Showing posts with label business. Show all posts
Showing posts with label business. Show all posts

Monday, October 17, 2011

Cuba: Anti-corruption campaign hits British golf developer


Directly affecting a core player in Cuba’s ambitious golf development plans and a major port expansion, the top executive of a British investment fund was arrested in Havana amid an investigation into alleged corruption.

The Cuban government has not made any announcement regarding the arrest last week in Havana of Amado Fakhre, of Coral Capital Group Ltd.

The arrest, first reported by Reuters, is part of a broadening anti-corruption sweep against Cuban state company executives and the foreign investors they interact with. The move against Coral Capital comes after long prison terms, in absence, for the Chilean owners of Alimentos Río Zaza and a shut-downs of Canadian trading companies Tokmakjian Group and Tri-Star Caribbean.

Cuban company executives receive tiny salaries, while often handling millions of dollars worth of transactions.

According to Reuters, the investigation of Coral Capital apparently centers on the company’s import business in Cuba, not on its plans to build a $120 million golf resort just east of Havana and a $43 million logistics zone at the port of Mariel.

Set up in 1999 and incorporated on the British Virgin Islands, the London-based company has slowly become a strategic player in the Cuban economy. Coral offers trade financing, manages the Laroc Trading Fund, provides brand representation in Cuba, and has invested in plastics bottle manufacturing, as well as film production and other cultural ventures in Cuba. It also spent $28 million on the Saratoga boutique hotel in the historic center of Havana and led the 2006 buyout of the foreign side of the El Senador joint venture hotel on Cayo Coco; that hotel, managed by Iberostar, is undergoing renovation and expected to reopen in winter 2011.

However, Coral may have the biggest impact yet with its plans to build a 1,200-home golf resort at Bellomonte, just 15 miles from the center of the capital. The 628-acre site at Playas del Este, within the city limits of Havana, is anchored by two 18-hole golf courses; plans include a country club, spa, and 323,000 square feet of commercial space. On a separate 20-acre property, Coral plans to build a 160-room beach hotel and beach club.

Bellomonte is one of four golf projects the Cuban government is expected to approve soon, and Coral was planning a construction start of the $120 million first phase for the end of 2012.

In another key project for Cuban economic development, Coral is a partner in a planned $43 million investment in the Mariel logistics zone just west of Havana. Over five years, Coral has produced a master plan with Dubai-based Economic Zones World. The first phase includes 540,000 square feet of warehousing, light industrial plants and offices.

Source: Cubastandard


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  • Saturday, October 8, 2011

    Vietnam presses Cuba on debt


    Before increasing investment in oil and construction on the island, Vietnam wants Cuba to find a way to its debt with rice exporter Vinafood and allow the opening of a Vietcombank office in Havana, official daily Viet Nam News reported.

    Debt is rarely mentioned in the official communication between the two long-time partner countries.

    Prime Minister Nguyen Tan Dung urged a Cuban delegation, in Hanoi for routine bilateral talks, to “continue creating favorable conditions for Vietnamese enterprises to invest in the Caribbean nation and to encourage more Cuban investment in Viet Nam,” according to the official daily. Dung suggested the partners should “come up with solutions to settle outstanding debt” and urged Cuba to speed up the permit process for Vietcombank, the government foreign trade bank, to open a branch in Cuba.

    “The presence of the bank will help facilitate the financial settlement between Vietnamese and Cuban companies and enable Vietnamese investors to invest in Cuba, particularly in the fields of construction, oil and gas, and trade,” Dung said, according to the newspaper.

    Foreign Trade Minister Rodrigo Malmierca, who led the Cuban delegation, said Cuba wants Vietnam to continue to sell rice, and pledged to honor Cuba’s financial commitments by gradually reducing credit debts with Vinafood, according to Viet Nam News. Malmierca said Cuba wanted the partners to agree on a joint development strategy.

    Neither Cuba nor Vietnam have released details about the debt.

    Vietnam, a close political ally of half a century, has been selling 400,000 tons of rice per year to Cuba under generous conditions, making the fellow Communist nation the island’s main source of the basic staple. Payment terms in the past have included 450 to 540 days and either interest-free or very low interest financing. In September 2010, state company Vinafood 1 signed an agreement to sell Cuba 200,000 tons of rice, including 50,000 tons for a low price of $496 per ton.

    Affected by a cash crunch in Cuba, bilateral trade dipped to $250 million in 2010 but is expected to grow again this year.

    State oil company PetroVietnam leased an offshore block in Cuban waters and partnered with Russia’s Zarubezhneft, but has not performed an exploration drill yet. Meanwhile, state construction company Housing & Urban Development Corp. (HUD) in 2008 signed a letter of intent with Grupo Palmares to jointly build a 300-hectare golf community near Bauta, just west of Havana. HUD has also been negotiating construction of another golf course resort in Varadero as well as a hotel at Playa Santa Lucía in Camagüey province. In 2009, Vietnam also agreed to set up textile and electronics joint venture production in Cuba.

    Dung committed to Vietnam’s continued support of rice cultivation programs in Cuba. Agricultural projects supported by Vietnam have played “a very important role” in Cuba, Malmierca said.

    Meanwhile, Cuba wants to introduce new pharmaceutical products to the Vietnamese market, Malmierca said.

    Source: Cubastandard


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  • Monday, September 19, 2011

    Corruption: Cuba shuts Canadian company



    Cuba has shut down one of the most important western trading companies in the country as an investigation into alleged corrupt import-export practices broadened to a second Canadian firm, foreign business sources said on Friday.

    State security agents on Friday watched who entered the building in Havana's Miramar Trade Center where Ontario-based Tokmakjian Group, one of the top Canadian companies doing business on the communist-run island, has its offices.

    The company offices on the fourth floor were sealed with a notice that it had been closed by Cuban State Security.

    "We received notice on Monday from the foreign ministry and the Council of State, which is the procedure in such cases, to stop all dealings with the Tokmakjian Group," said an employee of a Cuban company that does business with the firm.

    Like other people who spoke to Reuters about the clampdown on the company, she asked that her name not be used.

    Tokmakjian Group is estimated to do around $80 million in business annually with the Caribbean island, mainly selling transportation, mining and construction equipment.

    The company is the exclusive Cuba distributor of Hyundai, among other brands, and a partner in two joint ventures replacing the motors of Soviet-era transportation equipment.

    Company officials were not immediately available for comment.

    Cuban authorities shut down Canadian firm Tri-Star Caribbean on July 15 and arrested company president Sarkis Yacoubian. The company, considered a competitor of Tokmakjian Group, did around $30 million in business with Cuba.

    "Apparently Tri-Star Caribbean was just the beginning. They brought in more than 50 state purchasers for questioning, arrested some of them and broadened the investigation from there," a western businessman said.

    "As far as I know up to now just Canadian firms are involved, but you can bet every state importer and foreign trading company in the country is on edge," he said.

    FIGHTING CORRUPTION


    Cuban President Raul Castro has made fighting corruption a top priority since taking over for his ailing brother Fidel in 2008, and in the past year a number of Cuban officials and foreign businessmen have been charged in graft cases.

