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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Medicare fraud pays for Cuban spy activities against U.S.

The Communist Cuban dictatorship is draining hundreds of millions of dollars from America's already financially strapped Medicare program and using the money to finance its military and espionage services, according to one counterintelligence expert specializing in Cuban affairs.

In an exclusive interview with International News Analysis Today, Christopher Simmons not only ties in the Cuban dictatorship with the rampant Medicare fraud, but draws a stunning conclusion about the erosion of American sovereignty in south Florida.

Simmons is a retired Counterintelligence Special Agent with 28 years service in the Army, Army Reserve, and the Defense Intelligence Agency with a specialty in Cuban intelligence affairs. Simmons was part of the team that identified, arrested, and convicted former Defense Intelligence Agency senior analyst, Ana Belen Montes, Cuba's highest-ranking spy captured to date. Simmons has appeared on radio and television, and has given testimony before committees of Congress.

Cuban Government As Criminal Enterprise

Medicare fraud usually involves money billed for treatment or services never rendered. Most Medicare fraud in the U.S. occurs in southern Florida, and the majority of the fraud perpetrators flee to Cuba. Law enforcement officials publically state, however, that there is no proof of a connection between Medicare fraud and Cuba.

Ana Belen Montes, 1990.

Simmons pointedly disagrees and does see a clear connection.

"There is a huge difference between proof and evidence," observed Simmons.

"The Cuban government has been a criminal enterprise for 50 years, and has never been reluctant to engage in crime to make money," Simmons declared. Havana has a 50 year history of involvement in breaking international law, from drug trafficking to selling U.S. secrets, Simmons said. He reasons that expansion into a relatively simple scheme as Medicare fraud would be easy for the Communist state.

The Communist Cuban government's wide experience in breaking U.S. and international laws provides "proof of capability and intent" and a "pattern of behavior," Simmons asserted.

In seven out of ten cases, he said, the perpetrators are Cuban-born individuals who have come to the United States since the 1990s and who flee back to Cuba when law enforcement uncover their fraudulent activities. In Cuba, they enjoy every available comfort in return for funneling millions of dollars to the Cuban government.

A report issued by the University of Miami cites statements by a former high-level Cuban intelligence officer indicating that the Cuban government is either directing or assisting the perpetrators to obtain much needed hard currency.

Cuban Official Claims 'Ludicrous'

Cuba officially disclaims any knowledge of either the fraud in south Florida or the presence on the island of the perpetrators of the fraud.

Describing as "ludicrous" Havana's claims of ignorance of the crimes or the criminals. Simmons told INA Today that the newly returned Cuban exiles would have at the very least attracted the attention of members of the Committee for the Defense of the Revolution, a block-by-block organization of Cuban citizen informers whose job it is to watch other Cuban citizens and report everything they see. Simmons estimates that one out of ten Cubans work for the CDR.

Simmons' ratio of informers to citizen is corroborated by what we know about the conditions in the now-defunct Communist East German dictatorship. As many as one in six East Germans were informers for the Ministry for State Security, the feared Stasi secret police.

A returning Cuban exile living the good life in the tropical gulag that is Cuba would certainly attract the attention of the CDR spies across the island.

Fraud Pays for Espionage

Based on his knowledge of previous Cuban government criminal schemes, Simmons stated that a large part of the Medicare fraud profits go directly to support Cuba's vast foreign and domestic spy network and the military.

The United States is Cuba's only important enemy.

The money taken during Cuba's Medicare fraud scheme has returned to south Florida in the person of well-financed intelligence personnel. Simmons stated that from 150 to 200 Cuban intelligence officers are active in south Florida, vastly outnumbering U.S. spy catchers.

Carmen Kaeren González, suspected to be in Cuba

U.S. counterespionage efforts in south Florida are also impeded by the demands of the U.S. involvement in Iraq and Afghanistan.

Simmons explained that counterintelligence personnel, because of their experience and training, are often deployed to the Iraq and Afghanistan, because they capable of operating both as intelligence officers — those who seek to obtain restricted or secret information — and in their intended role of counterintelligence personnel — spy catchers.

Florida as 'Denied' Area — Like North Korea

As many as 70% of Cuba's spies operate in south Florida, and the limited number of U.S. counterintelligence personnel available in the region spells potential disaster for the United States.

America's resources available in the struggle against Cuban intelligence are so thin that Simmons regards south Florida as a "denied area," an intelligence designation indicating a place where U.S. intelligence operations "are either difficult or impossible."

