipeline whose valves are closed, residents in Havana will have to settle for cuts in the gas supply.

Nobody understands how these setbacks can occur in something as standardized as continuously providing electricity service to consumers. Apparently, the strategy followed since February to increase the hours of planned maintenance, in order to recover power and not have to make repairs, is partly responsible for the breakdown in the service.

Nor have new investments that should guarantee the stability of the electricity service served to increase consumption. So the fuel supply and the technical status of thermoelectric plants continue to be the vectors that distance the Castro electricity sector from any solution to the serious problems.

And of course, since there is no way to solve the energy crisis that grips the country, the minister attributes to the U.S. economic blockade the sole responsibility for an energy policy that responds to the terrible design of the communist economic model, inadequate to meet the needs, which exerts a key influence on the normal functioning of the entire country.

The company suggests that the completion of the repair work will allow greater reliability in the distribution of natural gas to the production plants of the Manufactured Gas Company, but consumers hardly believe these arguments, because the same problems of supply and blackouts continue.

This is the day-to-day of Castroism. The propaganda and demagogy of the regime on the one hand announce new wells that will solve all the problems and on the other, facts without solutions. Cubans are aware of the dynamics of these events, and after almost two long years of poor service, they have lost all hope.

The daily reports about the service published in the state press as warnings of what cannot be avoided are unique in the world. There is no other country in which citizens have this type of terrible service and are also informed by the government of the distribution of consumption.

Translated by Regina Anavy

COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

The Disaster of the Communist Business Model in Cuba

Caption: The rising cost of food in Cuba strains the budgets of many families. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 5 October 2023 — In a recent discussion on the Cuban State TV Roundtable program, the issue of the relationship of the ’regulated family basket’ [the monthly allotment of rationed goods] to banking was addressed by the Minister of Internal Trade (MINCIN), Betsy Díaz. She spoke about the increase in the autonomy of the business sector since 2010, especially in the gastronomy sector, but which, after Covid, the international economic crisis, the limitations of the Cuban economy and the effects of the blockade, must face new challenges.

The main challenge is self-management. The minister acknowledged that gastronomy has worked mainly through self-management with other actors, not only the micro, small and medium-sized businesses (MSMES) and cooperatives, but also agricultural producers and state companies that produce in the foreign exchange market, but that it is not enough.

The second challenge is the autonomy of entrepreneurs, with the development of first- and second-category gastronomy units, which refer to the popular network of economic line products and fast food. A truncated and beaten-down process.

The third is the boost to the network of bodegas, the ration stores, which must become commercial units of the neighborhood, incorporating other alternatives and services to fill, to some extent, the gap in the state network. It will be difficult for the current bodegas to do that. continue reading

Any approach makes sense, excepting a market economy, free enterprise and property rights. Communists test different formulas, but they refuse to redirect the Cuban economy to the model that exists in most countries of the world.

Therefore, this communist model of Cuban commerce generates dissatisfaction, which, according to the minister, is concentrated on the quality of services, especially on customer service, which affects the offer and the way the service is provided. If only this were true.

Next, the minister devoted herself to explaining the evolution of the bidding process in the business sector, which aroused so much interest at the time.

In 2014, establishments that offered beauty services, barbershops, hairdressing and some gastronomy were tendered by the MINCIN, but like so many other experiments of the regime, the process was stopped for political reasons. It began again in 2021 with the direct participation of the Municipal Assemblies controlled by the communists, which meant single-party control of the process, while allowing local authorities could bid for specific activities to be developed.

The Communist Party took control, and they say that 78.6% of the goal has been reached, but no information was offered either. The 11 real estate management companies specialized in leasing, which supervise and guarantee the fulfillment of the projects presented, were cited as an example. It’s a really low figure for a country with Cuba’s population.

Surprisingly, the minister was more satisfied with the control carried out by the Party through the Assemblies than by the activity of her own ministry. She pointed out that the key is to make better use of the infrastructure and to work with economic actors, preventing them from doing business in inappropriate places and recognizing the preeminence of the Party throughout the process.

For the maximum reinforcement of control, a Central Commercial Registry was created, responsible for granting permits for business activity. All natural and legal persons who carry out this activity have to register, including the MSMEs.

With these initial forecasts, the minister explained the relationship between the digital transformation process and business activities. It’s hard to believe that in a business sector like the one that exists in Cuba – backward, obsolete and inefficient – computerization or digitization can make any sense, much less the use of electronic payments. But the hierarchical slogan is mandatory, and the minister used it to explain this issue.

First of all, she argued that, as incredible as it may seem, despite not having all the equipment and infrastructure from a technological point of view, workers have even contributed their means and resources to promote this activity. With regard to banking, payment by QR code was conceived, starting with the point of sale terminals or POS in construction materials stores, a difficult process, “because it meant a cultural change in a sector that has been collecting cash for 64 years.”