    Tri-Star Caribbean did business with around half of the 35 Cuban state companies authorized to import, from tourism, transportation and construction to the nickel and oil industries, communications and public health.

    The whereabouts of the man who founded the family business, Cy Tokmakjian, of Armenian heritage, born in Syria and educated in Canada, was not clear on Friday.

    He was last seen by Reuters a week ago, the day after his offices were sealed, but another western businessman said he had been detained by Cuban authorities.

    "They picked up Cy on Saturday and I heard his wife and at least one of his kids flew in to see what they could do," he said.

    Cuba's state-run media rarely reports on corruption related investigations until they are concluded and those charged are sentenced.

    Tokmakjian, a former mechanic, is a self-made millionaire with interests in Canada and other countries besides Cuba, where he is a well known figure. He made his first deal with the Caribbean island in 1988.

    President Castro, a general who headed Cuba's Defense Ministry for 49 years, has cracked down on corruption as part of his efforts to revive the country's sagging economy, but to date has done little to change the conditions that foster it, such as low salaries and lack of transparency.

    There is no open bidding in Cuba's import-export sector and state purchasers who handle multimillion-dollar contracts earn anywhere from $50 to $100 per month.

    Castro has moved military officers into key political positions, ministries and export-import businesses and in 2009 established the Comptroller General's Office with a seat on the Council of State.

    A source close to the Tri-Star Caribbean case said the Comptroller General's Office had been brought into the investigation, indicating it most likely was targeting high level officials.

    Castro's crackdown has resulted in the breaking up of high-level organized graft in the civil aviation, cigar and nickel industries, at least two ministries and one provincial government. An investigation into the communications sector and another into shipping are also under way.

    By Marc Frank

    Source: The Gazette (Reuters)


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  • Sunday, September 4, 2011

    Cuba: 5 Billion Barrels of Undiscovered Oil

    Companies looking for oil in Cuban waters. (Courtesy of Jorge R. Piñon, click on the picture to enlarge)

    US delegates head to Cuba to discuss deepwater ambitions.


    Oil spill commission co-chief Bill Reilly is heading to Cuba next week to help evaluate that country’s plans for developing its oil resources, Dow Jones Newswires has learned.

    The trip represents an important development in a thorny situation that has U.S. lawmakers raising concerns about potential oil spills and oil experts pressing the Obama administration to grant exemptions under the decades-long embargo.

    The trip, which will involve a delegation of U.S. oil-drilling experts and environmentalists, coincides with Cuba’s effort to develop its offshore oil resources as a way to wean itself off imports from Venezuela. U.S. officials believe Cuba’s waters could contain more than 5 billion barrels of undiscovered oil.

    Cuba’s efforts to tap its offshore oil will get off the ground later this year, when a consortium led by Spanish company Repsol YPF S.A. (REPYY, REP.MC) is expected to begin drilling a well in more than 5,500 feet of water off the country’s northern coast. If Repsol finds oil, it could touch off a quick-moving race to set up production in Cuban waters.

    The delegation to Cuba, involving the International Association of Drilling Contractors and the Environmental Defense Fund, is on a fact-finding mission to determine the country’s long-term plans for pursuing its oil resources and identify steps to ensure safety and environmental protection. They’re scheduled to depart Monday.

    The process of oil drilling in thousands of feet of water is “inherently risky,” said Daniel Whittle, Cuba program director at the Environmental Defense Fund and a member of the delegation. “We believe it’s imperative that if and when Cuba drills, they get it right.”

    Reilly, as co-head of President Barack Obama’s oil-spill commission, helped to draft a report earlier this year that recommended U.S. officials work with Cuba and Mexico to develop shared standards for drilling in the Gulf. The oil-spill commission ceased operations in March after completing its work.

    Cuba’s effort to promote drilling in its waters is presenting a thorny situation for U.S. lawmakers, regulators and companies.

    Among the loudest critics of Cuba’s plans are Gulf Coast lawmakers who are raising questions about the country’s ability to respond to oil spills and the risks of crude oil washing on U.S. shores. Rep. Vern Buchanan, a Florida Republican whose district faces the Gulf of Mexico, introduced a bill earlier this year to allow the Interior Secretary to deny U.S. oil exploration and development leases to companies that do business with Cuba.

    “The United States is not going to see a drop of that oil,” said Max Goodman, a spokesman for Buchanan. “And we have learned from Deepwater Horizon that an oil spill can devastate a regional economy and pose long-term damage to our natural resources.”

    Repsol will be drilling in waters that are deeper than those in which the Deepwater Horizon rig operated at the time it exploded last year. Repsol will be using a Chinese-built drilling rig that only recently left Singapore for Cuban waters. The rig is expected to arrive in November or December.

    The rig, known as Scarabeo 9, was built to conform with the U.S. embargo and Repsol has said it will be following U.S. safety standards, Repsol representative Kristian Rix said.

    “We are confident that we have the right personnel and materials to drill safely and successfully in the area,” Rix said.

    If oil is discovered, Cuba has a greater chance of becoming less dependent on Venezuela for its energy needs. In 2009, the country produced roughly 50,000 barrels of oil a day from onshore and coastal wells, relying on imports to supply an additional 130,000 barrels to meet consumption levels, according to the Energy Information Administration.

    Given the risks of an oil spill, oil and natural gas experts are urging the Obama administration to grant exemptions under the embargo to allow U.S. companies and experts to respond to a disaster. U.S. companies, such as Helix Energy Solutions, have been particularly aggressive in developing oil spill containment systems in the wake of the BP Plc (BP, BP.LN) spill.

    Allowing U.S. companies and experts to respond to a Cuban spill would be in the U.S.’s best interest, given the proximity of the drilling to U.S. shores, said Jorge Pinon, former president of Amoco Oil Latin America and visiting research fellow at Florida International University.

    “There is an experienced company doing the work [in Cuba]” Pinon said. “What we’re lacking is, in the case of an emergency, Repsol and the other operators will not be able to access the resources” in the U.S.

    By Tennille Tracy
    Source: gCaptain


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  • Saturday, August 6, 2011

    Cuba's Liberation at Hand


    The liberation of Cuba has begun.  Not by invasion, but from within.  Communism has failed, and the people of Cuba are demanding freedom.  Including the revolutionary right to buy and own their own homes.

    Fifty-two years ago, Fidel Castro, posing as a reformer, seized power in a revolution promising "change," social justice and a redistribution of wealth.  He attacked the rich, the owners, the employers.  He was celebrated in leftist circles around the world as a herald of a new and better society.  His 1960 visit to New York set off waves of joy and adulation.

    When Castro plastered the walls of Havana with the slogan, "Socialism or Death," most Cuban employers fled, often with only the clothes on their backs.  Factories, farms, businesses, homes, cars with tail fins—all left behind, all confiscated by the state.  Private property was abolished.  All would be equal.  Cubans who stayed realized how equally poor they all quickly became.

    For longer than most Americans have been alive, Castro and his Communist elite have controlled every aspect of every Cuban's life.  They turned one of the most beautiful countries on Earth, "The Pearl of the Antilles," blessed with fertile soil, abundant water and numerous natural resources, and inhabited by some of the happiest, most fun-loving people in the world, into one big gray poor gulag.