Examples of other "denied areas" are North Korea and Iran, said Simmons

The FBI and other law enforcement agencies have scored impressive victories against Cuban intelligence services, among them the destruction of the Wasp Network in 1998 and the arrest of Ana Belen Montes in 2001.

There is much more to do to protect Americas against Cuban espionage activities, but Cuba has become to many influential Americans a politically correct subject. Within the U.S. policy elite there is often a discernible pro-Cuban element.

The U.S. pro-Cuban lobby includes in its ranks U.S. politicians, Hollywood stars, and think tank experts who regularly support Communist Cuba's agenda.

Silence also aids the Cuban dictatorship. Little or nothing is ever said in the U.S. media — liberal or conservative — about the struggles of pro-freedom activists in Cuba who face regular beatings and imprisonment.

Communist Cuba exists because of the relentless oppression carried out by its ruthless secret police for the benefit of the military and the Communist Party. Medicare fraud is just one more crime to add to the many perpetrated against the U.S. and the people of Cuba.

By Toby Westerman

Source: RenewAmerica

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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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Cuba Aviation & Biotech Execs Off to Prison

At least ten executives in Cuba’s government controlled airline and pharmaceutical industries were sentenced to 3 to 13 prison terms for corruption, announced official sources on Friday.

The accused “received cash and other benefits to favor foreign companies in business transactions” with the Cuban firms they represented, found the court, which also ordered the confiscation of money and goods obtained by the executives in their criminal activity.

Among those punished was Jose Heriberto Prieto, the director of the cargo division of Cubana de Aviación who got 13 years. Jair Rodríguez Martin, former head of exports for the Herber Biotec S.A. Biotech and Pharmaceutical products was given 10 years.

Nonetheless, the deposed president of the Institute of Civil Aeronautics, General Rogelio Acevedo, was not mentioned in the case. He was also absent from sentencing of other officials under his command earlier this year.

Cuba’s President Raul Castro has repeatedly warned that corruption will not be tolerated under his government, struggling to kick-start the country’s depressed economy.

In a recent meeting of the Council of Ministers, Castro said: “Whoever commits a violation, whatever it is, will be brought to task, and to do so our courts, judges and prosecutors will begin to play a more decisive role.”

Cuban political analyst Esteban Morales told IPS that corruption represents an “extraordinary danger” to the country and that “its corrosive power” makes it a matter “of national security.”

By Circles Robinson

Source: Havana Times 

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Chavez's illness spells trouble for Cuba

Hugo Chavez back in Venezuela, last Monday, the 4th July.

Cuba depends on Venezuela for billions of dollars in subsidies that could disappear if Chavez doesn't recover.

As Hugo Chavez boarded a plane here early Monday for his return to Caracas, he stood on the tarmac with Raul Castro and offered some parting words of reassurance: “Venezuela and Cuba are the same thing, the same country,” he said.

And that, precisely, is what’s at stake for Cuba with Chavez now battling cancer. Billions in Venezuelan subsidies to the island — and other regional left-leaning allies — are riding on his recovery.

Two decades after the Soviet Union’s implosion brought chronic blackouts to Cuba and sent the island’s economy into a ditch, Havana is once again highly dependent on foreign largess to keep the lights on. Chavez provides Cuba with more than two-thirds of its petroleum needs, and the island earned an estimated $3.5 billion in trade last year with Venezuela, its largest source of hard currency.

Chavez, 56, has not disclosed what type of cancer he has, or what the prognosis is, only that he had a growth described as a pelvic abscess removed and that “cancerous cells” were discovered by Cuban surgeons.

When he landed Monday in Venezuela in preparation for his country’s bicentennial celebration, Chavez appeared upbeat and energetic, sending out messages to his 1.7 million Twitter followers and assuring television audiences he was “devouring” his meals.

But in Havana, it has been the start of concern. Chavez’s imperiled health brings new attention to the fragility of Cuba’s economy, at a time when 80-year-old Raul Castro is struggling to put the island’s finances in order and proceed with carefully managed, incremental liberalization measures.

Cuba’s communist government is planning to lay off hundreds of thousands of state employees over the coming years and is allowing the expansion of small private businesses and cooperatives. One big reason Havana can afford to conduct the reforms at its own pace is the dependable revenue coming from Caracas.

If Chavez’s rule were to end because of his illness or impact his December 2012 re-election bid, the return of 40,000 Cubans now working in Venezuela — mostly in the health care sector — would create still more financial strain for the Castro government.