The minister said at the end of June, before Resolution 111 was issued, which represents the decision to apply banking reform practically all operations, there were 14,369 establishments with the QR code in their business networks, while in September there were 20,762 establishments, and although it grew by 6,000, there are still more  needed to ensure this form of payment. The distance that remains to be covered is long and complex, but the minister took the opportunity to give some data. In September, 4.1% of business sales went through electronic payment channels. There is a long way to go.

These are no longer privileged areas with technology but provinces where the commitment and purpose of advancing in electronic collections exist. Thus, the minister recognized that the sales people use their cell phones under a voluntarist principle, although she recognized the existence of errors in the design of the bonus actions, for example.

She spoke about the role of the bodegas as bank agents, a formula in which the bank gives the agent a peso for each transaction. An establishment that has performed 297,000 operations will receive 297,000 pesos, an income not related to its management nor to the offer of products. There were workers who earned from 300 to 2,000 pesos in incentives; this income should become part of the payment system. And she cited some examples, such as in La Rampa, the Plaza municipality where a cash deposit is penalized and an electronic payment is subsidized.

The minister believes that when all payrolls in the country are digitized, a legal norm will require that all natural and legal persons who carry out commercial activity, and who are subject to inclusion in the central commercial registry, provide an electronic payment channel to consumers. And this is not “obligatory.” In the end, all commercial activities of any kind, of any organization, must ensure that there are electronic payment channels. Ordered and commanded.

The minister said that it is about digitizing the greatest amount of financial flow, maintaining cash, but everyone who carries out commercial activity has to guarantee the means of electronic payment, and she said that a deadline will be given to that process. The subjects registered in the commercial registry will have a period of time to validate that they guarantee that means of payment to the population, even in places of difficult access, and all provincial capitals must have conditions for the deployment of what is being proposed.

The minister believes that there is a process of change in mentality and culture, where there are many things that have also changed in business. She pointed out that before, the ’basic basket’ was priced at 20 pesos, but today it costs 180 pesos. In an agricultural market, any product can exceed two pounds and 100 pesos, recognizing the serious inflation problem that exists in the Cuban economy that conditions the success of digitizing trade.

At this point she pointed out that in the digital transformation there are two fundamental areas: one is electronic commerce and the other is e-government.

But payment through these electronic payment channels is not e-commerce. In electronic commerce there is a debt to the population since it recognizes that the state system hasn’t managed to have stability in the virtual stores that began to work during Covid, due to a deficit of products and because the platforms have not been stable. However, it has not been renounced.

In the field of e-government, due to a call from President Díaz-Canel in the National Assembly in December 2018 regarding the computerization of offices, a process began that demonstrates how much it can grow. The process exists in the infrastructure of the Youth Club and in computer contracting infrastructure, and today the Consumer Registry is digitized by 93%. The cases that remain pending sometimes respond to the coincidence between what the citizen’s unique file says and what the Oficoda’s book has, which dates back to 60 years where calligraphy and so on… But the process must be concluded in the coming days to have everything digitized.

This digitization allowed an effective purification; that is, people who leave the country for more than ninety days are discharged from the consumer registry. This registry also provides a digital seal. Today all the Oficodas stamp documents and procedures with a digital stamp.

And she announced that when you have all the digital records and the media, they integrate that database with the database in the Institute of Occupational Safety and Health, to care for people in vulnerable situations and have the procedure online, but means are needed to achieve this goal.

With regard to the multiplication of the centers of population (nuclei) with more than ten people, based on a characterization of those nuclei, the minister said that at the end of September, 20,062 new nuclei have been created. For this it is not a requirement to have housing and is by individual decision. Sixty-two percent of the nuclei could do it or already have. She pointed out that in Pinar del Río and the special municipality Isla de la Juventud, all the planned nuclei were attended to, while the least number of requests were made for the breakdown of these nuclei in the provinces of Cienfuegos, Sancti Spíritus and Santiago de Cuba.

The minister said that for months medical diets have been reviewed with the Ministry of Public Health. The Oficoda system registers the medical diets and then supports the products. She did not recognize the existence of problems in the assurance of medical allowances, based on a legal norm from 1992. That legal norm was reviewed, to eliminate the requirement of renewal of diets for chronic diseases, and its lifelong character was established. She offered the figure of 837,980 consumers: 76% percent of the people who receive a medical diet.

At another point in the Roundtable discussion, the Minister of Internal Trade, Betsy Díaz Velázquez, referred to the population’s basic basket for the month of October and acknowledged that many programs are taken care of by the MINCIN, and the standard family basic basket is monitored daily, from different control mechanisms. However, its operation leaves much to be desired and is the source of many complaints.

She pointed out in this regard that the Minister of Economy, Alejandro Gil, recently explained how much dependence that basket has on imports and the cost of fuel, and she referred to the arrival on September 29 of the first rice shipment for the month of October, which coincided with a deficit of diesel fuel, which fundamentally moves freight transport. All territories, as a priority, said that they would begin a fractional distribution of the rice, with an extraordinary effort. But is it the only rice shipment for the whole month?

