Category: Elias Amor Bravo

This decision has been surprising, because since the start of the Ordering Task**, the Central Bank reminded the population on several occasions of the deadlines stipulated for the exchange of currency during the currency unification process. On the one hand, commercial banks would continue to exchange convertible pesos (CUC) for Cuban pesos (CUP) in cash at bank branches until December 30, 2021, the date of the initial term of 180 days granted in the Resolution No. 178 of June 15, 2021 to carry out this operation, as published by that institution on its website expired six months later.

On the other hand, the same resolution established that it would only be until March 31, 2022 that the accounts in convertible pesos for on-demand savings, fixed-term deposits and certificates of deposit of natural persons would be kept in that currency. During this period, the holder could decide whether to convert the account to Cuban pesos or opt for the certificate of deposit in foreign currency, according to the conditions established for this product. There were no other alternatives for the destination of those deposits.

There was so much insistence on the urgency of this change that many people went to formalize the established exchange operations, even with significant losses in value. Already at that time, the price of the dollar against the peso in the informal market exceeded 100 units at times, completely eroding the purchasing power of the national currency. Opting for the exchange at that time was unprofitable, especially considering how little could be bought with Cuban pesos. Now, it’s worse.

Therefore, extending, as they have, the period to keep deposits in CUC until December of this year is a decision that entails risks for the holders of CUCs, and that the regime, only concerned about making cash for the State, cares little that this is so. The option of converting the account to Cuban pesos makes little sense, due to the loss of value affected since 2021 by the 77.3% inflation that has reduced the real value of the deposits to 30%.

On the other hand, turning these accounts into the deception of the certificate of deposit in foreign currency is even worse, if one takes into account that this type of format can become uncollectible, considering the prospects for the circulation of foreign currency in the national economy.

As has been pointed out on previous occasions, the certificate of deposit in MLC (freely convertible currency) is an example of a “financial corralito” [bank freeze] created by the regime to appropriate the currencies contained in these deposits in CUC or dollars or euros, which follow the same pattern.

This modality of certificates of deposit is inefficient for savings at times like the present, when exchange rates between currencies are distorted by inflation and the negative dynamics of the Cuban economy, with all its sectors paralyzed. If someone needs that money in foreign currency at some point, forget about the certificates because availability will last a long time. It would be a serious mistake.

In the case of “collaborators,” the resolution details that they may request, from their account in Cuban pesos, to fully or partially convert the balance they had at the end of December 2020 in their accounts in convertible pesos, to a certificate of deposit in foreign exchange. Here the corralito is ready.

In this case of collaborators, the power of attorney is allowed, in cases where the holder of the bank account is abroad, to convert the total or partial balance of the accounts into convertible pesos for on-demand savings, fixed time deposits and certificates of deposits in foreign currency, provided that the representation is accredited by special power of attorney. Such is the urgency that the authorities do not hesitate to impose limitations. The objective is to control those currencies deposited in the accounts, as soon as possible.

Finally, the resolution states that there will be no more terms, and, therefore, bank accounts for current savings, fixed-term deposits and certificates of deposits in convertible pesos of natural persons, in that currency, as of 28 December 2022, are automatically converted to Cuban pesos, at the exchange rate of twenty-four Cuban pesos for one convertible peso, in the modality and term originally contracted, and generate interest in this currency at the corresponding rate. A mandatory warning that involves many legal problems.

These postponements are coming to an end, but if the previous guidelines are followed, the first objective of the Ordering Task, the unification of the CUC with the CUP, should have happened long ago. The reason that led the communist leaders to cause the worst crisis in the Cuban economy in recent decades, is still kicking in the form of bank deposits.

However, now, the terrible tourist campaign, and the non-entry of foreign currency, has led the regime to start capturing the deposits in dollars and CUC, which are in the hands of natural persons, and they have put an end to the conversion processes, and in addition: in only two ways: receiving pesos that are worth nothing, or contracting an uncollectible. This is how much Cubans matter to the regime. The umpteenth financial corralito in the history of Cuba, and it will not be the last. And then they want people to trust the banks.

Translator’s notes:
* CUC = Cuban convertible pesos, one of two currencies used in Cuba between 1994 and 2021.
**Tarea ordenamiento = the [so-called] ‘Ordering Task’ which is a collection of measures that includes eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso 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 others. 

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Yes, this is all very well; Díaz-Canel says and repeats that “there is, there is and there is”, but who is in charge of achieving that “there is”? Because, it is all very well to direct the economy with harangues, but that is not how you feed the people, you have to be practical.

Prime Minister Marrero also praised the plan and pointed out that “our job is the constant, realistic and objective updating of the Economic-Social Strategy, taking into account the processes that are being experienced” and then continuing with the perfection of the state Enterprise.