    Since the Castro revolution, the Free World has surged ahead, producing a higher standard of living for more people than any period in human history.  Wealth in free countries was not "spread around," it was created and multiplied, causing what Jack Kennedy called a rising tide to lift all boats.  Many thousands of Cubans, fleeing Castro's tyranny, have prospered in freedom in the U.S. and other countries.

    Modern communications have made it inevitable that despite state censorship, Cubans increasingly recognize the failure of communism, that confiscation has not produced "fairness" and that the state-run economy has not produced prosperity. They recognize and demand change.  The kind of change that toppled the failed Communist states all over Europe.  The kind of change that is bringing prosperity to China.

    Fidel nearly died in a botched operation by Cuban doctors (remember Michael Moore's praise of the Cuban state-run medical system?) and had to call in a Spanish doctor from a private clinic in Madrid to save his life.  Ditto Hugo Chavez.  His cancer was treated in Cuba, but by private doctors from Spain.  Cubans saw and reacted.  "Socialism or Death" for the common folk, but free-market doctors for the Communist elite.

    The everyday Cuban has long depended on an illegal black market to survive.  Doctors drive cabs, engineers fix 1950s cars, illegal restaurants spring up in a cook's living room, money changes hands so someone can illegally get a better apartment, college grads wait tables at the few tourist hotels allowed by the regime.  People get by doing what they have to do.

    In the last few years, Cuba has allowed more foreign investment, primarily to develop tourism, but more recently to exploit offshore oil deposits in the Gulf of Mexico that Americans have been forbidden to touch.  More Cubans are coming into contact with foreigners.  More jobs are being created by foreign investment

    Cubans want more.  The Castro regime is on the defensive.  Self-employment rules have been loosened in the last year and cell phone ownership is increasing.  Buying and selling cars will soon be allowed.  The dam is cracking, the river of freedom will be restored. 

    Starting at the end of this year, the regime has promised that Cubans can buy and own their own homes.

    Private property is the cornerstone of capitalism.  It's the talk of Havana.  After making the promise and raising expectations, the regime is widely predicted to hem in private ownership with regulation and taxation.  New owners might be limited to one home or apartment, forbidden to resell for a number of years, and be required to live there full-time.

    Nonetheless, in a country where all the land and buildings are owned by the Castro State, the restoration of the concept of private property ownership is a big (Biden) deal.

    A (freer) market in housing faces challenges created by 60 years of communism.  Private classified ads, for example, are forbidden.  How do you let buyers or renters know you want to sell or rent?  Brokers, cell phones and pads in hand, comb the streets of Havana listing availabilities and preparing to put buyers and sellers, renters and landlords, together.  Wait until they get the Internet!

    The government-owned housing stock is a wreck, with too many people jammed into small, deteriorating units.  There is no construction industry, no materials industry.  As in other collapsing socialist states, such industries will spring up to meet demand if the regime allows it.  They will allow it because the Cubans will demand it.

    Financing the recreation of a freer property market is the easy part. 

    Those prosperous Cubans who fled Cuba already legally pump more than $1 billion a year into the Cuban economy (and black market) through remittances to family members.  Cubans from Miami, hearing of the potential for private ownership, have already staked out their favorite homes, farms and apartments to buy either directly or through family members.

    Defenders of the Castro regime, especially the Left in the U.S., criticize the new reforms.  "Experts" fear, says the Los Angeles Times, a re-stratified society, the reemergence of the haves/have notes divide, the horror of "gentrification."  Yup, freedom and opportunity could be a downer.

    For the people of Cuba, these reforms are but a taste of the life they yearn for, the life of hope and opportunity they see people enjoying in other countries, a life forbidden to them by the Castro regime for all these years.

    What must the average Cuban, who has experienced not a "lost decade" but a lost lifetime, think of the U.S., the beacon of freedom and prosperity, turning now to national health care, government confiscation of private property, our President demonizing wealth creators and employers as the evil "rich."  Making the same mistakes, falling for the same propaganda that has enslaved Castro's Cuba.

    Pay attention to Cuba.  Know its history under Castro.  Or be condemned to repeat that history here.

    by Roger Hedgecock 

    Source: Human Events 


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  • Tuesday, August 2, 2011

    Russia's Gazprom Neft gains stake in four deepwater blocks offshore Cuba




    With the approval from the Cuban authorities, Russian firm Gazprom Neft has gained interest in four deepwater oil and gas exploration blocks offshore Cuba.

    Gazprom Neft, Cuba's national oil company Cubapetroleo (Cupet) and Malaysia's national oil company Petronas have signed a Supplementary Agreement to the Production Sharing Contract (PSC) on four blocks in the Gulf of Mexico offshore Cuba.

    Through the agreement, Gazprom will now hold a 30 percent stake in deepwater Blocks 44, 45, 50 and 51 of the Exclusive Economic Zone of the Republic of Cuba. Petronas holds the remaining 70 percent interest in the project.

    According to Oil & Gas Journal, the blocks are located 100 to 200 miles west of Havana.

    Cuban Timeline

    To date, 2D seismic has been performed across the acreage, and as of November 2010, an exploration well was scheduled for drilling in 2011.

    In addition to the exploration and development of the blocks, the agreement allows for the production of oil through 2037 and the production of natural gas through 2042.

    Petronas signed the PSC with the government of Cuba in 2006, and in October 2010, Gazprom Neft and Petronas signed a farm-out agreement and a Heads of Joint Operations Agreement on the leasehold.

    After receiving approval from the Cuban authorities, Gazprom Neft and Petronas signed a Deed of Assignment, as well as a Joint Operating Agreement in July 2011.

    “This partnership with Petronas will help Gazprom Neft to enforce its competence in the sphere of deepwater development and expand its expertise in projects outside of Russia,” said Alexander Dyukov, chairman of Gazprom Neft. “By 2020, we plan to have about 10 percent of our overall production from overseas projects.”

    International Interest Offshore Cuba

    While US firms are prohibited from operating in Cuba, many international oil and gas producers are eager to explore the Gulf of Mexico offshore Cuba. 

    Following an oil discovery in 2004, Spanish operator Repsol has contracted the newbuild deepwater semisub Scarabeo 9 to drill for oil offshore Cuba. The rig constructor Keppel FELS reported that the rig is nearly ready.

    Having drilled in Cuba before, Brazilian major Petrobras (NYSE:PBR) has also signed a joint oil and exploration production agreement for Block 37 offshore Cuba, and Venezuela's state-run firm PDVSA has also said that it will explore offshore Cuban waters for oil and gas.

    By Phaedra Friend Troy

    Source: PennEnergy



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  • Monday, July 18, 2011

    Cell phones and the cost of living in Cuba

    Courtesy of Omar Santana.

    When I first came to Cuba in 1995, cell phone service was so scarce that, after a meeting in which an official had flashed a cell phone from the podium, I turned to Abel Prieto, then the president of the writer’s union, and asked if he had one too.

    “Oh, no,” he said, “I’m not high enough to be part of the celucracia.”

    The cellucracy!

    In later years, of course, Abel became the minister of culture and acquired a pocketful of cells, and I began to know people – rarely connected with government – who had one too. But the stories behind their cells were always complicated and strange.

