Churches Help Cubans through Economic Transition

Evangelical church in Havana, Cuba.

The aging revolutionaries who have controlled Cuba for the past 50 years, haven't trained younger leaders to take their place.

That became evident at the long-awaited Communist Party Congress in April, when 79-year old Raul Castro was named the party's first secretary, and the number two spot went to an 80-year-old.

A feeble Fidel Castro, 84, made a surprise appearance. This was the first time in the Congress' history that he wasn't included on the powerful central committee.

That post went to his brother Raul, who admitted that Cuba has a succession problem. Raul Castro made a surprise recommendation of term limits for politicians -- including himself.

"We have reached the conclusion that it is recommendable to limit to a maximum of two five-year consecutive terms all the state's fundamental political positions," he said.

But that's not the only problem that keeps Cuba among the poorest nations in the Americas.

The government employs eight out of every 10 Cuban workers, a dead weight the economy can't sustain.

Raul Castro knows the country has to shed its Communist baggage, but as the new party leader he made a pledge to the faithful.

"To defend, preserve, and continue to perfect socialism and never allow the return of the capitalist regime," he said.

"Cuba right now is in a state of great confusion between shifting from purely a Socialist Communist system to a quasi market system," said Teo Babun, leader of the Miami-based charity Echo Cuba.

"Not quite at the acceleration of China or Vietnam, and not knowing where they're going," Babun said. "But being very cautious not to let this whole thing get out of hand for them."

Last year, Raul promised to reduce the bloated government payroll by laying off half a million workers.

While the the massive government layoffs haven't happened, the uncertainty has left many Cubans on edge. Now, many evangelical churches are helping their members create their own jobs.

"What the more aggressive churches have been doing is allowing the individual members of the churches to partner with organizations outside of Cuba that will help them start small businesses and therefore become tithers, for example, to the churches and supporters of the social programs that the churches are running," Babun explained.

With the help of Echo Cuba, Cuban evangelicals have started more than 1,200 small businesses.

"We select Cubans within the churches that are entrepreneurial. We help them write a business plan, guide them in the process of how to start their business, and then bring them a 'business in a box,'" Babun said.

"Everything that they need to start a business is basically purchased outside of Cuba and brought to Cuba so that they can get things going," he said.

But the budding entrepreneurs first have to forget what the Communist government has taught them for the past 50 years.

"The Socialist model of Cuba, starting in 1959, [has] one head, everything coming down," Babun continued.

"They really don't understand how to meet together, how to create collaboration with each other, how to make decisions in a meeting format," he said. "All those things that we take for granted, they don't understand it."

If churches are to help members survive Cuba's economic crisis, they must learn the basics of a free market economy.

Once Christians start their own businesses, Babun said other freedoms may follow.

"The freedom to be able to operate not only in the marketplace, but also in their place of worship," he said. "Freely, without any kind of restriction from any form of government."

Stan Jeter

Source: CBN News

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Cuba: Bloggers Reflect on Reforms at Communist Party Congress

The sixth congress of the Communist Party of Cuba (PCC), which was held in Havana from April 16 - 19, may have marked a major turning point for the Cuban economic system, and for Cuban society at large.

As detailed by the BBC, party members approved measures to institute term limits for top party and government leaders, legalize home ownership and sales, and restructure state salaries so that they will be determined in part by the amount and quality of labor performed by workers.

While many US and European news organizations viewed the changes as a great stride towards a market economy, with headlines like “Havana frees up markets—with a caveat” (The Miami Herald) and “Raúl Castro apuesta por reformar la economía y el Partido Comunista en el VI Congreso” [es] [“Raúl Castro is committed to reforming the economy and the Communist Party at the VI Congress”] (El Pais), the rhetoric of the congress itself demonstrated a commitment to strengthening and modernizing, but not marketizing, Cuban socialism.

Bloggers in Cuba, and those who follow Cuba from other parts of the world, offered a diverse range of reactions.