But let’s go to the data offered in the Granma report. The Council of Ministers has recognized that February “was once again a tense month for the Cuban economy, although certain indicators showed a more favorable situation compared to January, and also to the same period in 2021.” Tense is one way of naming the serious crisis that continues to affect the Cuban economy and that it is hopeless to hide.

Among the improvement indicators, “the plan for exports of agricultural products with a better performance in the markets” was cited. But don’t even think about food. The exports are rum, lobster, shrimp, honey, products that we Cubans are totally ignorant of. That maxim of exporting without satisfying the population’s demand is an insult to the intelligence of Cubans, but the Council of Ministers considers these exports of agricultural products to be an improvement.

The other data in which they see better behavior is tourism, but it is recognized that “it has not yet recovered from the resounding fall.” If tourism in January and February 2022 is compared with that of the last year before the pandemic, it does not even reach 20% of the figures then. Other than discreet advances, tourism does not raise its head. And it is insisted that this scenario is typical of Cuba, while the Dominican Republic has registered an exceptional first quarter in the tourist business.

The Economic and Social Strategy, which in its day was Díaz Canel’s protective shield against the serious consequences of the pandemic, was also pursued for its proposals to “oxygenate the economy faster.” But there is a feeling that, two years later, due to some blockage, that oxygen does not reach the lungs, and the economy is failing, suffocating with so many measures that are useless, acting only as patches in the face of very serious problems that require structural decisions.

And the communists recognize and applaud that they have to “increase production; improve the supply of food and medicines, and public transportation, anti-inflationary measures and stability in the electrical system,” but these measures remain in the statement, and do not come down to reality, and meanwhile, the Cuban economy languishes.

In the Council of Ministers, there was talk of the existence of different recognized economic actors, but for them, the proposal is not in line with more freedom and capacity for autonomy, but rather that “the State continues to fulfill its regulatory role, fully entering in the economic-financial, planning, control and management methods of private companies.” They say they want to reduce bureaucratic obstacles, but they do not renounce an ideological and outdated interventionism that seeks to put private companies at the service of the regime. A bad business.

There was also talk of the purpose “of expanding, in a more efficient and effective way, foreign investment in the country,” but at the same time they are messing around with an expropriation law that establishes differences between foreign and national capital that, one can be sure, will generate not a little uneasiness among international investors who are going to promote projects on the island.

Similarly, measures to deal with shortages were cited, “applying measures to internal trade that generate tranquility in the population, based on forms of marketing that allow, in a controlled manner, that goods arrive more equitably.” The answer is easy. Stop marketing agricultural products through the State company Acopio, give producers freedom to decide what, how much and at what price to sell, and free the markets, and you will see how the supply to the national market in pesos increases.

Of the socialist state company, whose “disadvantages with respect to other economic actors” were highlighted, the Council of Ministers insisted on its “fundamental role in the future of the nation” but once again, its actions go in the exact opposite direction in which they should go. It turns out that now they think that state companies can improve their performance thanks to “a political process of characterization of business management, which is telling us that we must make the policy of cadres in that sector more dynamic.” Let’s see if they manage that.

They also defended popular participation in all the processes of the nation, and insisted that “business decisions must also be brought to the workers. In our companies there has to be a different dynamic of participation.” What was missing.

This is to be developed with the “potentialities of the interface companies that have been created with the knowledge sector” the new science and innovation toy that has been given a certain role in the technological science parks. Pure and simple consulting business.

At this point, Economy and Planning Minister Alejandro Gil Fernández. took it upon himself to explain, in somewhat more detail, the state of the Cuban economy in February.

In his opinion, the most significant thing was that “the export of goods grew compared to January and also to the same period in 2021,” but he did not provide the data, so it is impossible to confirm his assertion. Of course, he said that the best exportable items were rum, lobster, sea shrimp and other fishery products; in addition to honey and nickel. The same as always. In addition, it is noted that between 2017 and 2020 these products barely represented 20% of Cuba’s total exports, so their impact in terms of income is reduced.

The deviations came when talking about food deliveries from Agriculture to the balance of the country. In February this affected the national production of rice, beef and pork. Basic food products for the population that are scarce. However, he pointed out that milk presented a favorable situation. Here if he offered the data, “little more than 31 million liters collected, which has affected, fundamentally, the increase in the price to producers.” Between 2017 and 2020, the average annual milk production in Cuba reached 538.8 thousand tons. The figure of 31 million liters cited by the minister is very low, in relative and absolute terms, barely 5%.

Minister Gil pointed out that in some agricultural products growth is taking place. And for this, he cited the comparison with the production of the first two months of 2021, to point out that today there are 77,378 more tons, still far from satisfying the demand. It is not easy to determine the satisfaction of the needs of the population citing tons of food, as if it were food for livestock. That lack of respect that leads to using indexes that insult the intelligence. The minister said, in relation to this issue, that he sees “the presence of products in the markets and greater stability in supply, which is essential to control inflation.” If he says so.