A total of 12,187 bodegas in the country, including in mountainous and hard-to-reach areas, have not received the rice, of which 88 are in the province of Granma, due to the rains.

In terms of distribution there is a problem with the oil, which had problems for July and August. The oil that began to be distributed in September is being completed. Today it is pending completion of its distribution in Pinar del Río, Matanzas, Holguín, Santiago de Cuba and Guantánamo. The rest of the provinces have concluded the distribution.

There are also problems with the distribution of sugar, with the decrease of one pound per consumer, which will have an impact in the months of September, October and November. The distribution is being completed in Pinar del Río, Artemisa, Havana, Mayabeque, Camagüey and  Santiago de Cuba.

She said that the product of compote is now stabilized, despite many difficulties at the beginning of the year.

As for the grains, which have also had to be replaced by peas, there is a boat currently operating in Cienfuegos, and the completion of distribution for September and October is assured.

She explained that the situation with fertilizers has forced more grains to be imported. In 2018, for example, the normal family basket was covered with domestically produced beans, and released beans were also sold. Today the dependence on imports is total.

Regarding coffee, the Minister said that eight provinces delivered their product to the wholesale system, and distribution is being made to the factories.

As for powdered milk, she said that it is being divided, even with an important contribution of fluid milk. The age groups have been split, prioritizing children up to six months old and those from six months to one year. Although sometimes outdated for a few days, the children’s milk has been guaranteed, but not for those on specialized diets and pregnant women.

The minister said that the most complex products in the basket are still the proteins. Chicken was offered for the months of July and August, and Havana received the August chicken in the month of September.

As for eggs, the distribution varies but is guaranteed for the month of October.

Later, the minister referred to the attention to vulnerable people in the tone of demagoguery. Cuba has received donations of a volume of food that has been distributed to the entire population, including products such as rice, pasta, grains, sugar and in some cases sardines and oil. At a certain point, it was decided to allocate these modules to families and people in vulnerable situations, pregnant women and underweight children.

Therefore, with food donated by friendly countries and the World Food Program, four food distributions have been made that complement the standard family basket to all the population centers of the country from July 2021 to date.

The minister said that in the family care system, more than 56,000 beneficiaries are served, who receive the standard family basket, and 18,000 of them are served by social assistance. That means that people in a situation of vulnerability can receive food in three ways.

As for the school uniforms and the basket, the Minister said that these two programs are very dependent on imports. For uniforms, the primary schools were prioritized, and practically all the fabric for the uniforms is financed, which has allowed the uniforms to be delivered gradually.

The basket has been a little more affected since August 2022, because there has been a deficit of textiles for mattresses. The situation is so serious that Marrero looked for alternatives and put the clothing manufacturers at their maximum capacity to participate with social responsibility in that program and be able to cover the cribs, the mattresses and the basket.

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

Is There Anything that Works Well in the Cuban Economy?

The housing situation in Cuba is one of the biggest problems in the country. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 2 October 2023 — How well a country operates is a reflection of how healthy its economy is. When it stalls, or begins showing signs that something might be amiss, it may be an indication that disaster is imminent. There is a common belief that the way to solve a problem is to try out a lot of different solutions, the more the better. But that is not the solution. The key is to first get the diagnosis right and then take appropriate action.

The Cuban regime, however, spent years doing neither. Its diagnoses are based on a reactionary, communist, ideological position that does not allow for changes or modifications. The measures that do get adopted reflect a poor understanding of how things work in the real world. They do not solve anything; they just end up making the situation worse. The victims In this endless merry-go-round of fatalities are the Cuban people. One gets the impression that they are starting to get tired of so much spinning around. The regime has managed to set off the alarm too many times.

What to make of an article entitled “Council of Ministers Approves Regulations to Be Presented to National Assembly” that appears in a government publication? It mentions “several legislative documents dealing with issues related to Cuba’s social and economic development.” Apparently, these were reviewed and approved at the September meeting of the Council of Ministers. Considering how slowly time has moved in the last 64 years of communist rule in Cuba, this suggests a new sense of urgency.

The council, which meets once a month, has approved a spate of legislative actions that, according to the regime, it “has been in the process of implementing for several years.” Here is a series of reflections on the state of the economy that raises the question, “Is there anything that works well in the Cuban economy?” continue reading

They consist of three preliminary projects which, for the umpteenth time and without deviating one iota from Communist ideology, Cuba’s leaders say will bring about “national social and economic development.”

The first is a draft of a proposed public health law to be debated in December.

The First Vice-Minister of Public Health, Tania Margarita Hernandez, pointed out that the proposed legislation defines “public health as a civil right; establishes constitutional rights, guarantees and duties; and proposes services to cover the care, protection and recovery of health.”

In other words, more or less the same old nonsense. This raises the question, “What is the purpose of a law that says the same thing as previous legislation but has no teeth?” It guarantees rights that are still not being granted, or are simply being provided in an inadequate way.

The communists say, “The document updates the obligations of the state and the government to guarantee free, accessible, high-quality services; establishes functions and obligations at the local level; clarifies the meaning health, which was not well-defined in the previous law, and allows for a multi-disciplined approach.”