Deisy Francis Mexidor, author of Kimbombo que resbala [es], asked various Cubans for their opinions on the proposed changes. Many were enthusiastic about the ideas proposed, but concerned about how they would be implemented. A journalism student interviewed by Mexidor commented that,

"[La] cuestión es cómo se logrará mantener el socialismo como proyecto sin caer en la economía de mercado.

The question is how we’ll be able to maintain the socialist project without becoming a market economy.

Another interviewee, the manager of a state-owned business, remarked,

"[D]ebemos ser capaces de lograr una mayor productividad, de bajar los gastos y hacer las cosas con mayor eficiencia, de lo contrario no se puede hablar de elevar salarios.

We should be able to achieve greater productivity, to lower production costs, and to do things with greater efficiency—if we can’t do this, we cannot talk about raising salaries."

Pedazos de la isla [es] interviewed various bloggers and journalists who are known for their criticism of the government, including Laritza Diversent, of Las leyes de Laritza [es]. Diversent noted that while some Cubans closely followed and opined on the Congress, many were ambivalent about the outcome because of the lack of progress in years past.

"Desde mi punto de vista el Congreso fue totalmente intranscendente, porque una cosa es lo que hablen ahí, y otra cosa es la que se haga. […] No hay una restructuración del partido o una restructuración democrática.

Pero nada de esto tiene ningún tipo de importancia entre los ciudadanos dentro de Cuba. No tiene ninguna importancia como yo creo que tiene afuera de Cuba. Por supuesto, es porque muy pocos cubanos le interesa la política, o no la entienden, precisamente por estos “va y bienes” de que hoy deciden algo, mañana deciden otra cosa, y entonces vuelven a cambiar. Por toda esta inseguridad nosotros no le hacemos ningún tipo de caso a ese Congreso.

From my point of view, the Congress was totally insignificant, because what they say is one thing, but what they do is another. There is no restructuring of the Party, nor is there democratic restructuring.

But none of this is important for the citizens of Cuba. It has no importance in comparison to the importance it has outside of Cuba. And this is precisely because very few Cubans are interested in politics, or they simply do not understand it. And they feel this way because of the “back and forth” of the government, while one day it says one thing, tomorrow it’ll say another, and so on. Because of this insecurity, we do not pay any attention to this Congress."

In the most radical change brought by the Congress, Raúl Castro himself proposed that top-level positions be limited to two, five-year terms. He emphasized the need for current leaders to encourage and educate younger politicians who would ultimately form the next generation of government on the island, and lamented the party’s inability to do this in the past. Contrary to this rhetoric, the party has elected the now 80 year-old Jose Machado Ventura, former party secretary and an original member of the July 26th Brigade, to the vice presidential seat that was left empty when Raúl took leadership of the country in 2008.

The irony of this choice has been criticized by Cubans on various sides of the political spectrum. Blogger Rogelio Díaz, author of Bubusopía [es] criticized the government’s inability to move forward, in spite of the consensus that this will be the only way for the original revolutionaries to build a sustainable legacy.

"[Lo] más preocupante es que [el liderazgo] todavia está en manos de los mismos sujetos estancadores de todo lo bueno y dinámico y prometedor y renovador y revolucionario de etapas anteriores.

The most worrisome part is that leadership is still in the hands of the same, now stagnating, originators of the great and dynamic and promising and innovative and revolutionary developments of past eras."

Octavo Cerco’s Claudia Cadelo [es] expressed a similar sentiment, writing that the implementation of the economic and political reforms agreed upon by the Congress could only move forward with new leadership in place.

"[Raúl] sabe, tiene que saberlo, que sus promesas sólo se cumplirán cuando él ya no esté en el Comité Central, cuando ya no sea el Primer Secretario de ningún partido, cuando verdaderamente una nueva ola de cargos públicos asuma los poderes.

[Raúl] knows, he has to know, that his promises will be fulfilled only when he is no longer on the Central Committee, when he is no longer First Secretary of any party, when a truly new wave of public officials assume power."

Ellery Roberts Biddle

Source: Global Voices

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Acts of bravado hardly the panacea for failed states

Mugabe and Castro, two losers in power for decades.