With regard to tourism, the minister pointed out that it can “achieve a better recovery, and of course, it pulls other sectors,” a controversial issue that is not clear about this “draft” as it occurs. He highlighted that 99,223 tourists arrived in February, representing 66.3% of what was planned, a figure lower than the plan, which he justified by the rebound of Omicron in the world.

He insisted that the figure foreseen in the plan for the end of the year will be 2.5 million international visitors this year. It’s difficult. The 99 thousand tourists in February barely represent 20% of those who arrived in the same month of 2019 before the pandemic. There is a long way to go, because tourism is still moving at levels 80% below pre-pandemic figures. One has to lower expectations.

Nor did retail trade adjust to the plan, reaching only 92.2%, although the minister believes that “there are possibilities to improve this indicator, based on a set of measures that are being worked on, with the aim of increasing offers to the population.” He didn’t mention what the measures are. In addition, in Cuba, the indicator of mercantile circulation is so affected by the amount of money in the hands of the public, that it is not a good measure of the economic situation, but of the lack of control of prices.

He referred to the data of MSMEs (micro, small and medium size businesses) and CNAs (non-agricultural cooperatives) created in the period being evaluated. In total, 470 MSMEs and 7 non-agricultural cooperatives, with which 6,758 new jobs were generated from these undertakings. Figures that continue to be low and that prevent the process from being described as a success.

He also spoke of the 439 companies with losses, more or less the same ones that have been in this situation since last year, and although he justified the results by saying that before there were around 500, the truth is that he stated that the number of countries without losses has to reach zero. In that sense, he explained that they are in “a timely review of each of these entities to identify the causes and, above all, the solutions.”

Undertaking the rescue operation of these companies goes through privatization or sale decisions that do not seem to be in the plans of the regime, but that would serve to overcome the serious situation in which they find themselves. The rest is nonsense.

He then referred to inflation and what he called “irrational prices, both in the state and non-state sectors,” which are going to be confronted with effective measures, although he did not state what measures are involved. Of course, he turned to delivering the outdated speech that pleases the communist audience so much, in the sense that “abuse cannot be allowed, one thing is the increase in costs, associated with the increase in the price of imports, and it is another to take advantage of the scarcity and to try to win two, three and even four times more.”

Hopefully the minister was able to understand what is one thing, and what is another. He would have an easier time in an economy where prices were not set by bureaucrats, but by supply and demand. He did not want to take advantage of the February data, which has placed the year-on-year inflation rate at 23.03% compared to 77.3% in December 2021. A good result, which, however, the minister did not want to assert. He will have his reasons for that, most likely a price rebound in the coming months. We’ll see.

In his opinion, to fight against inflation “you have to work at the base, where the economic event is generated, where products are being sold at exorbitant prices.” In this he agreed with this blog, when he said that the solution “is not only to issue a Resolution of the Ministry of Finance and Prices that establishes certain parameters, we must combat this, arguing with the cost sheets in hand.” Goodness. We are gradually approaching rationality, but without reaching it. Finally, Marrero took the floor to ask, surprisingly, for “more solutions of our own to the problems that the nation faces today, in the midst of a complex situation marked by a tightened blockade, the crisis generated by the pandemic, to which is added the conflict in Ukraine, which logically has an impact on our economy.” But is it understood that he must be the one to find those solutions.

Well no. He took advantage of his turn to make a call to businessmen, to groups at all levels, to look for variants that allow each of the problems to be solved, because we cannot sit back and wait, for example, for foreign currency to be allocated to us, today it’s not possible. So, in this governance model that Marrero has invented, what should the government do? Lock up dissidents?

Marrero said that we have to continue developing ourselves. Now more than ever, “each of us from our responsibility, we have to dress up to look for solutions, to find alternatives that allow us to continue advancing in the midst of so many complex problems.” And doesn’t Marrero believe that you can also advance and much better so with fatigues and rolling up your sleeves to work hard?

The Council of Ministers addressed the same issues as always, which according to Granma “has a great impact for the country,” such as the status of accounts receivable and payable after the deadline; the implementation of the comprehensive strategy for the export of goods and services; the economic effects caused by irregularities in foreign trade activities; and compliance with the Port-Transport-Internal Economy Operation.

Other issues of “great impact” were compliance with the plans to confront urban illegalities, prevention and confrontation with fuel theft, postgraduate academic training, master’s degrees, specialties and doctoral training, as well as the proposal to promote a development resilient and low in greenhouse gas emissions.

Surprisingly, in the Council of Ministers, two leaders gave an account of their management, in compliance with the provisions of the Constitution of the Republic, the governor of Guantánamo, and the minister of energy and mines. Terminations in sight? Movements on the bench?