    The reason was that Cuba did not allow its citizens to legally own cell phones until 2008. That’s right, 2008 – 45 years after its invention, Cubans finally got a chance to own a cell.

    Prior to that, to have a cell phone meant you were either very high in or very important to the government, or you had an European or Canadian connection – a foreigner willing to get a phone and cell service in her name and let you use it. It was an exclusive club, and pulling a cell out in public elicited envy, awe, and not a little bit of fear.

    After 2008, though, cell phones have become ubiquitous. The lowliest delivery boy has one attached to his belt. That is not, of course, in and of itself surprising. Like in so much of the Third World, cell service in Cuba doesn’t require the wait for a land line, which can be months or even years. If you have the right kind of apparatus, you can sign up for service on the same day.

    But what is curious is the chasm between the cost of cellular service and the official Cuban monthly salary.

    You see, after you pay the $30 CUCs – Cuba’s convertible peso, which is at about 0.87 per U.S. dollar – to establish a cell line, you need to buy phone cards to charge the phones at approximately 45 centavos a minute, or about 50 US cents.

    This means that cell phone usage in Cuba isn’t casual. It’s about location, or getting someone to drop a key from a higher floor to open a lobby door, or to ask someone to get to a landline for a real conversation. Cell phones, of course, also facilitate texts, which has been a boon for dissidents and their responders, both groups which have taken to Twitter like an addiction.

    But how, you might ask, can a Cuban earning between $15 and $20 USD a month pay such a steeply priced cell service? The answer is that, at least officially, they can’t.

    And this is where the Cuban government, regardless of its staunch public posture against corruption (especially under Raul Castro), colludes with and counts on the country’s rich black market. Because, really, otherwise how can a Cuban earning $15-$20 USD a month have cell service that ends up being twice that?

    Cell service is one of the many things that, prior to Raul, had been illegal but not uncommon for Cubans. In fact, many of his so-called reforms have been merely bringing into legality what had become common illegal practice: among other things, access for Cuban citizens to hotels, access to car rentals, access to DVD rental of foreign films, access to markets for individual farmers and artisans, and the ability to run a legal business, especially in sales or personal services.

    In the case of the cell service, the government assumes its citizens are getting their funds from abroad or through illegal means. As a friend of mine explained, it’s Cuba’s version of Don’t Ask Don’t Tell: The government agrees not to question source of income so long as the citizen agrees to pay the exorbitant fee.

    Added my friend: “It’s not exactly like we have a choice anyway.”

    by Achy Obejas

     

    Source: WBEZ



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  • Tuesday, June 28, 2011

    Cuba: Microcredit Knocks on Door...Softly



    'Until about a year and a half ago, you practically couldn't talk about this issue, but now the situation is different,' a European diplomat told IPS. He preferred not to be identified, to avoid undermining progress on the issue, which has its own particular complexities in the case of Cuba. 'The idea of microcredit went from being almost sacrilege to something interesting,' he noted.

    Juan Diego Ruiz, general coordinator of Spanish cooperation in Cuba, said the word microcredit is not part of the Cuban vocabulary, and actually might not be the most correct term in this case.

    'Today what's being talked about more is credit policy, credit for the productive sector, and it's an issue that is being discussed both on the street and in offices,' he told IPS.

    One of the entities feeling out the situation on the ground is the Italian National Committee for Microcredit. It has organised a couple of visits to Cuba, evidence that the subject of microfinance is drawing attention little by little in the context of development projects and an opening to the private sector, where international cooperation could play an important role.

    This type of loan was created in the 1970s as a financing alternative for low-income people in need of capital to set up small businesses. Unlike traditional credit, no collateral is required, the amount is usually relatively small, and payments are weekly or biweekly.

    These differences lead to micro-financing institutions being described as entities with high administrative costs covered by the high interest rates generated by their portfolio of clients, composed of a large number of small, short-term loans, without guarantees, concentrated in a specific geographic area.

    Credit exists in Cuba in the form of Cuban pesos and focused on consumption, such as the individual purchase of domestic goods, and agricultural cooperatives.But the strategy launched by the sixth congress of the ruling Communist Party of Cuba (PCC) to modernise the economic system anticipates expanding and diversifying possibilities in terms of bank loans.

    The 313-point programme charting the country's economic and social guidelines for the coming years specifies that credit policy will be essentially oriented towards providing necessary support for activities that stimulate national production and generate hard currency income or replace imports, as well as activities that promote development.

    Meanwhile, since March, banking and credit policies have been in place for individuals, such as loans for farmers to buy equipment and supplies in retail stores with the goal of boosting national food production.

    Also, loans may be granted to people authorised to engage in self- employment, to finance their working capital and investments via the purchase of assets, supplies and equipment, and to allow these self- employed workers to sell products and services to state entities through contracts.

    It is precisely in these emerging sectors, which have developed from the distribution of idle state land to thousands of farmers and the expansion of trades and activities in which self-employment is allowed, where microcredit could have the greatest impact, at least initially.

    However, the legal framework that will regulate the new policies on credit in general has yet to be defined.

    In these new forms of non-state activities, small-scale loans could facilitate access to machinery, tools, supplies and equipment, and increase the individual's ability to contract services or labour, which would stimulate the economy.

    It is in the area of self-employment 'where microcredit fits best, with a focus on individuals,' Tomas Marco, head of agricultural development in Cuba for the Spanish Technical Office for Cooperation, commented to IPS. 'What's opening up is a possibility; it's not even a certainty. Nobody knows if loans in hard currency for self-employed people will be permitted.'

    Cuba's dual currency system, in which the Cuban peso is the national currency and the convertible peso (CUC) replaced the U.S. dollar as hard currency in all transactions in 2004, is another challenge to overcome in making credit more widely available. However, no short-term changes to the system are on the horizon.

    'Another major obstacle is purchasing power,' Marco said. 'You might give a hard currency loan to a UBPC (Basic Unit of Cooperative Production in agriculture), but the cooperatives cannot directly buy in hard currency. We have to wait until regulations are created for the (new economic and political) guidelines, and see how these aspects are regulated.'

    Rodolfo Hernandez, an official with the Swiss Agency for Development and Cooperation (SDC), said microcredit could benefit Cuba 'fundamentally' in the low and medium-income sectors, with a certain amount of priority given to women and young people.

    'It would be important for loans to be granted in both currencies, for shops and other locales to be created that sell at the municipal and sub-municipal levels, and for the credits to carry a payable interest rate that would make the process sustainable and that would make loans accessible to people in low and medium-income segments of the population,' the expert said.

    In his opinion, funds should be channelled through the Bank of Credit and Development or local banks created for that purpose, and by associations of cooperatives - whose partners are other cooperatives - that have enough income to take on the commitment. For his part, Ruiz did not rule out that in the context of international cooperation, non-commercial but reimbursable credit instruments could operate. 'The opportunity and the will are there. In recent months, our headquarters (Spanish Agency for International Cooperation) has made several visits, and has reported on credit experiences that could have work here,' he commented.

    By Grogg, Patricia 

    Source: IPS


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  • Monday, June 6, 2011

    Recalling Tiananmen in Cuba

    Tiananmen Square, June 4, 1989.