Lots of my friends studied in Cuba. When they returned after four years on the Caribbean Island they waxed lyrical about the great revolutionary Fidel Castro. None of them had anything bad to say about him. One of my greatest wishes therefore was to meet this great icon before he or I died. Now because of his poor health this might not be possible or even necessary!

It has become clear in the past few months that my friends had been allowed to see, or had not been inquisitive enough to discover, what was really happening in Cuba. They were beneficiaries of Castro’s magnanimity and our own government encouraged a view of the island that was beyond reproach.

But I had my own fears. A few years ago the high-profile defection of two Cuban doctors working in Zimbabwe had awakened in the minds of even the least sceptical that “everything was but what it was not”.

Last September Castro confirmed in his own words that his economic model no longer worked even for Cuba.

He told Jeffrey Goldberg, a writer for the Atlantic Monthly magazine that “The Cuban model doesn’t even work for us anymore.”

Even in that statement Castro was being economic with the truth. Soviet-style socialism never worked for Cuba in the 50 years that he was forcing it upon his country.

A week ago Castro’s party, the Communist Party of Cuba, was meeting to discuss a raft of reforms that would, it was hoped, transform the country into a modern state and, more importantly, save the moribund party.

That meeting coincided with the 50th anniversary of the Bay of Pigs.

On April 17 1961 about 1 300 exiles, armed with US weapons, landed at the Bay of Pigs on the southern coast of Cuba. Hoping to find support from the local population, they intended to cross the island to Havana.

It was evident from the first hours of fighting that the exiles were likely to lose.

President JF Kennedy had the option of using the US Air Force against the Cubans but decided against it. Consequently, the invasion was stopped by Castro’s army.

By the time the fighting ended on April 19, 90 exiles had been killed and the rest had been taken as prisoners. The invasion made Castro wary of the US. He was convinced that the Americans would try to take over the island again. From the Bay of Pigs on, Castro had an increased fear of a US incursion on Cuban soil.

This was a heroic moment for Cuba for successfully defending its sovereignty but it also defined how Cuba was to operate in the next half century.

Because of the paranoia that resulted from the Bay of Pigs episode Cuba has been defined by little acts of bravado that brought economic stasis.

In the interview with Goldberg Castro even criticised his own actions during another little act of bravado, the 1962 Cuban Missile Crisis, when he urged the Soviet Union to launch nuclear weapons against the United States, telling Goldberg “it wasn’t worth it at all”.

How many other acts of the Communist Party of Cuba were not worth it at all? Sports boycotts, for example, were they worth it? And these were many.

For political reasons, Cuba boycotted the 2002 Central American and Caribbean Games in San Salvador, El Salvador. In 1987, Cuba did not compete at the Women’s World Junior Volleyball Championships in Seoul (South Korea). The reason: there were no diplomatic relations between Cuba and South Korea.

For political reasons, Cuba did not send a baseball team to the 27th Baseball World Cup in South Korea in 1982. Cuba boycotted the 1988 Olympic Games in South Korea.

Cuba sent only seven athletes to the 2007 World University Games in Thailand, heeding Fidel Castro’s fears about future defections. But the 1991 Pan American Games were held in Havana in which 39 countries participated. It is reported the Games were a huge source of pride for Castro.

Castro has been replaced as the leader of the Communist Party by his younger brother Raul who is trying to lead reforms, the major hitch though is that Raul himself is 79 years old and his vice José Ramón Machado Ventura, is an 80-year-old veteran of the revolution.

What this means is that although Raul is urging both political and economic reform, Cuba will for a while longer remain in the clutches of the same leadership that has failed to move it forward in the past 50 years.

One factor that stands out is that among Raul’s proposed reforms is not the opening of political space to other political parties. His major reform is that presidential terms would be limited to two five-year terms. This will not personally affect him for it will allow him to remain at the helm until 2018 when he will be 86.

A Cuban independent economist is quoted saying that term limits won’t “resolve our essential problem, which is the monopoly on power by a group whose policies have failed for 50 years.”