With regards to the minister of energy and mines, Marrero considered the need to move to another stage in the development of renewable energy sources, and pointed out that “we need to speed up the transition to cleaner energies,” relying on the experience of companies in the Mariel Special Development Zone. Afternoon. Their time is running out.

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It is observed that this “forgetfulness” of the legislator is intentional, and confirms that the communist leaders do not have the slightest intention of advancing in the restitution of the private property confiscated in those years, which reached practically 100% of the productive capital of the nation.

This law should have opted for achieving the necessary reconciliation with the owners and their confiscated heirs, but there is not the slightest intention that this should be the case. On the contrary, weak legal foundations are established to regulate expropriation processes, giving the communist state an evident supremacy with respect to other economic actors.

The law that is presented is confusing, has a terrible wording, errors in the enumeration of articles and points, and introduces dangerous repressive elements that show the worst face of communist ideology, contrary to the free and peaceful exercise of property rights by all economic actors.

A good example of this is the reference in the final provisions to the obligation imposed on small farmers to properly maintain, exploit and use the land and their other assets related to agricultural and forestry production, in a clear warning about possible expropriatory processes.

A brief review of the text raises many problems. It treats foreign and national capital unequally in confiscatory processes, does not properly define the assumptions of public utility and social interest that should justify expropriation and does not refer to legal content, maintains forced expropriation with an alternative process and carries out a confusing regulation of compensation payments.

Critically, the main problem with this law — which invalidates it for international purposes and, above all, as a possible instrument to consolidate the foundations of the future of the Cuban economy — lies in the fact that it grants the state an absolute pre-eminence with respect to the non-state actors in the expropriation processes, which borders on the most significant defenselessness, while laying the foundations for a process for which there are serious doubts about the political will to bring it to an end.

A more detailed study of the law will be carried out in the coming days.

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Those businessmen, Spanish, Mexican, Dutch, Canadian, were specialists in the techniques of flirting with the left in their respective countries. This businessman told me that a friend of his, also Spanish, wanted to take a photo with Castro to show it to the unions of his company, the Spanish CCOO, strongly anchored in the left. The photo with Castro was clearly visible on the wall of his office when he had meetings with the union. Then he would remove it. The man hated Castro, but he had to pay a price for doing business in Cuba. As you know, ethics goes as far as it goes.

Then came the tributes from the Cuban communists to those who had risked their money in Cuba, and the busts of remembrance began to multiply in the parks and gardens. It is not known how many there are. They end up being abandoned testimonials to unknown people; many of them, having paid a great deal, for monuments. Sad. The last one that has come to us from the Island was the “collection” carried out among businessmen, many of them Spanish, to finance the construction of the “Fidel Castro museum” in several stolen Vedado mansions that, in due course, will once again become the property of their true owners.

And so, when we had not yet recovered from the bittersweet taste of the 20 million dollars given by those businessmen to worship the communist dictator, we received this report in the regime’s press according to which the first secretary of the Central Committee of the Communist Party and President of the Republic of Cuba, Díaz-Canel held a meeting with Leon Binedell, president of Sherritt International, which according to the State-run newspaper Granma is “a prestigious Canadian company in the mining and oil sector.” And I highlight the “prestigious” part, because Granma does not give this title to just anyone, and, furthermore, if it were not so, this company would not be able to take a souvenir photograph with Díaz-Canel.

As Granma adds in the brief note that accompanies the report (which seems more like a society note than anything else) “during the cordial exchange, held at the Palace of the Revolution, both parties discussed the potentialities that exist, even amid the tightening of the United States blockade, to deepen the participation of this company in the economic development of Cuba, especially in activities such as mining, oil prospecting and power generation.”

Wow, now it turns out that business can be increased with Sherritt, which is none other than Moa mining, and on the other hand, the Cuban communists shout to the heavens when they see that another Canadian company manages to re-establish the business of remittances to Cuba without having to go through the dark and lustful hands of state security and the army, who do not want to lose a share in this business that moves, dollar-up-dollar-down, about six billion a year. It is clear that with Sherritt they do not have this problem, and thus Ramiro Valdés and the Ministers of Foreign Trade and Foreign Investment, and of Energy and Mines, Rodrigo Malmierca and Liván Arronte, respectively, also appeared at the meeting.

Why yes with some and with others no? What are the communist leaders looking for with these types of meetings? Perhaps to drag Sherritt into the conflict with the United States that they do not want to resolve, or to show that these types of companies that are “obedient” are received by the “senior staff of the regime” while, on the other hand, those that do not behave well, will they ever receive such treatment?

