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 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
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