But Raul does not see this; he wants to stick with the same geriatric leadership instead of inviting competing opinion:
“Today, we are faced with the consequences of not having a reserve of well-trained replacements with sufficient experience and maturity to undertake the new and complex leadership responsibilities in the Party, the State and the Government,” he said at his party congress.

What is clear from the Cuban fiasco is that eventually it is not the little acts of bravado that will stand a country in good stead on the world stage but its cultural software. By cultural software I refer to a country’s exploits in the arts, in sport and in initiatives that encourage national and world peace.

South Africa, for example, has taken its place on the world stage because of the efforts of liberation icon Nelson Mandela, when he was still able to bring peace to the world after he reunited his own people who had just emerged from apartheid. The leaders that followed him are also engaged in peace-building initiatives on the African continent. But also importantly, its hosting of the Rugby World Cup and the Fifa World Cup have made it a giant on the world stage.

In Zimbabwe Zanu PF’s little acts of bravado have not moved the country forward. Gukurahundi, Murambatsvina, chaotic land reform, pulling out of the Commonwealth and alienating the country from the West have already brought untold suffering on the common people.

When will President Mugabe meet his Damascus moment and ask himself: “Is his model working for us anymore?”

By Nevanji Madanhire

Source: The Standard

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In a nutshell / Cuba's revolution hasn't found its fountain of youth

CUBA'S Communist party held its convention this week. There were no surprises, but then there hardly ever are at Communist conventions unless the secret police show up.

This year, the big surprise involved former leader Fidel Castro, who ruled the Caribbean country with an iron fist -- Mr. Castro never bothered with niceties such as a velvet glove -- for 46 years until stepping down due to illness in 2006 and passing the crown on to his brother Raul.

Fidel had not been expected to make an appearance, but the 1,000 party faithful who showed up in Havana to nod their heads at all of Raul's proposals gave the old dictator a huge ovation anyway. And so they should have, since they all owe their sinecures to him. At the opening of the convention, Raul Castro had suggested that perhaps it was time for term limits in Cuba, that maybe his brother's 46 years in power was a little bit longer than is seemly in a government that claims to actually represent the people.

He suggested that maybe two five-year terms were as long as anybody really needed to be in power or as long as it was good for anybody to be in power. For a moment, he almost seemed as genuine a democrat as the Americans he regards with such loathing and who only allow their presidents to serve two four-year terms. (Canadian prime ministers, in contrast, can serve for as long as they can keep getting elected, which is perhaps one reason why our governments so often seem more sympathetic to their colleagues in Cuba than their fellow democrats in Washington.)

Even Raul's brother, Fidel, seemed to be in sync, suggesting that term limits were "a subject on which I have long meditated." Now that he is no longer in power -- for the first time since the revolution he no longer holds an office -- it appears that 46 years of meditation is time enough.

Unfortunately, when the leadership of the Communist party was announced at the close of the conference, nothing much had changed. A few younger people got promoted -- Communists in their 50s and 60s -- but when election fever had abated, President Raul Castro, who is 80 years old, was elected first secretary of the party and the No. 2 and 3 spots in the hierarchy went to men who are, respectively, 80 and relatively spring-like 78. Cuba, it seems, still needs another revolution.

by Tom Oleson

Source: Winnipeg Free Press

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Travel columnist explores Cuba

By Janice Law

HAVANA — As evening pedestrians, we stepped cautiously around and into alarmingly large holes packing nearly ink-black downtown streets, lit only every other block or so with the dimmest of lights.

As night bus passengers, we marveled how our driver navigated the same areas where vehicles, bikes and human shapes, indistinct in the darkened roadways, converged.

But sundown was a gift, obscuring blocks and blocks of once-resplendent, now-shockingly dilapidated offices, shops, apartment houses and previously elegant mansions where laundry sags from decaying windows and chickens cluck through weedy, unkempt yards on which, decades ago, armies of gardeners lavished love.

The guide’s standard explanation is: Everything is “under restoration.” Indeed, a few buildings, cherry-picked across this famous city, are beautifully restored. The stark contrast provides, unintentionally, a poignant, glamorous frame for the crumbling infrastructures that dominate.