This simply perpetuates the same old lies about a healthcare system which, though free of charge, offers very little or nothing. A system which is financed with taxes that the state imposes on a population that cannot freely choose the financial system it wants.

It is true that the legislation includes clarifications on end-of-life issues, the principles and purposes of public health, and the operations of the National Health System. But these are bureaucratic issues that would not have required a new law. Its backers also claim it protects a healthcare model that, for years, has left much to be desired. Officials claim, “Multiple consultations were carried out, both with specialists in the healthcare sector and with others closely related to it. International documents and legal instruments of various kinds were also evaluated.” Yet despite all this, Cubans remain dissatified with this system.

The second matter taken up by the Council of Ministers was the policy regarding a special Social Security program for agricultural and forestry workers as well as the preliminary draft of a law that must ultimately be approved by the Council of State. The Minister of Labor, Taniris Hernandez, described this document as “comprehensive and all-encompassing.” It incorporates new subjects into the program, expands and unifies protections for covered risks, and provides varying approaches for determining a worker’s period of employment in agricultural production.

The purported purpose of the regulation is to correct the inequalities created by the three different social security programs that currently exist. They are aimed at businesses in the agricultural and forestry sectors, and deal with financing issues, the scope of protections, the rights they grant and the risks they cover. Differences that are difficult to take into account in a centrally planned economy but are there nonetheless.

The directors have nothing but positive things to say about this piece of legislation. The Minister of Agriculture, Ydael Perez, declared, “The proposals were drafted in consultation with producers and prioritize their work in the field.” Julio Garcia, president of the AzCuba business group, claimed, “[It] will have a very favorable impact, especially for many people in rural areas, since now all types of businesses will be operating on the same playing field.”

The issue is that, although agriculture employs more people than any other sector, it has the lowest productivity. Many workers leave and move to service jobs in urban areas. It seems unlikely that these types of regulations will solve those structural problems.

The third piece of legislation is the System of Protected Areas Law, which must still be approved by the Council of State. The Minister of Science, Technology and the Environment, Elba Rosa Perez, noted, “For] the first time, the areas declared protected are part of the Natural Heritage of the Nation.” The legislation provides other conservation measures for areas that are not officially protected, including biological corridors and the Turquino Plan. Its statutes also take precedence over any possible private property rights.

The regulation creates a new office, the administrator of protected areas, who is tasked with drawing attention to these places and to the fact that some of the protected areas are scenes of illegal activities, notably logging and poaching. These and other such activities have led authorities to strengthen the everlasting systems of surveillance, denunciation and control.

Another topic approved in this session was the proposal to “lessen the current problems of rural Cuba,” an effort which apparently began in February. The objective is to improve living conditions in rural areas, which the regime acknowledges “is a fundamental component of national identity and on which the most important sector of the economy is based.” Inequities between rural and urban areas are just beginning to be questioned by large segments of the population, which has taken the regime by surprise.

Jorge Luis Tapia predicted these actions would create a more favorable environment for rural inhabitants, encouraging them to remain in these areas. He also believes they will increase local food production and self-sufficiency, raise incomes and improve living conditions. But measures like these already have a long track record and none of them have ever managed to boost agricultural productivity. It is not measures like these that provide people with a decent living or encourage them to remain in the countryside. For that, they need property rights to the land they work.

The communists forget this. They think the actions to be taken by various governmental agencies, will insure economic investments are made in rural areas if they are appropriately implemented (even with less than 5% of the total investments going to the agricultural sector); that they will encourage housing development, increase the supply construction materials and equipment, and provide other incentives for professionals who live and work in rural areas; that they will revitalize agricultural communities established after the revolution. Lastly, they believe this legislation will bring students studying agriculture at technical schools and universities closer to the means of production in rural areas. While this means more spending on the agricultural sector, it is indirect. If implemented, it will not have the income multiplier effect that should come from such an investment.

It seems the idea of prioritizing rural areas came from Diaz-Canel Bermudez, who describes it as a matter of “economic, productive and social importance as it relates to demographics, support for farm workers, food production, and many other issues.”

The members of the Castro-appointed Council of Ministers also approved the compliance report on housing policy. It was presented as part of detailed, critical analysis of the program’s delayed implementation. Delays, the U.S. embargo and poor performance by the housing sector explain the weakness in the Cuban economy and its inability to act as a economic driver as it does in other countries.

The Director General of Housing, Vivian Rodriguez, took over the disastrous housing sector in 2019 and began implementing the policy. Since then, 127,345 homes have been completed and 106,332 have been rehabilitated. But here’s the bad news: the country currently has a housing deficit of more than 800,000 units, with the situation being more serious in Havana, Holguín, Santiago de Cuba and Camagüey.

She acknowledged that the biggest problem with housing policy is subsidies. Investments which were supposed to increase the supply of building materials have not materialized, nor has the necessary equipment to expand construction capacity and sustainability. It’s the same old story but with the further aggravation that, as the director admitted, “fulfilling the plan for the current year is at risk.”