    Praises of Chinese socialism have appeared with greater frequency in the Cuban press over the last few years.

    The city buses that cruise the capital, the merchandise sold in hard-currency stores and the modern cars driven by military officers and state leaders are virtually all produced in China.

    The media reports to us ordinary Cubans about the relations that are being established between the government of our country and that of the Asian giant.

    These small details were enough to allow predictions on how the Cuban media would cover the actions that were commemorated around the world on June 4.

    Twenty-two years have passed since the events of Tiananmen Square yet we can still note an embarrassing silence here on the island.

    The Communist Party of Cuba (though I would prefer to be mistaken) seconded the position of the Chinese Communist Party (PCCh) in treating what happened in that plaza as an “inappropriate” issue.

    Because of this, millions of Cubans went along with that assessment without knowing the true position of the government and party in China, which has become an economic partner with Cuba.

    On June 4, 1989, that now world-famous square was the witness of a massacre where even today it’s impossible to conclude the true toll of the dead and wounded.

    The Chinese government gave the order to dissolve a demonstration of an estimated hundred thousand protesters, the majority students and workers.

    The method used for putting an end to the protest: armed soldiers and tanks.

    At Tiananmen Square the demonstrators requested the removal of corrupt rulers, freedom of the press, freedom of expression and free association, the end of the layoffs in factories and inflation, among other demands.

    The method used for protesting was the hunger strike.

    The only response given was a hail of bullets.

    China just signed a letter of intent to redo a Cuban oil refinery. Business is business even for"communists"

    The demonstrators were branded as counter-revolutionaries, criminals or agent provocateurs of the Western capitalist governments.

    On several occasions those who were protesting sang the words of The International, recognized as the hymn of communism.
    From this fact one could conclude that they were not aiming to renounce socialism.

    But that wasn’t enough, as orders were given to squeeze the triggers.

    Remembering the events in Tiananmen is a duty of all those on the left who are fighting against bureaucratic and totalitarian regimes around the world – those structures of individuals who attempt to smother people’s participation and leadership by perpetuating themselves in power at whatever the cost.

    Daisy Valera  

    Source: Havana Times


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  • Thursday, May 5, 2011

    Chilean businessman, ex-minister get long-term sentences

    Max Marambio (l) and Castro in the "friendship" times.

    Ending a one-year trial, a provincial court in Havana sentenced a former food industry minister and a Chilean investor to long prison terms.

    A report in Granma said ex Food Industry Minister Alejandro Francisco Roca Iglesias must serve 15 years, after the court convicted him in March of “repeated bribery” and “acts to harm economic activity,” while Max Marambio, who was sentenced in absence, must serve 20 years on convictions of bribery, fraud and falsification.

    In both cases, the court followed the guidance of prosecutors.

    Marambio, via his Twitter account from Chile, denounced the sentencing as “pure political persecution” and challenged the Cuban government to ask a Chilean court for his extradition. “They never sent anything,” he wrote.

    He was represented by a court-appointed defender. The political insider-turned-businessman and long-time resident of Cuba has not returned to the island since fall 2009. He filed legal proceedings against Cuba before the court of arbitration of the Paris-based International Chamber of Commerce (ICC) in October 2010.

    The Havana court’s ruling can be appealed before the Superior Court within 10 days.

    Neither did the Granma article provide any details of the allegations, nor has there been any other official information as to what the pair’s alleged crimes actually consisted of.

    “The charges of the prosecution were duly proven, and [the court] took into account that the crimes committed are of particular seriousness, requiring an energetic response for punishment that corresponds to the many damages to the national economy caused by the accused, to the detriment of the ethical behavior of various officials and subordinated workers,” Granma said, without explaining details.

    Marambio claims part of the accusations stem from his paying generous benefits to Cuban employees. According to Chilean press reports, Roca is accused of making considerable bank deposits abroad from illicit commissions. A son of Roca’s works for Marambio in Chile.

    The sentencing puts an end to a two-year investigation and trial that prompted broad media coverage in Chile. It comes on the heels of several cases of destitution and investigation against state company executives, most recently the imprisonment of a long-term executive at cigar company Habanos S.A. on corruption charges.

    Roca Iglesias.
    Roca Iglesias, 75, was minister of food industries from 1976 to March 2009. He lost his minister job the same time as Foreign Minister Felipe Pérez Roque and Vice President Carlos Lage.

    Marambio, 63, made it into Cuba’s inner circles of power under Fidel Castro. The former student leader in Chile and body guard of President Salvador Allende fled to Cuba after the 1973 coup, where he became a member of Cuba’s special forces, and founding chief executive of the CIMEX holding — today Cuba’s largest business conglomerate. In the 1990s, he used his close relationship with the Cuban government to build a thriving business, the Havana-based Alimentos Río Zaza joint venture. Early last year, the government shut down Río Zaza, which produced and sold processed food products in Cuba to the tune of $100 million a year, and took back Marambio’s house in Havana.

    As of October, two Río Zaza executives were imprisoned in relation to the investigation, according to Marambio; the government hasn’t released any information about related cases.

    Source: Cuba Standard


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  • Saturday, April 30, 2011

    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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  • Friday, April 1, 2011

    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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  • Saturday, March 5, 2011

    A new dawn for Cuba as capitalism eclipses communism

    Communism has nothing to offer to Cubans.
    The party begins to pop at about midnight when the half-naked male models point the last stragglers to the open roof top.

    On a second level above us under the stars the DJ turns it down briefly to allow a solo trumpeter to play a sensuous salsa serenade while behind the bar – as long as a swimming pool and sagging with mojito cocktails – lesbian porn from the nineteen thirties is projected on an bare wall.

    The guests, in from Sao Paolo, Mexico City, Paris and Madrid, take it in their sophisticated stride, navigating past mattresses for the boozed up and the louche and feigning insouciance as Oscar-winning actor Benicio Del Toro brushes past. There had been a clue in the invitation about what was to come. Dress code: "tropical glam".

    Yet there is wonder if not actual shock in their smiles even as they dance their last dance and surrender to the approaching Caribbean dawn. We are not in Miami, Palm Beach or even Los Angeles. This is Havana, home to one of the last Soviet-style regimes in the world. Now in the lift going back down an impossible rumour goes around. Two of Raul Castro's sons attended the party. You never saw them?

    Cuba is changing. The roof-garden fete, with its decadent pulse, was not something you see in Havana on your average Saturday night. Some may have thought of it as an aberrant flashback to the pre-revolution days when frolicsome behaviour was the norm. But to others it seemed like a back-to-the-future experience. Was this a glimpse of this grand but crumbling city 10 or 20 years from now, raring once again for fun? A reporter meanwhile tries to straighten out those Castro sightings. The surprise: no sons but two grand-daughters had indeed shown up.

    Grandfather Raul, who turns 80 this year four years after taking over as President from his ailing brother and founder of the revolution, Fidel, will not have given the party a second's thought. That Cuba is tiptoeing back into the sunlight is of his own personal doing, after all. It was last September that a stunned nation as told that the centrally planned economy was dying and needed radical surgery. By the end of this April, the government decreed, 500,000 Cubans would have been fired from state jobs. In the longer term, the Raul-sanctioned plan would eliminate about 1 million jobs, or roughly 20 per cent of the workforce.