We traveled to Cuba on a charter flight from Miami as U.S.-sanctioned delegates from the American Association of Museums with a mission to meet for six days with Cuban museum personnel on issues of mutual concern.

Havana evinces a surprising number of eclectic museums — staffed by Cubans who are universally friendly, knowledgeable and welcoming.

“We love Americans!” one staffer whispered, blowing a surreptitious kiss.

Cuba showcases a dynamic arts culture. Poets, musicians, writers, artists and dancers are popular. The Museum of Fine Arts featuring, in one building, only Cuban artists, is knock-your-socks-off spectacular.

We enjoyed an evening at the delightful Buena Vista Social Club, an Old Havana vestige out of a movie.

Veteran singers and musicians entertain with classic cultural songs to an enthusiastic crowd of young and old — mostly locals.

Less interesting is the iconic Tropicana, a Las Vegas-style feathers-and-fans, tourist-oriented cabaret, dating from 1939, where scantily clad women cavort in an open-air theater to salsa-style music for two hours.

We rode there in a caravan of Cuba’s classic cars from the 1950s and 1960s, snagging a salmon-colored ’56 Chevy like the one I drove in high school.

We ate in upscale restaurants arranged by the travel agency — that, we were told, most Cubans, on their average monthly salary of about $25, could not afford.

I wandered away to bread lines where the clerks scowled at me disapprovingly when I photographed. Our guide said every Cuban is given a free ration book to obtain bread and other staples.

But what locals termed “grocery stores” or downtown markets had some bare shelves — and fresh fruit and vegetables, as well as other standard food, and routine consumer products we take for granted seemed in short supply or absent entirely.

We lunched at Club Havana, the luxurious oceanside villa in Havana’s upscale neighborhood where Cuba’s elite played pre-1959. Members of our group said Fidel Castro lives nearby.

Havana is too complex, and our experiences there too intricate to relate in a short column.

Next month, I will discuss the many Cuban haunts of America’s nobel laureate writer Ernest Hemingway.
By Janice Law in http://galvestondailynews.com

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Jimmy Carter travels to Cuba, kisses up to “old friend” Fidel Castro

…because even mass-murdering thugs need a hug every now and then.

All I can say is somebody's gotta make a movie about this guy's life — except who could they ever get to play Carter now that Charlton Heston is dead?

Heston would have been perfect for the role. You know, just like in The Ten Commandments when he stepped over the enslaved Israelites to sup with Pharaoh, pose for photos, fawn over his "beautiful" palace, and then beat it on home to report on Pharaoh's "health" and brag about how they "welcomed each other as old friends" — building of course, to a soul-stirring climax where he raises his staff and bellows, "Let the Cuban 5 go!"

It kind of makes me feel sorry for President Reagan, serving as he did in the long shadow of such a great man. It's not that he didn't try, but he just didn't get it. I mean, who can forget that cringe-inducing moment when he stood at the Brandenburg Gate and commanded, "Mr. Gorbachev, tear down this wall!" I'm sure that gruel-spraying hoots rang out in political prison cells all over the Eastern Bloc after that – especially from the families of those shot trying to escape through that very same wall.

So, yeah, it's a cinch nobody's going to make a movie about that.

Whew. I feel better. Sometimes you just need to get the snark out. I apologize, but it's Jimmy Carter, and I'm only human. Being as nobody's figured out how to pull his passport yet, our elder Useful Idiot set out once again this week to service his tyrant fetish and convince his "old friends," the Castro brothers, to release Alan Gross, an American sentenced to 15 years for bringing Internet equipment and satellite phones to Cuban citizens.

And by all accounts, it was a lovely visit, except for the part where Carter went home alone because his "old friends" were unconvinced by his pledge that Gross was "innocent of any serious threat" to the "Cuban people."

For the best commentary on that remarkable statement, I defer to Real Cuba. (Hat tip to Gateway Pundit)

"No, socotroco, he [Gross] is not in jail for being a threat to the Cuban people, he is in jail for being a threat to the brutal dictator in Cuba, who is scared to death of the Internet and is trying to prevent the Cuban people from having access to news of what is happening in their own country and around the world.