Of greater worry is Cuba’s energy supply. Steady oil shipments from Venezuela have largely eliminated the chronic blackouts that plagued Cuba in the early 1990s and led to riots in Havana, as well as the chaotic departure of thousands of rafters for the U.S.

Back then, Fidel Castro was still at the height of his political powers, taking to the airwaves almost daily to pull Cubans through the crisis by the sheer force of his will. Now he’s 85, and far too frail to rally the country once more.

Public unrest in Cuba is closely linked to the power supply — especially during the torrid summer months — and over the past decade, Cuba has stabilized its electrical grid by installing a series of relatively small fuel-burning power plants. They run mostly on Venezuelan crude, and even as oil prices climbed over $100 a barrel in recent months, Cuba has continued to enjoy a reliable energy supply.

Cuba isn’t likely to find a quick alternative to Venezuelan oil, either. The island produces about 50,000 barrels of oil per day from domestic sources, used mostly for generating electricity. Spanish oil consortium Repsol is planning to begin drilling in offshore beds along Cuba’s north coast in the coming months, but even if it has a major strike, experts say it will take years to bring the crude to market.

Then there are hundreds of other commercial and trade agreements with Venezuela that could be jeopardized if the country’s next president isn’t as simpatico. Cubans privately worry those arrangements may be only as healthy as Chavez himself, a man who views Fidel Castro as his political father figure.

Other socialist allies around the region, like Nicaragua’s Daniel Ortega, are also highly reliant on Venezuelan oil diplomacy, along with the 19 nations of the Petrocaribe alliance, whom Chavez buffers from the global oil market’s volatility.

Chavez insists he is fine, and on the path to full recovery. In a written “Reflection” dedicated to Chavez’s illness Monday, Castro said the Venezuelan president had launched “a decisive battle” that “will lead him and his country to a great victory.”

But that victory now depends on the Cuban oncologists tasked with saving Chavez. While the location and stage of his cancer has been kept secret, experts speculate the area of affliction could be Chavez’s colon or prostate. A late-stage form of colon cancer would be extremely dangerous.

Chemotherapy treatments could force Chavez to withdraw from public view again, so his return to Caracas this week may also be a final attempt to put his political team in order before a lengthy absence.

Nick Miroff 

Source: Global Post

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Activists, Bloggers on the Cuba Money Project Vimeo Channel

For anyone interested in United States (US) policy, human rights activism, or the problem of free expression in Cuba, there is a new must-see channel on Vimeo. It belongs to the Cuba Money Project.

Last December, journalist, blogger, and Flagler College professor Tracey Eaton began the Cuba Money Project (CMP), a non-profit research and reporting initiative that aims to investigate and bring greater transparency and accountability to US federal spending on “pro-democracy” programs in Cuba. With the help of a grant from the Washington-based Pulitzer Center for Crisis Reporting, Eaton has employed a blend of traditional and new media techniques in his work.

In addition to an active newsfeed and blog, the CMP website includes data visualizations of spending details, a FOIA (Freedom of Information Act) tracker, and spaces where readers can contribute their own knowledge.

US funding in Cuba: ‘Pro-democracy’ or anti-government?

Despite sanctions against spending US dollars in Cuba, the US government has spent millions of dollars over the last five decades on an interventionist policy towards Cuba. Since 2007, Congress has allocated between 13 and 45 million USD per year to be spent on “pro-democracy” programs in the country.

These programs have grown out of a US-Cuba policy framework that once sought to overthrow the government of Fidel Castro. US ire for Cuban leadership began decades ago with Fidel Castro’s declaration of the socialist character of the revolution, and his refusal of economic aid from the US, and Cuba’s subsequent alliance with the Soviet Union.

Today, the rhetoric has shifted: the stated goal of US policy in Cuba is no longer to bring the downfall of the government, but rather to support Cuban citizens’ efforts to improve their lives through the restoration of human, civic, and economic rights. Yet regardless of how the US chooses to represent its efforts, the “pro-democracy” programs that it supports are, by nature, anti-government, or at least fall in opposition to some part of the Cuban system as it currently stands.

Diverse opposition

The 24 interviews on CMP’s Vimeo channel feature Cuban human rights activists, traditional dissidents, bloggers, and government workers and supporters, along with policymakers from Cuba, England, and the US. I recently had the chance to interview Eaton about this impressive archive.