Faced with a devastating diagnosis of the Cuban housing situation in 2023, the Council of Ministers could not come up with anything other than “the strategic redesign in each territory of local materiral production, with an increase in [the supply of] local raw materials that will guarantee independence in the production of materials and respond to the needs of the program.” In other words, things are getting worse and worse.

So again I ask, does anything work well in the Cuban economy?

COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

Budgets, Prices and Economic Control, the Black Hole of the Castro Economy

A Ration store (bodega) located on Valle Street, in Havana. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, October 3, 2023 — The Cuban communist state press, with its usual lack of transparency, addressed the issue of the 2023 state budgets that were approved before the highest governing body after the report on the process of implementing the State Budget in 2023 and the accountability of the Minister of Finance and Prices. Let’s see who dares to oppose it.

Therefore, if anyone is waiting for any indication, let them keep waiting. The only thing that has been known in this regard is that the Minister of Finance and Prices, Vladimir Regueiro, recognized “that this is an exercise that complies with the provisions of the Constitution of the Republic and other laws” in reference to the functions of the highest Cuban government body.

This phrase hides a terrifying idea. Perhaps it leads us to think that there have been other occasions when such compliance has not materialized, or, and it’s the same thing, that the leaders of the budgetary area have assumed compliance with aspects not established by the constitution.

Given the lack of evidence, because no one is going to denounce anything that comes out in the political script, the accountability of the Minister of Finance and Prices was basically focused on aspects related to the government management system, based on the science and innovation that Cuban President Díaz-Canel is so pleased with because it is his doctoral thesis. Likewise for the population’s attention to approach that, in general, is practically not to say anything. The price system was also addressed to replace the threat of inflation, which is the most pressing problem. continue reading

Accountability also dealt with the management of budget revenues, in absolute free-fall due to economic stagnation; of course, the budget system, the basis of which is unknown; government accounting, another great mystery; the strengthening of accounting, collections and payments; the control and collection of fines; the performance of the Business Wealth Management Organization, attached to the Ministry; as well as human capital and the policy for cadres. Anyway, it is a jumble of issues to cover a record without going directly to the numbers, which is what is really important in these cases.

The obsession with “guidelines” continues to confirm that Cuban communists are more oriented in their economic decisions by ideology than by technical issues

According to the minister, “the organization’s work projections give way to the implementation of several guidelines for the Economic and Social Policy of the Party and the Revolution, as well as other activities closely linked to the development of the country,” but he did not say which ones or how. In other words, the regime remains committed to complying with guidelines whose most prominent result, the Ordering Task,* has been one of the main failures of the economy in recent years. The obsession with “guidelines” continues to confirm that Cuban communists are more oriented in their economic decisions by ideology than by technical issues. That’s how it goes.

Among the work priorities of his department, the Minister of Finance and Prices highlighted those related to the “improvement of planning, budget execution, the articulation of the State Budget with the Economy Plan, the efficiency and effectiveness of public spending, the tariff system, the modernization of the tax system, price policies, regulatory mechanisms and other issues related to the functions of the organization.”

Questions immediately arise. Is the minister aware of the scarce relationship of these priorities, to which he is supposed to devote his time, to the urgent and immediate problems of the Cuban economy? What does the improvement of planning have to do with blackouts? What can the articulation of the budget and the plan do to solve the problem of runaway inflation?

What does the modernization of the tax system have to do with daily food? Enough of this nonsense! Time is running out

One has the impression that this minister, stating his priorities, is completely removed from the day-to-day life of Cubans, in which eating has become an obsession for many, because it is not guaranteed. What does the modernization of the tax system have to do with daily food? Enough of this nonsense! Time is running out.

Minister Regueiro spoke about prices, not inflation, and he said the only thing he could say, recognizing his failure: “The results in that sense are insufficient and require a transformation that allows verification of the effectiveness of the prices that are agreed and the population’s perception of the effectiveness of the measures.”

Effectiveness of the prices that are agreed? What the hell is this?

Effectiveness of the prices that are agreed? What the hell is this? And even worse, the population should perceive the effectiveness of the measures. Minister, this perception will only be achieved if prices stabilize, and when the CPI in the year-on-year rate grows to 40% on average, stability is very, very far away. What game is the minister playing at?

With regard to the management of budgetary revenues, in free fall due to the situation of economic stagnation, he could only recognize that “the measures that are implemented do not yet have the desired effect, since not all income reserves are captured, nor are tax debts managed to the maximum.” Isn’t it rather that the economy is in the terminal phase and that the tax bases are completely dead and don’t allow income to be obtained? Why isn’t the truth recognized?

No, because the Castroists always blame others for their failures, and the Minister of Finance and Prices says that little is collected because “it has not been possible to reverse the marked trend of under-declaration and evasion of income, which constitute one of the main indisciplines that affects municipal budgets.” Now that they have decided to ban the departure from the country of those who are in debt with the Treasury, they have given the definitive turn of the screw to suffocate the few survivors.