The only threat to the Cuban people comes from the Castro brothers, and the useful idiots like Jimmy Carter who are always finding excuses for the Castros' genocide against the Cuban people.

Carter also met with Cuba's walking corpse and "retired" dictator, who he called an "old friend."
It is hard to comprehend that this idiot was at one time president of this great country."

Carter also assured his "old friends" that he didn't support the U.S. trade restrictions and the continued incarceration of five Cuban spies in the U.S. because, I presume, we all have sins to atone for.

For example the Castro dictators might imprison 11 million of their own countryman and an American who threatened the Cuban people — but not "seriously" — with satellite phones, but we're not exactly pure as the wind-driven snow either. That's because we're holding the Cuban 5: Castro operatives — or "Cuban patriots" according to Carter — who infiltrated the Miami-based Cuban humanitarian group, Brothers to the Rescue, making it possible for Castro shoot down one of their mercy missions to those dehydrated, sunburned, half-drowned Cuban families that tend to bob about on inner tubes in the Caribbean. (Why do they do that, anyway?) And that constitutes moral equivalence in Carter's view.

Honestly, Carter's usefulness is anybody's call, but… what an idiot.

by Elena


From: Thinklets

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CUBA: Preparing For Perestroika

El Capitolio, or National Capitol Building in Havana, Cuba.

Dividing Old Havana from Chinatown is Cuba’s Capitolio Nacional, a monumental edifice with a fateful past. El Capitolio was conceived during the Roaring ’20s, when the island led the world in sugar exports and the future seemed sky blue.

President Gerardo Machado dreamed of turning Cuba into the Switzerland of the Americas. He decided that his 4 million countrymen needed a domed capitol building even taller and more ornate than the one he toured in Washington. So Cuba’s Congress dutifully poured 3% of the country’s GDP into their new home. (This would be akin to the US Congress spending $420 billion for a new office today, but let’s not give them any ideas…)

It took 8,000 skilled Cuban laborers just three years to complete El Capitolio, which featured gilt ceilings, a giant diamond embedded into the pristine marble floor and the world’s third-largest indoor statue. However, the showy project couldn’t have been more poorly timed. Work completed in 1929, just as America’s stock market crashed and the Great Depression unfolded.

The Smoot-Hawley tariffs crushed Cuban sugar prices by 74%. When El Capitolio’s ribbon was cut in 1931, Cuba’s economy lay in tatters. Machado was forced out of office, and his dream building would perform congressional service for only 28 years before Fidel Castro’s revolutionaries swept into Havana and opted for more austere premises. I don’t need to recite the history from here, which you probably well know.

The winds of change are gathering in Cuba, though. Since Fidel Castro’s health nearly failed in 2006, power has passed to his younger brother, Raul Castro. Raul has quietly reshuffled more than 30 cabinet members to prepare his party and people for a sweeping economic policy overhaul – Perestroika al Cubano. Even the semi-retired Fidel seems to have glumly accepted that change is inevitable, candidly admitting to a visiting US journalist that “the Cuban model doesn’t even work for us anymore.”

The global economic crisis whacked Cuba hard. Venezuela cut back on its largesse as its own economy worsened. Tourism and remittances softened, while nickel export prices tanked. Furthermore, three severe hurricanes left a wake of destruction in 2008. Unable to service Cuba’s estimated $21 billion foreign debt, and running out of generous leftist patrons to hit up, Raul Castro has, apparently, decided he has little choice but to pry open Cuba’s economy.

Castro’s wild card is Cuba’s oil and gas reserves. The island currently produces 60,000 bbl a day. But its US-facing northern waters hold an estimated 5-20 billion barrels of oil and 20 trillion cubic feet of natural gas. (Note: This compares with 29 billion barrels of oil reserves in the entire US.) Accessing this undersea oil requires the sophisticated drilling technology the US excels in. But as long as sanctions remain in place, the US oil majors are excluded from that bonanza. Amidst the applause of oil industry lobbyists, the dance for reengagement has begun, with both partners taking some unprecedented steps.