    It is an audacious blueprint that will kill the socialist model erected by Fidel and his co-revolutionary Che Guevara 53 years ago or save it from collapse. Its success or failure will depend largely on whether Cuba, with its epic inefficiencies and laid-back rhythms, can rediscover long-suppressed capitalist instincts. Today, the state employs almost 90 per cent of all workers. As many of those are now laid off they will be encouraged to apply for licenses to try their hand at private enterprise. Fidel did something similar 15 years ago, but on a far tinier scale – Havana saw the opening of a handful of family-run restaurants and hostelries for tourists – and he later backed away. This promises to be much bigger.

    What it means is that Cuba is in a state of high agitation. Interviews over several days with Cubans of all backgrounds suggested a people uncertain whether to be deeply afraid of what is coming or grateful that after decades of stagnation, their leaders finally are ready for reform. And there have been other signs of movement from the top. In February, the regime with little fanfare lifted the internet firewall that for years had blocked much of what Cubans could see on the web (though only a fraction of the population has access to it). And the months since last July have seen 60 political prisoners released, all originally rounded up in the so-called 'Black Spring' of 2003. Only seven of those arrested in that crackdown now remain behind bars.

    Miguel Barnet, the President of the Writers' and Artist's Union, an amiable man about Havana who has a direct line of communication with the Castros (and is therefore not free to speak entirely candidly), accepted that Cuba is in a tricky place but was certain that Raul knows what he's doing. "I am very optimistic for Cuba," he tells me. "What would be tricky is if there was no transition going on. We need to do this."

    Raul has support from other members of the top communist leadership. Next month, a Communist Party Congress will be convened, something not seen in a decade and a half. It will approve the full Raul reforms that not only will significantly broaden the areas in which free enterprise will be tolerated and even encouraged but – perhaps most surprising and risky – will simultaneously introduce a system of income tax.

    We also know, however, that resistance has been powerful at the next level of communist leaders – the ones who have to choose who is to lose their jobs and then tell them. Sources spoke of uproar one recent night at the luxury, state-operated Melia Cobiba Hotel when top socialist officials gathered the staff of 580 people and told them only 480 would be returning the following day.

    In an attempt at consultation and fairness, committees were established to discuss how the lay-offs might work. Their work was concluded last weekend and on Monday Raul acknowledged that progress on sacking the first 500,000 workers had been slow. The end-April deadline, he said, would therefore be extended. He gave no new clear schedule for reaching his final goals.

    Speculation abounds that he may also be slowing the pace because of Tunisia, Egypt, Libya and other countries in the Middle East where citizens have risen up against authoritarian regimes. However, Cuba is different. It does not have a youth-heavy population, access to sites like Twitter and Facebook is extremely limited and there is no issue of corruption or great displays of wealth among the ruling elite. "We write to our capitals every day and say it is not going to happen in Cuba," says one junior diplomat at the Canadian embassy here. "Change is going to come not at once, but bit by bit."

    Then there is this: while the prisoner release programme has cheered human rights groups and even some dissident leaders in the country, no one supposes that old habits of repression have died. Thus two weeks ago, on the first anniversary of the death from hunger strike while behind bars of dissident Orlando Zapata Tamayo, the regime moved temporarily to round up 45 dissidents and confine 60 more in their homes to diminish the chances of street protests. All were released when the anniversary was over.

    "Some positive steps have been taken," a diplomatic source in Havana said, noting the release of the 60 political prisoners. "But we remain extremely worried about the human rights situation." He described a security apparatus that remained alert and ubiquitous. Any kinds of street gatherings are instantly quashed, in part by thugs hired by the state. The front page of the Communist Party paper, Granma, last week reported that the spokesperson for the Ladies in White, a protest group of wives and relatives of those first incarcerated in 2003, had been unveiled as a government informer. What motivated the paper to run this is unclear.

    The United States, which maintains its 49-year-old economic embargo although restrictions on sending money and travelling to Cuba have been eased by President Barack Obama, has its own human rights crisis with Cuba, involving US citizen Alan Gross, 61, who was to go on trial in Havana yesterday. Caught distributing satellite reception equipment to Jewish groups in Cuba to improve their access to the internet, he was arrested on charges of espionage and could face 20 years in jail if convicted. The US has protested and demanded his release.

    The embargo is a big part of what ails Cuba, which was kept afloat for years by Moscow until the Soviet Union collapsed in 1989. The other problem is the lack of liquidity in Cuba, where no system of credit exists. Meet Jose, for example, who for years worked as a carpenter before – in the Cuban equivalent of winning the lottery – landed a job last year driving a tourist horse-drawn buggy in Old Havana on a monthly salary of $11 that is multiplied many times over by tips. With two of his four sons along with him, he acknowledges that he risks being fired under Raul's reforms. "We will deal with that if it comes," he says, before revealing an ambition to open a paladar – the name of the private restaurants permitted to serve tourists: "I will be the waiter and my wife will cook." But he echoes the worries many others have.

    "The pillars of our country are all gone – coffee, sugar, rum – they aren't good any more," laments Fran, 66, once a farm labourer who now earns $4 a month as cabaret singer for the state aviation institute. He too is lucky as the holder of one of Fidel's original licenses to entertain tourist groups. He sings old Beatles' numbers at a creaking paladar on a river outside Havana. Fran tells me something that would be hard to credit were we not in Cuba where nothing seems too bizarre. He claims his son Ojani was married in the early 1990s to Jennifer Lopez. "I told him not to worry about the money and just leave," he says with a smile of obvious chagrin. He is pessimistic about the Raul reforms. "So, the people will be allowed to work for themselves and have their own business. Yes, fine. But how do you that without any money? We have no savings."

    "It will all come from Miami," says a US businessman who has permitted business dealings in Cuba. In spite of the embargo, the US is Cuba's fifth trading partner. This is why the relaxation of the rules on money remittances to Cuba by Obama are seen by some as crucial, because those dollars may fuel the nascent free enterprise sector.

    Few in Cuba, however, expect the embargo to end soon and most react sceptically to the idea that when Fidel dies, Uncle Sam will come with dollars and cruise ships and take the island for itself. "I don't think that the Americans want another mortgage," says Mr Barnet, the union leader. "We have to do this for ourselves."

    More important now, with the Communist Congress around the corner, is if ordinary Cubans think it can be done. That they want to have faith is clear and they don't need rooftop parties to feel the breeze of possible change. But the gap between Raul's promises and free enterprise taking root is wide and fear still reigns over hope. "This," says a diplomat "is their last chance, because the country is in dire shape."

    By David Usborne

    From: Belfast Telegraph


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  • Friday, January 28, 2011

    Cuban Catholic magazine says no reason to fear "new rich"


    HAVANA – The magazine of the Cuban Catholic Church believes that the creation of wealth and the rise of a “new rich” class as a result of economic reforms being promoted on the communist-ruled island should be accepted by society without fear, though it does represent a “challenge.”

    The Web site Palabra Nueva published Friday an article by its editor, Orlando Marquez, which under the title “Without Fear of Riches” reflects on some possible consequences of expanding private employment and replacing egalitarianism with an equality of opportunities.