The derivative is not this. You have to think what Sherritt gains from this report in Granma with the Cuban communist leadership. This company must have a top-level image department because there’s no free lunch. Obtaining a report like this, which will be seen by the global shareholders of this company, many of them restless and upset with doing business with a country as complicated as Cuba, is not easy and can have consequences.

At the moment, the president of Sherritt may have to face the corporate social responsibility committee of his multinational asking him a question about why do business with a country that does not respect and outlaws human rights. What is going to be done, the rules of compliance are what they are and if Mr. Leon Binedell wants to go to the financial markets in search of financing, he may find some clause against doing business with a political regime like Cuba.

It could be anything. Nothing happens naturally in communist Cuba. In this event there are winners and losers. They have chosen the moment (the prices of mineral raw materials are soaring in the world markets and Sherritt must be making a lot of money with Moa’s business in Cuba); and Díaz-Canel, who must have Putin screaming to high heaven because Cuba abandoned him in the recent United Nations vote on the invasion of Ukraine, siding with China, has used the occasion to improve his poor international image. I insist. In Cuba nothing happens by chance and this handshake between a top-level Canadian “capitalist” and a Cuban enemy of capitalism has to have some meaning. We will see.
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The only reason given by the minister, every time he talks about this issue, is that the stores in MLC emerged in 2019 (they are going to last three years when it was said that they were going to be temporary) “as the US blockade against the largest of the Antilles. Specifically, these stores were intended, according to the minister, to prevent foreign exchange from leaving the country by natural persons, then suppliers of the domestic market, to capture it and use it based on the development of the national industry and to maintain a stable level of offers. in pesos; but nobody calculated that an epidemic would make the situation even more complex.”

But if this really were the reason, then it would not be possible to understand how, later, the free entry of travelers through the airports loaded with suitcases with merchandise, such as food, cleaning products, medicines, or small appliances, was authorized, an authorization which has been extended for another six months. One thing does not agree with the other, and contradictions appear in the minister’s argument.

Are these stores in MLC a business of the communist state (commercial margins are 200% and 300% on some products), to fill their coffers with hard currency? Are they a charitable action to be able to finance the acquisition of goods abroad that are paid for in foreign currency? A way to collect as much as possible of the foreign currency that enters the country by any mechanism?

The only certainty is that, in October 2021, the minister explained in the National Assembly that 300 million dollars of the sales in MLC had been used to supply merchandise to the trade network in national currency. That is, by selling products in MLC, the communist state raised funds to buy goods abroad that were later sold to the population in stores that sell them in pesos. It shouldn’t have worked if you take into account that these stores are still empty.

That a country has to resort to this type of mechanism to buy goods abroad says very little about its economic potential and shows that the collapse of tourism, since the second half of 2019, has done a lot of damage to the regime. The exchange control that exists in the Cuban economy, controlled by the state through the Central Bank, paralyzes the country’s activity.  Then the ’blockade’ always comes as a justification, since, as the minister said, the dollars collected during the first months of the sale in MLC stores could not be used, “due to the blockade that has just celebrated 60 years of being formalized the receipt of US currency in Cuban banks had to be stopped, as of July 20, 2021.”

The “famous” decision to prohibit cash deposits of dollars in banks, a measure used by private recipients of remittances to refill the electronic cards which they later used to shop in MLC stores. The whole communist tantrum, as a result of the refusal of the United States to do business with companies controlled by the Cuban military and state security conglomerate.

The minister also made reference to the more than 6,000 containers destined for Cuba, with products to supply the stores in Cuban pesos and in freely convertible currencies, and that due to the world crisis “are paralyzed in international ports because there are problems with the shipping companies, with containers and freight costs have increased.”

If you don’t pay, there is no service. You have to get used to paying in cash, especially when you cannot access credit due to a bad history as a debtor. For the umpteenth time, the minister confirmed the transitory nature of the stores in MLC, and said that the objective is being met insofar as its period of time will depend on the recovery of the economy and it can provide the Cuban peso with a real capacity to purchase. And this is where he missed what is perhaps more important.

Provide the Cuban peso with real purchasing power? It is worth reminding the minister that they had ten years to think about the Ordering Task*, whose star measure began with the absurd devaluation of 2,300% of the Cuban peso with respect to the dollar (the largest in history) leaving the national currency in the toilet, with a fixed exchange rate that could never be supported by the central bank, since it lacked foreign exchange.

Mistakes of bad economics students, who did not understand the relationship between the value of a currency, in this case, the Cuban peso, and the fundamentals of the economy it represents. The peso was born broken, worthless, and the informal market has been in charge of showing the minister what it is worth and what its real purchasing power is, after the Cuban economy has suffered a 77.3% variation rate in 2021 year-on-year inflation, one of the highest in the world.