It’s not surprising that the government report on the exercise points out that the issue “associated with prices, must be addressed in greater depth, since the population does not appreciate in that sense the regulatory role of the State.” And for greater emphasis, “it is necessary to define concrete indicators, which allow us to measure what has been achieved in terms of price reduction.”

And of course, the aforementioned document, instead of recognizing the damage that the regime is doing to private initiative and to what extent its possibilities for development are slowed down by public policies, refers to the need to “increase the demand and control over the State Budget Law and work for the gradual reduction of the deficit, guarantee more effective methods of price regulation and control, improve the management of tax collections and increase the confrontation with non-compliance and evasive behaviors, as well as strengthen the role of the technical advisory board.”

Díaz-Canel said at the end of the session that the fight must continue in the face of the difficulties that exist in the economic and social order, with the certainty that the obstacles can be overcome, and he ended up recognizing that “we are missing many things; we cannot be satisfied with what we have done, but throughout the country the fight is going on; work is being done; initiatives are being sought.”

Until when and how? Even Díaz-Canel doesn’t know, but you can move from one lost fight to another without a solution of continuity, and this is what may be happening right now in Cuba. While Díaz-Canel, increasingly distant from reality, thinks about exploiting “all the territorial potentialities, reviewing methods and styles of work and, together with the workers, the producers and the people, finding the solutions to all these difficulties that we face,” the desperate people, standing in line at the ration store for the standard family basket, lost any illusions long ago. Hope is what drives any revolution. They should know that.

*Translator’s note: The Ordering Task is a collection of measures that include eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso (CUP) as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency, which must be in the form of specially issued pre-paid debit cards, and a broad range of other measures targeted to different elements of the Cuban economy. 

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

The Cuban Countryside Goes From Bad to Worse: Lack of Manpower and Low Productivity, the Communist Pairing

When Raul Castro promoted the leasing of idle land to the farmers, he invited them to make it productive with oxen. (14ymedio)

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 30 September 2023 — On a Cuban television program that usually deals with issues related to the economy, a surprising question was raised: Are we running out of workers in the field? Yes. You have heard correctly. Now it turns out that the Cuban countryside is having an employment problem, and of course, from there we get the immediate conclusion of the regime: if there are no workers in the countryside there can be no production. And they identify that “leakage” of jobs as a factor that explains agricultural unproductivity in Cuba. Does anyone understand anything?

To begin with, it must be said that this analysis is incorrect for one reason. It does not take into account the importance of technological innovation for agricultural activities. For example, Spain, with less than 4% employment in the agricultural sector, is a nation that exports its main horticultural and fruit production throughout Europe, including pork derivatives such as ham and sausage. The question is, why is Cuba, with almost a fifth of those employed engaged in the agricultural sector, unable to feed the population, and Spain with less than 4% can feed all Spaniards and a good part of Europe?

The answer is in the technology. The Spanish countryside has experienced processes of expulsion from employment since the 60s of the last century, such as those now in Cuba, but agricultural production has actually been increasing. Before, tens of thousands of workers were employed every summer in the harvest of Castilian cereal. Now, a farmer with an automatic mower not only harvests the field but also manufactures at the same time the straw bales that are marketed in the markets of northern Europe where livestock feed is scarce. The land is much more productive than ever.

The profitability of cereal farms, vineyards, olive groves and all kinds of fruit trees has made the Spanish agricultural sector one of the most attractive in the economy to invest in and earn money. The private business sector has been in charge of achieving this magic that is real. continue reading

In Cuba, with so much influence and predominance of the State in agricultural production, the trend has been just the inverse, and now alarm is growing among the authorities because the general negative demographic dynamics suffered by the population is especially intensely affecting agricultural activities, which, according to the leaders, “puts food security and sovereignty, and other branches of the economy and society in danger.” And now they realize it.

So the leaders are facing an incredible problem. The sector of the Cuban economy that concentrates the highest volume of employment, exceeding 994,000 people, almost a fifth of total employment as has been said, is a sector in which workers are scarce. And that television program was dedicated to dealing with this issue.

The first thing was the migration to the city, also described as “a problem not only for the economy but for society as a whole, families and the country, including the migration that occurs between provinces and municipalities.” Described as a “decisive issue in the demographic dynamics of Cuba, which like the decrease in population constitutes a universal problem, in the same way migration from the city to the countryside occurs, but on a much smaller scale.”

Population movements from rural to urban areas are mostly female (about 17% in the country), with the predominance of populations in active and reproductive ages. Meanwhile, almost a quarter of the population still resides in rural areas, 23%, 2.3 million people, while 8.7 million reside in urban areas, pointing to an unequal distribution. Granma province is eminently agricultural with mountainous areas, and 40% of its inhabitants live in rural areas. Havana is, by definition, totally urban. In rural areas there are more men than women, in addition to being the areas of greatest aging, and women who work formally in the rural areas earn less than in the urban ones.