    “The creation of wealth and the coming of the ‘new rich’ could bring the challenge of a different ethical and legal order, but widespread poverty is no less of a challenge or danger to our society,” Marquez says.

    Society will be more secure when citizens achieve a standard of living consonant with their abilities and ambitions, while doing no harm to others, he says.

    “To procure a wealthier country with honesty and transparency is a necessity in this world. If the conditions and resources are there, aspiring to anything less is a sign of pitiful mediocrity,” the article says.

    “We might see some Cubans who are richer and others who are poorer, at least until the waters reach their level. And what a paradox, the difference could be diminished by socializing wealth by means of a tax policy that makes those who have the most contribute to those with the least,” it says.

    The adjective “rich” in Cuba has taken on an “unmerited negative significance,” according to Orlando Marquez, who says that “evil is neither in wealth nor in poverty but in the way we live with these realities and in the honesty and goodness of our lives, whether rich or poor.”

    The director of Palabra Nueva appears convinced that the “inevitable and difficult” adjustments being undertaken in Cuba could take the country on a better road, and warns that in the future even more reforms may be required.

    “Maybe we will need new rules or further updating of the economic model, and it is very probable that we will also need a new, modernized political class driven by a healthy national pride, observing a just rule of law and without fear of wealth,” the article says.

    The Raul Castro government has undertaken a plan of adjustments designed to “modernize the socialist economic model” in order to overcome the crisis that has afflicted the island for decades.

    The most important measures consist of expanding private employment, the elimination of 500,000 jobs in the public sector this year, and the elimination of “unnecessary” subsidies, among others. EFE

    From: Latin American Herald Tribune


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  • Monday, December 20, 2010

    Panic, anger as Cuba plans to lay off 1 of every 10 workers


    Cuba’s draconian plan to lay off 10 percent of its workforce is running into a slew of problems — not the least of which are the growing fights over who will wind up on the street.

    Cuban and foreign economists say it’s too much, too fast.

    Radical leftists are branding Raúl Castro as a capitalist exploiter of workers and – in an odd alignment with Cuban dissidents – are urging workers to fight the job cuts.

    One well-known historian and Communist Party member has warned of social chaos, maybe even a mass exodus, and cautioned that the layoffs may be unconstitutional.

    Workers desperately trying to keep their jobs are accusing others of corruption. And some blacks and women are warning that those sectors may be hardest hit by the job cuts.

    Almost no one doubts the job cuts are necessary in a country where the government pays the salaries of 85 percent of the workers – many of them in little more than make-work jobs. Castro has admitted the state payrolls are padded with more than one million surplus workers.

    In his most significant reforms since he succeeded brother Fidel in 2008, Castro is laying off 500,000 workers by April and is expected to cut another 500,000 to 800,000 in three years.

    He’s also cutting back other public spending and subsidies, and allowing an expansion of the private business sector in hopes that at least 250,000 of the newly laid off workers will be able to support themselves.

    Some Cubans say they are not overly concerned by the job cuts because Castro has promised that no worker “will be left unprotected.’’ The island will eventually muddle through the crisis, they say.

    Others say the country is awash in fear, especially among the bureaucrats, administrators, elderly, academics and recent university graduates seen as most likely to be left jobless.

    “The entire country is afraid. Fear of who’ll be out of work.

    Fear of how you’re going to buy food or something for the kids,’’ said Evelina, a Havana mother of two teenagers. “That’s what people are talking about, every minute, in every place.’’

    But the problems with the job cuts extend far beyond the fear. Dissident Havana economist Oscar Espinosa Chepe said he does not doubt the layoffs are needed, but argued that Castro is doing it the wrong way.

    “He’s doing in a very abrupt, very brutal way, without first creating the proper conditions’’ by waiting until the private sector had begun expanding, Espinosa said by telephone from Havana.

    “They got it ‘bass-ackwards’. They are laying off first and hoping and praying that the small private sector is going to expand enough to absorb them,’’ said Archibald Ritter, a professor at Carleton University in Ottawa who specializes in the Cuban economy.

    Former Cuban Deputy Labor Minister Lázaro González Rodríguez wrote in a recent Internet column that while the job cuts are needed, ‘‘what I can’t agree with are the methods, ways and time frame.’’

    The organization of labor at most state agencies and enterprises have not been studied for years, González argued, so the decisions on how many employees will be laid off at each workplace “are not the result of a technical study.”

    JOB IS A RIGHT

    Article 45 of the Cuban constitution also says that a job “in socialist society is a right, a duty and an honor,’’ he added. A group of Afro-Cubans, the Cofradía de la Negritud, in a Sept. 22 declaration urged blacks who believe they are to be dismissed for racial reasons to “not accept this passively and be ready to defend their labor rights.’’

    Cuban women also have warned against discriminating against them in the layoffs, with one writer noting that women hold 80 percent of the administrative jobs – a sector singled out for deep cutbacks.

    And a group of dissident lawyers, the Corriente Agramontista, issued a set of guidelines this month explaining the rights of workers to appeal their layoffs and if denied, challenge them in court.

    Even the leftist International League of Workers, active mostly in Latin America, blasted the layoffs as “a classic capitalist plan’’ and added: “The true defense of socialism in Cuba today means supporting the workers against this plan and ...demanding the right to strike.’’

    Castro has promised that the process of selecting those who will keep their jobs will be done not on the basis of seniority but “with strict observance of the principle of suitability.’’

    But his government has taken a somewhat hands-off approach to the process, apparently to distance itself from some of the pain of the cutbacks.

    The layoffs were first announced by the communist-run Confederation of Cuban Workers (CTC), the island’s lone labor union. And the initial recommendations on who goes are made in each workplace by a Committee of Experts made up of one administrator, one CTC official and either three or five workers chosen by fellow employees.

    Final decisions are made by higher-level supervisors. The government has not revealed how many workers have been laid off so far, though the cutbacks were to have started Oct. 4.

    But the committees already have sparked intense tensions, especially in government agencies and enterprises with access to goods that can be filched and sold on the black market.

    Miriam Celaya, a Havana woman who writes the blog Sin Evasion (Without Evasion), reported on Oct. 23 on a friend who works for a food-related state enterprise in Havana and now sits on its Committee of Experts.

    KICKBACK ECONOMY


    Workers at the enterprise used to happily kick back their meager salaries to supervisors in exchange for the chance to earn much more by stealing supplies and cheating customers, Celaya wrote, comparing the arrangement to a “Sicilian mafia.’’

    The scheme is not uncommon in tourist restaurants, where administrators claim that the state keeps all the profits so they need the workers’ salaries to maintain and upgrade the facilities, two Havana residents said.

    But now her friend “must decide, along with the other commissioners, which ones of these thieving associates [who, along with her, and just like her, cheat customers and bribe the bosses] ... remain as part of the gang’’ Celaya wrote.

    In another post, Celaya reported “pitched battles’’ between workers as the commissions consider who should keep their jobs.

    “These days anyone can be another’s executioner,’’ she added. “Why are they going to fire me and not that woman, who is corrupt ... And why me and not that guy, who’s always late? ...

    And of course they don’t fire that woman because she’s having an affair with the boss.’’

