Cuba Does Not Need US Investment To Develop Its Economy / 14ymedio, Pedro Campos

No one explains why the abundant income from tourism, among other sectors, does not allow improvement in domestic investment. (EFE)

14ymedio bigger14ymedio, Pedro Campos, Miami, 2 February 2017 – A previous article addressed the economic policy of the current Cuban government to hinder the private economy – forbidding investment from Cubans on the island and abroad – and favoring foreign investment, mainly from the United States, which could lead Cuba to a situation of virtual annexation to the United States. Meanwhile it appears that allowing free investment, and allowing employers to hire workers directly, versus requiring them to contract only through the state, is something that the state-socialist system is not willing to accept.

But, does it have to be like this to develop the country? Does Cuba have to depend on US and foreign investment in general?

My clear answer is no. Cuba does need investment and the international market for its development, but it does not have to rely on US investments or foreign capital to develop its economy.

An analysis of four basic elements suggests that Cuba could solve its investment needs without having to turn to US or foreign capital in general, as the government, official Cuban economists and others suggest, who do not imagine the island anything but subject to the US.

 1. Due to the lack of transparency in the government’s economic data it is unknown what is or could be invested, how much is squandered in the bureaucratic treasury at all levels, how much is wasted in the bad paternalistic-populist democracy, or where that money goes. There is such a lack of transparency about the investments and payments of the nation, no one explains what so much money from taxes of all kinds, remittances, the sale of medical and professional services abroad, or tourism, is spent on, and the national investment is so low.

A change from the current hyper-centralization to democratic control of revenues and budgets should shed light on the existence of the enormous amount of capital currently being wasted

A change from the current hyper-centralization to democratic control of revenues and budgets should shed light on the existence of the enormous amount of capital currently wasted that could increase the amount to be invested from the nation’s own resources. We are thinking about the necessary reduction in the Armed Forces, the apparatus of State Security, the enormous services abroad, the big bureaucracy lazing around in all the ministries and their provincial and municipal branches, the outreach and propaganda apparatus, and the costs of the system of organizations of the “dictatorship of the proletariat.” How much money could be freed up for investments through these reductions?

 2. There are enormous fortunes within Cuba that do not display their possibilities due to the current limitations and their fears of being audited. If the inviolability of private capital and property were guaranteed by law and clear relations of free trade were established, this internal capital could be developed, private banks could be generated to facilitate loans to private entrepreneurs and associates, to import the means and resources necessary for internal development and economic movements and associations could strengthen their opportunities. There are imprecise calculations of the thousands of millions of dollars, Cuban convertible pesos, Cuban pesos, stored in banks and mattresses awaiting changes in Cuba.

3. According to different sources, Cuba is receiving between three and five billion dollars a year from remittances, sent back to the island by Cubans abroad. Much of that revenue is being invested in private businesses and another part in using the services they generate. So there is a positive predisposition in the diaspora to support micro-enterprises with micro-investments. If conditions were established in Cuba for the development of free enterprise, this small capital could grow enormously, multiply and expand in a few years.

 4. There is a great deal of capital in the hands of Cuban Americans in the United States, a part of which they would be willing to invest in Cuba if a new system of laws, in a State of law, guaranteed private property and free markets, independent of a future analysis of nationalization and compensation*. Because of their Cuban origin, and for some because of their historic ties with specific production sectors on the island, they would be in better conditions than any foreign capital to engage in the Cuban economy and push its development. They bring capital, techniques, knowledge, markets and transportation systems.

The interaction of these four factors would enable a self-sufficient economy, which should not be confused with the absurdity of an autarchic economy

Thus, by simply facilitating the internally accumulated Cuban capital, reorganizing that of the government, and favoring that of emigrants – large, medium and small – with full guarantees, Cuba could receive a large injection of capital of national origin, capable of changing the economic landscape in a few years.

It would not be necessary to have investment from the United States or from other foreign countries. There would be no dependence on American capital. It would not be necessary to be virtually annexed to the United States. Cuba would trade with the United States like the rest of the Caribbean, the American continent and the world.

The interaction of these four factors would enable a self-sufficient economy, capable of generating, itself, the means and resources to resolve the needs of the population with domestic products, exchanged or acquired in the international market. This should not be confused with the absurdity of an autarchic economy that tries to survive without an external market.

How to do this will be the subject of another article.

*Translator’s note: “Nationalization and compensation” refers to the nationalization of private businesses and property in the early days of the Revolution, and the demands on the part of some for compensation for what was taken from them.