Internal migration, which is the objective to be addressed through the “socialist” policies that lead the nation, has its origin in the differences between territories in aspects such as the living and working conditions of people, who move to look for better opportunities and better living conditions. Nothing new under the sun. It’s the same as in other countries of the world.

To this are added other factors that are specific to Cuba. For example, even within the range of agricultural companies there are dissimilar incentives, not only in salaries. In terms of product marketing, for example, there are problems with roads and transportation, which affect the domestic sphere, and with fuel for cooking, which affects motivation. It’s the eternal problem of incentives, which are outlawed by the communist regime but which are more important than ever.

In second place are the issues related to the social organization of activities and life in those communities, where gender relations tend to be even comparatively more asymmetric, more unequal. This affects the mostly female migration to urban areas. In conclusion, Cuban women are still inferior to men despite the demagoguery of the so-called revolution.

And thirdly, it refers to access to Health and Education services, which also motivate many people in the face of difficulties with transportation to feel the need to bring their children closer to schools. The achievements of the revolution do not reach everyone. It was all a fairytale.

So, the participants in the program agreed that you have to address the differences in the territory if you want to achieve something, but you have the impression that also, on this issue, they arrive late and badly. It will be very difficult to act on population trends that have been manifesting for decades in the face of the leaders’ inertia, and even more difficult to solve the problem of an alleged lack of agricultural labor.

None of the attendees stopped to consider that perhaps the problem is related to the way of managing the means of production, land and work, which in the Cuban agricultural sector are state-owned and are unable to benefit from private commercial management. Perhaps we should start with the production relationships, which limit, slow down and repress the productive potential of the Cuban countryside.

Migration from the countryside to the city can be stopped, and drastically, if income, wages and profits grow and are directly related to sustainable productivity gains and the profitability of farms. That is the model to be tested, as the Vietnamese and Chinese did, where technology plays a key role in increasing production and productivity.

In the program it was also said that “young people do not want to go to the countryside,” and it was explained that this is not a phenomenon exclusive to Cuba, citing the case of China, where youth unemployment stands at 20% since many prefer to stay in cities with low wages than go to the countryside to work or live in more rural areas. It is still significant, to highlight at this point, the massive employment of young immigrant labor in the agricultural sectors of the advanced countries. Young men do want to participate in farming, but conditions must be right for this to happen.

A series of comments came to the program, such as the remarkably clairvoyant one that said “to really produce you have to be stimulated, and institutional voluntarism must be eliminated.” Another said that people who manage to uproot themselves from the place where they live in the countryside do so “for an improvement in life, because they get tired, and there is no good remuneration for agricultural work.” Blackouts were even cited in rural areas, apparently much more continuous and widespread than in urban areas.

So, what solutions were considered by the communist leadership to face this phenomenon of depopulation of the countryside?

Well, let’s not expect anything new because, in addition, none of them has been evaluated. They continue to bet, apparently, on the usufruct land delivery program that has been developed in the country, to reach 200,000 usufructuaries and almost more than 400,000 land tenants, and now they intend to grant land to young people who graduate from Active Military Service, another big mistake in the making. The results of this land transfer policy are well known and have not served to stimulate production because no one considers that those lands are theirs, and therefore there is a lack of motivation for their improvement and efficient exploitation.

The matter has been complicated in recent times, with the adoption of local territorial development strategies, which by the work and grace of the communists seek to strengthen the link of the population with the productive structure, in an aggressive exercise of rupture of the internal market that should guide production decisions at the national level.

As for the need to enhance the training of qualified and technical personnel in their areas of origin for the agricultural sector, it does not seem to be possible since it would require a volume of expenditure that is difficult to sustain in the current deficit situation.

With regard to housing to stimulate the permanence of young people who engage in agricultural activities, it’s not possible to act at that level if the entities in charge of new construction or improving the existing buildings don’t appear.

So the regime is overwhelmed by the phenomenon of internal and external migrations and the impact they have on employment needs in certain sectors. The fear is that it starts with agriculture and livestock, but at any time the lack of employment can be extended to other sectors of the economy, such as housing, transport and construction. The Cuban economy, led and planned by the communist state, continues without a fixed direction or strategy, and every step taken by the authorities (remember the Ordering Task?*) leaves more negative effects than the previous ones. We have to prepare for the worst.

*Translator’s note: The Ordering Task was a collection of measures that include eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso (CUP) as the only national currency, raising prices, raising salaries (but not as much as prices), opening stores that take payment only in hard currency, which must be in the form of specially issued pre-paid debit cards, and a broad range of other measures targeted to different elements of the Cuban economy. 

Translated by Regina Anavy


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.

The Cuban Regime Has No Solution for the Port of Mariel Crisis

Mariel Special Development Zone – ZEDM

14ymedio bigger14ymedio, Elías Amor Bravo, Economist, 27 September 2023 — Cuban state press just released information on freight traffic through the port of  Mariel’s container terminal. Forecasts for this year point to around 300,000 twenty-foot container units (TEUs), a figure close to what it was before the COVID-19 pandemic. But it’s too early to celebrate for several reasons. First of all, Mariel plays only a marginal role within the Latin American and Caribbean region. The numbers say it all.