That is why now, the minister is facing a scenario of adjustments and consolidation of spending that he should be afraid of, because it usually ends in the form of a social explosion, such as the one that occurred last July. Decisions such as those adopted by the Ordering Task make us lose the little confidence and credibility that we have in the Cuban communist regime, and for this reason, the dollar will continue to rise and drag down the peso as happened in the Special Period. And it is most likely that the minister will continue to blame everything on the ’blockade’. He has for a long time.

But coming down to reality, the problem with the stores in MLC is that they are profoundly unfair and do not fit easily into the populist paradigm of the Cuban communist regime. How can it be accepted that those who live off the dollars sent by the exile ’gusanos’ (worms) live much better than those revolutionaries who receive miserable salaries and pensions in pesos? How can it be allowed that the farmer who sells cassava in Cuban pesos has to change to dollars to buy tools or supplies in dollars in stores in his own country? Where are you trying to get to with the stupidity?

The minister clumsily justifies himself by saying that “if tomorrow we put these goods up for sale in national currency they will last 15 days and then there will be neither neither hard currency nor pesos.” Well, and why don’t you explain the reasons that lead to this scenario, which does not exist in other countries of the world, and not the alternative that can lead to companies, when faced with growing demand, simply doing what they have what to do, what is to produce more? Has the minister stopped to think why that link between demand and supply is non-existent in Cuba? Is that why there are no domestically made canned sodas or floor mop-clothes?

The unfortunate and shameful thing is that it is said that the stores in MLC are “a measure of social justice because it allows us to redistribute the currency based on the supply of the commercial network in pesos.” Fake. Why does the currency have to be redistributed? In whose hands is it and why can’t distribution companies manage changes based on their operations? Why this suffocating control of the economy that does not let it work? An exchange rate system that does not depend on political and interested decisions of the regime would work much better, because it would serve the needs of economic agents. Much has been said about eliminating obstacles, the minister already knows where they can start.

And now, to make matters worse, inflation hits the whole world hard, and it can only be resolved, and the minister is right about that, if an increase in product availability is achieved by the state, or by anyone, in national currency.

It is true that this cannot be achieved overnight, but since 2019, when the stores in MLC have been operating, there has been plenty of time to overcome the problems of agricultural and industrial shortages, and of all kinds of services.

The minister really knows that there is something in the Cuban economy that prevents it from achieving these objectives and that it is not outside, but inside, and that we call it “internal blockade.” Much more serious than the other, and based on the fact that the regime does not want to lose control of the economy at the expense of economic actors.

*Translator’s note: Tarea ordenamiento = the [so-called] ‘Ordering Task’ which is a collection of measures that includes eliminating the Cuban Convertible Peso (CUC), leaving the Cuban peso 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 others. 

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COLLABORATE WITH OUR WORK: The 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.

nothing more than patches on faulty marketing, contracting and scientific applications. They did not yield the expected results. Agriculture has remained stagnant, waiting for opportunities to open up in the private sector and for property rights to be restored. Vietnam provided these opportunities and, in little more than five years, famine was a thing of the past.

Recently, the State newspaper Granma has been reporting on the latest experiment. The government now says that agricultural producers whose crops are exported will be guaranteed a percentage of the proceeds in the form of hard currency. This is part of a package of measures (no less than sixty-three) that, the government complains, “farmers do not know about because they do not read them.” Meanwhile, Cuban farmers ignore the new regulations and go about tilling their fields, trying to find a solution to the many obstacles the system puts in their way.

Granma stated, “Some eight months after these measures took effect, changes are beginning to be seen in agricultural and livestock performance, with better numbers in the supply of milk, meat, fruit and honey… yes, though still far from satisfying current demand.” Curiously, however, the economics minister, Alberto Gil, looked at his balance sheet for the first nine months of this year and acknowledged a few days ago that no agricultural production targets were met. So who’s right?

But back to the issue at hand. According to Granma, the measure that has had the greatest impact is the one that gives farm producers a percentage of the proceeds in freely convertible foreign currency (moneda libremente convertible or MLC), which they can use to buy supplies to increase production and support their families.

The question is, why do they only get a portion of the proceeds and not the full amount? What is preventing producers from being able to reap the full rewards of their time and effort? Why is the state extracting all the income and wealth rather than relying on the tax system?

The Granma article describes a situation in Guantanamo where — and here comes the good part — there has been a significant “decline in the number of MLC debit cards issued to farmers who, without these cards, cannot receive the hard currency they have earned from the export of their products.”

Damn! So who has that money now? To provide some idea of the scope of the problem, Granma reports that, of the 20,000 fruit, vegetable and livestock farmers in the province, only 300 have these cards. The numbers speak for themselves.

The regime now requires MLC cards be used for a growing number of retail transactions to prevent foreign currency from circulating freely as cash, as farmers would prefer. One would assume, then, that the regime would see to it that its inefficient state-run banks would get the cards out quickly. Though the cards are essential to the whole MLC operation, that is not happening.