    Independent journalist Adolfo Pablo Borrazá wrote that at the Book Institute in Havana employees are denouncing co-workers “just to keep their jobs.’’ He added, “Even if it’s a good worker, it would be enough for someone to denounce a criticism of the government.’’

    Mutual accusations of corruption during committee sessions at a Havana hotel and José Martí International Airport already have sparked inquiries by prosecutors, according to reports circulating in Havana. The planned layoffs also have sparked warnings of unrest, even among government supporters like Pedro Campos, a historian, Communist Party member and former diplomat.

    “This could lead to unnecessary chaos, a social collapse, a massive and uncontrollable exodus,’’ declared a column signed by Campos “and other companeros’’ and published Sept. 27 on the Internet.

    But Cubans are more likely to accept the layoffs without complaints, wrote Havana blogger Elha Kovacs on her Internet page, Arma de Tinta – Ink Weapon. “In the long run people will use their personal resources and strategies for survival – and continue thinking about anything except changing the circumstances and conditions at the root of the dramatic scenario,’’ Kovacs added.

    Espinosa Chepe said the Castro government may even decide to lay off less than the targeted 500,000, or extend the March 31 deadline, once it realizes the magnitude of the problems ahead.

    “I have my doubts that this will go ahead as planned because there are no – none at all – conditions for it to succeed,’’ he said.

    By Juan O. Tamayo
     
    From: McClatchy

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  • Friday, December 17, 2010

    Quo Vadis Fidel? Where are you going?

    The enormously talented and courageous woman, Yoani Sanchez, summarized the meaning of the forthcoming April 2011 Conference Guidelines for the Communist Party’s Sixth Congress in her biting blog called Generation Y. On November 9th, 2010, she wrote “not a single line refers to the expansion of civil rights, including the restrictions suffered by Cubans in entering and leaving our own country. Nor is there a word about freedom of association or expression, without which the authorities will continue to behave more like factory foremen than as the representatives of their people.”

    However, other than castigating the “bloodsucking character” of the thirty some odd pages of text containing economic proposals, “more appropriate for the Ministry of Finance than for the compass of a political party,” she treads lightly on the bureaucratic contradictions that drive the Cuban Communist Party at this critical point in time. The emotional turmoil of present day Cuba she gives voice to as a “detective of the unexpressed.” She rarely is excelled by anyone in an overseas context. However the political economy of the moment remains fair game for foreign policy analysis.

    Other than those who remain dedicated to the cause of the 1959 Cuban Revolution, I suspect that most serious analysts would correctly claim that the forthcoming assembly can only seek to preserve and protect the Communist party apparatus. To expect it to declare itself out of business and defunct is too much to imagine from a single party that monopolizes every organ of public opinion and political mobilization. But this very domination of politics is a source of deep weakness; it demonstrates the absence of legitimacy in the Castro brothers’ regime. It may rotate leadership elites, but it can not change the course of totalitarianism.

    In a system of dynastic communism, practiced to a fine art in North Korea, but mocked everywhere else, its impact beyond the 800,000 members of the Communist Party ranges from negligible to indifferent. The decision of the Communist Party to reform the economic system from within is faced with a cul-de-sac from which it cannot readily extricate itself. Reduced to a political faction of less than ten percent (closer to seven percent) of the population, and faced with a variety of cultural distancing from the regime-ranging from rebellious youth to religious revivalism as a mobilizing device-the system at the level of ideological superstructure is a ghost of what it was in earlier periods of Cuban communist history.

    Turning toward the political economic base, the system seems even more vulnerable than in the past. The natural history which transpired in 2010 augurs poorly for a party conference scheduled for late spring 2011. Even the supposition that the actors in this drama will remain the same is dubious. Leaders in their eighties cannot presume immortality.

    1. First, there is the strange September 8, 2010 interview with Jeffrey Goldberg, the National Correspondent for The Atlantic in which Fidel Castro admits plainly that “The Cuban [Communist] model doesn’t even work for us anymore.” Castro’s post-interview shifts and qualifications hardly constituted damage control.

    2. The government apparatus of Raul Castro declares a reduction in the size of the central bureaucracy by at least 500,000 to 700,000 individuals. The size of the public sector was thus reduced from 85 percent to somewhere between 75-70 percent.

    3. The problem is that there is no private sector available to absorb such a huge exodus from government employment. Not only is this population redundant within the bureaucracy, it has little tooling or educational retraining in the largely pyrrhic private sector.

    4. Often overlooked is that the culture of communism strongly discourages business skills and private sector initiatives. Those who engaged in such practices in earlier decades were rapidly forced to surrender its activities; or failing that, pay exorbitant taxes for the privilege of embracing the private sector as small time entrepreneurs.

    5. The swollen public sector exiles thus must turn to the black market or gray market in order to survive. Already rife with a myriad of widely reported illegal activities in the black market, from stealing of any moveable parts, to services rendered “off the books” in repairs and services, the situation is grim.

    6. The currency situation created by the new edicts will do little to strengthen the value of Cuban currency, certainly neither abroad and probably not within Cuba itself. What it is likely to accomplish is the further flight from the Peso Cubano (moneda nacional) into convertible currencies such as North American dollars and European euros.

    7. The trade unions mandated by the government now stand exposed as the ideological voice of the Communist Party and its edicts, or must face the prospect of opposition to the regime itself. This is a situation strangely parallel to Poland during the founding of Solidarity in the Gdansk shipyards in September 1980 where Lech Walesa and others formed a broad anti-Soviet social movement ranging from people associated with the Catholic Church to members of the anti-regime Left.

    The larger, external macroeconomic factors for Cuba offer little comfort-dependency on Venezuela or at least on Hugo Chavez parading about as the savior of the island for providing petroleum products at reduced rates and bartering professional personnel in exchange for such assistance. This offers little succor to either the Party or its leadership. The declining markets for sugar and tobacco produced as a result of stiff competition from other nations and regions also have become part of the permanent Cuban landscape. The island is unable to compete, and even less able to revitalize established industries much less institutionalize new technologies that have become routine even in less democratic parts of the world. The pressures from the embargo by the United States (which are real, despite Fidel’s repeated past blaring that they counted for little) do weigh heavily on the regime. Add to this Russia’s loss of support on a variety of finished products, the Castro brothers are faced with impossible choices. Not even Chinese good will can bail out the system.

    The Castro entourage would be wise to retool the getaway airplane used by Fulgencio Batista, and try for January 1, 2011 as a fine one-way departure date. And so might this prove to be the peaceful end of the Communist regime in Cuba: not in a thundering manifesto of historical absolution, but as a quiet departure of a frenetic politburo that should have taken place years ago. The Cuban people will have to figure out who to punish and how to move beyond more than a half century of authoritarian rule. They will also need to examine options and alternatives before them in the torturous road of re-entry into hemispheric civilities and global economics. But this upcoming event — Proyeto de Lineamientos de la Política Económico y Social — far from alleviating the situation will only exacerbate matters. It will focus attention on systemic failures, and add substance to Fidel’s off-handed remarks in the Atlantic interview. In this way, Fidel may yet prove a prophet of doom, rather than a harbinger of the future.

    By Irving Louis Horowitz

    From: Eurasia Review

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