Eaton’s goal is to get representative views from across the spectrum of opinion and influence on these issues:

People have passionate views. I want to help them tell their story without taking sides. Letting them talk into the camera is a great way to do that. […] Video [allows] people to speak directly to the [viewers] without any intervention from me. I ask questions, but I don’t filter what people say. I try to let them tell their story. I edit the videos very lightly, if at all.

He says that the archive is far from complete, and that he is determined to get more Cuban government supporters and workers to participate.

The videos do not form a cohesive narrative about activism and US involvement in Cuba; rather, they show the truly diverse range of ideas and goals espoused by Cuban political activists and by those in the US who influence US-Cuba policy. As dissident leader Martha Beatríz Roque says:

[l]a ideología dentro de la opposición es diversa. […] No somos partido único—partido único es el partido comunista.

Ideology within the opposition is diverse. […] We are not one sole party—the communist party is a sole party.

One important difference between activist groups that is all but indecipherable in mainstream coverage of Cuba is that which separates “old guard” dissidents, whose primary aim is to bring about the downfall of the Castro regime and the Cuban socialist project at large, and those who advocate for human rights in Cuba.

While leaders like Roque, who is connected with anti-Castrist leaders in Miami, believe that more US government money could make a meaningful change in dissident work on the island, Oswaldo Payá, leader of the famed 1990s Varela Project, is not so sure of this:

El dinero de los Estados Unidos no va a decidir el cambio en Cuba. […] La esencia del problema es que el gobierno cubano no reconoce los derechos de los ciudadanos cubanos en Cuba. […] El problema está en Cuba, y la solución está en Cuba, y entre cubanos.

Money from the United States is not going to drive change in Cuba. […] The essence of the problem is that the Cuban government does not recognize the rights of Cuban citizens in Cuba. […] The problem is in Cuba, and the solution is in Cuba, between Cubans.

Unemployment among opposition activists

Eaton has interviewed several members of the women’s opposition group, Las Damas de Apoyo, who advocate for the end of politically-motivated incarceration in Cuba. They work in support of the Damas de Blanco, a coalition of women whose husbands and sons have been imprisoned for political reasons. Each of the women interviewed described how she had lost her job, and was unable to find work, because of her political beliefs:

Unemployment and underemployment among members of Cuba’s political opposition is widespread…[They] are in a difficult spot…They have to do something to get by. I can understand why a dissident might accept help from a non-governmental organization.

But, he says, “It’s a risky proposition. Accepting support from a US-financed NGO can set them up for possible arrest or jail time.” And doing political work costs money:

If dissidents from Havana need to travel to another town to meet with other dissidents, it costs money…Internet access and phone calls are extraordinarily expensive…Simple things can be tough to accomplish in Cuba, especially if you are strapped for cash. You can’t just walk to a Kinko’s on the corner to make copies.

Opposition leaders in various camps described the problems that money can create for their cause, particularly when coming from the US. Aleida Godinez, a state security agent, believes that when US money stops coming in, the dissident movement will end. When asked about US support for pro-democracy initiatives in Cuba, Godinez notes an important problem that many Cubans perceive within this paradigm:

Los promotores de los valores de la democracia, de la libertad, son norteamericanos. No entiendo por que razón no permiten que un país como Cuba no puede elegir su propio sistema social. […] [Demuestra] una falta de respeto para el pueblo cubano.

The people who promote the virtues of democracy and freedom are North Americans. I don’t understand why they cannot allow a country like Cuba to elect its own social system. […] It [shows] a lack of respect for the Cuban people.

 

“Dissident bloggers” or just bloggers?

Eaton has interviewed three of Cuba’s most prominent anti-government bloggers, Claudia Cadelo [es], Laritza Diversent [es], and Yoani Sánchez [es]. I asked him what he thought of their involvement with opposition initiatives, and how he saw them fitting into the larger landscape of pro-democracy activism that CMP seeks to better understand.

Eaton calls Cuba’s bloggers a “diverse bunch.” “[T]hey shouldn't be lumped together with political dissidents,” he told me. “Some Cuban bloggers support the socialist system. Others rebel against it, but don't consider themselves to be dissidents.”

“Many bloggers want change, but steer clear of politics,” he told me:

When I talked to blogger Claudia Cadelo last year, she…didn't seem too interested in politics. She wants change. She wants an expansion of basic freedoms. But I wouldn't consider her to be a political dissident.
[…]
Some bloggers purposely avoid the U.S. Interests Section in Havana because they don't want to be linked to American efforts to undermine the Cuban government.