They trot out the usual excuses, which boil down to two things: reduced operational capacity due to Covid-19 and low interest on the part of consumers, who have made little effort to acquire the cards since efforts were made to streamline the process in November 2020 as part of currency unification reforms.

Anything that could stimulate agricultural production, though we have serious doubts this is even possible, is always delayed or stymied by the inertia of the government sector. The same could be said of the banking sector as well, which also has no incentive to make sure things work.

On the one hand, the banks do as they are told. They require farmers to open  accounts in person, in spite of the threat from Covid-19. Small farmers open bank accounts without a clear idea what they will get out of it. When they later encounter roadblocks, chaos is unleashed. Imagine how that turns out. Very badly indeed.

So far, only a few bee keepers and those who pay taxes to the Milk Company have been issued cards. And as Granma points out, many have not gotten them because bureaucratic rules require producers to provide copies of their lease and their ID cards to open an account.

Then the merry-go-round begins. The communists always manage to entangle everyone in their problems. On the one hand, officials say the country wants everyone to get what he or she deserves for his or her time and effort while at the same time claiming that MLC cards will help the economy.

To achieve that objective, every agricultural producer will need extra support because not all farm cooperatives have the computers and infrastructure needed to achieve this. In other words, farmers toiling in the fields will have to be computerized. How many Cuban peasants do you think have access to this technology?

Producers are more interested in being left alone to do what they do, which is tilling the fields. It is not clear to them why they would need a plastic card — many, in fact, are using the cards they already have to run their operations — especially when they are being told from on-high to get one even though it does not address their specific needs.

Add to that the banks’ complicated and cumbersome management of the cards, and delayed payments from the state. The benefit of the new card is that it would allow farmers to receive something from the sale of their exports. But if they are not receiving the full proceeds from those sales, why would they be interested? Then there are the payments producers have still not received for the crops they have already delivered. This further erodes confidence in the state, which has a reputation of not paying its bills and currently runs a deficit equal to 20% of GDP.

Officials should be encouraging economic actors to focus their attention on the things that really matter to them, not on red tape and communist craziness. If there are entities that are selling things online and generating significant hard currency income that they can later use to buy things in government-run MLC stores, let them keep doing it.

If economic actors benefit from entering into joint ventures or other cooperative business relationships, let them do it if they serve the interests of all parties. These are the keys to a functioning economy, which Cuban communists have made impossible for six decades. A return to rationality and efficiency is necessary but it is not enough to overcome backwardness and supply shortages.

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For the Electrical Union, the origin of the problem came from the greater impact on “peak hours.” which was 480 MW at 7:10 at night. Later, at 8:26 pm, Unit 1 of the CTE Ernesto Guevara (80MW) was incorporated, while Unit 2 was damaged by a leak in the furnace. It was not enough. This was followed by “service disruptions,” a convenient term, throughout the early hours of October 27, as a consequence of the reported breakdowns and, also, due to the behavior of the demand, which exceeded what was expected by 100 MW. From 2:00 am, the impact remained below 100 MW and, as of 6:02, the service was restored. Four hours of blackout.

At 7:00 in the morning, the availability of the national electrical system was 2,080 MW compared to a demand of 2,020 MW “with all the load served,” almost at the limit. As of 9:00 am, possible blackouts were noted again, this time due to a generation capacity deficit, with a maximum of 250 MW.

The information from the Electrical Union indicated that Unit 2 of the Ernesto Guevara CTE, unit 6 of Diez de Octubre,  Unit1 of the Lidio Ramón Pérez CTE and Unit 5 of Antonio Maceo remained out of service due to breakdowns. Meanwhile, maintenance work was being carried out on Unit 4 of the Antonio Maceo CTE. In addition, limitations persisted in thermal generation with 698 MW. As a consequence of the foregoing, 1,038 MW were not available in distributed generation and the breakdowns mentioned, and 329 MW corresponded to Units under maintenance.

The statement said that Unit 1 of the Lidio Ramón Pérez thermoelectric plant, which completed its hydraulic test, could improve the situation once again in the national electricity service. The Electrical Union indicated that for the peak hours of October 27, the incorporation, in addition to Unit 1 in question, of the CTE Lidio Ramón Pérez (260 MW), of the Rincón (15 MW), and Varadero (17 MW). An availability of 2,734 MW and a maximum demand of 2,700 MW were estimated for the “peak,” for a reserve of 34 MW. This meant that, given the low levels of reserves, the authorities ended up recognizing that blackouts could occur.