The most important ports in the area in terms of volume are, in descending order, Colón in Panama, Santos in Brazil, Manzanillo in Mexico, Cartagena in Colombia, Panama Pacific, Callao in Peru, Guayaquil in Ecuador, Kingston in Jamaica, Buenos Aires’ two urban ports, San Antonio in Chile, San Juan in Puerto Rico, Buenaventura in Colombia, Caucedo in the Dominican Republic, Lázaro Cárdenas in Mexico, Limon Moin in Costa Rica, Veracruz in Mexico, Freeport in the Bahamas, Itajai in Brazil, Valparaíso in Chile, and Altamira in Mexico.

Yes, you heard that right. In this long list, Mariel is nowhere to be found. Castro triumphalism aside, we are talking about a marginal facility that goes unnoticed amid the extensive and consolidated network of Latin America and the Caribbean ports.

The U.N. Economic Commission for Latin America and the Caribbean (CEPAL) took a look at the volumes these ports handle and all of them clearly have figures much higher than the meager 300,000 TEUs that the Cuban press touts as evidence of Mariel’s success. The port of Colón alone moves more than four million TEUs, a volume so much greater than Mariel that it is hard to phathom. This does not stop Mariel’s deputy-director from trying to highlight the importance of the increase in containerized goods passing through the port.

But a measly 300,000 TEUs simply confirms that Mariel is a business failure. Despite all the time that has passed and all the money that has been invested, the port has still not been able to turn a profit. Business failures are a feature of Cuba’s communist regime. While other ports in the region benefit from the growth commercial and passenger traffic, Mariel is still trying — after three years — to get back to 2019 levels. Back then, what they call “infrastructure services to shipping companies” amounted to 800,000 TEUs. The master plan calls for a total capacity of three million TEUs using twenty-four Super Post Panamax cranes. We’ll see if they can make that happen but it does not look like it will be easy.

Meanwhile, the regime keeps on doing what it does: investing in hotels which remain empty because there aren’t enough tourists. So now it is focusing its investment strategy on Mariel in hopes of creating what the container terminal’s general director, Martín José Spini, describes as the continue reading

most modern infrastructure in the region. These Castro-era managers do not know how lucky they are not to have to answer to boards of directors keeping an eye on the cash flow and monitoring the return on their investments.

The regime, relying on an anachronistic view of maritime traffic, is convinced that it must invest in Mariel, and not just because it could be a possible source export earnings. They believe it could be an ideal transfer point, a stopover between Asia and ports in the Gulf of Mexico and the Caribbean. Someone should tell them that the Manila galleón — the old trade route that once operated between Spain’s colonies in the Americas and its Asian territories — dried up a long time ago. And 21st-century China sees no need to revive it.

Work is being done to enlarge the channel so that the container terminal — the primary user of the Mariel Special Development Zone — can accomodate Neopanamax vessels. These large ships measure 366 meters long by 52 meters wide, with and underwater depth of 15 meters. Dredging the channel, an expensive operation that was carried out in three stages, involved biological studies, environmental impact studies and technical-executive projects, all done entirely by GeoCuba Estudios Marinos.

As almost always happens in these cases, the regime is blaming Mariel’s failure on the Torricelli Act, part of the framework of economic, commercial and financial sanctions that make up the U.S. trade embargo on Cuba. According to the port’s management, the law hinders the ability of ships that dock at Cuban ports to later use U.S. ports, a limitiation that precludes, for the time being at least, the possibility of using Mariel for transhipments.

Okay, but everyone already knew this would happen back when Mariel’s Brazilian backers laid the first stone there years ago. The dispute with the United States has being going on for six decades so those who risked their capital on Cuba’s communist regime knew what they were getting into.

No one could expect a change in the status quo without the regime making some moves towards democracy and freedom. So no one can use the embargo as an excuse because it was an issue that existed before work on the Mariel project began. If the situation remains unchanged, the person responsible is the one who refuses to budge.

The Mariel authorities are trying to carry on with this adventure, knowing it won’t get them very far. They hope to do this by providing trade and transport services to ships that transit through the Caribbean on their way to other ports in the region, Asia and northern Europe. Their selling point is the chance to cut transit times and freight costs but they are clinging to an outdated idea of how trade works that makes little sense in these times.

Low TEU levels are not the only indicactors that Mariel is in crisis. There is also in the inadequate infrastructure that makes it unable to compete with the large, consolidated ports of Latin America and the Caribbean. It’s a wasted effort. Communist leaders should spend some time visiting ports like the one in Panama more frequently.


COLLABORATE WITH OUR WORKThe 14ymedio team is committed to practicing serious journalism that reflects Cuba’s reality in all its depth. Thank you for joining us on this long journey. We invite you to continue supporting us by becoming a member of 14ymedio now. Together we can continue transforming journalism in Cuba.