Indeed, many of the island’s most widely read bloggers advocate for change, but do not engage directly with politics. Even Yoani Sánchez did not begin blogging with a particular political agenda, though unlike many, she has since become a vociferous advocate for particular political changes in Cuba.

If there were a political platform for bloggers, Eaton says it would be advocacy for free expression and open Internet access for all Cubans:

My impression is that a key issue for many Cuban bloggers is freedom of expression. They want Internet access for all. They want it to be affordable. They want to network with other people and they want the freedom to use technology without someone looking over their shoulder. […] Outside Cuba, there are many bloggers and democracy activists who are eager to see change on the island. Many are Cuban exiles who have no plans to return to Cuba while the Castro brothers are in power. They are quick to support many of the bloggers, and sometimes pull them into the swirling currents of the U.S.-Cuba grudge match whether the bloggers want that or not.

Projects like Eaton's might well serve as a counterbalance to the common assumption by many activists groups that all Cubans who criticize their government are alike. No matter what side they're on, anyone interested in the complex political world of Cuba today should check out the Cuba Money Project Vimeo channel.

Written by Ellery Roberts Biddle 

Source: Global Voices

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Cuba: Tobacco dollars over public health

In a section of the documentary "An Inconvenient Truth", Al Gore talks on the topic of smoking and its harmful effects on human life, but this piece of the film seems to be ignored by Fidel Castro and the Cuban communists, although they are apparently anti-global-warming activists.

Much of the civilized world has begun to pass laws to ban smoking in places that affect other people, as recommended by the World Health Organization; however, as if it were not enough to be one of the only countries still governed by a socialist dictatorship, Cuba also prefers to be one of the few nations to avoid anti-tobacco regulations in order to not harm the earnings of its state tobacco industry.

According to WHO, about 6 million people will die this year because of smoking, not including passive smoking, but in the socialist paradise of the Castro brothers, the "problem" to choose between health and dollars is defined in the style of Wall Street investment bankers, what makes more profit?, where tobacco capitalism wins easily.

While Venezuela, Argentina, Ecuador, Peru, Colombia, Guatemala, Panama, Brazil, Mexico, Uruguay and other Latin American countries continue to move to offer its citizens smoke-free spaces, Cuba continues to hold the annual "Habano's Festival", tobacco is still among the top three Cuban export products, and the pictures of Fidel Castro and Che Guevara with cigars in their mouths are part of Latin American communist culture.

A few years ago, the government of Cuba sought to promote anti-tobacco regulations, but they were nullified with the excuse of being intolerable for the people, which sounds highly implausible because we are talking about one of the most repressive dictatorships on the planet.

And in this we have another of the contradictions of Cuban socialism. Fidel prefers to write about the growth of deserts in Africa and toxic emissions in the northern hemisphere, but where he can do something real for life, in Cuba, where the Castro family has dominated for the past 52 years, he chooses to discuss the problems in foreign countries.

Luis Alberto López Rafaschieri and José Alberto López Rafaschieri

Source: From the Beginning

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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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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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Mafias Get Involved in Administering The Sectors of The Cuban State

Corruption in Cuba is “widespread” and sections of the state are administered by “mafias”, according to diplomatic cables from the U.S. mission in Havana, released by WikiLeaks and published in the newspaper El Pais in Spain on Saturday. According to the cables, corrupt practices included “bribery”, “misuse of state resources,” accounting tricks and “illegal commissions charged by officials in exchange for concessions and an amount is deposited in accounts opened in your name or that of people brought in foreign banks. “

“There are state facilities that are managed, in fact, mafias (in sectors such as tourism and construction) as anywhere in the world, a one million dollars is (for the Cuban commission) 100,000 dollars in bank “, the reports said.

The newspaper added that according to these corrupt leaders cables are not aware of the revolutionary leadership, but officials “pragmatists have a space within a rigid communist system.” Information submitted to the State Department for the U.S. Interest Section in Cuba states that where the state controls more than 90% of the economy, theft and corruption, to feed the black market “is a survival mechanism, due to low wages.

“The authorities tolerate the corruption of survival to some extent, but when they know detours act with severity,” the report added.

They note that many of the potentially most profitable jobs are usually assigned by bribing the official who decides and that the police “are famous for taking bribes.” Raul Castro’s government carried out a crackdown on corruption and theft of resources to the state and created a powerful Comptroller General.
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From: CoffeToday

To read:

Corruption in Cuba: Castro and Beyond

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