A new note from the Electrical Union regarding October 28 highlighted that there were no blackouts in the electricity service in the morning and afternoon. However, as of 6:14 p.m., the service began to be affected due to a generation capacity deficit. During peak hours the maximum impact was 247 MW at 7:30 p.m. As a consequence, from 9:31 p.m. there was a blackout of 3 hours and 17 minutes. The electricity monopoly apologized for the inconvenience to those who wanted to rest by watching television or listening to the radio.

Next, the causes of the blackout were explained again, starting with the exits of Units 5 and 7 of the CTE Máximo Gómez de Mariel, the delay in the entry of Unit 2 of the CTE Ernesto Guevara, which synchronized at 19:59 hours, as well as the increase in demand above the planned 62 MW. Later, at 11:08 p.m. due to the unexpected departure of Unit 6 of the Máximo Gómez CTE (90 MW), another blackout occurred, with a maximum of 80 MW, which was reestablished at 12:01 a.m. on the 29th.

The electricity monopoly indicated in its statement that the availability of the national electricity system at 07:00 hours was 2,183 MW and the demand 2,045 MW with all the load served, estimating that there would be no power outages due to a deficit in generation capacity during Friday morning and afternoon, to maintain the expected conditions. And this is the question, how difficult it is to maintain those conditions.

The Otto Parellada CTE and the Máximo Gómez CTE Unit 5 remained out of service due to a breakdown, waiting for someone to repair them. Unit 3 of the Carlos Manuel de Céspedes CTE was out of service for condenser cleaning, Unit 6 of the Diez de Octubre CTE and Unit 4 of the Antonio Maceo CTE were under maintenance, also ceasing to supply electricity to the grid. At Energas Varadero, 40 MW in the steam turbine was out of service and at Energas Boca de Jaruco so was a gas turbine with 30 MW, so the limitations on thermal generation were maintained (425 MW).

For the Friday peak, the electricity monopoly predicted several Units would come on line, specifically Unit 3 at CTE Carlos Manuel de Céspedes with 130 MW; Unit 5 of the CTE Máximo Gómez with 30 MW; Unit 6 of the CTE Máximo Gómez with 85 MW and an engine in the CDE Mariel with 5 MW, with the use of 291 MW in diesel engines. Under these conditions, an availability of 2,761 MW and a maximum demand of 2,650 MW were estimated for peak hours, for a reserve of 111 MW. So if these conditions were maintained, no blackouts were foreseen, although the reserve levels were low at this time.

These statements, appearing almost daily in the communist state press, with the same justifications of outages, breakages, lack of maintenance, disconnections of power plants, peak hours, etc., etc., not only end up tiring the population, but also come to confirm what Minister Gil said in his analysis of the economy before the National Assembly, placing “blackouts as one of the nation’s main problems, and one of the most difficult and complex to solve,” at least in the short term. In any case, who compensates Cubans for the blackouts, and how? This is an issue that is not discussed, but it is essential to put this situation in order.

The minister made a more general analysis of the matter, with reference to the energy shortage and its high cost, but also cited these problems and mechanical breakdowns, to to justify the unjustifiable. He did not tell the truth. And the electricity monopoly, in its communiqués, I’m afraid, did not either, going for the technological nonsense, without allowing the Cubans to really know what the origin of the problem is.

The Electrical Union functioned relatively reasonably in providing its services before January 1, 2021. Yes, of course there were blackouts, but much less so than now. In fact, during the closures of the pandemic, in Cuba there were almost no blackouts. It is a phenomenon of the moment, and that is related, on the one hand, to the small rebound in economic activity that is taking place on the Island, after the end of 2020.  The communists not only had not foreseen that to meet growing needs for electricity there need to be more production on the grid.

On the other hand, nobody wants to agree that, after the increases in electricity rates agreed to in the “Ordering Task*,” people were going to protest, as in fact happened. Electricity rates rose exponentially as of January 1 because the monopoly had no choice but to face wage increases without productivity benchmarks that compromised solvency. But the new rates were immediately questioned by all social sectors, forcing the regime to back down, thereby compromising the supply levels of the state monopoly, which are highly sensitive to prices.

The subsequent story is known. Who could be interested in providing a service, even a minimal one, when the prices charged to consumers do not pay them properly and they have to face imposed wage increases without reference to productivity?

It is already known that no leader of the Cuban economy will speak of this, but it is the origin of the problems with the blackouts and with many other sectors of activity. The Home Services price index prepared by the ONEI (which included electricity) increased by 152.8% in the interannual rate as of September, almost 90 points more than the average inflation rate, of 63.3%. The Ordering Task has upset the weak balances of the Cuban economy, specifically the relative prices of goods and services, and the blackouts will continue until the electricity monopoly restores its profitability and ensures the availability of resources to cover its very high costs (the regime seems to think that it no longer want to grant more subsidies and this cannot end well).

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COLLABORATE WITH OUR WORK: The 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.