Raul Castro has issued a far-reaching five-year road map for Cuba’s future economic reform. The proposed changes would put Cuba on a very similar path to that taken by China in the 1980s and Vietnam in the 1990s. Here are some of the ideas: permit real estate transactions amongst Cubans, merge the two-tier currency system, close down inefficient state enterprises, decentralize state ownership, facilitate private ownership of businesses, distribute idle land to farmers, open state-owned wholesale markets and further encourage foreign investment – particularly in tourism.

In recent months, some planned reforms have already been implemented in an effort to delay Cuba’s impending insolvency. Costly subsidies on sugar and personal care products are being scaled back. The government announced plans to shed 500,000 state workers (that’s 10% of the country’s government work force in a country where 85% of workers work for the state) and guide them somehow into the private sector.

Cubans are being encouraged to grow and sell their own fruits and vegetables. The government is inviting foreign investors to develop 10 golf course estates in Cuba, with a new law allowing 99-year land leases to foreign buyers of plots in such projects. In the old days of Fidel’s revolution, such policies were unthinkable.

So what is the potential for a liberalized Cuban economy?

Just look 90 miles across the straits to Florida. A million Cuban-Americans call Miami home. Cuba has 60% of Florida’s population and 80% of its landmass, but greater natural resources and a much longer coastline, so one might conclude that the two are of comparable overall potential.

Perhaps to underscore their similarities, remember the fact that England and Spain cleanly swapped the two in 1763. Today, Florida’s economy is 12 times larger than Cuba’s. One reason is that Florida gets 20 times as many tourists as Cuba, plus an inflow of affluent retirees.

When the US government stops restricting its citizens from traveling to Cuba, the island will become an instant tourist magnet. Offering short flights, sunny beaches, cool music, “old world” architecture and cheap surgery, Cuba should have no problem drawing several million American tourists a year, as further-away destinations like Costa Rica have done.

Should reforms become comprehensive enough, agriculture seems an obvious investment play: Half the land is arable, labor is cheap and rain is plentiful. Cuba’s once-vaunted sugar industry stands in disarray, with 80% of the old mills shut down. However, today’s high sugar prices provide ample incentive to revive the sector, along with other traditional crops such as cigar tobacco.

Despite its long coastline, fisheries and aquaculture remain largely overlooked. Cuba is a world-class producer of nickel, but other mineral deposits remain underexploited. And then there’s the oil. The entire power system needs to be updated, financial services developed, retailing expanded – the opportunities seem endless.

Beyond the subsidized basics, most consumer goods have to be imported, and imports draw heavy duties. Telecom services are costly due to government monopolization and inefficiency. The list goes on. In this environment, it is tough for most Cubans to get by unless they receive remittances, tourist gratuities or tea money.

All in all, we eagerly await the implementation of Cuba’s economic reforms. As this process unfolds, Cuba could transform into one of the world’s most attractive frontier investment destinations. America has a long track record of turning bitter rivals into productive partners (a recent example being Vietnam), and re-engagement with Cuba could be one of Obama’s most notable foreign policy legacies.

Some frontier investors are not waiting for that and are already investing in Cuba. While 100% foreign ownership is permitted, most investors enter joint ventures with Cuban state enterprises, which typically contribute land, labor and sometimes capital. Over 250 such joint ventures exist, mostly for specific sectors or projects. Investments are made in foreign currency, eliminating exchange rate issues, and there are no restrictions on capital repatriation. Corporate income tax is 30% for joint ventures and 35% for wholly owned foreign companies, but tax holidays of five-seven years are available.

A few Cuba-focused investment groups have been established that non-US investors can access. Canada-listed Sherritt Group is a major player in Cuban nickel mining and, formerly, telecoms. A private investment group backed by European investors, Coral Capital has restored Havana’s historic Saratoga Hotel, which was recently ranked by Conde Nast as the 16th best hotel in the world. Coral is now planning a number of golf courses, marina, housing and hotel projects, as is Leisure Canada, a Canada-listed investment vehicle.

Douglas Clayton

Source: Business Insider

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