14ymedio, Elías Amor Bravo, Economist, 11 February 2023 — Communist leaders bet on foreign capital rather than national capital. They admit that private entrepreneurs come to Cuba to make a profit and do business, but they prevent it for nationals. The last thing has been the expansion of the so-called Portfolio of Opportunities to attract foreign investment to the agricultural sector. It seems like a lie. Any government interested in defending the interests of its citizens would never act this way. The investment of foreigners is the last resort when all possible options have been explored with nationals. This commitment of Cuban communists to foreign capital is a sign of the distrust they have in Cuban private entrepreneurs, who are relegated to the background.
Apparently, it has now occurred to them to allow agricultural cooperatives to be associated with foreigners, but they limit the possibility to businesses of production and marketing pork, chicken, milk and others aimed at local development. Obstacles and more obstacles in a country that works at 20% of its potential due to the ideological obsession of the communist economic model.
Many of us think that the Cuban agricultural productive sector could work much better if it had the freedom to do so, if it were privatized and the means of production were directed to generate national wealth and employment. For the development of a country, foreign capital can be a good option when national investment cannot function. But in Cuba in the last 64 years, they have not wanted to explore this option, and there is a prostrate, weak, inefficient economy, controlled by the state and subject to communist interests.
Faced with this situation, Law 118 was devised, but it has not yielded the desired fruits because its definition was incorrect. It is not possible to attract foreign capital to a country if its national companies are dead, as is the case in Cuba. The regime’s efforts to increase the number of projects in the so-called Portfolio of Opportunities have not borne fruit except in very specific sectors. The vast majority of Cuban economic activities are on the margins of foreign capital and, of course, far from the real possibility of use by the Cuban private sector.
The attraction of foreign investment to the agricultural sector does not depend on the flexibility of conditions or on opening the projects to cooperatives. This works only for those who are determined to fulfill the plans but don’t care about the results. Attracting foreign capital to the cooperative sector in certain businesses goes against the very concept of a cooperative, which is an entity that organizes work activities where, coincidentally, capital takes a back seat.
You have to ask what foreign investor would want to form a cooperative with Cubans or what the point would be of opening this organizational form to capital, when its priority is the labor factor. In fact, the cooperative distributes its benefits among the workers for its own raison d’être. How can the foreign investor gain income as one more cooperative participant? Who came up with this absurd idea?
We are not against foreign capital, which is fundamental for technology, organization, finance and many aspects of the economic process. But what we are against is the regime’s policy of royalties to foreign investors from the nation’s productive capital, until now, 90% state. Wouldn’t it be more appropriate for that productive capital to be privately owned by establishing a respectable legal framework for property rights?
The Cuban economy cannot reach its potential if the assets aren’t private. There is no point in nonsense activities such as vegetal charcoal, honey, cocoa and coffee, or nature tourism. The Foreign investor wants to know with whom he will risk his money and technology, and this does not depend only on the qualification of the experienced workforce or the existence of research centers. The legal framework of property rights is fundamental, and if the multiple unknowns that exist are not clear, foreign investment will not grow.
The Cuban agricultural sector is far from attractive to the foreign investor, but if it were exploited by the private sector as a whole, the results would be very different. It is unheard of that in 2023 and with the problems of lack of food in Cuba, almost 20% of the farmland is not in use. Long-term leases have not served to grow production, because the farmer and rancher want the means of production to be their property. Why is the foreigner allowed to take over the means of production for investment while nationals are prohibited? How long can this discrimination that doesn’t exist in any other country in the world be maintained?
The regime should be aware that increasing production, reducing imports and creating more exportable resources is not achieved with foreign investment. There are the results of tourism. The national private sector must assume ownership of property rights and lead the national economy. Vietnam did it and left its famine behind.
Foreign capital doesn’t give a damn about reducing the gap between the countryside and the city, creating better living conditions in rural areas or fixing the problem of housing and infrastructure. This could be driven by an economy of private agents, oriented by private property and the market to allocate resources.
There is no alternative model because communism went into crisis after the collapse of the Berlin wall, and no one gives it the least viability. Turning 180 degrees and beginning in the Cuban countryside makes perfect sense. It would be a good way to forget about that traumatic experience of the Agrarian Reform Law and start over. It’s never too late if the ideas are the right ones.
Translated by Regina Anavy
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